EN BANC

[G.R. No. L-4148. July 16, 1952.]

MANILA TERMINAL COMPANY, INC. , petitioner, vs . THE COURT OF

INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND
MUTUAL AID ASSOCIATION , respondents.

Perkins, Ponce Enrile & Contreras for petitioner.

Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacar for respondent
Association.
Mariano R. Padilla for respondent Court of Industrial Relations.

SYLLABUS

1. COURT OF INDUSTRIAL RELATIONS; JURISDICTION TO AWARD MONEY

JUDGMENT. — Under its power to settle disputes between employer and employee, the
Court of Industrial Relations has jurisdiction to award a money judgment covering past
overtime compensation.
2. EMPLOYER AND EMPLOYEE; EIGHT-HOUR LABOR LAW; OVERTIME
COMPENSATION; CONTRACT TO WORK FOR MORE THAN EIGHT HOURS AT
SPECIFIED DAILY WAGE NOT SUFFICIENT TO COVER OVERTIME COMPENSATION. —
Where the contract of employment requires work for more than eight hours at specified
wages per day, without providing for a fixed hourly rate or that the daily wages include
overtime pay, said wages cannot be considered as including overtime compensation
required under the Eight-Hour Labor Law.
3. ID.; ID.; ID.; OVERTIME COMPENSATION CANNOT BE WAIVED. — The right
of employees and laborers to overtime compensation cannot be waived expressly or
impliedly.
4. ID.; ID.; ID.; ID.; ESTOPPEL AND LACHES CANNOT BAR RECOVERY OF
OVERTIME COMPENSATION. — The principle of estoppel and laches cannot be invoked
against the recovery of overtime compensation, because that would be contrary to the
spirit of the Eight-Hour Labor Law and because the employee or laborer, who cannot
renounce his right to extra compensation, may be compelled to accomplish the same
thing by mere silence or lapse of time.
5. ID.; ID.; ID.; NULLITY OR ILLEGALITY OF EMPLOYMENT CONTRACT DOES
NOT BAR RECOVERY OF OVERTIME COMPENSATION. — The fact that no permit has
previously been obtained from the proper authorities for the performance of overtime
work, or that the employment contract is illegal because it does not provide for
overtime compensation, will not prevent recovery by the employee or laborer, because
the Eight- Hour Labor Law is intended for the benefit of laborers and employees, and
because the law makes only the employer criminally liable for any violation.

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 6. ID.; ID.; BACK OVERTIME COMPENSATION COLLECTIBLE. — As sections 3
and 5 of Commonwealth Act No. 444, the Eight-Hour Labor Law, expressly provides for
the payment of extra compensation in cases where overtime services are required, the
employees or laborers are entitled to collect such extra compensation for past
overtime work. To hold otherwise would allow an employer to violate the law by simply
failing to provide for and pay overtime compensation.

