1. Clientlogic Philippines, Inc. v.
Castro, thereof; or (ii) execute under general
G.R. No. 186070, April 11, 2011
DOCTRINE: The test of supervisory or
managerial status depends on whether a person
possesses authority to act in the interest of his
employer and whether such authority is not
merely routinary or clerical in nature, but requires
the use of independent judgment.
Employees are considered occupying
managerial positions if they meet all
of the following conditions, namely:
1) Their primary duty consists of
management of the establishment in
which they are employed or of a
department or subdivision thereof;
2) They customarily and regularly direct
the work of two or more employees
therein;
3) They have the authority to hire or fire
other employees of lower rank; or their
suggestions and recommendations as to
the hiring and firing and as to the
promotion or any other change of status
of other employees are given particular
weight.
They are considered as officers or
members of a managerial staff if they
perform the following duties and
responsibilities:
1) The primary duty consists of the
performance of work directly related to
management of policies of their
employer;
2) Customarily and regularly exercise
discretion and independent judgment;
3) (i) Regularly and directly assist a
proprietor or a managerial employee
whose primary duty consists of
management of the establishment in
which he is employed or subdivision
supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (iii)
execute, under general supervision,
special assignment and tasks
ER: Castro was a team supervisor who is charge
of dealing with customer complaints which cannot
be resolved by call center agents. Castro was
dismissed. This prompted him to file illegal
dismissal with non-payment of overtime pay, rest
day pay, holiday pay, SIL, full backwages,
damages and attorneys fees before the LA.
SITEL argues that as a team supervisor, Castro
was a member of the managerial staff, thus not
entitled to overtime pay, rest day pay, holiday
pay, and service incentive leave pay. Issue is
whether Castro’s duties and responsibilities
qualify him as member of managerial staff.
The Court held that no because his duties and
responsibilities did not require him to use
independent judgement, his job’s main duty was
merely to deal with customer complaints which
could not be handled or solved by call center
agents. This he is not entitled to his money
claims. See doctrine.
FACTS:
1. Castro was employed by petitioner
ClientLogic (SITEL) in 2005 as a call center
agent for its Bell South Account. After six (6)
months, he was promoted to the Mentor
position, and thereafter to the Coach position.
a. A Coach is a team supervisor who is
in charge of dealing with customer
complaints which cannot be resolved
by call center agents.
2. In June 2006, he was transferred to the
Dot Green Account.
3. Castro received a notice requiring him to
explain why he should not be penalized for:
(1) violating Green Dot Companys Policy and
Procedure for Direct Deposit Bank Info
Request when he accessed a customers
online account and then gave the latters
routing and reference numbers for direct
deposit; and (2) gravely abusing his
 discretion when he requested for the medical
records of his team members.
4. Castro, however, justified his actuations
by explaining that the customer begged him
to access the account because she did not
have a computer or an internet access and
that he merely requested for a patient tracker,
not medical records.
5. In November 2006, a poster showing
SITELs organizational chart was posted on
the companys bulletin board, but Castro’s
name and picture were conspicuously
missing, and the name and photo of another
employee appeared in the position which
respondent was supposedly occupying.
6. In February, 2007, he received a Notice
of Termination. These events prompted him
to file a complaint for illegal dismissal; non-
payment of overtime pay, rest day pay,
holiday pay, service incentive leave (SIL)
pay; full backwages; damages; and
attorneys fees before the Labor Arbiter
(LA) against herein petitioners SITEL and
its officers
7. SITEL argues that as a team
supervisor, Castro was a member of the
managerial staff; hence, he is not entitled
to overtime pay, rest day pay, holiday pay,
and service incentive leave pay.
ISSUE:
Whether the duties and responsibilities
performed by Castro qualify him as a member of
petitioners managerial staff. NO!!
HELD:
Article 82 of the Labor Code states that the
provisions of the Labor Code on working
conditions and rest periods shall not apply to
managerial employees. Generally, managerial
employees are not entitled to overtime pay for
services rendered in excess of eight hours a day.
Article 212 (m) of the Labor Code defines a
managerial employee as one who is vested with
powers or prerogatives to lay down and execute
management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or
discipline employees, or to effectively
recommend such managerial actions.
As a coach or team supervisor, respondents main
duty was to deal with customer complaints which
could not be handled or solved by call center
agents. If the members of his team could not
meet the needs of a customer, they passed the
customers call to respondent.
This job description does not indicate that
respondent can exercise the powers and
prerogatives equivalent to managerial actions
which require the customary use of independent
judgment. There is no showing that he was
actually conferred or was actually exercising the
following duties attributable to a member of the
managerial staff, viz.:
1) The primary duty consists of the
performance of work directly related to
management of policies of their
employer;
2) Customarily and regularly exercise
discretion and independent judgment;
3) (i) Regularly and directly assist a
proprietor or a managerial employee
whose primary duty consists of
management of the establishment in
which he is employed or subdivision
thereof; or (ii) execute under general
supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (iii)
execute, under general supervision,
special assignment and tasks; and
4) Who do not devote more than 20
percent of their hours worked in a
workweek to activities which are not
directly and closely related to the
performance of the work described in
paragraphs (1), (2), and (3) above.
2. Cruz v. BPI, G.R. No. 173357, February
13, 2013
DOCTRINE: The test of "supervisory" or
"managerial status" depends on whether
a person possesses authority to act in the
interest of his employer and whether
such authority is not merely routinary or
clerical in nature, but requires the use of
independent judgment.
ER: Cruz was an Assistant Branch
Manager of BPI. After 13 years she was
terminated on grounds of gross
negligence and breach of trust for the
following acts: (1) allowing the issuance
of USD Certificates of Deposit (CDs)
under the bank's safekeeping to an
impostor without valid consideration; (2)
allowing USD CD pre-terminations based
on such irregularly released certificates;
and (3) allowing withdrawals by third
parties from clients' accounts, which
resulted in prejudice to the bank. She
claims she was only a Cash II Officer.
However, SC held that [SEE DOCTRINE]
and BPI was able to prove that she
exercised independent judgment when
she approved transactions based on the
similarity of signatures presented.
FACTS:
● Petitioner was hired by Far East Bank
and Trust Company (FEBTC) in 1989.
Upon the merger of FEBTC with
respondent BPI in April 2000,
petitioner automatically became an
employee of respondent. Petitioner
held the position of Assistant Branch
Manager of the BPI Ayala Avenue
Branch in Makati City, and she was in
charge of the Trading Section.
● On July 12, 2002, after 13 years of
continuous service, respondent
terminated petitioner on grounds of
gross negligence and breach of trust.
Petitioner's dismissal was brought
about by the fraud perpetrated against
three depositors (see details below),
namely, Geoffrey L. Uymatiao,
Maybel Caluag and Evelyn G. Avila, in
respondent's Ayala Avenue Branch.
● On April 19, 2002, BPI Vice-President
Edwin S. Ragos issued a
memorandum directing petitioner to
explain within 24 hours… On May 22,
2002, an administrative hearing was
held to give petitioner an opportunity
to explain her side of the controversy.
● On July 10, 2002, a notice of
termination was issued informing
petitioner of her dismissal effective
July 12, 2002 on grounds of gross
negligence and breach of trust for the
following acts: (1) allowing the
issuance of USD Certificates of
Deposit (CDs) under the bank's
safekeeping to an impostor without
valid consideration; (2) allowing USD
CD pre-terminations based on such
irregularly released certificates; and
(3) allowing withdrawals by third
parties from clients' accounts, which
resulted in prejudice to the bank.
● Thereafter, petitioner filed a
Complaint for illegal dismissal against
respondent and its officers with the
Arbitral Office of the NLRC.
● LA: Favored petitioner, dismissal was
illegal
● NLRC: Reversed LA, dismissed
complaint
● CA: Affirmed NLRC
ISSUE: Whether petitioner is a
managerial employee whose continuous
employment is dependent on the trust
and confidence reposed on her by
respondent.
HELD:
Yes
● Respondent dismissed petitioner
from her employment on grounds of
gross negligence and breach of trust
reposed on her by respondent under
Article 282 (b) and (c) of the Labor
Code.
● In this case, respondent avers that
petitioner held the position of
Assistant Manager in its Ayala
Avenue Branch. However, petitioner
contends that her position was only
Cash II Officer.
● [SEE DOCTRINE] Respondent
stated that the responsibility of
petitioner, among others, were as
follows: (1) to maintain the integrity of
the signature card files of certificates
of deposits and/or detect spurious
signature cards in the same files; (2)
to ensure that releases of original
CDS are done only against valid
considerations and made only to the
legitimate depositors or their duly
authorized representatives; (3) to
approve payments or withdrawals of
deposits by clients to ensure that
such withdrawals are valid
transactions of the bank; and (4) to
supervise the performance of certain
rank-and-file employees of the
branch.
● Petitioner holds a managerial status
since she is tasked to act in the
interest of her employer as she
exercises independent judgment
when she approves pre-termination
of USD CDs or the withdrawal of
deposits. In fact, petitioner admitted
the exercise of independent
judgment when she explained that as
regards the pre-termination of the
USD CDs of Uymatiao and Caluag,
the transactions were approved on
the basis of her independent
judgment that the signatures in all
the documents presented to her by
the traders matched.
● Hence, respondent was justified in
dismissing petitioner on the ground
of breach of trust. As long as there is
some basis for such loss of
confidence, such as when the
employer has reasonable ground to
believe that the employee concerned
is responsible for the purported
misconduct, and the nature of his
participation therein renders him
unworthy of the trust and confidence
demanded of his position, a
managerial employee may be
dismissed.
● As a general rule. employers are
allowed a wider latitude of discretion
in terminating the services of
employees who perform functions by
which their nature require the
employer's full trust and confidence.
Mere existence of basis for believing
that the employee has breached the
trust and confidence of the employer
is sufficient and does not require
proof beyond reasonable doubt.
Thus, when an employee has been
guilty of breach of trust or his
employer has ample reason to
distrust him. a labor tribunal cannot
deny the employer the authority to
dismiss him.
● PETITION DENIED.
3. Echo 2000 Commercial Corp. v.
Enriquez, G.R. No. 214092, January
11, 2016
DOCTRINE:An employee is not bound to
accept a promotion, which is in the nature
of a gift or reward. Refusal to be
promoted is a valid exercise of a right.
Such exercise cannot be considered as
insubordination, or willful disobedience of
a lawful order of the employer, hence, it
cannot be the basis of an employee's
dismissal from service.
ER: Employer re-assigned/promoted
respondent employees into
Managerial/Supervisorial positions. The
latter refused for lack of experience.
Employer terminated their services for
not performing their duties for the
position they were promoted to. SC held
that there is illegal dismissal because the
employees validly refused to accept the
promotion.
FACTS:
1. Echo is a provider of warehousing
management and delivery services.
2. Private respondents were initially
employed by King 8, Echo's
predecessor. They were later
absorbed by Echo as Warehouse
Checker for Somido, while Cortes, a
Forklift Operator.
3. Echo received information about
shortages in peso value arising from
the movement of products to and
from its warehouse. Since an
uninterrupted investigation was
necessary, Echo, in the exercise of
its management prerogative,
decided to re-assign the staff.
4. Somido declined to be re-
assigned/promoted as Delivery
supervisor since the position was
sensitive and required more
expertise and training, which he did
not have.
5. Cortes also declined to be re-
assigned/promoted because he
lacks prior supervisory experience.
6. For refusal to perform their duties in
their new positions, Echo informed
respondents of their termination.
7. Respondents filed before the NLRC
a complaint against Echo for unfair
labor practice, illegal dismissal,
illegal suspension, illegal deductions
and payment of money claims,
damages and attorney's fees.
8. LA: dismiss complaint
9. NLRC: reverse, in favor of
respondents
10. CA; Affirm NLRC
11. Hence, this petition.
ISSUE: Whether respondents were
illegally dismissed for not performing
their duties in new position, despite
refusal to accept the promotion..
HELD: Yes, illegally dismissed.
1. The offer of transfer is, in legal
contemplation, a promotion,
which the respondents validly
refused. Such refusal cannot be
the basis for the respondents'
dismissal from service.
Article 212(13) of the Labor Code
distinguishes from each other as follows
the concepts of managerial, supervisory
and rank-and-file employees:
"Managerial employee" is one who is
vested with the powers or prerogatives to
lay down and execute management
policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or
discipline employees. Supervisory
employees are those who, in the interest
of the employer, effectively recommend
such managerial actions if the exercise of
such authority is not merely routinary or
clerical in nature but requires the use of
independent judgment. All employees
not falling within any of the above
definitions are considered rank-and-file
employees for purposes of this Book.
In the pursuit of its legitimate
business interest, management has the
prerogative to transfer or assign
employees from one office or area of
operation to another - provided there is
no demotion in rank or diminution of
salary, benefits, and other privileges; and
the action is not motivated by
discrimination, made in bad faith, or
effected as a form of punishment or
demotion without sufficient cause.
