SECOND DIVISION

[G.R. No. 149640. October 19, 2007.]

SAN MIGUEL CORPORATION, ANDRES SORIANO III, FRANCISCO C.

EIZMENDI, JR., and FAUSTINO F. GALANG , petitioners, vs .
NUMERIANO LAYOC, JR., CARLOS APONESTO, PAULINO BALDUGO,
QUEZON BARIT, BONIFACIO BOTOR, HERMINIO CALINA, DANILO
CAMINGAL, JUAN DE MESA, REYNOLD DESEMBRANA, BERNARDITO
DEUS, EDUARDO FILLARTA, MAXIMIANO FRANCISCO, MARIO
MARILIM, DEMETRIO MATEO, FILOMENO MENDOZA, CONRADO
NIEVA, FRANCISCO PALINES, FELIPE POLINTAN, MALCOLM
SATORRE, and ALEJANDRO TORRES , respondents.

DECISION

CARPIO , J : p

The Case
This is a petition for review 1 of the decision 2 promulgated on 29 August 2001
by the Court of Appeals (appellate court) in CA-G.R. SP No. 55838. The appellate
court's decision set aside the decision 3 in NLRC NCR Case No. 00-12-08656-94 dated
23 March 1998, the decision 4 dated 27 November 1998, and the resolution 5 dated 31
August 1999 in NLRC CA No. 015710-98. The appellate court ordered San Miguel
Corporation (SMC), Andres Soriano III, Francisco C. Eizmendi, Jr., and Faustino F.
Galang (collectively, petitioners) to pay respondent Numeriano Layoc, Jr. (Layoc)
P125,000, representing overtime pay for services that he could have rendered from
January 1993 up to his retirement on 30 June 1997, and respondents Carlos Aponesto,
Paulino Baldugo, Quezon Barit, Bonifacio Botor, Herminio Calina, Danilo Camingal, Juan
de Mesa, Reynold Desembrana, Bernardito Deus, Eduardo Fillarta, Maximiano Francisco,
Mario Marilim, Demetrio Mateo, Filomeno Mendoza, Conrado Nieva, Francisco Palines,
Felipe Polintan, Malcolm Satorre, and Alejandro Torres (collectively, respondents)
P10,000 each as nominal damages.
The Facts
The appellate court stated the facts as follows:
[Respondents] were among the "Supervisory Security Guards" of the Beer
Division of the San Miguel Corporation (p. 10, Rollo), a domestic corporation duly
organized and existing under and by virtue of the laws of the Republic of the
Philippines with o ces at No. 40 San Miguel Avenue, Mandaluyong City. They
started working as guards with the petitioner San Miguel Corporation assigned to
the Beer Division on different dates until such time that they were promoted as
supervising security guards. The dates of their employment commenced as
follows (Ibid., pp. 87-89):

As guards As supervising guards

a. Aponesto, Carlos June 1970 February 1983

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 b. Baldugo, Paulino November 1978 May 1984
c. Barit, Quezon January 1969 May 1984
d. Botor, Bonifacio April 1980 January 1987
e. De Mesa, Juan November 1977 May 1984
f. Calina, Herminio February 1976 May 1984
g. Desembrana, Reynold November 1976 April 1983
h. Camingal, Danilo December 1975 December 1985
i. Deus, Bernardito July 1976 May 1983
j. Fillarta, Eduardo January 1979 May 1989
k. Francisco, Maximiano October 1977 May 1984
l. Layoc, Numeriano June 1974 January 1982
m. Marilim, Mario December 1977 June 1984
n. Mateo, Demetrio November 1976 March 1984
o. Mendoza, Filomena March 1980 May 1983
p. Palines, Francisco May 1979 May 1985
q. Nieva, Conrado January 1977 June 1987
r. Polintan, Felipe June 1972 May 1983
s. Satorre, Malcolm September 1970 May 1984
t. Torres, Alejandro January 1974 May 1984

As supervising security guards, the private respondents were performing

the following functions (Ibid., pp. 202-204):

1. Supervises the facility security force under his shift;

2. Inspects all company-owned rearms and ammunition and

promptly submits report as regards to discrepancy and/or state of
doubtful/suspected serviceability;

3. Receives and transfers from outgoing to incoming supervising

security guard all company property, all o cial papers, documents
and/or cases investigated including pieces of evidence properly
labeled and secured;

