FERNANDEZ VS.

NLRC

FACTS: The Agencia Cebuana is a sole proprietorship operated by Margueritte Lhuillier. Two (2) Position
Papers were filed by petitioners. In their Position Papers, petitioners alleged that they were employed by
Lhuillier and that they were illegally dismissed.

Petitioners Fernandez, Adriano, Negapatan, Tomongha, Quianola, Campo, Villaceran, Talledo, and Gadiano
further 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. Lhuillier became angry and threatened them that something
would happen to their employment if they would report her to the BIR. Thereafter, Lhuillier suspected them
of stealing jewelry from the pawnshop; and verbally informed them not to report for work as their
employment had been terminated.

Petitioners Lim and Canonigo alleged that (same as above). Lhuillier advised them to tender their resignations
as they were reportedly responsible for some anomalies at the Agencia Cebuana-H Lhuillier. Lhuillier assured
them that they will be given separation pay, but they were not.

Lhuillier contended that it informed Lim that an investigation will be conducted by Lhuillier because of the
report received by Flora Go, also an employee of Lhuillier, that Lim sold to a company consumer her own
jewelry, in violation of the company house rules. In the case of Jesus Tomongha, he was found to have stolen
rematado jewelries worth P70,670.00. Instead of attending the investigation scheduled for this offense, he
abandoned his job although his application for leave of absence was not approved.

In the case of the other petitioners, Gloria Adriano was found by Flora Go to have over-declared the weights
and values of certain items of jewelry pawned to the company, as a result of which, upon investigation, the
pawnshop was found to have lost the amount of P174,850.00. A letter dated July 19, 1990 was served upon
Adriano to explain within 72 hours why she should not be terminated. On July 20, 1990, Gloria Adriano,
Florida Villaceran, Emilia Negapatan, Brenda Gadiano, Leiden Fernandez, Jesus Tomongha, Asteria Campo
and Florida Talledo did not report for work although no requests for leave of absence were filed by them.

ISSUES: 1.) Whether or not the petitioners were illegally dismissed

2.) Assuming petitioners were illegally dismissed, was the computation of the backwages, service incentive
leave pay and damages valid and correct?

HELD:
The petition is meritorious. Nine of the petitioners were illegally dismissed, but that Petitioners Lim and
Canonigo were not.
1.) Private respondents controvert the claim of illegal dismissal by maintaining that petitioners abandoned
their employment. On the other hand, petitioners maintain that on July 19, 1990, Private Respondent
Marguerite Lhuillier, the pawnshop owner, told them not to report for work because their employment had
been terminated. Thus, they did not report for work the following day, July 20, 1990. On July 23, 1990, they
filed their respective complaints before the Regional Arbitration Board of Respondent NLRC.
The records of the case reveal that petitioners did not abandon their employment; rather, they were illegally
dismissed. To succeed in pleading abandonment as a valid ground for dismissal, the employer must prove (1)
the intention of an employee to abandon his or her employment and (2) an overt act from which such
intention may be inferred; i.e., the employee showed no desire to resume his work. Mere absence is not
sufficient. The employer must prove a deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning. Private respondents failed to discharge this burden. The
claim of abandonment was inconsistent with the immediate filing of petitioners’ complaint for illegal
dismissal and prayer for reinstatement. For how can an inference be made that an employee had no
intention of returning to work, when he filed a complaint for illegal dismissal praying for reinstatement three
days after the alleged abandonment. Moreover, considering that petitioners had been with Pawnshop
Lhuillier for several years -- ranging from six (6) years to thirty three (33) years -- it is unlikely that they would
simply leave their employment. Clearly, there is no cogent basis for private respondent’s theory that said
petitioners abandoned their work. In this light, we sustain the finding of the labor arbiter that said petitioners
were illegally dismissed, with neither just cause nor due process.
The foregoing holding cannot apply to Petitioners Marilyn Lim and Joseph Canonigo, however, because they
resigned.
2.) In his decision, the labor arbiter granted varying amounts of service incentive leave pay to the petitioners
based on the length of their tenure; i.e., the shortest was six years and the longest was thirty-three years.
While recommending that the labor arbiter's decision be reinstated substantially, the solicitor general
recommended that the award of service incentive leave be limited to three years. This is based on Article 291
of the Labor Code
Petitioners counter that Article 291 "speaks clearly on the prescription of filing [an] action upon monetary
claims within three (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 service incentive leave pay to workers in all establishments,
subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations 39 provides
that "[e]very 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."  In other words, an employee who has served for
one year is entitled to it. He may use it as leave days or he may collect its monetary value.  To limit the award
to three years, as the solicitor general recommends, is to unduly restrict such right. The law indeed does not
prohibit its commutation
Since a service incentive leave is clearly demandable after one year of service — whether continuous or
broken — or its equivalent period, and it is one of the "benefits" which would have accrued if an employee
was not otherwise illegally dismissed, it is fair and legal that its computation should be up to the date of
reinstatement as provided under Article 279 of the Labor Code.
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."43Hence,
petitioners, except Lim and Canonigo, should be entitled to service incentive leave pay from December 16,
1975 up to their actual reinstatement.
Auto Bus Transport v Bautista