(Coca-cola case)
A transfer is a movement from one
position to another which is of equivalent
rank, level or salary, without break in
service. Promotion, on the other hand, is
the advancement from one position to
another with an increase in duties and
responsibilities as authorized by law, and
usually accompanied by an increase in
salary. Conversely, demotion involves a
situation where an employee is relegated
to a subordinate or less important
position constituting a reduction to a
lower grade or rank, with a corresponding
decrease in duties and responsibilities,
and usually accompanied by a decrease
in salary. (Blue Dairy Case)
 An employee is not bound to accept
a promotion, which is in the nature of a
gift or reward. Refusal to be promoted is
a valid exercise of a right. Such exercise
cannot be considered as insubordination,
or willful disobedience of a lawful order of
the employer, hence, it cannot be the
basis of an employee's dismissal from
service.
In the case at bench, a
Warehouse Checker and a Forklift
Operator are rank-and-file employees.
On the other hand, the job of a Delivery
Supervisor/Coordinator requires the
exercise of discretion and judgment from
time to time. Specifically, a Delivery
Supervisor/Coordinator assigns teams to
man the trucks, oversees the loading of
goods, checks the conditions of the
trucks, coordinates with account
specialists in the outlets regarding their
delivery concerns, and supervises other
personnel about their performance in the
warehouse. A Delivery
Supervisor/Coordinator's duties and
responsibilities are apparently not of the
same weight as those of a Warehouse
Checker or Forklift Operator. Hence,
despite the fact that no salary increases
were effected, the assumption of the post
of a Delivery Supervisor/Coordinator
should be considered a promotion. The
respondents' refusal to accept the same
was therefore valid.
4. Mercidar Fishing Corp. v. NLRC, G.R.
No. 112574, October 8, 1998
DOCTRINE: Although fishermen perform
non-agricultural work away from
petitioner's business offices, the fact
remains that throughout the duration of
their work they are under the effective
control and supervision of petitioner
through the vessel's patron or master,
hence, they cannot be classified as field
personnel.
ER: Respondent Fermin Agao, Jr. filed a
complaint against petitioner for illegal
dismissal, violation of P.D. No. 851, and
non-payment of service incentive leave
(SIL). Petitioner argues that Agao is a
field personnel and not entitled to SIL.
The SC stated that fishermen are not
field personnel. (See doctrine)
FACTS:
● Fermin Agao, Jr. alleged that he
had been sick and thus allowed to
go on leave without pay for one
month. But that when he reported to
work at the end of such period with
a health clearance, he was told to
come back another time as he could
not be reinstated immediately.
● Thereafter, petitioner refused to
give him work. For this reason,
Agao asked for a certificate of
employment from petitioner. When
he came back for the certificate,
petitioner refused to issue the
certificate unless he submitted his
resignation. Since Agao refused to
submit such letter unless he was
given separation pay, petitioner
prevented him from entering the
premises.
● Petitioner, on the other hand, alleged that
it was Agao who actually abandoned his
work. It claimed that the latter failed to
report for work after his leave had expired
and was, in fact, absent without leave for
three months. Petitioner further claims
that, nonetheless, it assigned private
respondent to another vessel, but the
latter was left behind. Agao asked for a
certificate of employment on the pretext
that he was applying to another fishing
company. Eventually, Agao refused to
get the certificate and resign unless he
was given separation pay.
● LA - ordered petitioner to reinstate Agao
with backwages, 13th month pay, and
incentive leave pay.
● NLRC - dismissed petitioner's claim that
it cannot be held liable for SIL pay by
fishermen in its employ as the latter
supposedly are " field personnel" and
thus not entitled to such pay under the
LC.
ISSUE: W/N fishermen, like Agao, can be
classified as field personnel? - NO.
HELD:
● Art. 82 LC defines Field Personnel as
non-agricultural employees who
regularly perform their duties away from
the principal place of business or branch
office of the employer and whose actual
hours of work in the field cannot be
determined with reasonable certainty.
5. Dasco v. Philtranco, G.R. No. 211141,
● Petitioner argues essentially that
since the work of Agao is performed
away from its principal place of
business, it has no way of verifying
his actual hours of work on the
vessel. It contends that private
respondent and other fishermen in
its employ should be classified as
"field personnel" who have no
statutory right to service incentive
leave pay.
● Union of Filipro Employees: in
deciding whether or not an
employee's actual working hours in
the field can be determined with
reasonable certainty, query must be
made as to whether or not such
employee's time and performance
is constantly supervised by the
employer.
● Nestle case: The law requires that
the actual hours of work in the eld
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 am prior to eld
work and come back at 4:30 pm,
really spend the hours in between in
actual field work.
● In contrast, in the case at bar, during
the entire course of their fishing
voyage, fishermen employed by
petitioner have no choice but to
remain on board its vessel.
Although they perform non-
agricultural work away from
petitioner's business offices, the
fact remains that throughout the
duration of their work they are under
the effective control and supervision
of petitioner through the vessel's
patron or master as the NLRC
correctly held.
June 29, 2016
DOCTRINE: As a general rule, field
personnel are those whose performance
of their job is not supervised by the
employer or his representatives, the
workplace being away from the principal
office and whose hours and days of work
cannot be determined with reasonable
certainty; hence they are paid specific
amount for rendering specific service or
performing specific work.
ER: Petitioners were hired as bus
drivers/conductors. They were hired for
various dates from 2006-2010. They filed
a complaint for regularization,
underpayment of wages and non-
payment of SIL. Respondents alleged
that petitioners were field personnel. The
SC ruled that they are not field personnel.
Field personnel are those whose
performance of their job is not supervised
by the employer or his representatives,
the workplace being away from the
principal office and whose hours and
days of work cannot be determined with
reasonable certainty. The work hours of
petitioners were regulated by the
respondents. Therefore, they are not field
personnel.

FACTS:1. This is a case for
regularization, underpayment of wages
and non-payment of SIL against
Philtranco Service Enterprises Inc.
(PSEI).Petitioners were employed on
various dates from 2006-2010 as bus
drivers and/or conductors.
2. Petitioners then filed a case
against respondents alleging the
following: a. they were already qualified
to be regular employees (they’ve
rendered work for several years; b.they
were only paid P404 per round trip
without overtime work and below
minimum wage; c. they cannot be
considered as field personnel because
their working hours are controlled by
respondents; and d. they were not given
their yearly 5-day SIL since they were
hired.
On the other hand, respondents alleged
that: a. they were paid P0.49 per
kilometre run, or minimum wage,
whichever is higher; b. petitioners were
seasonal employees; and c. the
petitioners are field personnel, which are
not entitled to SIL.
ISSUE: Whether or not petitioners (as
bus drivers and/or conductors) are field
personnel?
HELD:No, they are not field personnel.
Petition has merit
As a general rule, field personnel are
those whose performance of their job is
not supervised by the employer or his
representatives, the workplace being
away from the principal office and whose
hours and days of work cannot be
determined with reasonable certainty;
hence they are paid specific amount for
rendering specific service or performing
specific work. To conclude that an
employee is a field employee, it is
necessary that their duties are performed
away from the principal place of business
and whose actual hours of work in the
field cannot be determined with
reasonable certainty.
Petitioners are not field personnel but
regular employees who perform tasks
usually necessary and desirable to the
respondents’ business. The following
facts are established: a. petitioners, as
bus drivers/conductors, are directed to
transport their passengers at a specified
time and place; 2. They are not given the
discretion to select and contract with
prospective passengers; 3.their actual
work hours could be determined with
reasonable certainty; and 4. The
respondents supervised their time and
performance of duties.
WHEREFORE, the petition is granted.
6. Remington Industrial v. Castañeda,
G.R. No. 169295-96, Nov. 20, 2006
DOCTRINE: The criteria (to be
considered a househelper) is the
personal comfort and enjoyment of the
family of the employer in the home of said
employer.
ER: CASTENEDA, a company cook for
REMINGTON, instituted a complaint for
illegal dismissal, among others.
REMINGTON stated that she was a mere
domestic helper as her job did not have
anything to do with REMINGTON’s
business. Court held that she was a
regular employee as she does not cater
exclusively to the personal comfort and
enjoyment of Mr. Tan (Employer).
FACTS:
Erlinda CASTANEDA instituted a
complaint for illegal dismissal,
underpayment of wages, non-payment of
overtime services, non-payment of SIL
pay and non-payment of 13th month pay
against Remington Industrial Sales Corp.
before the NLRC-NCR.
Erlinda alleged that she started working
in 1983 as company cook for
Remington, a corporation engaged in the
trading business and that she
continuously worked with Remington
until she was unceremoniously
prevented from reporting for work when
Remington transferred to a new site.
Remington denied that it dismissed
Erlinda illegally. It posited that Erlinda
was a domestic helper, not a regular
employee; Erlinda worked as a cook and
this job had nothing to do with
Remington’s business of trading in
construction or hardware materials, steel
plates and wire rope products.
LA: dismissed the complaint and ruled
that the respondent was a domestic
helper under the personal service of
Antonio Tan (the Managing Director),
finding that her work as a cook was not
usually necessary and desirable in the
ordinary course of trade and business of
the petitioner corporation, and that the
latter did not exercise control over her
functions.
ISSUE: W/N Castaneda a regular
employee
HELD: YES
The petition is DENIED for lack of merit.
The assailed Decisions of the CA are
AFFIRMED
Apex Mining Company, Inc. v. NLRC,
this Court held that a househelper in the
staff houses of an industrial company
was a regular employee of the said
firm. We ratiocinated that:
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’ as used herein
is synonymous to the term ‘domestic
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 foregoing definition clearly
contemplates such househelper or
domestic servant who is employed in the
employer’s home to minister exclusively
to the personal comfort and enjoyment of
the employer’s family. Such definition
covers family drivers, domestic servants,
laundry women, yayas, gardeners,
houseboys and similar househelps.
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.
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.
IN SUM: she works within company
premises, and that she does not cater
exclusively to the personal comfort of
Mr. Tan and his family, is reflective of
the existence of the petitioner’s right
of CONTROL over her functions,
which is the PRIMARY indicator of the
existence of an employer-employee
relationship.
7. Lambo v. NLRC, G.R. No. 111042,
October 26, 1999
DOCTRINE: [Topic: e. Workers paid by
results - i. Categories] There are 2
categories of employees paid by results:
(1) Those whose time and performance
are supervised by the employer. (Here,
there is an element of control and
supervision over the manner as to how
the work is to be performed. A piece-rate
worker belongs to this category
especially if he performs his work in the
company premises.); and
[Note: Petitioners belong to 1st group]
(2) Those whose time and performance
are unsupervised. (Here, the employer’s
control is over the result of the work.
Workers on pakyao and takay basis
belong to this group.) Both classes of
workers are paid per unit accomplished.
Piece-rate payment is generally
practiced in garment factories where
work is done in the company premises,
while payment on pakyao and takay
basis is commonly observed in the
agricultural industry, such as in sugar
plantations where the work is performed
in bulk or in volumes difficult to quantify.
ER:
FACTS: Petitioners Lambo and Belocura
were employed as tailors by private
respondents J.C. Tailor Shop and/or
Johnny Co. They worked from 8:00 a.m.
to 7:00 p.m. daily, including Sundays and
holidays. As in the case of the other 100
employees, petitioners were paid on a
piece-work basis, according to the style
of suits they made. Regardless of the
number of pieces they finished in a day,
they were each given a daily pay of at
least P64.00.
Petitioners filed a complaint against
private respondents for illegal dismissal.
Labor Arbiter found private respondents
guilty; NLRC reversed the decision of the
Labor Arbiter. NLRC found that
petitioners had not been dismissed from
employment but merely threatened with
a closure of the business if they insisted
on their demand for a "straight payment
of their minimum wage”. According to the
NLRC, during a meeting, the employees
voted to maintain the company policy of
paying them according to the volume of
work finished at the rate of P18.00 per
dozen of tailored clothing materials. Only
petitioners allegedly insisted that they be
paid the minimum wage and other
benefits. The NLRC held petitioners
guilty of abandonment of work.
Petitioners allege that they were
dismissed by private respondents as they
were about to file a petition with the
Department of Labor and Employment
(DOLE) for the payment of benefits such
as Social Security System (SSS)
coverage, sick leave and vacation leave.
 They deny that they abandoned their
work.
ISSUE: WON petitioners are regular
employees.
HELD: The decision of the NLRC is SET
ASIDE. The following factors show that
petitioners, although piece-rate
workers, were regular employees of
private respondents: (1) within the
contemplation of Art. 280 of the Labor
Code, their work as tailors was
necessary or desirable in the usual
business of private respondents, which is
engaged in the tailoring business; (2)
petitioners worked for private
respondents throughout the year, their
employment not being dependent on a
specific project or season; and, (3)
petitioners worked for private
respondents for more than one year.