4. Physically checks and accounts for all company property within his
area of responsibility immediately upon assumption of duty;
5. Updates compilation of local security rules, policies and regulations
and ensures that all his guards are posted thereon;

6. Conducts regular and irregular inspection to determine his guards'

compliance with all guard force instructions, corporate security
standards and procedures; CEcaTH

7. Passes on all o cial communications, requests, applications of

leaves, etc. and makes his comments and/or recommendations to
his superior;
8. Systematically and continuously screens the good performers from
the marginal or poor among his guards; concentrates on teaching
and guiding the latter; determines further what training and/or skills
that should be learned and submits appropriate report to superior;

9. Corrects, on the spot, all de ciencies noted and institutes corrective

measures within his authority; recommends commendations for
those guards who deserves [sic] recognition for good work;
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 10. Conducts an investigation of all cases coming to his attention and
promptly submits appropriate report to his superiors;
11. Evaluates individual guard performance and renders e ciency
reports in accordance with standing instructions;

12. Ensures that all his guards are courteous, respectful and
accommodating at all times;

13. Ensures that even those who have been found violating the
facility's policies, rules and procedures are professionally treated
with courtesy and understanding to preclude embarrassment and
humiliation;
14 Ensures the maintenance of [a] logbook of all incidents,
communications, personnel and materials' movements;

15. Responds to all calls for assistance;

16. Conducts continuing physical checks of the facility's critical and

vulnerable areas;

17. Obtains critical security information and passes it on to his

superiors;

18. Assesses the need for extra guard service requirements;

19. Continuously monitors the personal needs and problems of his
men to his superiors;

20. Acts as Detachment Commander in the latter's absence;

21. Responds to emergencies and activates the Corporate Security

Alerting System as appropriate; and

22. Performs such other duties as may be required by his Detachment

Commander/Plant Security Officer.
From the commencement of their employment, the private respondents
were required to punch their time cards for purposes of determining the time they
would come in and out of the company's work place. Corollary [ sic], the private
respondents were availing the bene ts for overtime, holiday and night premium
duty through time card punching (Rollo, p. 89). However, in the early 1990's, the
San Miguel Corporation embarked on a Decentralization Program aimed at
enabling the separate divisions of the San Miguel Corporation to pursue a more
efficient and effective management of their respective operations (Ibid., p. 99).

As a result of the Decentralization Program, the Beer Division of the San

Miguel Corporation implemented on January 1, 1993 a "no time card policy"
whereby the Supervisory I and II composing of the supervising security guards of
the Beer Division were no longer required to punch their time cards (Ibid., p. 100).
Consequently, on January 16, 1993, without prior consultation with the private
respondents, the time cards were ordered con scated and the latter were no
longer allowed to render overtime work (Ibid., p. 117).

However, in lieu of the overtime pay and the premium pay, the personnel of
the Beer Division of the petitioner San Miguel Corporation affected by the "No
Time Card Policy" were given a 10% across-the-board increase on their basic pay
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 while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.)
were given night shift allowance ranging from P2,000.00 to P2,500.00 a month
(Rollo, p. 12). 6

On 1 December 1994, respondents led a complaint for unfair labor practice,

violation of Article 100 of the Labor Code of the Philippines, and violation of the equal
protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32
of the New Civil Code of the Philippines. Respondents prayed for actual damages for
two years (1993-1994), moral damages, exemplary damages, and overtime, holiday,
and night premium pay.
In their position paper dated 28 February 1995, respondents stated that the Beer
Division of SMC maliciously and fraudulently refused payment of their overtime, holiday,
and night premium pay from 1 to 15 January 1993 because of the "no time card policy."
Moreover, petitioners had no written authority to stop respondents from punching their
time cards because the alleged memorandum authorizing such stoppage did not
include supervisory security guards. Thus, the respondents suffered a diminution of
bene ts, making petitioners liable for non-payment of overtime, holiday, and night
premium pay. cCSEaA

