In the action for illegal dismissal and payment of
FIRST DIVISION salary differential, service incentive leave pay and
[G.R. No. 122468. September 3, 1998]
SENTINEL SECURITY AGENCY, INC., petitioner,
vs. NATIONAL LABOR RELATIONS
COMMISSION, ADRIANO CABANO, JR.,
VERONICO C. ZAMBO, HELCIAS
ARROYO, RUSTICO ANDOY, and
MAXIMO ORTIZ, respondents.
[G.R. No. 122716. September 3, 1998]
PHILIPIPPINE AMERICAN LIFE INSURANCE
COMPANY, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION,
VERONICO ZAMBO, HELCIAS ARROYO,
ADRIANO CABANO, MAXIMO ORTIZ,
and RUSTICO ANDOY, respondents.
DECISION
PANGANIBAN, J.:
The transfer of an employee involves a lateral
movement within the business or operation of the
employer, without demotion in rank, diminution of
benefits or, worse, suspension of employment even if
temporary. The recall and transfer of security guards
require reassignment to another post and are not
equivalent to their placement on floating status. Off-
detailing security guards for a reasonable period of six
months is justified only in bona fide cases of
suspension of operation, business or undertaking.
The Case
This is the rationale used by the Court in
dismissing the two consolidated petitions
for certiorari before us, seeking the reversal of the
Decision dated August 25, 1995, and the Resolution
date October 24, 1995, both promulgated by the
National Labor Relations Commission[1] in NLRC Case
No. V-0317-94 (RAB VII-01-0097-94, RAB VII-
020173-94, and RAB VII-01-0133-94).
separation pay filed by private respondents, Labor
Arbiter Dominador A. Almirante rendered a Decision,
which disposed:[2]
WHEREFORE, premises considered[,] judgment is
hereby rendered ordering xxx Sentinel Security
Agency, Inc. jointly and severally with xxx Philamlife,
Cebu Branch, to pay complainants the total amount of
[s]ixty [t]housand [o]ne [h]undred [t]welve [p]esos
and 50/100 (P60,112.50) in the concept of 13th month
pay and service incentive leave benefits as computed
by our Labor Arbitration Associate whose computation
is hereto attached and forming part thereof.[3]
On appeal, the NLRC modified the labor arbiters
Decision. The dispositive portion of the NLRC
Decision[4]reads:
WHEREFORE, the assailed Decision is hereby
MODIFIED in so far as the award of 13th month pay
for the previous years which is hereby
excluded. Further, xxx Sentinel Security Agency, Inc.
is hereby ORDERED to pay complainants separation
pay at the rate of month pay for every year of service
and for both xxx Philippine American Life Insurance,
Inc. and Sentinel Security Agency, Inc. and/or Daniel
Iway to pay to the [complainants] jointly and
severally their backwages from January 16, 1994 to
January 15, 1995 and the corresponding 13th month
pay for the said year. The monetary awards hereby
granted are broken down as follows [into separation
pay, back wages, 13th month pay and service
incentive leave pay]:
x x x x x x x x x.[5]
The challenged Resolution denied
reconsideration for lack of merit.[6]
The Facts
The undisputed factual backdrop is narrated by
Respondent Commission as follows:[7]
The complainants were employees of Sentinel
[Security Agency, Inc. hereafter referred to as the
Agency] since March 1, 1966 in the case of Veronico
Zambo; October 27, 1975 in the case of Helcias
Arroyo; September 20, 1985 in the case of Adriano
Cabano; February 1, 1990 in the case of Maximo
Ortiz; and Ortiz and November 1, 1967 in the case of
Rustico Andoy. They were assigned to render guard
duty at the premises of [Philippine American Life
1
Insurance Company] at Jones Avenue, Cebu City. On
December 16, 1993 Philippine American Life
Insurance Company [the Client, for brevity], through
Carlos De Pano, Jr., sent notice to all concerned that
the [Agency] was again awarded the contract of
[s]ecurity [s]ervices together with a request to
replace all the security guards in the companys offices
at the cities of Cebu, Bacolod, Cagayan de Oro,
Dipolog and Ilagan. In compliance therewith, [the
Agency] issued on January 12, 1994, a Relief and
Transfer Order replacing the complainants as guards
[of the Client] and for then to be re-assigned [to]
other clients effective January 16, 1994. As ordered,
the complainants reported but were never given new
assignments but instead they were told in the
vernacular, gui-ilisa mo kay mga tigulang naman
mo which when translated means, you were
replace[d] because you are already old. Precisely, the
complainants lost no time but filed the subject illegal
dismissal cases on January 18, January 26 and
February 4, 1994 and prayed for payment of
separation pay and other labor standard benefits.