In this case, private respondents
exercised control over the work of
petitioners. As tailors, petitioners worked
in the company’s premises from 8:00
a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact
that they were paid on a piece-rate
basis does not negate their status as
regular employees. The term "wage" is
broadly defined in Art. 97 of the Labor
Code as remuneration or earnings,
capable of being expressed in terms of
money whether fixed or ascertained on a
time, task, piece or commission basis.
Payment by the piece is just a method
of compensation and does not define
the essence of the relations. Nor does
the fact that petitioners are not covered
by the SSS affect the employer-
employee relationship.
8. Luzon Stevedoring Co. v. Luzon
Marine Dept. Union, G.R. No. L-9265,
April 29, 1957
DOCTRINE: The principle in determining
hours of work is whether it is broken or
continuous. If continuous like seamen,
rest periods are included and thus
entitled compensation.
ER:
FACTS:
● The respondent union filed with
Court of Industrial Relations that
they be paid for 4 hours, working
from 6am-6pm. Included therein
is the 20 minute break after each
meal (they are given 3 meals
each day).
● Court rendered decision granting
that.
● Luzon moved for reconsideration
on Court’s interpretation of
working time for seamen.
Because, Court interpreted that
as to include “all the time which
a seaman is aboard, even in
tugboats”.
ISSUE: Whether working time includes
all the time and so the 20 minute breaks
included
HELD: YES
● Hours of work for seamen is the
same for hours of work for
workers in dryland
● As a general rule, period of rest
is NOT counted as Working time
when work is broken and the
laborer is
○ Not working and can
leave working place and
○ Can rest completely
● The reckoning point is the
capability of utilizing the rest
period and thus capacity to leave
premises of work
● IN THIS CASE, upon inspection
of the court, they found that the
20 minute breaks are intended to
be included in hours of work.
● This can be derived from the fact
that by their work’s nature, it is
continuous and not broken.
 ● Also, even on Sundays and
Holidays they are made to work.
●
9. National Development Co. v. CIR, G.R.
No. L- 15422, November 30, 1962, 6
SCRA 763
DOCTRINE: When the work is not
continuous, the time during which the
laborer is not working and can leave his
working place and can rest completely
shall not be counted. Idle time that an
employee may spend for resting and
during which he may leave the spot or
place of work though not the premises of
his employer, is not counted as working
time only where the work is broken or is
not continuous.
ER: no need, short case
FACTS:
- NADECO, a GOCC have 4 shifts
of work (8-4 pm; 6-2 pm; 2-10
pm; and 10-6 am).
- In each shift, there was 1 hour
mealtime period.
- Although there was a one-hour
mealtime, NADECO
nevertheless credited the
workers with eight hours of work
for each shift and paid them for
the same number of hours.
- However, since 1953, whenever
workers in one shift were
required to continue working until
the next shift, NAEDCO, instead
of crediting them with 8 hours of
overtime work, has been paying
them for 6 hours only,
- NADECO argued that the two
hours corresponding to the
mealtime periods should not be
included in computing
compensation.
- Respondent National Textile
Workers Union filed a case with
CIR for payment of additional
overtime pay corresponding to
the mealtime periods → CIR
granted
ISSUE: WON the mealtime breaks
should be considered working time and
should be paid by NADECO? YES.
HELD:
- No general rule can be laid down
is to what constitutes
compensable work, rather the
question is one of fact depending
upon particular circumstances,
to be determined by the
controverted in cases.
- Here, CIR’s finding that work in
NADECO was continuous and
did not permit employees and
laborers to rest completely is not
without basis in evidence
- While it may be correct to say
that it is well-high impossible for
an employee to work while he is
eating, yet under Section 1 of
Com. Act No. 444 such a time for
eating can be segregated or
deducted from his work, if the
same is continuous and the
employee can leave his working
place rest completely.
- The time cards show that the
work was continuous and without
interruption. There is also the
evidence adduced by the
petitioner that the pertinent
employees can freely leave their
working place nor rest
completely. There is furthermore
the aspect that during the period
covered the computation the
work was on a 24-hour basis and
previously stated divided into
shifts.
- From these facts, the CIR
correctly concluded that work in
NADECO was continuous and
therefore the mealtime breaks
should be counted as working
 time for purposes of overtime
compensation.
- NADECO gives an eight-hour
credit to its employees who work
a single shift say from 6 a.m. to 2
p.m. Why cannot it credit them
sixteen hours should they work
in two shifts?
10. Sime Darby Pilipinas, Inc. v. NLRC,
G.R. No. 119205, April 15, 1998
DOCTRINE:
The right to fix the work schedules of the
employees rests principally on their
employer. Where 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
union, it cannot be said that the new
scheme adopted by management
prejudices the right of the union to self-
-organization.
ER: Petitioner issued a memorandum
advising change in work schedule of
factory employees - removed its paid “on-
call” lunch break. SC ruled that it is within
the management prerogative of
Petitioner.
FACTS:
● Sime Darby Pilipinas (Petitioner)
is engaged in the manufacture of
automotive tires
● Sime Darby Salaried Employees
Association (Private
Respondent) is an association of
monthly salaried employees of
petitioner at Marikina Factory
● All factory workers of Petitioner
worked from 7:45 AM to 3:45 PM
with a 30 Minute paid “on-call”
lunch break.
● August 14, 1992: Petitioner
issued a memorandum to all
factory-based employees
advising a change in work
schedule --- The paid “on call”
lunch break was removed. They
will now have a 12 NN - 1 PM
Lunch Break from Monday to
Friday.
● Private Respondent filed a
complaint for unfair labor
practice, discrimination, evasion
of liability pursuant to Sime
Darby International Tire Co v.
NLRC(1990) before the LA ---
Dismissed.
● NLRC affirmed LA. But, upon
MR, reversed its decision.
ISSUE:
WON the act of management in revising
the work schedule of its employees and
discarding their paid lunch break
constitutive of unfair labor practice
HELD:
NO. The right to fix the work schedules of
the employees rests principally on their
employer. In the instant case petitioner,
as the employer, cites as reason for the
adjustment the efficient conduct of its
business operations and its improved
production. It rationalizes that while the
old work schedule included a 30-minute
paid lunch break, the employees could
be called upon to do jobs during that
period as they were “on call.” Even if
denominated as lunch break, this period
could very well be considered as working
time because the factory employees
were required to work if necessary and
were paid accordingly for working. With
the new work schedule, the employees
are now given a one-hour lunch break
without any interruption from their
employer. For a full one -hour
undisturbed lunch break, the employees
can freely and effectively use this hour
not only for eating but also for their rest
and comfort which are conducive to more
efficiency and better performance in their
 work. Since the employees are no longer
required to work during this one-hour
lunch break, there is no more need for
them to be compensated for this period.
We agree with the Labor
Arbiter that the new work schedule fully
complies with the daily work period of
eight (8) hours without violating the Labor
Code. Besides, the new schedule applies
to all employees in the factory similarly
situated whether they are union
members or not.
As to Discrimination
The case before us does not pertain to
any controversy involving discrimination
of employees but only the issue of
whether the change of work schedule,
which management deems necessary to
increase production, constitutes unfair
labor practice. 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 private respondent union.
Hence, it cannot be said that the new
scheme adopted by management
prejudices the right of private respondent
to self--organization.
Note: 1990 Sime Darby Case is not
applicable here. The issue in that case
involved the matter of granting lunch
breaks to certain employees while
depriving the other employees of such
breaks.
11. Arica v. NLRC, G.R. No. 78210,
February 28, 1989
ER
Petitioners contend that the preliminary
activities as workers in the assembly area is
compensable as working time (from 5:30 am
to 6:00 am) since these are necessarily and
primarily for respondent’s benefit. HELD:
NOT WAITING TIME. The 30-minute
assembly is a deeply-rooted, routinary
practice of the EEs, and the proceedings
attendant thereto are not infected with
complexities as to deprive the workers the
time to attend to other personal pursuits.
FACTS
· Complaint against respondent STANFILCO for
assembly time.
· LA favored STANFILCO:
o The 30-minute assembly time long
practiced cannot be considered
waiting time or work time and,
therefore, not compensable.
· NLRC affirmed:
o Res judicata, citing ALU vs.
STANFILCO.
· Hence, this petition. Petitioners contend that
the preliminary activities as workers in the
assembly area is compensable as working
time (from 5:30 am to 6:00 am) since these
are necessarily and primarily for respondent’s
benefit.
o Roll call, followed by getting work
assignments from foreman;
o Then, required to accomplish
Laborer’s Daily Accomplishment
Report;
o Then, go to stockroom to get working
materials, tools, and equipment;
o Lastly, they travel to the field with the
tools, etc.
· Respondent invoked a NLRC case where the
court decided (ALU vs. STANFILCO) the
court decided that the preliminary activities
are not considered waiting time.
ISSUE
Whether the 30-minute activity of the
petitioners before the scheduled working time
is compensable under the Labor Code
HELD
· Facts of this case is the same as that of ALU
vs. STANFILCO. Thus, res judicata.
· As ruled in ALU vs. STANFILCO:
o The 30-minute assembly time long
practiced and institutionalized by
mutual consent of the parties under
the CBA cannot be considered as
 waiting time within the purview of
IRR, LC.
o The 30-minute assembly is a deeply-
rooted, routinary practice of the EEs,
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
EEs as to require the company to
deliver long briefings regarding their
respective work assignments. Their
houses are situated right on the area
where the farms 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.
o 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.
o The CBA does not contain any
provision to this effect; the record is
also bare of any proof on this point.
Therefore, the 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.
Affirmed.
12. University of Pangasinan Faculty
Union v. University of Pangasinan,
G.R. No. L-63122, 127 SCRA 691
DOCTRINE: The “No work,no pay”
principle contemplates a "no work"
situation where the employees
voluntarily absent themselves. This is not
clearly applicable in this case because
teachers are considered to be working
even during semestral break. Although
on forced leave, they are, nevertheless,
burdened with the task of working during
a period of time supposedly available for
rest and private matters.
ER: The teachers/professors through the
union, filed a complaint to seek the
university’s payment of their ECOLA. The
university declined paying them pursuan
to the NO WORK NO PAY PRINCIPLE.
The Supreme Court said this is wrong
(See Doctrine).
FACTS:
● The petitioner filed a complaint
against the private respondent with
the Arbitration Branch of the NLRC.
The complaint seeks: (a) the payment
of Emergency Cost of Living
Allowances (ECOLA) for November 7
to December 5, 1981, a semestral
break; (b) salary increases from the
sixty (60%) percent of the incremental
proceeds of increased tuition fees;
and (c) payment of salaries for
suspended extra loads.
● The petitioner’s members are full-time
professors, instructors, and teachers
of respondent University. The
teachers in the college level teach for
a normal duration of ten (10) months
a school year, divided into two (2)
semesters of five (5) months each,
excluding the two (2) months summer
vacation. These teachers are paid
their salaries on a regular monthly
basis.
● In November and December, 1981,
the petitioner’s members were fully
paid their regular monthly salaries.
However, from November 7 to
December 5, during the semestral
break, they were not paid their
ECOLA. The private respondent
claims that the teachers are not
entitled thereto because the
semestral break is not an integral part
of the school year and there being no
actual services rendered by the
teachers during said period, the
principle of "No work, no pay" applies.
ISSUE:
 1. Are the teachers/professors
entitled to ECOLA? Yes.
2. Whether the 60% of the
incremental proceeds of
increased tuition shall be
devoted exclusively to salary
increase- No.
HELD:
● WITH REGARD TO THE FIRST
ISSUE- The PD’s 1614, 1634, 1678
and 1713, provide on "Allowances of
Fulltime Employees . . ." that
"Employees shall be paid in full the
required monthly allowance
regardless of the number of their
regular working days if they incur no
absences during the month. If they
incur absences without pay, the
amounts corresponding to the
absences may be deducted from the
monthly allowance . . ." ; and on
"Leave of Absence Without Pay", that
"All covered employees shall be
entitled to the allowance provided
herein when they are on leave of
absence with pay."
● "NO WORK, NO PAY" PRINCIPLE
NOT APPLICABLE’ CASE AT BAR.
— It is beyond dispute that the
petitioner’s members are full-time
employees receiving their monthly
salaries irrespective of the number of
working days or teaching hours in a
month. However, they find
themselves in a most peculiar
situation whereby they are forced to
go on leave during semestral breaks.
These semestral breaks are in the
nature of work interruptions beyond
the employees’ control. The duration
of the semestral break varies from
year to year dependent on a variety of
circumstances affecting at times only
the private respondent but at other
times all educational institutions in the
country. As such, these breaks cannot
be considered as absences within the
meaning of the law for which
deductions may be made from
monthly allowances. The "No work, no
pay" principle does not apply in the
instant case. The petitioner’s
members received their regular
salaries during this period. It is clear
from the aforequoted provision of law
that it contemplates a "no work"
situation where the employees
voluntarily absent themselves.