In their position paper dated 23 February 1995, petitioners maintained that

respondents were supervisory security guards who were exempt from the provisions of
the Labor Code on hours of work, weekly rest periods, and rest days. The "no time card
policy" did not just prevent respondents from punching their time cards, but it also
granted respondents an across-the-board increase of 10% of basic salary and either a
P2,000 or P2,500 night shift allowance on top of their yearly merit increase. Petitioners
further asserted that the "no time card policy" was a valid exercise of management
prerogative and that all supervisors in the Beer Division were covered by the "no time
card policy," which classi cation was distinct and separate from the other divisions
within SMC.
Respondents led their reply dated 15 March 1995 to petitioners' position paper.
Petitioners, on the other hand, led their rejoinder dated 27 March 1995 to
respondents' reply. Respondents led a request for admission dated 2 May 1995 to
which petitioners filed their reply dated 15 May 1995.
The Ruling of the Labor Arbiter
In his decision dated 23 March 1998, Labor Arbiter Potenciano S. Canizares, Jr.
(Arbiter Canizares) stated that the principal issue is whether petitioners can, in their "no
time card policy," remove the bene ts that respondents have obtained through
overtime services. Arbiter Canizares then stated that the facts and the evidence are in
respondents' favor. Arbiter Canizares ruled that rendering services beyond the regular
eight-hour work day has become company practice. Moreover, petitioners failed to
show good faith in the exercise of their management prerogative in altering company
practice because petitioners changed the terms and conditions of employment from
"hours of work rendered" to "result" only with respect to respondents and not with other
supervisors in other departments. The dispositive portion of Arbiter Canizares' decision
reads:
WHEREFORE, the [petitioners] are hereby ordered to restore to the
[respondents] their right to earn for overtime services rendered as enjoyed by the
other employees.
The [petitioners] are further ordered to indemnify the [respondents] for lost
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 earnings after their terms and conditions of employment have been unilaterally
altered by the [petitioners], namely in the amount of P500,000.00 each as
computed by the [respondents], and the [petitioners] failed to refute.

[Petitioners] are furthermore ordered to pay the [respondents] P100,000.00

each as moral and exemplary damages.

All other claims are hereby dismissed for lack of evidence.

SO ORDERED. 7

On 26 May 1998, petitioners led their notice of appeal and memorandum of

appeal with the National Labor Relations Commission (NLRC).
The Ruling of the NLRC
On 27 November 1998, the NLRC a rmed with modi cation the ruling of Arbiter
Canizares that respondents suffered a diminution of bene ts as a result of the
adoption of the "no time card policy." The NLRC cited a well-established rule that
employees have a vested right over existing bene ts voluntarily granted to them by
their employer, who may not unilaterally withdraw, eliminate, or diminish such bene ts.
In the present case, there was a company practice which allowed the enjoyment of
substantial additional remuneration. Furthermore, there is no rule excluding managerial
employees from the coverage of the principle of non-diminution of benefits. SIaHTD

The NLRC ruled thus:

WHEREFORE, the decision appealed from is hereby AFFIRMED, with slight
modification deleting the award of moral and exemplary damages.
SO ORDERED. 8

Both petitioners and respondents led their respective motions for

reconsideration. Petitioners stated that the NLRC erred in sustaining the award of
overtime pay despite its nding that respondents were managerial personnel.
Furthermore, there was no evidence that respondents rendered overtime work and
respondents admitted that they never or seldom rendered overtime work. The award of
overtime pay was thus contrary to the principle of no work, no pay. For their part,
respondents stated that the NLRC erred in deleting the award of moral and exemplary
damages. The implementation of the "no time card policy," the discrimination against
them vis-a-vis the supervising security o cers in other divisions of SMC, and the
execution of quitclaims and releases during the pendency of the case were all attended
with bad faith, thus warranting the award of moral and exemplary damages.
On 31 August 1999, the NLRC further modi ed Arbiter Canizares' decision. The
NLRC ruled thus:
WHEREFORE, the November 27, 1998 Decision of this Commission is
hereby REITERATED with a slight modi cation to the effect that the computation
of the [respondents]' withdrawn bene ts at P125,000.00 yearly from 1993 should
terminate in 1996 or the date of each complainant's retirement, whichever came
first. aTDcAH