[The Client and the Agency] maintained there was no
dismissal on the part of the complainants,
constructive or otherwise, as they were protected by
the contract of security services which allows the
recall of security guards from their assigned posts at
the will of either party. It also advanced that the
complainants prematurely filed the subject cases
without giving the [Agency] a chance to give them
some assignments.
On the part of [the Client], it averred further that
there [was] no employer-employee relationship
between it and the complainants as the latter were
merely assigned to its Cebu Branch under a job
contract; that [the Agency] ha[d] its own separate
corporate personality apart from that of [the
Client]. Besides, it pointed out that the functions of
the complainants in providing security services to [the
Clients] property [were] not necessary and desirable
to the usual business or trade of [the Client], as it
could still operate and engage in its life insurance
business without the security guards. In fine, [the
Client] maintains that the complainants have no cause
of action against it.
Ruling of Respondent Commission
Respondent Commission ruled that the
complainants were constructively dismissed, as the
recall of the complainants from their long time post[s]
at [the premises of the Client] without any good
reason is a scheme to justify or camouflage illegal
dismissal.
It ruled Superstar Security Agency, Inc. vs.
National Labor Relations Commission [8] and A Prime
Security Services, Inc. vs. national Labor Relations
Commission[9] were not applicable to the case at
bar. In the former, the security guard was placed on
temporary off-detail due to his poor performance and
lack of elementary courtesy and tact, and to the cost-
cutting program of the agency. In the latter, the relief
of the security guard was due to his sleeping while on
duty and his repeated refusal to resume work despite
notice.
In the present case, the complainants case, the
complainants were told by the Agency that they lost
their assignment at the Clients premises because they
were already old, and not because they had
committed any infraction or irregularity. The NLRC
applied RA 7641, [10] which gives retirement benefits of
one-half month pay per year of service to retirable
employees, viz.:
xxx As stated earlier xxx, the complainants were in
the service of [the Client] for nearly twenty (20) years
in the cases of Helcias Arroyo and for more than
twenty (20) years in the cases of Veronico Zambo and
Rustico Andoy, which long years of service [appear]
on record to be unblemished. The complainants were
then confronted with an impending sudden loss of
earning for while the order of [the Agency] to
immediately report for reassignment momentarily
gave them hope, there was in fact no immediate
reinstatement. While it could have been prudent for
the complainants to wait, they were set unstable and
were actually threatened by the statement of the
personnel in charge of [the Agency] that they were
already old, that was why they were replaced.
Against these glaring facts is the new Retirement
Law, R.A. 7641 which took effect on January 7, 1993
giving retirement benefits of month pay per year of
service to an employee upon reaching retirement age
to be paid by the employer, in this case at quiet a
sizeable amount and in not so long due time as some
of the complainants were described as already old.
As complainants were illegally dismissed, the
NLRC ruled that they were entitled to the twin
remedies of back wages for one (1) year from the
time of their dismissal on January 15, 1994, payable
by both the Client and the Agency, and separation
pay one-half month pay for every year of service
payable only by the Agency. Reinstatement was not
granted due to the resulting antipathy and
resentment among the complainants, the Agency and
the Client.
Hence, this petition.[11]
2
 The Issues
In their memoranda, the Agency poses this
question:[12]
xxx [W]hether xxx Sentinel is guilty of illegal
dismissal[,]
On the other hand, the Client raises the
following issues:[13]
Whether xxx [the complainants] were illegally
dismissed by their employer, Sentinel Security
Agency, Inc., and in holding petitioner to be equally
liable therefor.
Whether xxx petitioner is jointly and severally liable
with Sentinel Security Agency, Inc., in the latters
payment of backwages, 13th month pay and service
incentive leave pay to its employees xxx.