Petitioners, in the case at bar,
certainly do not, ad voluntatem,
absent themselves during semestral
breaks. Rather, they are constrained
to take mandatory leave from work.
For this they cannot be faulted nor can
they be begrudged that which is due
them under the law.
● EMPLOYEES WHETHER PAID ON
MONTHLY OR DAILY BASIS
ENTITLED TO DAILY LIVING
ALLOWANCE WHEN PAID THEIR
BASIC WAGE. — Respondent’s
contention that the "factor receiving a
salary alone should not be the basis
of receiving ECOLA", is likewise,
without merit. Particular attention is
brought to the Implementing Rules
and Regulations of Wage Order No. 1
to wit: "Sec. 5. Allowance for
Unworked Days. — a) All covered
employees whether paid on a monthly
or daily basis shall be entitled to their
daily living allowance when they are
paid their basic.." . .
● PURPOSE OF THE LAW. — The
legal principles of "No work, no pay;
No pay, no ECOLA" must necessarily
give way to the purpose of the law to
augment the income of employees to
enable them to cope with the harsh
living conditions brought about by
inflation; and to protect employees
and their wages against the ravages
brought by these conditions.
Significantly, it is the commitment of
the State to protect labor and to
provide means by which the
 difficulties faced by the working force
may best be alleviated
● WITH REGARD TO THE SECOND
ISSUE, under Section 3 of
Presidential Decree 451, “no increase
in tuition or other school fees or
charges shall be approved 60% of the
proceeds is allocated for increase in
salaries or wages of the members of
the faculty and all other employees of
the school concerned, and the
balance for institutional development,
student assistance and extension
services, and return to investments:
Provided, That in no case shall the
return to investments exceed twelve
(12%) per centum of the incremental
proceeds; . . .”Such allowances must
be taken in resources of the school
not derived from tuition fees.
● If the school happen to have no other
resources to grant allowances and
benefits, either mandated by law or
secured by collective bargaining, such
allowances and benefits should be
charged against the return to
investments referred.
● The law is clear. The 60% incremental
proceeds from the tuition increase are
to be devoted entirely to wage or
salary increases which means
increases in basic salary. The law
cannot be construed to include
allowances which are benefits over
and above the basic salaries of the
employees. To charge such benefits
to the 60% incremental proceeds
would be to reduce the increase in
basic salary provided by law.
● Law provides that 60% of tuition fee
increase should go to wage increases
and 40% to institutional
developments, student assistance,
extension services, and return on
investments. Framers of the law
intended this portion (return on
investments) of the increases in
tuition fees to be a general fund to
cover up for the university’s
miscellaneous expenses.
●
13. Legahi v. NLRC, G.R. No. 122240,
November 18, 1999
DOCTRINE: The rendition of overtime
work and the submission of sufficient
proof that said work was actually
performed are conditions to be satisfied
before a seaman could be entitled to
overtime pay.
The contract provision guarantees the
right to overtime pay but the entitlement
to such benefit must first be established.
ER: Legahi was hired as Chief Cook
aboard M/V "Federal Nord" for a period
of ten months. However, barely four
months therefrom, petitioner filed a
complaint for illegal dismissal. Private
respondent alleged that petitioner was
asked to prepare a victualling cost
statement which petitioner previously
said he knew. However, petitioner
arrogantly refused and later, left the
vessel without permission and did not
perform his job for a day. On these
accusations against him, petitioner
chose to remain silent and thus, he was
immediately sent home. Both the POEA
and the NLRC ruled that there was just
cause for petitioner's dismissal.
SC: Petitioner was illegally dismissed but
was not entitled to payment of overtime
pay [see doctrine.]
FACTS:
● Legahi filed a complaint before
the POEA alleging that he was
hired as “chief cook” aboard M/V
Federal Nord by Northsouth Ship
Management (PTE), Ltd.,
Singapore and represented by
its local agent United Philippine
Lines, Inc. (UPLI).
● Contract of employment:
○ Term – 10 months
starting Oct. 9, 1992
 ○ Salary – US$450.00 with
44 hours weekly as
minimum number of
hours worked with a
fixed overtime pay of
$185 and 3 days leave
with pay every month.
● In January 1993, the Shipmaster
asked petitioner to do the
victualling cost statement for
December which he complied.
On Jan 6, the Shipmaster
requested the petitioner to
prepare a corrected victualling
statement for the same month of
December. Petitioner asked the
Shipmaster if he could defer the
correction as he was busy doing
his chores. The response
certainly did not sit well with the
Shipmaster so he was called for
a meeting which petitioner did
not attend.
● A committee was formed and in
a meeting, the Shipmaster read
to him the offenses he committed
on board. He was asked to
answer the charges but
petitioner opted to remain silent.
Thereafter, petitioner was
informed that he was dismissed.
● The next day petitioner was
repatriated to the Philippines.
● Petitioner filed with POEA a
complaint for illegal dismissal
against private respondents.
Sought the payment of his salary
corresponding to:
○ Unexpired portion of his
contract
○ Unpaid overtime pay
○ Leave pay
○ Salary differential
○ Damages
● Private Respondent: a runs counter to the intention
committee was formed to hear
the case of petitioner. Petitioner
remained silent so the committee
decided to send him home.
Contrary to petitioner's
allegation, it was not the
Philippine Consulate, but the
shipowner's agent, Navios Ship
Agencies, which arranged his
repatriation. The respondent
noticed petitioner to be very
homesick and surmised that he
deliberately committed the
offenses just so he could be sent
home. Upon his return, petitioner
did not even report to the local
representative UPLI implying
that he had no cause of action
against them. Petitioner was
terminated for just cause and
must, therefore, reimburse
private respondent for the cost of
repatriation.
● POEA: there was just cause for
petitioner’s dismissal
● NLRC: affirmed in toto the POEA
decision.
ISSUE: W/N payment of overtime pay
should be allowed
HELD: No. Payment of the overtime pay
should be disallowed in the light of our
ruling in the case of Cagampan v. NLRC,
where we held that:
Petitioners have conveniently
adopted the view that the
"guaranteed or fixed overtime
pay of 30% of the basic salary
per month" embodied in their
employment contract should be
awarded to them as part of a
"package benefit." They have
theorized that even without
sufficient evidence of actual
rendition of overtime work, they
would automatically be entitled
to overtime pay. Their thinking is
erroneous for being illogical and
unrealistic. Their thinking even
behind the provision. The
contract provision means that
the fixed overtime pay of 30%
would be the basis for computing
 the overtime pay if and when
overtime work would be
rendered. Simply, stated, the
rendition of overtime work and
the submission of sufficient proof
that said work was actually
performed are conditions to be
satisfied before a seaman could
be entitled to overtime pay which
should be computed on the basis
of 30% of the basic monthly
salary. In short, the contract
provision guarantees the right to
overtime pay but the entitlement
to such benefit must first be
established. Realistically
speaking, a seaman, by the very
nature of his job, stays on board
a ship or vessel beyond the
regular eight-hour work
schedule. For the employer to
give him overtime pay for the
extra hours when he might be
sleeping or attending to his
personal chores or even just
lulling away his time would be
extremely unfair and
unreasonable.
In the same vein, the claim for day's
leave pay for the unexpired portion of the
contract is unwarranted since the same
is given during the actual service of the
seaman.
Petitioner's dismissal without a valid
cause constitute a breach of contract.
Consequently, he should only be paid the
unexpired portion of his employment
contract.
(Other issue not related to the topic): W/N
petitioner’s dismissal was valid. NO.
Petitioner was not afforded due process
as he was not given reasonable time to
answer the charges hurled against him.
There was no compliance of the law as to
notice and hearing. There was no
showing that the preparation of the
victualling cost statement is actually part
of petitioner's duty as a cook. Hence,
petitioner was dismissed without a valid
cause.
14. Pigcaulan v. Security & Credit, G.R.
No. 173648, January 16, 2012
DOCTRINE: The burden of proving
payment of these monetary claims rests
on SCII, being the employer.
It is a rule that one who pleads payment
has the burden of proving it. Even when
the plaintiff alleges non-payment, still the
general rule is that the burden rests on
the defendant to prove payment, rather
than on the plaintiff to prove non-
payment.
ER:
Canoy and Pigcaulan both employed by SCII as
security guards filed with LA claims for
underpayment of salaries and non-payment of
overtime, holliday, rest day, service incentive
leave (SIL), and 13th month pay. Only Pigcaulan
applead from CA to SC. Before that, however;
Canoy and Pigcaulan, in support of their claim,
submitted their respective daily time records
reflecting the number of hours served and their
wages for the same. They likewise presented
itemized lists of their claims for the corresponding
periods served. The issue is whether there was
substantial basis for the grant of overtime
pay? The Court held no, but awarded his holiday
pay, service incentive leave benefits and
proportionate 13th month pay for the year 2000
because of failure of SCII to show or overcome
the burden of proof that it had paid the same. With
regard to overtime pay, SC reasoned out that
handwritten itemized computations are self-
serving, unreliable and unsubstantial evidence to
sustain the grant of salary differentials,
particularly overtime pay. Unsigned and
unauthenticated as they are, there is no way of
verifying the truth of the handwritten entries
stated therein. Written only in pieces of paper and
solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by
the Labor Arbiter, can hardly be considered as
competent evidence to be used as basis to prove
that the two were underpaid of their salaries. SC
found nothing in the records which could
substantially support Pigcaulans contention that
he had rendered service beyond eight hours to
entitle him to overtime pay and during Sundays to
entitle him to rest day pay.
FACTS:
1. Canoy and Pigcaulan were both
employed by SCII as security guards and
were assigned to SCIIs different clients.
Subsequently, however, Canoy and
Pigcaulan filed with the Labor Arbiter
separate complaints for underpayment of
salaries and non-payment of overtime,
holiday, rest day, service incentive leave and
13th month pays.
2. These complaints were later on
consolidated as they involved the same
causes of action.
3. Canoy and Pigcaulan, in support of their
claim, submitted their respective daily time
records reflecting the number of hours served
and their wages for the same. They likewise
presented itemized lists of their claims for the
corresponding periods served.
4. SCII maintained that Canoy and
Pigcaulan were paid their just salaries and
other benefits under the law; that the salaries
they received were above the statutory
minimum wage and the rates provided by the
Philippine Association of Detective and
Protective Agency Operators (PADPAO) for
security guards; that their holiday pay were
already included in the computation of their
monthly salaries; that they were paid
additional premium of 30% in addition to their
basic salary whenever they were required to
work on Sundays and 200% of their salary for
work done on holidays; and, that Canoy and
Pigcaulan were paid the corresponding
13thmonth pay for the years 1998 and 1999.
In support thereof, copies of payroll listing
and lists of employees who received their 13th
month pay for the periods December 1997 to
November 1998 and December 1998 to
November 1999 were presented. In addition,
respondents contended that Canoys and
Pigcaulans monetary claims should only be
limited to the past three years of employment
pursuant to the rule on prescription of claims.
5. LA – gave credence to the itemized
computations and representative daily time
records submitted by Canoy and Pagcaulan.
Further, it held that the payroll listings
presented by the SCII did not prove that
Canoy and Pigcaulan were duly paid as
same were not signed by the latter or by any
SCII officer. Thus, it ordered the payment of
overtime pay, holiday pay, service incentive
leave pay and proportionate 13th month pay
for the year 2000 in favor of Canoy and
Pigcaulan,
6. NLRC affirmed. CA reversed.
7. Only Pigcaulan appealed to the SC.
ISSUE:
Whether there was substantial basis for the grant
of overtime pay based on the itemized
computations submitted by Pigcalaulan? NO!!
HELD:
The handwritten itemized computations are self-
serving, unreliable and unsubstantial evidence to
sustain the grant of salary differentials,
particularly overtime pay.
Unsigned and unauthenticated as they are, there
is no way of verifying the truth of the handwritten
entries stated therein.
Written only in pieces of paper and solely
prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by
the Labor Arbiter, can hardly be considered as
competent evidence to be used as basis to prove
that the two were underpaid of their salaries.
We find nothing in the records which could
substantially support Pigcaulans contention that
he had rendered service beyond eight hours to
entitle him to overtime pay and during Sundays to
entitle him to restday pay.
Hence, in the absence of any concrete proof that
additional service beyond the normal working
hours and days had indeed been rendered, we
cannot affirm the grant of overtime pay to
Pigcaulan.
SCII presented payroll listings and transmittal
letters to the bank to show that Canoy and
Pigcaulan received their salaries as well as
benefits which it claimed are already integrated in
the employees monthly salaries.
However, the documents presented do not prove
SCIIs allegation. SCII failed to show any other
concrete proof by means of records, pertinent
files or similar documents reflecting that the
specific claims have been paid.