ART. 95 Labor Code: Right to Service Incentive Leave

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. – This rule shall apply to all employees except:
…
(d) Field personnel and other employees whose performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount
for performing work irrespective of the time consumed in the performance thereof; . . .

FACTS:
Since May 24 1995, Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-
Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven
percent (7%) of the total gross income per travel, on a twice a month basis. On January 3 2000, While
respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally
bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning. Respondent averred that the accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he
had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work
until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondent’s pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of termination.

Respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month
pay and service incentive leave pay against Autobus.

Petitioner avers that in the exercise of its management prerogative, respondent’s employment was
terminated only after the latter was provided with an opportunity to explain his side regarding the accident.

LA: DISMISSED the complaint for illegal dismissal. However, the respondent must pay to the complainant the
following:

a. his 13th month pay from the date of his hiring to the date of his dismissa.

b. his service incentive leave pay for all the years he had been in service with the respondent, presently
computed at P13,788.05.

NLRC: MODIFIED LA’s decision by deleting the award of 13th month pay he being a field employee. The award
of service incentive leave pay was maintained. MR: DENIED, CA: DISMISSED for lack of merit

ISSUE/S:
1) Whether or not respondent is entitled to service incentive leave
2) When does action for its claim prescribe
HELD: YES

The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code
vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code. (Refer
to the provisions provided above)

According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field
personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be
understood as a separate classification of employees to which service incentive leave shall not be granted.
Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor
Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."The
same is true with respect to the phrase "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.Hence,
employees engaged on task or contract basis or paid on purely commission basis are not automatically
exempted from the grant of service incentive leave, unless, they fall under the classification of field
personnel.

Therefore, petitioner’s contention that respondent is not entitled to the grant of service incentive leave
just because he was paid on purely commission basis is misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a
field personnel.

The definition of a ‘Field Personnel’ is elaborated in the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial Employees Association which states that:

As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and
days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required to be at specific places at specific times,
employees including drivers cannot be said to be field personnel despite the fact that they are performing
work away from the principal office of the employee.

As observed by the Labor Arbiter and concurred in by the Court of Appeals:

It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors
assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the
conductor’s reports. There is also the mandatory once-a-week car barn or shop day, where the bus is
regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems
thereon as reported by the driver and/or conductor. They too, must be at specific place at a specified time, as
they generally observe prompt departure and arrival from their point of origin to their point of destination. In
each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and
its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in
the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the
performance of this work. He cannot be considered a field personnel.
Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular
employee who performs tasks usually necessary and desirable to the usual trade of petitioner’s business.
Accordingly, respondent is entitled to the grant of service incentive leave.

2.) The question now that must be addressed is up to what amount of service incentive leave pay respondent
is entitled to.

The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year
prescriptive period under Article 291 of the Labor Code is applicable to respondent’s claim of service
incentive leave pay.

Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall
be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever
barred.

It is essential at this point, however, to recognize that the service incentive leave is a curious animal in
relation to other benefits granted by the law to every employee. In the case of service incentive leave, the
employee may choose to either use his leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year. Furthermore, if the employee entitled to service incentive leave does not
use or commute the same, he is entitled upon his resignation or separation from work to the commutation of
his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC

Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim
his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary
equivalent if the employee did not make use of said leave credits but instead chose to avail of its
commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at
the time of his resignation or separation from employment.

In the case at bar, respondent had not made use of his service incentive leave nor demanded for its
commutation until his employment was terminated by petitioner. Neither did petitioner compensate his
accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint
for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. His cause of action to claim the payment of his
accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed
to pay his accumulated leave credits.

Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily,
his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.
JPL Marketing v. Court of Appeals
FACTS: JPL Marketing and Promotions (hereinafter referred to as JPL) is a domestic corporation engaged in
the business of recruitment and placement of workers. On the other hand, private respondents Noel
Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate dates
and assigned at different establishments in Naga City and Daet, Camarines Norte as attendants to the display
of California Marketing Corporation (CMC), one of petitioners clients.