In sum, the resolution of these consolidated
petitions hinges on (1) whether the complainants
were illegally dismissed, and (2) whether the Client is
jointly and severally liable for their thirteenth-month
and service incentive leave pays.
The Courts Ruling
The petition is partly meritorious.
First Issue: Illegal Dismissal
The private respondents transfer, according to
Respondent Commission, was affected to circumvent
the mandate of Republic Act 7641 (New Retirement
Law), which by then had already taken effect, in view
of the fact that the complainants had worked for both
the Client and the Agency for 10 to 20 years and
were nearing retirement age. With this premise, the
NLRC concluded that the guards were illegally
dismissed. The complainants add that the findings of
the Commission match the remarks of the personnel
manager of the Agency, Feliciano Marticion; that is,
that they were being replaced because they were
already old. They insist that their service records are
unblemished; hence, they could not have been
dismissed by reason of any just cause.
We agree that the security guards were illegally
dismissed, but not for the reasons given by the public
respondent. The aforecited contentions of the NLRC
are speculative and unsupported by the evidence on
record.As the solicitor general said in his
Manifestation in Lieu of Comment, the relief and
transfer order was akin to placing private respondents
on temporary off-detail.
Being sidelined temporarily is a standard
stipulation in employment contracts, as the availability
of assignment for security guards is primarily
dependent on the contracts entered into by the
agency with third parties.Most contracts for security
services, as in this case, stipulate that the client may
request the replacement of the guards assigned to
it. In security agency parlance, being placed off detail
or on floating status means waiting to be posted.
[14]
This circumstance is not equivalent to dismissal, so
long as such status does not continue beyond
reasonable time.[15]
In the case at bar, the relief and transfer
order per se did not sever the employment
relationship between the complainants and the
Agency. Thus, despite the fact that complainants
were no longer assigned to the Client, Article 287 of
the Labor Code, as amended by RA 7641, still binds
the Agency to provide them upon their reaching the
retirement age of sixty to sixty-five years retirement
pay or whatever else was established in the collective
bargaining agreement or in any other applicable
employment contract. On the other hand, the Client is
not liable to the complainants for their retirement pay
because of the absence of an employer-employee
relationship between them.
However, the Agency claims that the
complainants, after being placed off-detail,
abandoned their employ. The solicitor general, siding
with the Agency and the labor arbiter, contends that
while abandonment of employment is inconsistent
with the filing of a complaint for illegal dismissal, such
rule is not applicable where [the complainant]
expressly rejects this relief and asks for separation
pay instead.
The Court disagrees. Abandonment, as a just
and valid cause for termination, requires a deliberate
and unjustified refusal of an employee to resume his
work, coupled with a clear absence of any intention of
returning to his or her work.[16] That complainants did
not pray for reinstatement is not sufficient proof of
abandonment. A strong indication of the intention of
complainants to resume work is their allegation that
on several dates they reported to the Agency for
reassignment, but were not given any. In fact, the
contention of complainant is that the Agency
constructively dismissed them. Abandonment has
recently been ruled to be incompatible with
constructive dismissal. We, thus, rule that
complainants did not abandon their jobs. [17] We will
now demonstrate why we believe complainants were
illegally dismissed.
3
 In several cases, the Court has recognized the
prerogative of management to transfer an employee
from one office to another within the same business
establishment, as the exigency of the business may
require, provided that the said transfer does not
result in a demotion in rank or a diminution in salary,
benefits and other privileges of the employee; [18] or is
not unreasonable, inconvenient or prejudicial to the
latter;[19] or is not used as a subterfuge by the
employer to rid himself of an undesirable worker. [20]
A transfer means a movement (1) from one
position to another of equivalent rank, level or salary,
without a break in the service; [21] and (2) from one
office to another within the same business
establishment.[22] It is distinguished from a promotion
in the sense that it involves a lateral change as
opposed to a scalar ascent.[23]
In this case, transfer of the complainants
implied more than a relief from duty to give them
time to rest a mere changing of the guards. Rather,
their transfer connoted a reshuffling or exchange of
their posts, or their reassignment to other posts, such
that no security guard would be without an
assignment.