With respect to 13th month pay, SCII presented
proof that this benefit was paid but only for the
years 1998 and 1999. To repeat, the burden of
proving payment of these monetary claims rests
on SCII, being the employer.
It is a rule that one who pleads payment has the
burden of proving it. Even when the plaintiff
alleges non-payment, still the general rule is that
the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-
payment.
Since SCII failed to provide convincing proof that
it has already settled the claims, Pigcaulan
should be paid his holiday pay, service incentive
leave benefits and proportionate 13th month pay
for the year 2000.
Under the Art. 94 of the Labor Code, Pigcaulan is
entitled to his regular rate on holidays even if he
does not work. Likewise, express provision of the
law entitles him to service incentive leave benefit
for he rendered service for more than a year
already under Art. 95. Furthermore, under
Presidential Decree No. 851, he should be paid
his 13thmonth pay.
As employer, SCII has the burden of proving that
it has paid these benefits to its employees.
15. Robina Farms Cebu v. Villa, G.R. No.
175869, April 18, 2016
DOCTRINE: Hours worked include all
time spent for such work if it was with the
knowledge of the ER or immediate
supervisor. Entitlement to OT pay must
be established by proof that OT work was
actually performed before the EE may
claim the benefit.
ER: Villa was a sales clerk. She earlier
applied for the special retirement
program but was suspended for the late
issuance of sales invoices. Her
retirement application was denied (the
rate she requested was available only for
the operations dept) and wanted to return
to work. However, Robina refused on the
ground that she was liable for violation of
company rules on the issuance of
invoices. SC found that she was not
entitled to OT pay although the lower
courts were correct insofar as illegal
dismissal is concerned. EE must first
prove entitlement by establishing that OT
work was performed. Villa failed to prove
that she performed OT work
notwithstanding DTRs showing she
stayed in the premises beyond 8 hrs.
There was no prior authorization by
management which was required for OT
work.
FACTS:
● Respondent Elizabeth Villa brought
against the petitioner her complaint
for illegal suspension, illegal
dismissal, nonpayment of overtime
pay, and nonpayment of service
incentive leave pay in the Regional
Arbitration Branch No. VII of the
NLRC in Cebu City.
● LA rendered decision finding that
Villa had not been dismissed from
employment.
● Although ordering Villa's
reinstatement, LA denied her claim
for backwages and OT pay because
she had not adduced evidence of the
overtime work actually performed.
● NLRC dismissed the appeal by the
petitioner but granting that of Villa.
● CA dismissed the petition for
certiorari.
● Petitioner posits that CA erroneously
affirmed the giving of OT pay and SIL
pay to Villa; that she did not adduce
proof of her having rendered actual
OT work; that she had not been
authorized to render overtime work;
and that her availment of vacation
and sick leaves that had been paid
precluded her claiming the service
incentive leave pay.
ISSUES:
Whether Villa was entitled to OT pay.
HELD:
Not entitled to OT pay.
● Entitlement to OT pay must be
established by proof that OT work
was actually performed before the
EE may claim the benefit. The
burden of proving entitlement rests
on the EE because the benefit is not
incurred in the normal course of
business.
● DTRs show that Villa stayed in the
ER premises beyond 8 hrs but this
did not prove the actual performance
of overtime work. EE could only
render OT if there was prior
authorization by management. Villa
did not have prior authorization and
she could not validly claim having
performed work beyond the normal
hours.
● Omnibus Rules Implementing the LC
states that all time spent for such
work shall considered as hours
worked if it was with the knowledge
of the ER or immediate supervisor.
Villa was illegally dismissed.
○ Robina argues that Villa had the
intention to sever the ER-EE
relationship.
○ Records show that she was
advised to tender a resignation
letter with request for financial
assistance after her suspension
ended and retirement application
was denied. She was later
prevented from entering ER’s
premises despite manifestation of
her intention to return to work.
These acts are strong indication
that ER wanted sever the ER-EE
relationship.
● Her application for early retirement
did not manifest her intention to
sever the ER-EE relationship. She
did so upon the belief that she would
receive a higher rate. Her consent
could not be deemed to have been
knowingly and freely given.
● Retirement may be voluntary (no
residual ER liability) or involuntary
(ER liable for termination w/o cause).
● In case of early retirement programs,
the offer of benefits must be certain
while the acceptance to be retired
should be absolute.
● EES are free to accept the ER's offer
to lower the retirement age if they
feel they can get a better deal with
the retirement plan presented by the
employer. Here. Villa was terminated
solely on the basis of a provision of a
retirement plan which was not freely
assented to by her. Robina was
guilty of illegal dismissal.
16. Association of International Shipping
Lines, Inc. v. United Harbors’ Pilot
Association, G.R. No. 172029, August
6, 2008
DOCTRINE: [Court discussed
importance of OT pay and night pay and
why it should be paid. See Held.]
ER: PPA issued AO providing for OT pay
and Nighttime pay for pilotage service.
EO 1088 was issued providing for
uniform rates for pilotage service based
on vessel tonnage. PPA issued
resolutions pursuant to EO removing OT
pay, hence AISL did not pay OT and
Nighttime pay. UHPAP threatened to
stop their services to AISL, so AISL filed
for decl relief. SC held that no
inconsistency, OT pay and nighttime pay
are not repealed by EO 1088. RTC
denied execution. Issue is whether OT
and night pay in the earlier PPA AO still
stands. SC held that the pilots are
entitled to the same because they pilots
provided services for overtime and at
night (see held for important discussion).
FACTS:
1. PPA Admin order 03-85 were
issued providing overtime and
nighttime pay for pilotage services.
2. Pres Marcos issued EO 1088
providing for uniform and modified
rates for pilotage service, based on
vessel tonnage. It has a general
repealing clause.
3. Pursuant to EO 1088 PPA issued
resolutions expressly removing
overtime and night pays for pilotage
service, because pay is now based
on vessel tonnage.
4. Because of the resolutions,
Association of International
Shipping Lines (AISL) and its
members refused to pay
respondent United Harbor Pilots
Association of the Philippines, Inc.
(UHPAP)s claims for nighttime and
overtime pay.
5. In response, UHPAP threatened to
discontinue pilotage services
should their claims be continually
ignored.
6. AISL filed a petition for declaratory
relief
7. RTC: UHPAP not authorized to
collect overtime and night
differential because repealed by EO
1088.
8. SC: not repealed because the
clause in EO 1088 is merely a
general repealing clause, and
implied repeal is frowned upon.
Nothing in EO 1088 shows intention
to supersede PPA AO 03-85
benefits of overtime and night pay.
EO 1088 rates apply only to pilotage
maneuver and not all pilotage
service. PPA can issue new rates,
but not lower than those prescribed
in EO.
9. UHPAP filed for execution before
RTC.
10. RTC denied because not entitled.
Acc to it, the SC decision merely
affirmed rule-making power of PPA.
The PPA’s removing overtime pay
and night diff pay are valid and
effective.
11. CA: reverse because RTC reversed
SC decision.
12. Hence, this petition.
ISSUE: Whether overtime and night pay
in the PPA AO 03-85 still stands, despite
EO 1088 making pilotage service pay
based on vessel tonnage.
HELD: Yes, valid overtime and night
diff pay. The subsequent PPA
resolutions removing the same are
without effect.
1. There is no inconsistency between
EO No. 1088 and the provisions of
PPA AO No. 03-85. These two
orders dwell on entirely different
subject matters. EO No. 1088
provides for uniform and modified
rates for pilotage services rendered
to foreign and coastwise vessels in
all Philippine ports, public or private.
On the other hand, the subject matter
of the provisions of PPA AO No. 03-
85 is the payment of the additional
charges of nighttime and overtime
pay. Plainly, EO No. 1088 involves
the basic compensation for pilotage
service while PPA AO No. 03-85
 provides for the additional charges
where pilotage service is rendered
under certain circumstances. Hence,
no possible repeal or inconsistency.
2. In the earlier SC ruling, it recognized
the right of UHPAP to overtime and
nighttime pay under PPA AO No. 03-
85. Indeed, a harbor pilot who has
rendered nighttime and overtime
work must be paid nighttime and
overtime pay.
3. [IMPORTANT DISCUSSION]The
additional compensation for
nighttime work is founded on public
policy. Working at night is violative of
the law of nature for it is the period
for rest and sleep. An employee who
works at night has less stamina and
vigor. Thus, he can easily contract
disease. The lack of sunlight tends to
produce anemia and tuberculosis
and predispose him to other ills.
Night work brings increased liability
to eyestrain and accident. Serious
moral dangers also are likely to result
from the necessity of traveling the
street alone at night, and from the
interference with normal home life.
Hygienic, medical, moral, cultural
and socio-biological reasons are in
accord that night work has many
inconveniences and when there is no
alternative but to perform it, it is but
just that the laborer should earn
greater salary than ordinary work so
as to compensate the laborer to
some extent for the said
inconveniences.
OT is the additional work,
labor or service employed and the
adverse effects of his longer stay in
his place of work that justify and is
the real reason for the extra
compensation that he called
overtime pay. Overtime work is
actually the lengthening of hours
developed to the interests of the
employer and the requirements of his
enterprise. It follows that the wage or
salary to be received must likewise
be increased, and more than that, a
special additional amount must be
added to serve either as
encouragement or inducement or to
make up for the things he loses
which we have already referred to.
And on this score, it must always be
borne in mind that wage is
indisputably intended as payment for
work done or services rendered
4. SC notes that Pet for Decl Relief
does not entail execution.The proper
remedy would have been for
members of respondent UHPAP to
claim for overnight and nighttime pay
before petitioners AISLI and its
members.
17. Dacut v. CA, G.R. No. 169434, March
28, 2008, 550 SCRA 260
DOCTRINE: The correct criterion in
determining whether they are entitled to
overtime pay or night shift differential is
not whether they were on board and
cannot leave ship beyond the regular
eight working hours a day, but whether
they actually rendered service in excess
of said number of hours.
ER: Petitioners (Dacut, Cajote, Tungala,
Zubista, and Taboy) were crew members
of an inter-island cargo vessel. Dacut and
Tungala resigned due to the vessel’s
alleged unseaworthiness while Cajote
resigned so he would not be charged with
AWOL. Petitioners filed a complaint for
constructive dismissal amounting to
illegal dismissal (except for Zubista and
Taboy); underpayment of wages, special
and regular holidays; non-payment of
rest days, sick and vacation leaves, night
shift differentials, subsistence allowance,
and fixed overtime pay; actual, moral and
exemplary damages; and litigation costs
and attorney's fees. Petitioners were not
entitled to overtime pay or night shift
differential (see doctrine).
FACTS:
Dacut discovered a hole in the vessel's
engine room. The company had the hole
patched up with a piece of iron and
cement. Despite the repair, Dacut and
Tungala resigned due to the vessel's
alleged unseaworthiness.
On the other hand, Cajote went on leave
to undergo eye treatment. Since then, he
has incurred several unauthorized
absences. Fearing that he will be
charged as Absent Without Leave
(AWOL), Cajote resigned.
Petitioners filed a complaint for
constructive dismissal, etc. (see ER).
Dacut and Tungala claimed that they
resigned after Reynalyn G. Orlina, the
secretary of the Personnel Manager, told
them that they will be paid their
separation pay if they voluntarily
resigned. They also resigned because
the vessel has become unseaworthy.
Cajote alleged that he resigned because
the company hired a replacement while
he was still on leave. When he returned,
the Operations Manager told him that he
will be paid his separation pay if he
voluntarily resigned; otherwise, he would
be charged for being AWOL.
Zubista claimed that his wage was below
the minimum.
All petitioners claim they were not paid
their rest days, sick and vacation leaves,
night shift differentials, subsistence
allowance, and fixed overtime pay.
LA - dismissed complaint (except for the
holiday pay, accrued sick and vacation
leaves, and wage differential, petitioners
failed to substantiate their monetary
claims); NLRC & CA affirmed.
ISSUE:
(1) whether Dacut, Tungala and Cajote
voluntarily resigned from their
employment? - YES
(2) whether petitioners were entitled to
their monetary claims? - NOT ALL. *if
you’re rushing, just read the rationale for
this issue
HELD:
(1) The LA, the NLRC, and the CA were
unanimous in finding that the primary
reason why Dacut and Tungala resigned
was the vessel's alleged
unseaworthiness as borne by their
pleadings before the LA. Dacut and
Tungala never mentioned that they
resigned because they were being
harassed by the company due to a
complaint for violation of labor standards
they had led against it. This ground was
alleged only before the NLRC and not a
single act or incident was cited to prove
this point.
Even the alleged assurance by Orlina,
that they would be given separation pay,
served merely as a secondary reason
why they resigned. In fact, there is doubt
that such assurance was even made
considering that as secretary of the
Personnel Manager, it was not shown
under what authority Orlina acted when
she told Dacut and Tungala to resign.