DECISION

PARAS , C.J : p

On September 1, 1945, the Manila Terminal Company, Inc., hereinafter to be

referred to as the petitioner, undertook the arrastre service in some of the piers in
Manila's Port Area at the request and under the control of the United States Army. The
petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation
of P3 per day for the day shift and P6 per day for the night shift. On February 1, 1946,
the petitioner began the postwar operation of the arrastre service at the request and
under the control of the Bureau of Customs, by virtue of a contract entered into with the
Philippine Government. The watchmen of the petitioner continued in the service with a
number of substitutions and additions, their salaries having been raised during the
month of February to P4 per day for the day shift and P6.25 per day for the night shift.
On March 28, 1947, Dominador Jimenez, a member of the Manila Terminal Relief and
Mutual Aid Association, sent a letter to the Department of Labor, requesting that the
matter of overtime pay be investigated, but nothing was done by the Department. On
April 29, 1947, Victorino Magno Cruz and ve other employees, also members of the
Manila Terminal Relief and Mutual Aid Association, led a 5-point demand with the
Department of Labor, including overtime pay, but the Department again failed to do
anything about the matter. On May 24, 1947, the petitioner instituted the system of
strict eight-hour shifts. On June 19, 1947, the Manila Port Terminal Police Association,
not registered in accordance with the provisions of Commonwealth Act No. 213, led a
petition with the Court of Industrial Relations. On July 16, 1947, the Manila Terminal
Relief and Mutual Aid Association was organized for the rst time, having been granted
certi cate No. 375 by the Department of Labor. On July 28, 1947, the Manila Terminal
Relief and Mutual Aid Association led an amended petition with the Court of Industrial
Relations praying, among others, that the petitioner be ordered to pay to its watchmen
or police force overtime pay from the commencement of their employment. On May 9,
1949, by virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of
the President of the Philippines, the entire police force of the petitioner was
consolidated with the Manila Harbor Police of the Customs Patrol Service, a
Government agency under the exclusive control of the Commissioner of Customs and
the Secretary of Finance. The Manila Terminal Relief and Mutual Aid Association will
hereafter be referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of
April 1, 1950, as amended on April 18, 1950, while dismissing other demands of the
Association for lack of jurisdiction, ordered the petitioner to pay to its police force —
(a) Regular or base pay corresponding to four hours' overtime plus 25 per
cent thereof as additional overtime compensation for the period from September 1,
1945 to May 24, 1947;
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 (b) Additional compensation of 25 per cent to those who worked from 6:00
p.m. to 6 :00 a.m. during the same period;
(c) Additional compensation of 50 per cent for work performed on Sundays
and legal holidays during the same period;
(d) Additional compensation of 50 per cent for work performed on Sundays
and legal holidays from May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from
May 24, 1947 to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been
integrated into the Manila Harbor Police, Judge Yanson ruled that the court has no
jurisdiction because it affects the Bureau of Customs, an instrumentality of the
Government having no independent personality and which cannot be sued without the
consent of the State. (Metran vs. Paredes, 45 Off. Gaz., 2835.).
The petitioner led a motion for reconsideration. The Association also led a
motion for reconsideration in so far as its other demands were dismissed. Judge
Yanson, concurred in by Judge Jose S. Bautista, promulgated on July 13, 1950, a
resolution denying both motions for reconsideration. Presiding Judge Arsenio C.
Roldan, in a separate opinion concurred in by Judge Modesto Castillo, agreed with the
decision of Judge Yanson of April 1, 1950, as to the dismissal of other demands of the
Association, but dissented therefrom as to the granting of overtime pay. In a separate
decisive opinion, Judge Juan S. Lanting concurred in the dismissal of other demands of
the Association. With respect to overtime compensation, Judge Lanting ruled:
1. The decision under review should be af rmed in so far as it grants
compensation for overtime on regular days (not Sundays and legal holidays) during the
period from the date of entrance to duty to May 24, 1947, such compensation to
consist of the amount corresponding to the four hours' overtime at the regular rate and
an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the
petitioner should pay to its watchmen the compensation that corresponds to the
overtime (in excess of 8 hours) at the regular rate only, that is, without any additional
amount, thus modifying the decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services,
and therefore the decision should be reversed with respect thereto.
The petitioner has led the present petition for certiorari. Its various contentions
may be brie y summed up in the following propositions: (1) The Court of Industrial
Relations has no jurisdiction to render a money judgment involving obligations in
arrears. (2) The agreement under which its police force were paid certain speci c
wages for twelve-hour shifts, included overtime compensation. (3) The Association is
barred from recovery by estoppel and laches. (4) the nullity or invalidity of the
employment contract precludes any recovery by the Association. (5) Commonwealth
Act No. 4444 does not authorize recovery of back overtime pay.
The contention that the Court of Industrial Relations has no jurisdiction to award
a money judgment was already overruled by this Court in G. R. No. L-4337, Detective &
Protective Bureau, Inc. vs. Court of Industrial Relations and United Employees Welfare
Association, 90 Phil., 665, in this wise: "It is also argued that the respondent court has
no jurisdiction to award overtime pay, which is a money judgment. We believe that
under Commonwealth Act No. 103 the Court is empowered to make the order for the
purpose of settling disputes between the employer and employee 1 . As a matter of
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 fact this Court has con rmed an order of the Court of Industrial Relations requiring the
Elks Club to pay to its employees a certain sum of money as overtime back wages
from June 3, 1939 to March 13, 1941. This, in spite of the allegation of lack or excess
of jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80 Phil., 272)".
The important point stressed by the petitioner is that the contract between it and
the Association upon the commencement of the employment of its watchmen was to
the effect that the latter were to work twelve hours a day at certain rates of pay,
including overtime compensation, namely, P3 per day for the day shift and P6 per day
for night shift beginning September 1, 1945, and P4 per day for the day shift and P6.25
per day for the night shift since February, 1946. The record does not bear out these
allegations. The petitioner has relied merely on the facts that its watchmen had worked
on twelve-hour shifts at speci c wages per day and that no complaint was made about
the matter until, first, on March 28, 1947 and, secondly, on April 29, 1947.