However, this legally recognized concept of
transfer was not implemented. The agency hired new
security guards to replace the complainants, resulting
in a lack of posts to which the complainants could
have been reassigned. Thus, it refused to reassign
Complainant Andoy when he reported for duty on
February 2, 4 and 7, 1994; and merely told the other
complainants on various dates from January 25 to 27,
1994 that they were already too old to be posted
anywhere.
The Agency now explains that since, under the
law, the Agency is given a period of not more than six
months to retain the complainants on floating status,
the complaint for illegal dismissal is premature. This
contention is incorrect.
A floating status requires the dire exigency of
the employers bona fide suspension of operation,
business or undertaking. In security services, this
happens when the clients that do not renew their
contracts with a security agency are more than those
that do and the new ones that the agency
gets. However, in the case at bar, the Agency was
awarded a new contract by the Client. There was no
surplus of security guards over available
assignments. If there were, it was because the
Agency hired new security guards. Thus, there was
no suspension of operation, business or undertaking,
bona fide or not, that would have justified placing the
complainants off-detail and making them wait for a
period of six months. If indeed they were merely
transferred, there would have been no need to make
them wait for six months.
The only logical conclusion from the foregoing
discussion is that the Agency illegally dismissed the
complainants. Hence, as a necessary consequence,
the complainants are entitled to reinstatement and
back wages.[24]However, reinstatement is no longer
feasible in this case. The Agency cannot reassign
them to the Client, as the former has recruited new
security guards; the complainants, on the other hand,
refuse to accept other assignments. Verily,
complainants do not pray for reinstatement; in fact,
they refused to be reinstated. Such refusal is
indicative of strained relations.[25] Thus, separation
pay is awarded in lieu of reinstatement.[26]
Second Issue:
Clients Liability
The Client did not, as it could not, illegally
dismiss the complainants. Thus, it should not be held
liable for separation pay and back wages. But even if
the Client is not responsible for the illegal dismissal of
the complainants, it is jointly and severally liable with
the Agency for the complainants service incentive
leave pay. In Rosewood Processing, Inc. vs. National
Labor Relations Commission,[27] the Court explained
that, notwithstanding the service contract between
the client and the security agency, the two are
solidarily liable for the proper wages prescribed by the
Labor Code, pursuant to Article 106, 107 and 109
thereof, which we quote hereunder:
ART. 106. Contractor or subcontractor.Whenever an
employer enters into a contract with another person
for the performance of the former[s] work, the
employees of the contractor and of the latter[s]
subcontractor, if any, shall be paid in accordance with
the provisions of this Code.
In the event that the contractor or subcontractor fails
to pay the wages of his employees in accordance with
this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such
employees to the extent of the work performed under
the contract, in the same manner and extent that he
is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate
regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only
contracting and job contracting as well as
differentiations within these types of contracting and
determine who among the parties involved shall be
considered the employer for purposes of this Code, to
4
prevent any violation or circumvention of any
provision of this Code.
xxx In such cases [labor-only contracting], the person
or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the
workers in the same manner and extent as if the
latter were directly employed by him.
ART. 107. Indirect employer.The provisions of the
immediately preceding Article shall likewise apply to
any person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of any
work, task, job or project.
ART. 109. Solidary liability.The provisions of existing
laws to the contrary notwithstanding, every employer
or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purpose of determining the
extent of their civil liability under this Chapter, they
shall be considered as direct employers.
Under these provisions, the indirect employer,
who is the Client in the case at bar, is jointly and
severally liable with the contractor for the workers
wages, in the same manner and extent that it is liable
to its direct employees. This liability of the Client
covers the payment of the service incentive leave pay
of the complainants during the time they were posted
at the Cebu branch of the Client. As service had been
rendered, the liability accrued, even if the
complainants were eventually transferred or
reassigned.
The service incentive leave is expressly granted
by these pertinent provisions of the Labor Code:
ART. 95. Right to service incentive leave.(a) Every
employee who has rendered at least one year of
service shall be entitled to a yearly service incentive
leave of five days with pay.
(b) This provision shall not apply to those who are
already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days
and those employed in establishments regularly
employing less than ten employees or in
establishments exempted from granting this benefit
by the Secretary of Labor after considering the
viability or financial condition of such establishment.
(c) The grant of benefit in excess of that provided
herein shall not be made a subject of arbitration or
any court [or] admnistrative action.