Likewise deserving scant consideration
is Cajote's claim. Although the company
already hired a replacement, Cajote
admitted that he was still employed at the
time he resigned. In fact, the company
tried to give him another assignment but
he refused it. Thus, the only reason why
Cajote resigned was his long
unauthorized absences which would
have warranted his dismissal in any
case.
(2) As crew members, petitioners were
required to stay on board the vessel by
 the very nature of their duties, and it is for
this reason that, in addition to their
regular compensation, they are given
free living quarters and subsistence
allowances when required to be on
board. It could not have been the
purpose of our law to require their
employers to give them overtime pay or
night shift differential, even when they
are not actually working. Thus, the
correct criterion in determining
whether they are entitled to overtime
pay or night shift differential is not
whether they were on board and
cannot leave ship beyond the regular
eight working hours a day, but
whether they actually rendered
service in excess of said number of
hours. In this case, petitioners failed to
submit sufficient proof that overtime and
night shift work were actually performed
to entitle them to the corresponding pay.
18. Bisig Manggagawa sa Tryco v. NLRC,
G.R. No. 151309, October 15, 2008
DOCTRINE: The MOA is enforceable
and binding against the petitioners (esp.
waiver of overtime). Where it is shown
that the person making the waiver did so
voluntarily, with full understanding of
what he was doing, and the consideration
for the quitclaim is credible and
reasonable, the transaction must be
recognized as a valid and binding
undertaking.
ER:
FACTS: Tryco Pharma Corp. is a
manufacturer of veterinary medicines.
Tryco and BMT (rank-in-file union)
signed separate MOA, providing for a
compressed workweek. The MOA was
entered into pursuant to DO No. 21,
Series of 1990, Guidelines on the
Implementation of Compressed
Workweek. As provided in the MOA, 8:00
a.m. to 6:12 p.m., from Monday to Friday,
shall be considered as the regular
working hours, and no overtime pay shall
be due and payable to the employee for
work rendered during those hours.
However, should an employee be
permitted or required to work beyond
6:12 p.m., such employee shall be
entitled to overtime pay. Tryco informed
the BWC of the DOLE of the
implementation of a compressed
workweek in the company. Meantime,
Tryco received a Letter from the Bureau
of Animal Industry of the Department of
Agriculture reminding it that its
production should be conducted in San
Rafael, Bulacan, not in its main office in
Caloocan City. The concerned
employees were directed to report at the
company’s plant site. BMT opposed the
transfer of its members to San Rafael,
Bulacan, contending that it constitutes
unfair labor practice. In protest, BMT
declared a strike, claiming that the
transfer was inconvenient and amounts
to ULP.
ISSUE: (1) W/N the MOA valid? Yes.
(2) W/N there is constructive dismissal?
No.
HELD: The MOA complied with the
following conditions set by the DOLE,
under D.O. No. 21, to protect the interest
of the employees in the implementation
of a compressed workweek scheme:
1. The employees voluntarily
agree to work more than eight (8) hours
a day the total in a week of which shall
not exceed their normal weekly hours of
work prior to adoption of the compressed
workweek arrangement;
2. There will not be any
diminution whatsoever in the weekly or
monthly take-home pay and fringe
benefits of the employees;
3. If an employee is permitted
or required to work in excess of his
normal weekly hours of work prior to the
adoption of the compressed workweek
scheme, all such excess hours shall be
considered overtime work and shall be
compensated in accordance with the
provisions of the Labor Code or
applicable Collective Bargaining
Agreement (CBA);
4. Appropriate waivers with
respect to overtime premium pay for work
performed in excess of eight (8) hours a
day may be devised by the parties to the
agreement.
5. The effectivity and
implementation of the new working time
arrangement shall be by agreement of
the parties.
Absent any evidence that the Bureau of
Animal Industry conspired with Tryco, the
allegation is not only highly irresponsible
but is grossly unfair to the government
agency concerned. The transfer of its
production activities to San Rafael,
Bulacan, regardless of whether it was
made pursuant to the letter of the Bureau
of Animal Industry, was within the scope
of its inherent right to control and manage
its enterprise effectively. Management’s
prerogative of transferring and
reassigning employees from one area of
operation to another in order to meet the
requirements of the business is,
therefore, generally not constitutive of
constructive dismissal. Indisputably, in
the instant case, the transfer orders do
not entail a demotion in rank or
diminution of salaries, benefits and other
privileges of the petitioners. Mere
incidental inconvenience is not sufficient
to warrant a claim of constructive
dismissal. Personal inconvenience or
hardship that will be caused to the
employee by reason of the transfer is not
a valid reason to disobey an order of
transfer. Moreover, the adoption of a
compressed workweek scheme in the
company will help temper any
inconvenience that will be caused the
petitioners by their transfer to a farther
workplace. The transfer orders do not
amount to ULP. Contrary to BMT’s claim,
mere transfer of its members will not
paralyze and render the union ineffective.
The union was not deprived of the
membership of the petitioners whose
work assignments were only transferred
to another location. There was no
showing or any indication that the
transfer orders were motivated by an
intention to interfere with the petitioners’
right to organize. The MOA is
enforceable and binding against the
petitioners (esp. waiver of overtime).
Where it is shown that the person making
the waiver did so voluntarily, with full
understanding of what he was doing, and
the consideration for the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and
binding undertaking.
19. Asian Transmission Corp. v. CA, G.R.
No. 144644, March 15, 2004
DOCTRINE:
Art. 94 of the Labor Code, as amended, affords a
worker the enjoyment of 10 paid regular holidays.
The provision is mandatory, regardless of
whether an employee is paid on a monthly or
daily basis. Unlike a bonus, which is a
management prerogative, holiday pay is a
statutory benefit demandable under the law.
Since a worker is entitled to the enjoyment of ten
paid regular holidays, the fact that two holidays
fall on the same date should not operate to
reduce to nine the ten holiday pay benefits a
worker is entitled to receive.
ER: Petitioner (ATC) opted to pay 100%
of its basic pay even if the DOLE issued an
explanatory bulletin stating that the EEs are
entitled to 200% of their basic wage. Issue arose
as to w/n the EEs are entitled to be paid for 2
regular holidays which fell on the same day, and
the Court held in the affirmative, stating that
Holiday pay is a legislated benefit and part of the
constitutional imperative that the State shall
afford protection to labor. (See Doctrine)
FACTS:
DOLE issued an Explanatory Bulletin wherein it
clarified that employees are entitled to 200% of
their basic wage on Apr. 9, 1993, whether
unworked, which, apart from being Good Friday
[and, therefore, a legal holiday], is also Araw ng
Kagitingan [which is also a legal holiday]. The
bulletin was reproduced on Jan. 23, 1998, when
Apr. 9, 1998 was both Maundy Thursday and
Araw ng Kagitingan.
Despite the explanatory bulletin, ATC opted to
pay its daily paid employees only 100% of their
basic pay on Apr. 9, 1998. BATLU protested.In
accordance with Step 6 of the grievance
procedure of the CBA existing between ATC and
BATLU, the controversy was submitted for
voluntary arbitration. Bacungan (Voluntary
Arbitrator) rendered a decision directing ATC to
pay its covered employees "200% and not just
100% of their regular daily wages for the
unworked Apr. 9, 1998 which covers 2 regular
holidays, namely, Araw ng Kagitignan and
Maundy Thursday."
CA: Upheld the findings of Bacungan, holding
that the CBA between ATC and BATLU
recognizes their intent to consider Araw ng
Kagitingan and Maundy Thursday, on
whatever date they may fall in any calendar year,
as paid legal holidays during the effectivity of the
CBA and that "there is no condition, qualification
or exception for any variance from the clear intent
that all holidays shall be compensated." Also, in
the absence of an explicit provision in law which
provides for a reduction of holiday pay if 2
holidays happen to fall on the same day, any
doubt in the interpretation and implementation of
the Labor Code provisions on holiday pay must
be resolved in favor of labor.
ISSUE: WON BATLU should be paid
200% of their regular daily
wages/WON daily-paid employees are
entitled to be paid for two regular
holidays which fall on the same day
HELD: YES.
Holiday pay is a legislated benefit enacted as part
of the Constitutional imperative that the State
shall afford protection to labor. Its purpose is not
merely "to prevent diminution of the monthly
income of the workers on account of work
interruptions. In other words, although the worker
is forced to take a rest, he earns what he should
earn, that is, his holiday pay." It is also intended
to enable the worker to participate in the national
celebrations held during the days identified as
with great historical and cultural significance.
Independence Day (June 12), Araw ng
Kagitingan (April 9), National Heroes Day (last
Sunday of August), Bonifacio Day (November 30)
and Rizal Day (December 30) were declared
national holidays to afford Filipinos with a
recurring opportunity to commemorate the
heroism of the Filipino people, promote national
identity, and deepen the spirit of patriotism. Labor
Day (May 1) is a day traditionally reserved to
celebrate the contributions of the working class to
the development of the nation, while the religious
holidays designated in Executive Order No. 203
allow the worker to celebrate his faith with his
family. (SEE DOCTRINE)
In the case at bar, there is nothing in the law
which provides or indicates that the entitlement to
ten days of holiday pay shall be reduced to nine
when two holidays fall on the same day. ATC’s
assertion that Wellington v. Trajano has
"overruled" the DOLE March 11, 1993
Explanatory Bulletin does not lie. In Wellington,
the issue was whether monthly-paid employees
are entitled to an additional day’s pay if a holiday
falls on a Sunday. This Court, in answering the
issue in the negative, observed that in fixing the
monthly salary of its employees, Wellington took
into account "every working day of the year
including the holidays specified by law and
excluding only Sunday." In the instant case, the
issue is whether daily-paid employees are
entitled to be paid for two regular holidays which
fall on the same day.
Sec. 11, Rule IV, Book III of the Omnibus Rules
to Implement the Labor Code provides that
"Nothing in the law or the rules shall justify an
employer in withdrawing or reducing any benefits,
supplements or payments for unworked regular
holidays as provided in existing individual or
collective agreement or employer practice or
policy."
20. Jose Rizal College v. NLRC, G.R. No.
L-65482, 156 SCRA 27
DOCTRINE: [Topic: 4, Teachers paid by the
hour] Be it noted that 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.
ER: National Alliance of Teachers and Office
Workers (NATOW), in behalf of the faculty and
personnel of Jose Rizal College, filed with the
Ministry of Labor a complaint against the college
for said alleged non-payment of holiday pay.
FACTS: Petitioner Jose Rizal College is a non-
stock, non-profit educational institution duly
organized and existing under the laws of the
Philippines. It has 3 groups of employees
categorized as follows:
(1) Personnel on monthly basis, who receive their
monthly salary uniformly throughout the year,
irrespective of the actual number of working days
in a month without deduction for holidays; (2)
Personnel on daily basis who are paid on actual
days worked and they receive unworked holiday
pay and (3) Collegiate faculty who are 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.
Unable to receive their corresponding holiday
pay, from 1975-1977, National Alliance of
Teachers and Office Workers (NATOW), in behalf
of the faculty and personnel of Jose Rizal
College, filed with the Ministry of Labor a
complaint against the college for said alleged
non-payment of holiday pay. Due to the failure of
the parties to settle their differences on
conciliation, the case was certified for compulsory
arbitration. LA rendered the following decision:
1. The faculty and personnel of the
respondent Jose Rizal College who are paid
their salary by the month uniformly in a
school year, irrespective of the number of
working days in a month, without deduction for
holidays, are presumed to be already paid the 10
paid legal holidays and are no longer entitled to
separate payment for the said regular holidays;
2. The personnel of the respondent Jose
Rizal College who are paid their wages daily are
entitled to be paid the 10 unworked regular
holidays according to the pertinent provisions of
the Rules and Regulations Implementing the
Labor Code;
NLRC modified the decision appealed from, in the
sense that: teaching personnel paid by the hour
are declared to be entitled to holiday pay.
ISSUE: WON the school faculty who according to
their contracts are paid per lecture hour are
entitled to unworked holiday pay.
HELD: Decision of NLRC is set aside, and a new
one is hereby RENDERED:
(a) Exempting petitioner from paying hourly paid
faculty members their pay for regular holidays, whether the
same be during the regular semesters of the school year or
during semestral, Christmas, or Holy Week vacations;
(b) but Ordering petitioner to pay said faculty
members their a) regular hourly rate on days declared as
special holidays or for some reason classes are b) called off
or shortened for the hours they are supposed to have taught,
whether extensions of class days be ordered or not; c) in case
of extensions said faculty members shall likewise be paid their
hourly rates should they teach during said extensions.
There appears to be no problem as to the first 2
classes or categories of petitioner's workers. The
problem lies with its faculty members, who are
paid on an hourly basis.