On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising activity in
the Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996. They were advised to wait for further
notice as they would be transferred to other clients. However, on 17 October 1996, private respondents
Abesa and Gonzales filed before the National Labor Relations Commission Regional Arbitration Branch (NLRC)
Sub V complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay
and payment for moral damages. Aninipot filed a similar case thereafter.

Labor Arbiter: Dismissed the complaint. Denied 13th month pay and service incentive leave pay.
NLRC: Not illegally dismissed. Ordered the payment of separation pay, service incentive leave pay and 13th
month pay. CA: Affirmed in toto the NLRC resolution.

ISSUE/S:
1. W/N there private respondents are entitled to separation pay, 13th month pay and service incentive
leave; and
2. Granting that they are so entitled, what should be the reckoning point for computation of said awards

HELD: PETITION GRANTED IN PART.

1. Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals
due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d)
cessation of the employer's business; and (e) when the employee is suffering from a disease and his
continued employment is prohibited by law or is prejudicial to his health and to the health of his co-
employees. However, separation pay shall be allowed as a measure of social justice in those cases where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character, but only when he was illegally dismissed. In addition, Sec. 4(b), Rule I, Book VI of the Implementing
Rules to Implement the Labor Code provides for the payment of separation pay to an employee entitled to
reinstatement but the establishment where he is to be reinstated has closed or has ceased operations or his
present position no longer exists at the time of reinstatement for reasons not attributable to the employer.
 
The common denominator of the instances where payment of separation pay is warranted is that the
employee was dismissed by the employer. In the instant case, there was no dismissal to speak of. Private
respondents were simply not dismissed at all, whether legally or illegally. What they received from JPL was
not a notice of termination of employment, but a memo informing them of the termination of CMCs contract
with JPL. More importantly, they were advised that they were to be reassigned. At that time, there was no
severance of employment to speak of.
 
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months, wherein an employee/employees are placed on the
so-called floating status. When that floating status of an employee lasts for more than six months, he may be
considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding
benefits for his separation, and this would apply to suspension either of the entire business or of a specific
component thereof. As clearly borne out by the records of this case, private respondents sought employment
from other establishments even before the expiration of the six (6)-month period provided by law. As they
admitted in their comment, all three of them applied for and were employed by another establishment after
they received the notice from JPL. JPL did not terminate their employment; they themselves severed their
relations with JPL. Thus, they are not entitled to separation pay. The Court is not inclined in this case to
award separation pay even on the ground of compassionate justice. The Court of Appeals relied on the cases
wherein the Court awarded separation pay to legally dismissed employees on the grounds of equity and
social consideration.

In addition, the doctrine enunciated in the case of Serrano cited by private respondents has already been
abandoned by our ruling in Agabon v. National Labor Relations Commission. Private respondents are not
entitled to the payment of damages considering that there was no violation of due process in this case.
Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to private
respondents. Said benefits are mandated by law and should be given to employees as a matter of right.

On the other hand, 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, private 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.

2. 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 private 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.
David vs Macasio

Facts: In January 2009, Macasio filed before the LA a complaint7 against petitioner Ariel L. David, doing
business under the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and
13th month pay. He also claimed payment for moral and exemplary damages and attorney’s fees. Macasio
also claimed payment for service incentive leave (SIL).8

Macasio alleged9 before the LA that he had been working as a butcher for David since January 6, 1995.
Macasio claimed that David exercised effective control and supervision over his work, pointing out that
David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he was
to perform his work; (2) daily paid his salary of ₱700.00.(3) approved and disapproved his leaves. Macasio
added that David owned the hogs delivered for chopping, as well as the work tools and implements; the
latter also rented the workplace. Macasio further claimed that David employs about twenty-five (25)
butchers and delivery drivers.

In his defense,10 David claimed that he started his hog dealer business in 2005 and that he only has ten
employees. He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is,
therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually
starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume
of the delivered hogs; (2) received the fixed amount of ₱700.00 per engagement, regardless of the actual
number of hours that he spent chopping the delivered hogs; and (3) was not engaged to report for work and,
accordingly, did not receive any fee when no hogs were delivered.

 LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime, holiday,
SIL and 13th month pay.

 NLRC affirmed the LA ruling

While the CA agreed with the LAand the NLRC that Macasio was a task basis employee, it nevertheless found
Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino Santos
Transit.23 The CA explained that as a task basis employee, Macasio is excluded from the coverage of
holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by the Labor Code, a
"field personnel" is one who performs the work away from the office or place of work and whose regular
work hours cannot be determined with reasonable certainty. In Macasio’s case, the elements that
characterize a "field personnel" are evidently lacking as he had been working as a butcher at David’s "Yiels
Hog Dealer" business in Sta. Mesa, Manila under David’s supervision and control, and for a fixed working
schedule that starts at 10:00 p.m.