Under the Implementing Rules and Regulations
of the Labor Code, an unused service incentive leave
is commutable to its money equivalent, viz.:
Sec. 5. Treatment of Banefit. - The service incentive
leave shall be commutable to its money equivalent if
not used or exhausted at the end of the year.
The award of the thirteenth-month pay is
deleted in view of the evidence presented by the
Agency that such claim has already been paid to the
complainants. Obviously then, the award of such
benefit in the dispositive portion of the assailed
Decision is merely an oversight, considering that
Respondent Commission itself deleted it from the
main body of the said Decision.
WHEREFORE, the petition is DISMISSED and
the assailed Decision and Resolution are
hereby AFFIRMED, but the award of the thirteenth-
month pay is DELETED. Costs against petitioners.
SO ORDERED.
Sentinel Security Agency Inc. v. NLRC
Facts:
The complainants were employees of Sentinel
Security Agency. They were assigned to render guard
duty at the premises of [Philippine American Life
Insurance Company] at Jones Avenue, Cebu City.
Philippine American Life Insurance Company, the
Client, sent notice to replace all the security guards in
the company’s offices at the cities of Cebu, Bacolod,
Cagayan de Oro, Dipolog and Ilagan. Agency issued a
Relief and Transfer Order replacing the complainants
as guards [of the Client] and for then to be re-
assigned [to] other clients. As ordered, the
complainants reported but were never given new
assignments but instead they were told that they
were replaced because they are already old. The
complainants prayed for payment of separation pay
and other labor standard benefits.
Held:
The transfer of an employee involves a lateral
movement within the business or operation of the
employer, without demotion in rank, diminution of
benefits or, worse, suspension of employment even if
temporary. The recall and transfer of security guards
require reassignment to another post and are not
equivalent to their placement on “floating status.”
Off-detailing security guards for a reasonable period
of six months is justified only in bona fide cases of
suspension of operation, business or undertaking.
5

The Client did not, as it could not, illegally dismiss the
complainants. Thus, it should not be held liable for
separation pay and back wages. But even if the
Client is not responsible for the illegal dismissal of the
complainants, it is jointly and severally liable with the
Agency for the complainants’ service incentive leave
pay.
As the indirect employer, the Client is jointly and
severally liable with the contractor for the workers’
wages, in the same manner and extent that it is liable
to its direct employees. This liability of the Client
covers the payment of the service incentive leave pay
of the complainants during the time they were posted
at the Cebu branch of the Client. As service had been
rendered, the liability accrued, even if the
complainants were eventually transferred or
reassigned.
Q. Several security guards of Sentinel Security,
assigned to PHILAM were found to have been illegally
dismissed. Can PHILAM be made liable for the
payment of backwages and separation pay of the
illegally dismissed employees?
A. Yes. Although an indirect employer should not be
made liable without a finding that it had committed or
conspired in the illegal dismissal ( Rosewood ruling), in
the case at bar the exoneration of PHILAM was not
included in the DISPOSITIVE PORTION of the Court’s
decision despite the fact that it was clearly stated in
the body of the decision that they were exonerated.
The decision did not completely exonerate PHILAM
which, as an indirect employer is solidarily liable with
Sentinel for the complainants’ unpaid service incentive
leave pursuant to Art. 106, 107 and 109 of the Labor
Code. Should the contractor fail to pay the wages of
its employees in accordance with law, the indirect
employer is jointly and severally liable with the
contractor, but such responsibility should be
understood to be limited to the extent of work
performed under the contract, in the same manner
and extent that he is liable to the employees directly
employed by him. (Sentinel Security v. NLRC,
Nov. 16,1998)
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 82823-24 July 31, 1989
AGRO COMMERCIAL SECURITY SERVICES
AGENCY, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS
COMMISSION, HON. LABOR ARBITER
BIENVENIDO V. HERMOGENES and MANUEL
JIMENEZ. ET AL., respondents.
San Juan, Gonzalez, San Agustin & Sinense for
petitioner.
Mauricio Law Office for private respondents.
GANCAYCO, J.:
Is there an employer-employee relationship between
a security agency and its security guards? Is the so-
called "floating status" of a security guard lawful and
could such prolonged status amount to illegal
dismissal? These are the issues raised in this petition
for certiorari and prohibition with preliminary
injunction questioning the resolution dated January
20, 1988 of public respondent National Labor
Relations Commission (NLRC) affirming the decision
of public respondent labor arbiter Bienvenido V.