Subject holiday pay is provided for in the Labor
Code (Presidential Decree No. 442, as
amended), which reads:
Art. 94. Right to holiday pay — (a) Every worker shall be
paid his regular daily wage during regular holidays, except in take a rest, does not earn what he should earn on
retail and service establishments regularly employing less
that day. Be it noted that when a special public
than ten (10) workers; (b) The employer may require an
employee to work on any holiday but such employee shall be holiday is declared, the faculty member paid by
paid a compensation equivalent to twice his regular rate; ... " the hour is deprived of expected income, and it
does not matter that the school calendar is
And in the Implementing Rules and Regulations, extended in view of the days or hours lost, for
Rule IV, Book III, which reads: their income that could be earned from other
sources is lost during the extended days.
SEC. 8. Holiday pay of certain employees. — (a) Private Similarly, when classes are called off or
school teachers, including faculty members of colleges and
shortened on account of typhoons, floods, rallies,
universities, may not be paid for the regular holidays during
semestral vacations. They shall, however, be paid for the and the like, these faculty members must likewise
regular holidays during Christmas vacations. ... be paid, whether or not extensions are ordered.

Under the foregoing provisions, apparently, the 21. San Miguel Corp. v. CA, G.R. No.
petitioner, although a non-profit institution is 146775, January 30, 2002, 375 SCRA
under obligation to give pay even on unworked 311
regular holidays to hourly paid faculty DOCTRINE: Muslim Holidays are also
members subject to the terms and conditions entitled to pay as regular holidays to all
provided for therein. employees without distinction as to
whether they are Muslim or non-Muslim.
We believe that the aforementioned FACTS:
implementing rule is not justified by the provisions ● Pursuant to DOLE Regional
of the law which after all is silent with respect to Office’s inspection in SMC Iligan
faculty members paid by the hour who because branch’s premises, it discovered
of their teaching contracts are obliged to work and underpayment of regular Muslim
consent to be paid only for work actually done Holiday pay to its employees.
(except when an emergency or a fortuitous event ● SMC was then ordered to
or a national need calls for the declaration of explain and submit proof of
special holidays). Regular holidays specified as payment because SMC
such by law are known to both school and faculty contested such findings.
members as no class days;" certainly the latter do ● SMC yet failed to present proof
not expect payment for said unworked days, and so they were issued compliance
this was clearly in their minds when they orders which they also failed to
entered into the teaching contracts. act on.
● SMC appealed to DOLE main
On the other hand, both the law and the office but dismissed for being out
Implementing Rules governing holiday pay are of time.
silent as to payment on Special Public ● SMC then petitioned for certiorari
Holidays. to SC. But SC remanded to CA
following the St. Martin Funeral
It is readily apparent that the declared purpose of Homes doctrine (hanggang dito
the holiday pay which is the prevention of talaga ah)
diminution of the monthly income of the ● CA rendered decision ordering
employees on account of work interruptions is SMC to pay but with reduced
defeated when a regular class day is cancelled amount from 200% to 150% of
on account of a special public holiday and class the basic salary.
hours are held on another working day to make ● SMC moved for reconsideration
up for time lost in the school calendar. Otherwise but was denied. Hence this
stated, the faculty member, although forced to certiorari.
 ● SMC insisted that Muslim
Holiday pays are only
compensable to Muslim
employees because of the
applicability of code of muslim
personal laws only to Muslims.
ISSUE: Whether Muslim Holidays
compensable as Regular Holidays
HELD: YES
● Article 169 (list of recognized
holidays) and 170 (observance
of holidays upon proclamation of
the President) of Code of Muslim
Personal Laws is to be read
together with Article 94 (right to
holiday pay) of the Labor Code.
● From those provisions, nowhere
did they distinguish Muslims
from non-Muslims.
● If that logic will apply, then
Muslims will not be entitled pays
also for Christian Holidays.
● In fact, 1999 Handbook on
Worker’s Statutory Benefits
approved by DOLE expressly
provided that “both Muslims and
Christians working within Muslim
areas may not report for work on
days designated as Muslim
Holidays”
● Thus, entitled payment even on
Muslim Holidays.
PETITION DISMISSED.
22. Fernandez v. NLRC, G.R. No. 105892,
January 28, 1998
DOCTRINE: 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.
FACTS:
- Case stemmed from a
consolidated complaint against
Cebuana Lhuillier for illegal
dismissal. Petitioners alleged
that prior to and during early July
1990, they "demanded" from
Margueritte Lhuillier an increase
in their salaries since her
business was making good and
that she was evading payment of
taxes by making false entries in
her records of account; that
Lhuillier became angry and
threatened them that something
would happen to their
employment if they would report
her to the BIR; that shortly
thereafter, Lhuillier suspected
them of stealing jewelry from the
pawnshop; that on July 19, 1990,
Lhuillier verbally informed them
not to report for work as their
employment had been
terminated; that from July 20,
1990 they did not report for work;
and on July 23, 1990, they filed
the instant complaint
- The decision vacated by the
NLRC was disposed as follows:
To reinstate the complainants to
their respective position at the
Agencia Cebuana with full back
wages without qualification; if
reinstatement is not feasible, for
one reason or another, to pay the
complainants their respective
separation pay, service incentive
leave pay with full backwages
without qualification computed
as follows:
- 1. LEIDEN FERNANDEZ:
Service Incentive Leave (6 yrs.)=
3,322.50 xxx
TOTAL = P 46,522.50
- 2. GLORIA ADRIANO:
Service incentive leave (17
yrs.)= 10,986.25 xxx
TOTAL = P 79,866.25
- 3. EMELIA NEGAPATAN:
 Service incentive leave (24
yrs.)= 13,752.00 xxx
TOTAL = P 85,272.00
- 4. JESUS P. TOMONGHA:
Service Incentive leave = shortest was 6 years and the longest was 33
19,478.25 xxx
TOTAL = P 106,973.25
- 5. ELEONOR QUIANOLA:
Service Incentive Leave = the Labor Code which provides: Money Claims.
8,022.00 xxx
TOTAL = P 64,642.00
- 6. ASTERIA CAMPO:
Service Incentive Leave (13 yrs.)
= 7,400.00 xxx
TOTAL = P62,160.25
- 7. FLORIDA VILLACERAN:
b) Service Incentive leave (17
yrs.) = 9,677.25 xxx
TOTAL = P 70,357.25
- 8. FLORIDA TALLEDO:
Service Incentive leave (18 yrs.)
= 10,557.00 xxx
TOTAL = P 74,607.00
- 9. BRENDA GADIANO
b) Service Incentive leave (13
yrs.) 7,536.75 xxx
TOTAL = P 63,313.25
- 10. MARILYN LIM:
Service Incentive for 7 yrs. =
4,980.50 xxx
TOTAL P 62,330.00
- 11. JOSEPH CANONIGO:
Service Incentive Leave (2 yrs.)
= 1,038.50 xxx
TOTAL = P 36,138.50
- doctrine.
ISSUE: Assuming petitioners were illegally
dismissed, was the computation of the
backwages, service incentive leave pay and
damages valid and correct? No, the SIL should
not have been limited to 3 years.
HELD: The LA granted varying amounts of SIL
pay based on the length of their tenure; i.e., the
years. While recommending that the LA’s
decision be reinstated substantially, the solicitor
general recommended that the award of SIL be
limited to 3 years. This is based on Article 291 of
— 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. xxx
Petitioners counter that Article 291 "speaks
clearly on 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.
The clear policy of the Labor Code is to grant SIL
pay to workers in all establishments, subject to a
few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides
that “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."
Service incentive leave is a right which accrues
to every employee who has served "within 12
months, whether continuous or broken reckoned
from the date the employee started working,
including authorized absences and paid regular
holidays unless the working days in the
establishment as a matter of practice or policy, or
that provided in the employment contracts, is less
than 12 months, in which case said period shall
be considered as one year." It is also
"commutable to its money equivalent if not used
or exhausted at the end of the year." See
In accordance with RA No. 6715, petitioners are
entitled to their full backwages, inclusive of
allowances and other benefits or their monetary
equivalent, from the time their actual
compensation was withheld from them up to the
time of their actual reinstatement.
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, it is fair and legal that its
computation should be up to the date of
reinstatement as provided under Section 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 equivalent computed from the
time his compensation is withheld from him up to
the time of his actual reinstatement.
However, the Implementing Rules 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."43 Hence, petitioners, except Lim and
Canonigo, should be entitled to service incentive
leave pay from December 16, 1975 up to their
actual reinstatement.
23. HSY Marketing Ltd., Co. v. Villastique,
G.R. No. 219569, August 17, 2016
DOCTRINE:
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 [(1)] year.’ It is
also commutable to its money
equivalent if not used or exhausted at
the end of the year. In other words, an
employee who has served for one (1)
year is entitled to it. He may use it as
leave days or he may collect its
monetary value.
ER:
FACTS:
● Petitioner (HSY Marketing) hired
respondent (Villastique) as a
field driver for Fabulous jeans.
● Respondent figured in an
accident when the service
vehicle he was driving bumped a
pedestrian.
● Fabulous Jeans shouldered the
hospitalization and medical
expenses of Dorataryo in the
amount of P64,157.15, which
respondent was asked to
reimburse, but to no avail
● Respondent was allegedly
required to sign a resignation
letter, which he refused to do. He
tried to collect his salary for that
week but was told that it was
withheld because of his refusal
to resign.
● He filed a complaint for illegal
dismissal with money claims
against petitioner, Fabulous
Jeans,
● Petitioner: Respondent
voluntarily severed his own
employment since he has the
one who refused to report for
work.
● LA dismissed the charge for
illegal dismissal.
● NLRC affirmed.
● CA affirmed. CA ruled that
respondent is a regular
employee entitled to service
incentive leave pay.
ISSUE: WON Respondent is a regular
employee and entitled to service
incentive leave pay
HELD:
 Company drivers who are under the
control and supervision of management
officers — like respondent herein — are
regular employees entitled to benefits
including service incentive leave pay
[Please see doctrine]
Petitioner, as the employer of
respondent, and having complete control
over the records of the company, could
have easily rebutted the said monetary
claim against it by presenting the
vouchers or payrolls showing payment of
the same. However, since petitioner
opted not to lift a finger in providing the
required documentary evidence, the
ineluctable conclusion that may be
derived therefrom is that it
never paid said benefit and must,
perforce, be ordered to settle its
obligation to respondent.
24. David v. Macasio, G.R. No. 195466,
July 2, 2014
DOCTRINE:
Employees engaged on task or contract basis
are not automatically exempted from the grant
of SIL, UNLESS, they fall under the
classification of field personnel.
ER
John Macasio filed a complaint for payment of SIL,
among others. He is being paid on a pakyaw basis
as a butcher. Employer David claims that he hired
Macasio as a butcher on the “pakyaw” basis thus
not entitled to the payment. Whether he is
entitled to SIL. HELD: YES. Since Macasio cannot
be considered as a “field personnel,” then he is
not exempted from the grant of holiday, SIL pay
even as he was engaged on “pakyaw” or task
basis. The payment of an employee on task or
pakyaw basis alone is insufficient to exclude one
from the coverage of SIL and holiday pay. They
are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they
qualify as “field personnel.” Thus, to be
exempted, they must be field personnel OR paid
on a pakyaw basis who are at the same time filed
personnel.
FACTS
· John Macasio filed a complaint against David,
doing business under “Yiels Hog Dealer”, in
the LA for non-payment of overtime pay,
holiday pay, and 13thmonth pay, and service
incentive leave.
· Macasio alleges that he had been working as
a butcher for David since 1995.
o David sets the work day, reporting time
and hogs to be chopped as well as the
manner by which he was to perform his
work
o David pays him a daily salary of P700
which was increased from P600 in 2007,
P500 in 2006, and P400 in 2005.
o David Approved/Disapproved his leaves,
o David owned the hogs delivered for
chopping as well as the tools and
implements, rented the workspace and
employs about 25 butchers and deliver
drivers.
· David claims that he hired Macasio as a
butcher on the “pakyaw” basis thus not
entitled to the payment.
· LA dismissed Macasio’s complaint and
concluded that he was engaged on a pakyaw
basis thus not entitled to overtime, holiday,
SIL and 13 month pay.
· NLRC affirmed the LA’s ruling and ruled that
since Macasio was paid by result and not in
terms of the time spent, he is not covered by
Labor standards law.
· CA partly granted Macasio’s petition and
reversed the NLRC ruling. The CA awarded
Macasio’s claim for holiday, SIL and
13thmonth pay for 3 years with 10% attorney’s
fees by denied his claim for moral and
exemplary damages for lack of basis.
o Macasio entitled to his monetary
claims following the doctrine of
Serrano v. Severino Santos Transit.
As a Task Based employee,
Macasio is excludedfrom the
coverage of the holiday, SIL and
13thmonth pay only if he is a field
personnel.