Accordingly, the CA awarded Macasio’s claim for holiday, SIL and 13th month pay for three years, with 10%
attorney’s fees on the total monetary award.

Issue:

Held: The general rule is that holiday and SIL pay provisions cover all employees. To be excluded from their
coverage, an employee must be one of those that these provisions expressly exempt, strictly in accordance
with the exemption. 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 Article 82 of the Labor Code, 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.

Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those who
are engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what the Labor
Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this rule may be
conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial bodies with expertise
on labor matters.

However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49 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 xxx Clearly,
petitioner's teaching personnel cannot be deemed field personnel which refers "to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

In short, 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."

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of granting
Macasio’s petition.

In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor Code
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. 52 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.

Macasio does not fall under the classification of "field personnel"

Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall
under the definition of "field personnel." The CA’s finding in this regard is supported by the established facts
of this case: first, Macasio regularly performed his duties at David’s principal place of business; second, his
actual hours of work could be determined with reasonable certainty; and, third, David supervised his time
and performance of duties. Since Macasio cannot be considered 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.

Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRC’s ruling
dismissing Macasio’s complaint for holiday and SIL pay for having been rendered with grave abuse of
discretion.
 RICARDO G. PALOMA v PAL
FACTS:
Paloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of
continuous service, as senior vice president for finance. Nine (9) months before Paloma retired on November
30, 1992, PAL was privatized.
By way of post-employment benefits, PAL paid Paloma the total amount of PhP5,163,325.64 which
represented his separation/retirement gratuity and accrued vacation leave pay. The leave benefits Paloma
claimed being entitled to refer to his 450-day accrued sick leave credits which PAL allegedly only paid the
equivalent of 18 days. He anchored his entitlement on Executive Order No. (E.O.) 1077.
Answering Paloma's written demands for conversion to cash of his accrued sick leave credits, PAL
asserted having paid all of Paloma's commutable sick leave credits due him pursuant to company policy. The
company leave policy adverted to grants PAL's regular ground personnel a graduated sick leave benefits,
those having rendered at least 25 years of service being entitled to 20 days of sick leave for every year of
service. An employee, under the policy, may accumulate sick leaves with pay up to 230 days. Subject to
defined qualifications, sick leave credits in excess of 230 days shall be commutable to cash at the employee's
option and shall be paid in lump sum on or before May 31st of the following year they were earned. Per PAL's
records, Paloma appears to have, for the period from 1990 to 1992, commuted 58 days of his sick leave
credits, broken down as follows: 20 days each in 1990 and 1991 and 18 days in 1992.
Paloma maintains that he comes within the coverage of E.O. 1077, the same having been issued in
1986, before he severed official relations with PAL, and at a time when the applicable constitutional provision
on the coverage of the civil service made no distinction between GOCCs with original charters and those
without, like PAL which was incorporated under the Corporation Code. Implicit in Paloma's contention is the
submission that he earned the bulk of his sick leave credits under the aegis of the 1973
Constitution when PAL, being then a government-controlled corporation, was under civil service coverage.
Subsequently, Paloma filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a Complaint7 for Commutation of Accrued Sick Leaves Totaling 392 days. In the
complaint, docketed as NLRC-NCR-Case No. 00-08-05792-94, Paloma alleged having accrued sick leave credits
of 450 days commutable upon his retirement pursuant to EO 1077 which allows retiring government
employees to commute, without limit, all his accrued vacation and sick leave credits. And of the 450-day
credit, Paloma added, he had commuted only 58 days, leaving him a balance of 392 days of accrued sick leave
credits for commutation.
LA: entitled to 162 accumulated sick leave credits. PAL not covered by civil service – cannot use EO 177
NLRC: affirmed 162 to 230, CA:DISMISSED the case o PALOMA – MR: EO 177 applies to PAL, reinstated NLRC

ISSUE:
1. Whether or not E.O. 1077, before PAL's privatization, applies to its employees;
2. Whether or not Paloma is entitled to a commutation of his accrued sick leave credits.