Hermogenes dated March 19, 1987 finding private
respondents to have been illegally dismissed and
ordering petitioner to pay them separation pay of
one-half (1/2) month salary for every year of service,
13th month pay for the year 1986 and the money
value of their respective service incentive leave
amounting to fifteen (15) days salary each with
allowances. The petition also assails the resolution of
the respondent NLRC dated April 18, 1988 denying
the motion for reconsideration filed by petitioner.
Private respondents, numbering forty-six (46) in all,
worked as security guards and/or janitors under
individual contracts with petitioner. They were
assigned to firms and offices where petitioner had
contracts providing security and janitorial services.
Their service period and last rates of salary are stated
in the decision of the labor arbiter. 1Their individual
contracts of employment provide, among others, as
follows:
3.d. That the security guard, agrees
to temporary suspension of his
employment completely to include
6
 such changes in his employment
status with the Agency, in case of
termination of contract between the
Agency and its Client, or reduction
in force of same;
In the early part of 1986, petitioner's service
contracts with various corporations and government
agencies to which private respondents were
previously assigned had been terminated generally
due to the sequestration of the said offices by the
Presidential Commission on Good Government.
Accordingly, many of the private respondents were
placed on "floating status" on September 16, 1986. A
number of them had been put on that status even
earlier. "Floating status" means an indefinite period of
time when private respondents do not receive any
salary or financial benefit provided by law. A number
of them later obtained employment in other security
agencies.
On account of the uncertainty of their employment
with the petitioner, on July 25, 1986, private
respondents filed a complaint for illegal dismissal in
the Arbitration Branch of the Department of Labor
and Employment against petitioner. They sought the
payment of their respective separation pay, 13th
month pay for 1986 and service incentive leave pay.
After due' proceedings where the parties were
required to submit their position papers and
stipulation of facts, the respondent labor arbiter ruled
in favor of the private respondents whose decision as
above-related was affirmed by the NLRC.
Hence, the herein petition alleging that the petitioner
was denied due process of law by the NLRC and it
committed a grave abuse of discretion in considering
private respondents as employees of petitioner, in
ruling that the "floating status" of private respondents
amounted to an illegal dismissal, and in causing the
execution of the judgment pending a complete and
full adjudication of the issues.
Forthwith, the allegation of denial of due process is
without basis. Petitioner was afforded the opportunity
to file its position paper. It even entered into a
stipulation of facts with private respondent.
As to the issue of employer-employee relationship, an
examination of the records shows that private
respondents are regular employees of petitioner.
Their individual length of service ranges from four (4)
to more than ten (10) years. In accordance with the
stipulation of facts, it appears that private
respondents worked with petitioner as security
guards/janitors Their employment contracts provide,
among others:
1. That the AGENCY hereby undertakes to look
for, procure, and/or furnish the services of the
SECURITY GUARD, with any individual, business
establishment, residential houses or any entity
whatsoever, and the SECURITY GUARD agrees to
supply his services, assignments, position and
undertaking, subject to the following conditions:a)
That the SECURITY GUARD upon acceptance of
his position or undertaking for employment, shall
observe, follow and obey all rules, regulations,
code of conduct required by the AGENCY and any
of its contracted client, in accordance with the
provisions of RA 5487 and its implement Rules and
Regulations;b) That the AGENCY shall pay the
SECURITY GUARD a monthly salary of P
_______/day payable on the 5th and 20th of the
month;c) That the AGENCY shall have the
exclusive right to withdraw or re-assign the
SECURITY GUARD;d) That the SECURITY GUARD,
agrees to temporary suspension of his
employment completely to include such changes;
in bis employment status with the AGENCY, in
case of termination of contract between the
AGENCY and its client, or reduction in force of
same;e) That the AGENCY may terminate or
dismiss the SECURITY GUARD, if, after proper and
due investigation it is shown that the SECURITY
GUARD has violated any rule, regulation, code of
conduct and discipline, imposed by the AGENCY;f)
That the terms and conditions pertinent to service
and discipline embodied in the Agreement
executed between the AGENCY and any person,
establishment, or entity with whom the SECURITY
GUARD is going to serve or is assigned shall be
considered part of this Agreement and therefore
binding on SECURITY GUARD. 2
It was petitioner who determined how much private
respondents received as their monthly salary,
overtime/night differential pay, mid-year and
Christmas bonus and 13th month pay, uniforms and
meal allowances and other benefits mandated by law.