In times of acute unemployment, the people, urged by the instinct of self-

preservation, go from place to place and from of ce to of ce in search for any
employment, regardless of its terms and conditions, their main concern in the rst
place being admission to some work. Specially for positions requiring no special
quali cations, applicants would be good as rejected if they ever try to be inquisitive
about the hours of work or the amount of salary, or ever attempt to dictate their terms.
The petitioner's watchmen must have railroaded themselves into their employment, so
to speak, happy in the thought that they would then have an income on which to subsist.
But, at the same time, they found themselves required to work for twelve hours a day.
True, there was an agreement to work, but can it fairly be supposed that they had the
freedom to bargain in any way, much less to insist in the observance of the Eight-Hour
Labor Law?.
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct.
159; 6 CCH Labor Cases, Par. 51, 147, "A contract of employment, which provides for a
weekly wage for a speci ed number of hours, suf cient to cover both the statutory
minimum wage and overtime compensation, if computed on the basis of the statutory
minimum, and which makes no provision for a xed hourly rate or that the weekly wage
includes overtime compensation, does not meet the requirements of the Act.".
Moreover, we note that after the petitioner had instituted the strict eight-hour
shifts, no reduction was made in the salaries which its watchmen received under the
twelve-hour arrangement. Indeed, as admitted by the petitioner, "when the members of
the respondent union were placed on strict eight-hour shifts, the lowest salary of all the
members of respondent union was P165 a month, or P5.50 daily, for both day and night
shifts." Although it may be argued that the salary for the night shift was somewhat
lessened, the fact that the rate for the day shift was increased in a sense tends to
militate against the contention that the salaries given during the twelve-hour shifts
included overtime compensation.
Petitioner's allegation that the Association had acquiesced in the twelve-hour
shifts for more than 18 months, is not accurate, because the watchmen involved in this
case did not enter the service of the petitioner, at one time, on September 1, 1945. As
Judge Lanting found, "only one of them entered the service of the company on said
date, very few during the rest of said month, some during the rest of that year (1945)
and in 1946, and very many in 1947, 1948 and 1949.".
The case at bar is quite on all fours with the case of Detective & Protective
Bureau, Inc. vs. Court of Industrial Relations and United Employees Welfare Association,
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 supra, in which the facts were as follows: "The record discloses that upon petition
properly submitted, said court made an investigation and found that the members of
the United Employees Welfare Association (hereafter called the Association) were in
the employ of the petitioner Detective & Protective Bureau, Inc. (herein called the
Bureau) which is engaged in the business of furnishing security guards to commercial
and industrial establishments, paying to said members monthly salaries out of what it
received from the establishments bene ted by guard service. The employment called
for daily tours of duty for more than eight hours, in addition to work on Sundays and
holidays. Nonetheless the members performed their labors without receiving extra
compensation." The only difference is that, while in said case the employees concerned
were paid monthly salaries, in the case now before us the wages were computed daily.
In the case cited, we held the following:
"It appears that the Bureau had been granting the members of the
Association, every month, 'two days off' days in which they rendered no service,
although they received salary for the whole month. Said Bureau contended below
that the pay corresponding to said 2-day vacation corresponded to the wages for
extra work. The court rejected the contention, quite properly we believe, because in
the contract there was no agreement to that effect; and such agreement, if any,
would probably be contrary to the provisions of the Eight-Hour Law (Act No. 444,
sec. 6) and would be null and void ab initio.
"It is argued here, in opposition to the payment, that until the
commencement of this litigation the members of the Association never claimed
for overtime pay. That may be true. Nevertheless the law gives them the right to
extra compensation. And they could not be held to have impliedly waived such
extra compensation, for the obvious reason that they could not have expressly
waived it."
The foregoing pronouncements are in point. The Association cannot be said to
have impliedly waived the right to overtime compensation, for the obvious reason that
they could not have expressly waived it.".
The principle of estoppel and laches cannot well be invoked against the
Association. In the rst place, it would be contrary to the spirit of the Eight-Hour Labor
Law, under which, as already seen, the laborers cannot waive their right to extra
compensation. In the second place, the law principally obligates the employer to
observe it, so much so that it punishes the employer for its violation and leaves the
employee or laborer free and blameless. In the third place, the employee or laborer is in
such a disadvantageous position as to be naturally reluctant or even apprehensive in
asserting any claim which may cause the employer to devise a way for exercising his