HELD:
PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service Law.
The Court can allow that PAL, during the period material, was a government controlled corporation
in the sense that the GSIS owned a controlling interest over its stocks. One stubborn fact, however, remains:
Through the years, PAL functioned as a private corporation and managed as such for profit. Their personnel
were never considered government employees. Of governing application to them was the Labor Code.
 The Court no less recognized the applicability of the Labor Code to, and the authority of the NLRC to
exercise jurisdiction over, disputes involving discipline, personnel movements, and dismissal in GOCCs,
among them PAL;25 (b) Company policy and collective bargaining agreements (CBAs), instead of the civil
service law and rules, govern the terms and conditions of employment in PAL.
Given the foregoing considerations, Paloma cannot plausibly be accorded the benefits of E.O. 1077
which, to stress, was issued to narrow the gap between the leave privileges between the members of the
judiciary, on one hand, and other government officers and employees in the civil service, on the other

Paloma not entitled to the benefits granted in E.O. 1077; existing company policy on the matter applies
What governs Paloma’s entitlement to sick leave benefits and the computation and commutation of
creditable benefits is not EO 1077, as the labor arbiter and originally the NLRC correctly held, but PAL’s
company policy on the matter which, as found below, took effect in 1990
Accrued sick leave credits in excess of 230 days were not, if earned before 1990 when the above
policy took effect, commutable to cash; they were simply forfeited. Those earned after 1990, but still subject
to the 230-day threshold rule, were commutable to cash to the extent of 75% of the employee's current
entitlement, and payable on or before May 31st of the following year, necessarily implying that the privilege
to commute is time-bound.
It appears that Paloma had, as of 1990, more than 230 days of accrued sick leave credits. Following
company policy, Paloma was deemed to have forfeited the monetary value of his leave credits in excess of
the 230-day ceiling. Now, then, it is undisputed that he earned additional accrued sick leave credits of 20
days in 1990 and 1991 and 18 days in 1992, which he duly commuted pursuant to company policy and
received with the corresponding cash value. Therefore, PAL is correct in contending that Paloma had received
whatever was due on the commutation of his accrued sick leave credits in excess of the 230 days limit,
specifically the 58 days commutation for 1990, 1991, and 1992.
No commutation of 230 days accrued sick leave credits
PAL's company policy did not provide for a commutation of the first 230 days accrued sick leave
credits employees may have upon their retirement. No law provides for commutation of unused or accrued
sick leave credits in the private sector. Commutation is allowed by way of voluntary endowment by an
employer through a company policy or by a CBA.  Indeed, no law provides for commutation of unused or
accrued sick leave credits in the private sector. Commutation is allowed by way of voluntary endowment by
an employer through a company policy or by a CBA. None of such medium presently obtains and it would be
incongruous if the Court fills up the vacuum.
In fine, absent any provision in the applicable company policy authorizing the commutation of the
230 days accrued sick leave credits existing upon retirement, Paloma may not, as a matter of enforceable
right, insist on the commutation of his sick leave credits to cash.
NOTES:
 Applicability of E.O. 1077
E.O. 1077 dated January 9, 1986, entitled Revising the Computation of Creditable Vacation and Sick Leaves of
Government Officers and
Employees, provides:
 WHEREAS, under existing law and civil service regulations, the number of days of vacation
and sick leaves creditable to a government officer or employee is limited to 300 days;
xxx xxx xxx
Section 1 Any officer [or] employee of the government who retires or voluntary
resigns or is separated from the service through no fault of his own and whose leave
benefits are not covered by special law, shall be entitled to the commutation of all the
accumulated vacation and/or sick leaves to his credit, exclusive of Saturdays, Sundays, and
holidays, without limitation as to the number of days of vacation and sick leaves that he
may accumulate.
 Company Policy
POLICY
Regular employees shall be entitled to a yearly period of sick leave with pay, the exact number of days to be
determined on the basis of the employee's category and length of service in the company.
RULES
A. For ground personnel
2. Sick leave shall be granted only upon certification by a company physician that an employee is incapable of
discharging his duties due to illness or injury . . . .
xxx xxx xxx
3. Sick leave entitlement accrues from the date of an employee's regular employment . . . .
In case of direct conversion from temporary/daily/project/contract to regular status, regular employment
shall be deemed to have begun on the date of the employee's conversion as a regular employee.
xxx xxx xxx
4. An employee may accumulate sick leave with pay up to Two Hundred Thirty (230) days;

An employee who has accumulated seventy-five (75) days sick leave credit at the end of each year
may, at his option, commute seventy-five percent (75%) of his current sick leave entitlement to cash and the
other twenty-five percent (25%) to be added to his accrued sick leave credits up to two hundred thirty (230)
calendar days.
The seventy-five percent (75%) commutable to cash as above provided, shall be paid up in lump sum
on or before May 31st of the following year.
Sick leave credits in excess of two hundred thirty (230) days shall be commutable to cash at the
employee's option, and shall be paid in lump sum on or before May 31st of the following year it was
earned. (Emphasis ours).
Sugue v. Triumph International

The antecedents of the case show that Triumph hired Sugue in May 1990 as its Assistant Manager for
Marketing and was subsequently promoted to Marketing Services Manager with a monthly salary of
P82,500.00. On the other hand, Valderrama was hired in April 1993 as Direct Sales Manager with a monthly
salary of P121,000.00.