ISSUE
Whether Macasio is entitled to SIL pay
HELD
Yes. Since Macasio cannot be considered as
a “field personnel,” then he is not exempted
 from the grant of holiday, SIL pay even as he
was engaged on “pakyaw” or task basis.
· General rule: Holiday and SIL pay provisions
cover ALL employees. To be excluded, must
be expressly exempt.
· Under the IRR, exemption from the coverage
of holiday and SIL pay refer to “field personnel
and other employees whose time and
performance is unsupervised by the employer
including those who are engaged on task or
contract basis.” Note that unlike LC 82,the
IRR on holiday and SIL pay do not exclude
employees “engaged on task basis” as a
separate and distinct category from
employees classified as “field personnel.”
Rather, these employees are altogether
merged into one classification of exempted
employees.
· As early as 1987 in the case of Cebu Institute
of Technology v. Ople (1987),the phrase
“those who are engaged on task or contract
basis” in the rule has already been interpreted
to mean as follows: [the phrase] should
however, be related with “field personnel”
applying the rule on ejusdem generis that
general and unlimited terms are restrained
and limited by the particular terms that they
follow. x x x Clearly, petitioner’s teaching
personnel cannot be deemed field personnel
which refers “to nonagricultural 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. [Par. 3, Article 82, Labor
Code of the Philippines]. Petitioner’s claim
that private respondents are not entitled to the
service incentive leave benefit cannot
therefore be sustained.
· The payment of an employee on task or pakyaw
basis alone is insufficient to exclude one from
the coverage of SIL and holiday pay. They are
exempted from the coverage of Title I
(including the holiday and SIL pay) only if they
qualify as “field personnel.”The IRR therefore
validly qualifies and limits the general
exclusion of “workers paid by results” found in
Article 82 from the coverage of holiday and
SIL pay. This is the only reasonable
interpretation since the determination of
excluded workers who are paid by results
from the coverage of Title I is “determined by
the Secretary of Labor in appropriate
regulations.”
· Cebu Institute Technology ruling was reiterated
in 2005 in Auto Bus Transport Systems, Inc.
v. Bautista: “Those who are engaged on task
or contract basis, purely commission basis.”
Said phrase should be related with “field
personnel,” applying the rule on ejusdem
generis that general and unlimited terms are
restrained and limited by the particular terms
that they follow.
· Serrano v. Santos Transit:The Court, applying
the rule on ejusdem generisdeclared that
“employees engaged on task or contract
basis x x x are not automatically exempted
from the grant of SIL, unless, they fall
under the classification of field
personnel.”
· In contrast and in clear departure from settled
case law, the LA and the NLRC still
interpreted the LC provisions and the IRR as
exempting an employee from the coverage of
Title I of the Labor Code based simply and
solely on the mode of payment of an
employee. The NLRC’s utter disregard of this
consistent jurisprudential ruling is a clear act
of grave abuse of discretion. In other words,
by dismissing Macasio’s complaint without
considering whether Macasio was a “field
personnel” or not, the NLRC proceeded
based on a significantly incomplete
consideration of the case. This action clearly
smacks of grave abuse of discretion.
25. JPL Marketing Promotions v. CA, G.R.
No. 151966, 463 SCRA 136
DOCTRINE: SIL pay should start a year
after commencement of service, for it is
only then that the employee is entitled to
said benefit.
ER: : Respondents are employed by JPL
Marketing. JPL notified respondents that
CMC would stop its direct merchandising
activity in the Bicol Region, Isabela, and
Cagayan Valley. They were advised to
wait for further notice as they would be
transferred to other clients. However,
they filed a case for illegal dismissal. Our
issues in this case are Whether or not
 private respondents are entitled to
separation pay, 13th month pay and
service incentive leave pay and granting
that they are so entitled, what should be
the reckoning point for computing said
awards. They are not entitled to any
separation pay because JPL did not
terminate their employment; they
themselves severed their relations with
JPL. What they received from JPL was
not a notice of termination of
employment, but a memo informing them
of the termination of CMC’s contract with
JPL. However, they are entitled to 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. 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.
FACTS:
● JPL Marketing and Promotions is a
domestic corporation engaged in the
business of recruitment and placement of
workers. Noel Gonzales, Ramon Abesa
III and Faustino Aninipot were employed
by JPL as merchandisers on separate
dates and assigned at different
establishments in Naga City and Daet,
Camarines Norte as attendants to the
display of California Marketing
Corporation (CMC), one of JPL’s clients.\
● JPL notified respondents that CMC
would stop its direct merchandising
activity in the Bicol Region, Isabela, and
Cagayan Valley. They were advised to
wait for further notice as they would be
transferred to other clients. However,
respondents Abesa and Gonzales filed
before the NLRC Regional Arbitration
Branch (NLRC) Sub V complaints for
illegal dismissal, praying for separation
pay, 13th month pay, service incentive
leave pay and payment for moral
damages. Aninipot filed a similar case
thereafter.
ISSUE:
1. Whether or not private respondents
are entitled to separation pay, 13th
month pay and service incentive leave
pay NO to separation pay but YES to
13th month pay and SIL
2. Granting that they are so entitled,
what should be the reckoning point for
computing said awards 13th month
pay = the first day of employment; SIL
pay = start a year after
commencement of service.
Computation for both benefits should
only be up to 15 August 1996, or the
last day that respondents worked for
JPL.
HELD:
● Separation Pay - GR: Under Arts. 283
and 284 of the Labor Code, separation
pay is authorized only on account of
“Authorized causes”.
EXC: separation pay shall be allowed as
a measure of social justice
EXC to EXC: Cause is serious
misconduct or those reflecting on his
moral character, but only when he was
illegally dismissed.
● The common denominator of the
instances where payment of separation
pay is warranted is that the employee
was dismissed by the employer.
● In the instant case, there was no
dismissal to speak of. Respondents
were simply not dismissed at all, whether
legally or illegally. What they received
from JPL was not a notice of termination
of employment, but a memo informing
them of the termination of CMC’s
contract with JPL. More importantly, they
were advised that they were to be
 reassigned. At that time, there was no
severance of employment to speak of.
● Art. 286 allows the bona fide suspension
of the operation of a business or
undertaking for a period not exceeding
six (6) months, wherein an
employee/employees are placed on the
so-called “floating status.”
○ When that “floating status” of
an employee lasts for more
than six months, he may be
considered to have been
illegally dismissed from the
service. Thus, he is entitled
to the corresponding benefits
for his separation, and this
would apply to suspension
either of the entire business
or of a specific component
thereof.
● As clearly borne out by the records of
this case, respondents sought
employment from other establishments
even before the expiration of the six (6)-
month period provided by law. As they
admitted in their comment, all three of
them applied for and were employed by
another establishment after they
received the notice from JPL.
● JPL did not terminate their employment;
they themselves severed their relations
with JPL. Thus, they are not entitled to
separation pay.
● Moreover, JPL cannot escape the
payment of 13th month pay and
service incentive leave pay to
respondents. Said benefits are
mandated by law and should be given to
employees as a matter of right (PD No.
851)
● Service incentive leave, as provided in
Art. 95 of the Labor Code, is a yearly
leave benefit of five (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
twelve (12) months, whether continuous
or broken reckoned from the date the
employee started working. The Court
has held in several instances that
“service incentive leave is clearly
demandable after one year of service.”
● Admittedly, respondents were not given
their 13th month pay and service
incentive leave pay while they were
under the employ of JPL. Instead, JPL
provided salaries which were over and
above the minimum wage.
● The Court rules that the difference
between the minimum wage and the
actual salary received by private
respondents cannot be deemed as their
13th month pay and service incentive
leave pay as such difference is not
equivalent to or of the same import as
the said benefits contemplated by law.
Thus, as properly held by the Court of
Appeals and by the NLRC, private
respondents are entitled to the 13th
month pay and service incentive leave
pay.
Reckoning point for computing said awards
● 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.
To extend the period to the date of finality
of the NLRC resolution would negate the
absence of illegal dismissal, or to be
more precise, the want of dismissal in
this case.
● Besides, it would be unfair to require JPL
to pay respondents the said benefits
beyond 15 August 1996 when they did
not render any service to JPL beyond
that date. These benefits are given by
law on the basis of the service actually
 rendered by the employee, and in the
particular case of the service incentive
leave, is granted as a motivation for the
employee to stay longer with the
employer. There is no cause for granting
said incentive to one who has already
terminated his relationship with the
employer.
● The law in protecting the rights of the
employees authorizes neither
oppression nor self-destruction of the
employer. It should be made clear that
when the law tilts the scale of justice in
favor of labor, it is but recognition of the
inherent economic inequality between
labor and management. The intent is to
balance the scale of justice; to put the
two parties on relatively equal positions.
There may be cases where the
circumstances warrant favoring labor
over the interests of management but
never should the scale be so tilted if the
result is an injustice to the employer.
Justitia nemini neganda est (Justice is to
be denied to none).
26. Ace Navigation Co. v. CA, G.R. No.
140364, 338 SCRA 70
DOCTRINE: Practice of tipping and that
tips are normally paid by customers and
not by the employer.
ER: After the expiration of the contract of
employment, Orland filed a complaint
before the labor arbiter for payment of his
vacation leave pay ($450.00) and unpaid
tips ($36,000).
The Supreme Court held that he is
entitled to the vacation leave pay but not
to the unpaid tips. The contract of
employment between petitioners and
Orlando is categorical that the monthly
salary of Orlando is US$450.00 flat rate.
This already included his overtime pay
which is integrated in his 12 hours of
work. The words "plus tips of US$2.00
per passenger per day" were written at
the line for overtime. Since payment for
overtime was included in the monthly
salary of Orlando, the supposed tips
mentioned in the contract should be
deemed included thereat.
FACTS:
● Ace Navigation Co., Inc. (Ace
Nav) recruited private
respondent Orlando Alonsagay
to work as a bartender on board
the vessel M/V "Orient Express"
owned by its principal, Conning
Shipping Ltd. (Conning).
● POEA approved contract:
○ Monthly basic salara –
US$450.00, flat rate
including OT pay for 12
hours of work daily plus
tips of US$2.00 per
passenger per day
○ Entitled to 2.5 days of
vacation leave with pay
each month
○ Term of contract – 1
year
● After the expiration of the
contract on June 13, 1995,
Orlando returned to the
Philippines and demanded from
Ace Nav his vacation leave pay.
Ace Nav did not pay him
immediately. It told him that he
should have been paid prior to
his disembarkation and
repatriation to the Philippines.
Moreover, Conning did not remit
any amount for his vacation
leave pay. Ace Nav, however,
promised to verify the matter and
asked Orlando to return after a
few days. Orlando never
returned.
● Orlando filed a complaint 3
before the labor arbiter for
vacation leave pay of U.S.
$450.00 and unpaid tips
amounting to U.S. $36,000.00.
 ● LA: ordered Ace Nav and
Conning to pay jointly and
severally Orlando his vacation
leave pay but dismissed the
claim for tips for lack of merit.
● NLRC: ordered Ace Nave and
Conning to pay the unpaid tips in
addition to vacation leave pay.
● CA dismissed the petitioner’s
petition hence this appeal.
ISSUE: W/N petitioners are liable to pay
the tips to Orlando.
HELD: No. The contract of employment
between petitioners and Orlando is
categorical that the monthly salary of
Orlando is US$450.00 flat rate. This
already included his overtime pay which
is integrated in his 12 hours of work. The
words "plus tips of US$2.00 per
passenger per day" were written at the
line for overtime. Since payment for
overtime was included in the monthly
salary of Orlando, the supposed tips
mentioned in the contract should be
deemed included thereat.
As a bartender, Orlando cannot feign
ignorance on the practice of tipping and
that tips are normally paid by customers
and not by the employer.
It is also absurd that petitioners intended
to give Orlando a salary higher than that
of the ship captain. As petitioners point
out, the captain of M/V "Orient Princess"
receives US$3,000.00 per month while
Orlando will receive US$3,450.00 per
month if the tip of US$2.00 per
passenger per day will be given in
addition to his US$450.00 monthly
salary. It will be against common sense
for an employer to give a lower ranked
employee a higher compensation than an
employee who holds the highest position
in an enterprise.
CA reversed and set aside.

The actuations of Orlando during his

employment also show that he was
aware his monthly salary is only
US$450.00, no more no less. He did not
raise any complaint about the non-
payment of his tips during the entire
duration of his employment. After the
expiration of his contract, he demanded
payment only of his vacation leave pay.
He did not immediately seek the payment
of tips. He only asked for the payment of
tips when he filed this case before the
labor arbiter. This shows that the alleged
non-payment of tips was a mere
afterthought to bloat up his claim. The
records of the case do not show Orlando
was deprived of any monthly salary. It will
now be unjust to impose a burden on the
employer who performed the contract in
good faith.