Private respondents were reported by the petitioner
as its employees for purposes of social security
coverage. Petitioner remitted their withholding taxes
to the Bureau of Internal Revenue and made monthly
contributions to the Pag-ibig fund for their benefit. It
was petitioner who determined and decided on the
assignments, promotions and salary increases of
private respondents, their working hours, the firearms
to be issued to them and janitorial devices and tools
to be used. Likewise, it was petitioner who imposed
the appropriate disciplinary measures on private
respondents by way of reprimand, suspension and
dismissal.
In determining the existence of an employee-
employer relationship, the following elements are
generally considered:
7
1) the selection and engagement of the employees;
2) payment of wages;
3) the power of dismissal and
4) the power to control the employees' conduct .
accepted assignments in other security agencies
without previously resigning should be considered to
have been dismissed with just cause. In the
stipulation of facts, the parties admitted that the
disciplinary rules promulgated by petitioner for its
employees provide that acceptance by an employee
of other employment without first resigning from the
3
agency is a cause for dismissal.

It is clear, therefore, that private respondents are
petitioner's regular employees who enjoy security of
tenure and who cannot be dismissed except for cause
.4
As to the alleged illegal dismissal of private
respondents, the records show that they filed their
complaint against petitioner on July 25, 1986. At the
time they filed their complaint, most of them were still
on the job or on assignments and it was only in
September 1986 when most of them were placed on
"floating status."
Obviously, the filing of the complaint was premature.
Apparently, this issue was not raised at all and so it is
deemed waived. Thus, when the labor arbiter
rendered his decision, he considered those who have
been out of work or "floating status" for a period
exceeding six (6) months to have been terminated
from the service without just cause thus entitling
them to the corresponding benefits for such
separation. We agree.
Under Article 286 of the Labor Code it is provided as
follows:ART. 286. When employment not deemed
terminated. — The bonafide suspension of the
operation of a business or undertaking for a period
not exceeding six months, or the fulfillment by the
employee of a military or civic duty shall not
terminate employment. In all such cases, the
employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates
his desire to resume his work not later than one
month from the resumption of operations of his
employer or from his relief from the military or civic
duty.
From the foregoing it is clear that when
the bonafide suspension of the operation of a
business or undertaking exceeds six (6) months then
the employment of the employee shall be deemed
terminated. By the same token and applying the said
rule by analogy to security guards, if they remained
without work or assignment that is in "floating status"
for a period exceeding six (6) months, then they are
in effect constructively dismissed.
In this case, it appears that twenty-seven (27) of the
private respondents violated this rule by accepting
employment in other security agencies without
previously resigning from employment with petitioner.
No doubt, this is a just cause for termination of their
services and as such they are not entitled to any
separation pay. 5
As regards the other seventeen (17) private
respondents, they admittedly remained in "floating
status" for more than six (6) months. Such a 'floating
status" is not unusual for security guards employed in
security agencies as their assignments primarily
depend on the contracts entered into by the agency
with third parties. Such a stipulated status is,
therefore, lawful.
The "floating status" of such an employee should last
only for a reasonable time. In this case, respondent
labor arbiter correctly held that when the "floating
status" of said employees lasts for more than six (6)
months, they may be considered to have been
illegally dismissed from the service. Thus, they are
entitled to the corresponding benefits for their
separation.
WHEREFORE, the petition is GRANTED insofar as the
twenty- seven (27) private respondents are
concerned who have accepted employment
elsewhere. The questioned resolutions of the NLRC
dated January 29, 1988 and April 18, 1988 are hereby
modified as to said twenty-seven (27) private
respondents in that their complaint is hereby
dismissed for lack of merit. The questioned
resolutions are hereby affirmed in all other respects
as to the other private respondents. No
pronouncement as to costs.
SO ORDERED.

The labor arbiter disagreed with the representations

of petitioner that the private respondents who