 On June 1, 2000, Sugue and Valderrama filed a complaint with the NLRC against Triumph for
payment of money claims arising from allegedly unpaid vacation and sick leave credits, birthday
leave and 14th month pay for the period 1999-2000.
 On June 19, 2000, Sugue and Valderrama personally attended the preliminary conference of the said
case
 Personnel Manager, Ralph Funtila, issued separate memoranda to Sugue and Valderrama requiring
them to inform the office of the General Manager of their whereabouts on June 19, 2000 from 9:06
a.m. to 11:15 a.m. They replied that they attended the aforementioned preliminary conference. 7
HDTCSI On June 23, 2000, Valderrama and Sugue were directed to submit a written explanation as to
why they used company time and the company vehicle and driver in attending the preliminary
conference at the NLRC and why they left the office without advising the Managing Director. They
explained that they believed they may use company time and the company vehicle since the hearing
they attended was pursuant to a complaint that they filed as employees of the company.
 On June 28, 2000, Triumph charged the one-half day utilized by Sugue and Valderrama in attending
the NLRC hearing on June 19, 2000 to their vacation leave credits.
 On July 17, 2000, Valderrama wrote the company a letter stating that he considered himself
constructively dismissed due to the unreasonable pressures and harassments he suffered the past
months which prevented him from effectively exercising his tasks as Direct Sales Manager.
 Subsequently, on July 28, 2000, Triumph issued a memorandum requiring Valderrama to explain,
under pain of dismissal, his continued absences without official leave. Valderrama failed to respond,
thus, on August 11, 2000, Triumph decided to terminate Valderrama's employment for
abandonment of work.
 July 25, 2000, Sugue also wrote the company stating that she considers herself constructively
dismissed. 12 From the pleadings, Sugue's charge of constructive dismissal was based on the fact
that her request for vacation leave from July 14 to 15, 2000 was subject to the condition that she
first submit a report on the company's 2001 Marketing Plan.
 On August 11, 2000, Triumph required Sugue to explain why she should not be terminated for
continued absences without official leave. 13 Sugue failed to comply, thus, on September 1, 2000,
her employment was terminated for abandonment of work.
 Labor Arbiter Salimathar Nambi rendered a decision, declaring that Sugue and Valderrama were
constructively dismissed.
 NLRC granted the appeal and reversed the ruling of Labor Arbiter Nambi.
 CA rendered its assailed decision, the dispositive portion of which reads: WHEREFORE, the petition is
partly granted.
 Triumph's subsequent motion for reconsideration as well as the motion for partial reconsideration
filed by Sugue and the heirs of Valderrama were both denied by the appellate court in its resolution
dated July 21, 2004.
 After a thorough review of the evidence on record, we find sufficient reasons to uphold Triumph's
position.
 In the case of Valderrama:
1. The half-day he spent in attending the NLRC hearing on June 19, 2000 was charged to his vacation
leave credit;
2. His application for sick leave for July 3 to 5, 2000 was disapproved; and
3. His request for executive check-up was denied.

In the case of Sugue:

1. The half-day she spent in attending the NLRC hearing on June 19, 2000 was charged to her
vacation leave credit;
2. The approval of her application for leave of absence for July 14 and 15, 2000 was made subject to
the condition that she should first submit a report on the 2001 Marketing Plan; HCITAS
3. The approval of her request for executive check-up was deferred until after the visit of the
company's regional marketing manager

According to Sugue and Valderrama, this series of discriminatory acts committed by Triumph
created an adverse working environment rendering it impossible for them to continue working for
Triumph. Hence, their severance from the company was not of their own making and therefore
amounted to constructive dismissal which is tantamount to an illegal termination of employment.

HELD: With respect to the first alleged discriminatory act, we can conceive of no reason to ascribe
bad faith or malice to Triumph for charging to the leave credits of Sugue and Valderrama the half-day
that they spent in attending the preliminary conference of the case they instituted against Triumph.
It is fair and reasonable for Triumph to do so considering that Sugue and Valderrama did not perform
work for one-half day on June 19, 2000.
Indeed, we find it surprising that Sugue and Valderrama would even have the temerity to
contend that the hours they spent in attending the hearing were compensable time. As the NLRC
correctly pointed out, as early as the case of J.B. Heilbronn Co. v. National Labor Union, 29 this Court
held that:

When the case of strikes, and according to the CIR even if the strike is legal, strikers may not
collect their wages during the days they did not go to work, for the same reasons if not more,
laborers who voluntarily absent themselves from work to attend the hearing of a case in which
they seek to prove and establish their demands against the company, the legality and propriety of
which demands is not yet known, should lose their pay during the period of such absence from
work. The age-old rule governing the relation between labor and capital or management and
employee is that a "fair day's wage for a fair day's labor." If there is no work performed by the
employee there can be no wage or pay, unless of course, the laborer was able, willing and ready to
work but was illegally locked out, dismissed or suspended. It is hardly fair or just for an employee or
laborer to fight or litigate against his employer on the employer's time.