SO ORDERED. 9

Petitioners then led their petition for certiorari before the appellate court on 16
November 1999.
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 The Ruling of the Appellate Court
On 29 August 2001, the appellate court set aside the ruling of the NLRC and
entered a new judgment in favor of respondents. The appellate court stated that there
is no legal issue that respondents, being the supervisory security guards of the Beer
Division of SMC, were performing duties and responsibilities being performed by those
who were considered as o cers or members of the managerial staff as de ned under
Section 2, paragraph (c), Rule 1, Book III of the Implementing Rules of the Labor Code.
1 0 The appellate court ruled that while the implementation of the "no time card policy"
was a valid exercise of management prerogative, the rendering of overtime work by
respondents was a long-accepted practice in SMC which could not be peremptorily
withdrawn without running afoul with the principles of justice and equity. The appellate
court a rmed the deletion of the award of actual, moral, and exemplary damages. With
the exception of Layoc, respondents did not present proof of previous earnings from
overtime work and were not awarded with actual damages. Moreover, the appellate
court did not nd that the implementation of the "no time card policy" caused any
physical suffering, moral shock, social humiliation, besmirched reputation, and similar
injury to respondents to justify the award of moral and exemplary damages.
Nonetheless, in the absence of competent proof on the speci c amounts of actual
damages suffered by respondents, the appellate court awarded them nominal
damages.
The dispositive portion of the appellate court's decision reads thus:
WHEREFORE, foregoing considered, the instant petition is hereby GIVEN
DUE COURSE and is GRANTED. The Decision issued in NLRC NCR CASE No. 00-
12-08656-94 dated March 23, 1998, the Decision issued in NLRC CA No. 015710-
98 dated November 27, 1998 and the Resolution dated August 31, 1999, are
hereby ANNULLED and SET ASIDE, and a new judgment is hereby entered
ordering the petitioners to pay as follows:
1) the private respondent Numeriano Layoc, Jr., the amount of One
Hundred Twenty-Five Thousand (P125,000.00) Pesos per year, representing
overtime pay for overtime services that he could have rendered computed from
the date of the implementation of the "no time card policy" or on January 1993
and up to the date of his retirement on June 30, 1997; and

2) the other private respondents, the amount of Ten Thousand

(P10,000.00) Pesos each as nominal damages.
SO ORDERED. 1 1

Dissatis ed with the appellate court's ruling, petitioners led a petition before
this Court.
The Issues
Petitioners ask whether the circumstances in the present case constitute an
exception to the rule that supervisory employees are not entitled to overtime pay. CTSDAI

Respondents, on the other hand, question petitioners' procedure. Respondents

submit that the Court should dismiss the present petition because petitioners did not
file a motion for reconsideration before the appellate court.
The Ruling of the Court
The petition has merit.
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 Requirement of Prior Filing of a
Motion for Reconsideration
It appears that respondents confuse certiorari as a mode of appeal under Rule
45 of the 1997 Rules of Civil Procedure with certiorari as an original special civil action
under Rule 65 of the same Rules. In Paa v. Court of Appeals, 1 2 we stated that:
There are, of course, settled distinctions between a petition for review as a
mode of appeal and a special civil action for certiorari, thus:
a. In appeal by certiorari, the petition is based on questions of law
which the appellant desires the appellate court to resolve. In certiorari as an
original action, the petition raises the issue as to whether the lower court acted
without or in excess of jurisdiction or with grave abuse of discretion.
b. Certiorari, as a mode of appeal, involves the review of the judgment,
award or nal order on the merits. The original action for certiorari may be
directed against an interlocutory order of the court prior to appeal from the
judgment or where there is no appeal or any other plain, speedy or adequate
remedy.
c. Appeal by certiorari must be made within the reglementary period for
appeal. An original action for certiorari may be led not later than sixty (60) days
from notice of the judgment, order or resolution sought to be assailed.
d. Appeal by certiorari stays the judgment, award or order appealed
from. An original action for certiorari, unless a writ of preliminary injunction or a
temporary restraining order shall have been issued, does not stay the challenged
proceeding.
e. In appeal by certiorari, the petitioner and respondent are the original
parties to the action, and the lower court or quasi-judicial agency is not to be
impleaded. In certiorari as an original action, the parties are the aggrieved party
against the lower court or quasi-judicial agency and the prevailing parties, who
thereby respectively become the petitioner and respondents.

f. I n certiorari for purposes of appeal, the prior ling of a

motion for reconsideration is not required (Sec. 1, Rule 45); while in
certiorari as an original action, a motion for reconsideration is a
condition precedent (Villa-Rey Transit vs. Bello, L-18957, April 23, 1963),
subject to certain exceptions .