right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a
situation, whereby the employee or laborer, who cannot expressly renounce their right
to extra compensation under the Eight-Hour Labor Law, may be compelled to
accomplish the same thing by mere silence or lapse of time, thereby frustrating the
purpose of the law by indirection.
While counsel for the petitioner has cited authorities in support of the doctrine
invoked, there are also authorities pointed out in the opinion of Judge Lanting to the
contrary. Suf ce it to say, in this connection, that we are inclined to rule adversely
against petitioner for the reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes
recovery by the Association of any overtime pay is also untenable. The argument, based
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 on the supposition that the parties are in pari delicto, was in effect turned down in
Gotamo Lumber Co. vs. Court of Industrial Relations, * 47 Off. Gaz., 3421, wherein we
ruled: "The petitioner maintains that as the overtime work had been performed without
a permit from the Department of Labor, no extra compensation should be authorized.
Several decisions of this court are involved. But those decisions were based on the
reasoning that as both the laborer and employer were duty bound to secure the permit
from the Department of Labor, both were in pari delicto. However, the present law in
effect imposed that duty upon the employer (C. A. No. 444). Such employer may not
therefore be heard to plead his own neglect as exemption or defense.
"The employee in rendering extra service at the request of his employer has a
right to assume that the latter has complied with the requirement of the law, and
therefore has obtained the required permission from the Department of Labor."
Moreover, the Eight-Hour Law, in providing that "any agreement or contract
between the employer and the laborer or employee contrary to the provisions of this
Act shall be null and void ab initio," (Commonwealth Act No. 444, sec. 6), obviously
intended said provision for the bene t of the laborers or employees. The employer
cannot, therefore, invoke any violation of the Act to exempt him from liability for extra
compensation. This conclusion is further supported by the fact that the law makes only
the employer criminally liable for any violation. It cannot be pretended that, for the
employer to commit any violation of the Eight-Hour Labor Law, the participation or
acquiesence of the employee or laborer is indispensable, because the latter, in view of
his need and desire to live, cannot be considered as being on the same level with the
employer when it comes to the question of applying for and accepting an employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for
recovery of back overtime pay, and to support this contention it makes reference to the
Fair Labor Standards Act of the United States which provides that "any employer who
violates the provisions of section 206 and section 207 of this title shall be liable to the
employee or employees affected in the amount of their unpaid minimum wages or their
unpaid overtime compensation as the case may be," - a provision not incorporated in
Commonwealth Act No. 444, our Eight-Hour Labor Law. We cannot agree to the
proposition, because sections 3 and 5 of Commonwealth Act 444 expressly provides
for the payment of extra compensation in cases where overtime services are required,
with the result that the employees or laborers are entitled to collect such extra
compensation for past overtime work. To hold otherwise would be to allow an
employer to violate the law by simply, as in this case, failing to provide for and pay
overtime compensation.
The point is stressed that the payment of the claim of the Association for
overtime pay covering a period of almost two years may lead to the nancial ruin of the
petitioner, to the detriment of its employees themselves. It is signi cant, however, that
not all the petitioner's watchmen would receive back overtime pay for the whole period
specified in the appealed decision, since the record shows that the great majority of the
watchmen were admitted in 1946 and 1947, and even 1948 and 1949. At any rate, we
are constrained to sustain the claim of the Association as a matter of simple justice,
consistent with the spirit and purpose of the Eight-Hour Labor Law. The petitioner, in
the rst place, was required to comply with the law and should therefore be made liable
for the consequences of its violation.

It is high time that all employers were warned that the public is interested in the
strict enforcement of the Eight-Hour Labor Law. This was designed not only to
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 safeguard the health and welfare of the laborer or employee, but in a way to minimize
unemployment by forcing employers, in cases where more than 8-hour operation is
necessary, to utilize different shifts of laborers or employees working only for eight
hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is
af rmed, it being understood that the petitioner's watchmen will be entitled to extra
compensation only from the dates they respectively entered the service of the
petitioner, hereafter to be duly determined by the Court of Industrial Relations. So
ordered, without costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angeloand Labrador, JJ., concur.

Footnotes

1. Cf. The Shell Co. vs. National Labor Union, 46 Off. Gaz. Supp. 1, p. 97; 81 Phil., 315.
* 85 Phil, 291.

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