In a case where a laborer absents himself from work because of a strike or to attend a
conference or hearing in a case or incident between him and his employer, he might seek
reimbursement of his wages from his union which had declared the strike or filed the case in the
industrial court. Or, in the present case, he might have his absence from his work charged against
his vacation leave. . . . (Emphasis ours)
 This doctrine in Heilbronn was reiterated in Manila Trading & Supply Co. v. Manila Trading
Labor Association 30 and quoted favorably in later cases. Triumph is, thus, justified in charging Sugue
and Valderrama's half-day absence to their vacation leave credits.

Corollarily, we cannot uphold the CA's approval of the Labor Arbiter's finding that the
memoranda issued by Triumph in connection with the June 19, 2000 hearing constitute undue
harassment.

Anent Sugue and Valderrama's claim that they were unjustly denied availment of their
leaves as part of a scheme on the part of Triumph to harass them, we find the same patently without
merit.

In the case of Valderrama, he applied for sick leave for the period July 3 to 5, 2000 allegedly
because of persistent cough and vertigo, but this was disapproved by Triumph. The record, however,
reveals that he failed to comply with the company's requirement that an application for sick leave
for two or more days must be supported by a medical certificate which must be verified by the
company physician. He was even given twenty-four (24) hours to submit the same but he totally
ignored it. That his sick leave application was denied was mainly due to his own fault and must not
be unduly blamed on his employer.

For her part, Sugue condemns Triumph for putting a condition on the approval of her two
days vacation leave for July 14 and 15, 2000, when she was required to first submit a report on the
2001 Marketing Plan. To be very accurate, Mr. Escueta's memorandum dated July 13, 2000 advised
Sugue that her application for leave will be approved if she will commit to submit her reports in
connection with the 2001 Marketing Plan by July 17, 2000, which was two days after her leave.
Again, we find nothing discriminatory in such a condition considering that she was unable to show
that she was the only employee whose leave application has been subjected to a condition.
As for the nature of the condition itself, we do not see how it can be deemed unreasonable
or in bad faith for the employer to require its employee to complete her assignments on time or
before taking a vacation leave. Being the Marketing Services Manager, Sugue's reports were
indispensable in the preparation of the 2001 Marketing Plan plus the fact that the company had
been experiencing a significant decline in sales at that time which all the more emphasizes the need
for her to submit an updated report relative to the 2001 Initial Marketing Plan. For sure, she failed to
show that the company prevented her from availing of her vacation leave afterwards or at some
other time. Clearly then, there was no discrimination nor harassment to speak of.

Third, both Sugue and Valderrama question the denial by Triumph of their request for
executive check-up. It should be noted that Triumph did not completely turn down their request.
Based on Sugue and Valderrama's own evidence, their request was merely deferred because the
2001 Initial Marketing Plan was due on June 26, 2000 and Triumph's regional product manager was
scheduled to visit the country on June 26 to 29, 2000. 36 As Valderrama was the Direct Sales
Manager and Sugue was the Marketing Services Manager, their presence on those dates was
undoubtedly needed. Thus, their contention that the approval of their request was indefinitely
withheld is apocryphal. In fact, there is nothing that prevented them from scheduling their executive
check-up after the visit of the regional marketing manager.
 It is worth stressing that in the grant of vacation and sick leave privileges to an employee, the
employer is given leeway to impose conditions on the entitlement to the same as the grant of
vacation and sick leave is not a standard of law, but a prerogative of management. It is a mere
concession or act of grace of the employer and not a matter of right on the part of the
employee. Thus, it is well within the power and authority of an employer to deny an employee’s
application for leave and the same cannot be perceived as discriminatory or harassment.

All told, Triumph did not act with discrimination, insensibility or disdain towards Sugue and
Valderrama, which foreclosed any choice on their part except to forego their continued employment.
Purely conjectural are their assertions that the disapproval of their leave applications, the denial of
their request for executive check-up and the alleged demotion, were carried out by Triumph in
retaliation to their filing of a complaint for unpaid money claims against the company. Sugue and
Valderrama offered insufficient proof to substantiate their allegations. For this reason, their bare and
selfserving charges of constructive dismissal, when unsupported by the evidence on record, cannot
be given credence.

. The National Labor Relations Commission's Decision dated June 13, 2001 is REINSTATED.

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION (PSTMSDWO),
represented by its President, RENE SORIANO, v. PNCC SKYWAY CORPORATION

FACTS:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment
(DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by
virtue of the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a Collective Bargaining Agreement
(CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses
for security license provisions.
Among the pertinent provisions of the CBA are the following:
 ARTICLE VIII
VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[b] The company shall schedule the vacation leave of employees during the year taking into
consideration the request of preference of the employees. (emphasis supplied)
[c] Any unused vacation leave shall be converted to cash and shall be paid to the employees on the first
week of December each year.

In a Memorandum dated December 29, 2003, respondent's Head of the Traffic Management and
Security Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the year
2004. Petitioner objected to the implementation of the company’s memorandum. It insisted that the
individual members of the union have the right to schedule their vacation leave. It opined that the unilateral
scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave in
December 2004.
Petitioner also demanded that the expenses for the required in-service training of its member
security guards, as a requirement for the renewal of their license, be shouldered by the
respondent. However, the respondent did not accede to petitioner's demands and stood firm on its decision
to schedule all the vacation leave of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-NCMB for
preventive mediation. For failure to settle the issue amicably, the parties agreed to submit the issue before
the voluntary arbitrator.
The Voluntary Arbitrator issued a Decision that the scheduling of all vacation leaves under Article
VIII, Section 6, thereof, shall be under the discretion of the union members entitled thereto, and the
management to convert them into cash all the leaves which the management compelled them to use and to
pay the expenses for the in-service-training of the company security guards, as a requirement for renewal of
licenses, shall not be their personal account but that of the company.
Respondent filed a motion for reconsideration, which the voluntary arbitrator denied. Aggrieved,
respondent filed a Petition for Certiorari with Prayer for Temporary Restraining Order and/or Writ of
Preliminary Injunction with the CA, and the CA rendered a Decision annulling and setting aside the decision
and order of the voluntary arbitrator. The CA ruled that since the provisions of the CBA were clear, the
voluntary arbitrator has no authority to interpret the same beyond what was expressly written. Petitioner
filed a motion for reconsideration, which the CA denied.
ISSUE:
Whether or not the Court of Appeals erred in holding that the management has sole discretion to schedule
the vacation leave of the petitioner

HELD:
As to the issue on vacation leaves, the petition has no merit.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where the language of a written contract is
clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean,
unless some good reason can be assigned to show that the words used should be understood in a different
sense.
 In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1
(b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the
employer. The preference requested by the employees is not controlling because respondent retains its
power and prerogative to consider or to ignore said request.
If the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its
ends have to be achieved, being the law between the parties.
Although the preferred vacation leave schedule of petitioner's members should be given priority,
they cannot demand, as a matter of right that their request be automatically granted by the respondent. If
the petitioners were given the exclusive right to schedule their vacation leave then said right should have
been incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA
giving respondent the right to schedule the vacation leave of its employees, compliance therewith is
mandated by law.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose
conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a
standard of law, but a prerogative of management. It is a mere concession or act of grace of the employer
and not a matter of right on the part of the employee. Thus, it is well within the power and authority of an
employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such as having the
option to schedule the same.
Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can
compel its employees to exhaust all their vacation leave credits. Of course, any vacation leave credits left
unscheduled by the employer, or any scheduled vacation leave that was not enjoyed by the employee upon
the employer's directive, due to exigencies of the service, must be converted to cash, as provided in the CBA.
However, it is incorrect to award payment of the cash equivalent of vacation leaves that were already used
and enjoyed by the employees. By directing the conversion to cash of all utilized and paid vacation leaves, the
voluntary arbitrator has licensed unjust enrichment in favor of the petitioner and caused undue financial
burden on the respondent. Evidently, the Court cannot tolerate this.
It would seem that petitioner's goal in relentlessly arguing that its members preferred vacation leave
schedule should be given preference is not allowed to them to avail themselves of their respective vacation
leave credits at all but, instead, to convert these into cash.
 The vacation leave privilege was not intended to serve as additional salary, but as a non-monetary
benefit. To give the employees the option not to consume it with the aim of converting it to cash at the end
of the year would defeat the very purpose of vacation leave.

In house training – sagot ng company. However, the 1994 Revised Rules and Regulations Implementing
Republic Act No. 5487 provides the following:

Section 17. Responsibility for Training and Progressive Development. It is the primary responsibility of all
operators private security agency and company security forces to maintain and upgrade the standards of
efficiency, discipline, performance and competence of their personnel.