g. In appeal by certiorari, the appellate court is in the exercise of its

appellate jurisdiction and power of review for, while in certiorari as an original
action, the higher court exercises original jurisdiction under its power of control
and supervision over the proceedings of lower courts. (Emphasis added) cdrep

Respondents' contention that the present petition should be denied for failure to
file a motion for reconsideration before the appellate court is, therefore, incorrect.
Overtime Work and Overtime Pay
for Supervisory Employees
Both petitioners and respondents agree that respondents are supervising
security guards and, thus, managerial employees. The dispute lies on whether
respondents are entitled to render overtime work and receive overtime pay despite the
institution of the "no time card policy" because (1) SMC previously allowed them to
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 render overtime work and paid them accordingly, and (2) supervising security guards in
other SMC divisions are allowed to render overtime work and receive the
corresponding overtime pay.
Article 82 1 3 of the Labor Code states that the provisions of the Labor Code on
working conditions and rest periods shall not apply to managerial employees. The
other provisions in the Title include normal hours of work (Article 83), hours worked
(Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work
(Article 87), undertime not offset by overtime (Article 88), emergency overtime work
(Article 89), and computation of additional compensation (Article 90). It is thus clear
that, generally, managerial employees such as respondents are not entitled to overtime
pay for services rendered in excess of eight hours a day. Respondents failed to show
that the circumstances of the present case constitute an exception to this general rule.
First, respondents assert that Article 100 1 4 of the Labor Code prohibits the
elimination or diminution of bene ts. However, contrary to the nature of bene ts,
petitioners did not freely give the payment for overtime work to respondents.
Petitioners paid respondents overtime pay as compensation for services rendered in
addition to the regular work hours. Respondents rendered overtime work only when
their services were needed after their regular working hours and only upon the
instructions of their superiors. Respondents even differ as to the amount of overtime
pay received on account of the difference in the additional hours of services rendered.
To illustrate, Layoc's records 1 5 show the varying number of hours of overtime work he
rendered and the varying amounts of overtime pay he received from the years 1978 to
1981 and from 1983 to 1994:
Number of Hours Overtime Pay
Worked Overtime Received (in Pesos)

1974 — Appointment No record No record

as guard
1975 No record No record
1976 No record No record
1977 No record No record
1978 1,424.00 5,214.88
1979 1,312.56 5,189.30
1980 1,357.50 5,155.71
1981 474.00 1,781.81
1982 — Appointment as No record No record
supervising security guard
1983 947.50 6,304.33
1984 889.00 8,937.00
1985 898.00 12,337.47
1986 1,086.60 18,085.34
1987 1,039.50 32,109.85
1988 633.00 29,126.10
1989 723.50 39,594.55
1990 376.50 21,873.33
1991 149.50 12,694.97
1992 144.00 17,403.38
1993 0.50 47.69

Aside from their allegations, respondents were not able to present anything to prove that
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 petitioners were obliged to permit respondents to render overtime work and give them
the corresponding overtime pay. Even if petitioners did not institute a "no time card
policy," respondents could not demand overtime pay from petitioners if respondents did
not render overtime work. The requirement of rendering additional service differentiates
overtime pay from bene ts such as thirteenth month pay or yearly merit increase. These
bene ts do not require any additional service from their bene ciaries. Thus, overtime pay
does not fall within the definition of benefits under Article 100 of the Labor Code. 1 6
Second, respondents allege that petitioners discriminated against them vis-a-vis
supervising security guards in other SMC divisions. Respondents state that they should
be treated in the same manner as supervising security guards in the Packaging
Products Division, who are allowed to render overtime work and thus receive overtime
pay. Petitioners counter by saying that the "no time card policy" was applied to all
supervisory personnel in the Beer Division. Petitioners further assert that there would
be discrimination if respondents were treated differently from other supervising
security guards within the Beer Division or if other supervisors in the Beer Division are
allowed to render overtime work and receive overtime pay. The Beer Division merely
exercised its management prerogative of treating its supervisors differently from its
rank-and- le employees, both as to responsibilities and compensation, as they are not
similarly situated.
We agree with petitioners' position that given the discretion granted to the
various divisions of SMC in the management and operation of their respective
businesses and in the formulation and implementation of policies affecting their
operations and their personnel, the "no time card policy" affecting all of the supervisory
employees of the Beer Division is a valid exercise of management prerogative. The "no
time card policy" undoubtedly caused pecuniary loss to respondents. 1 7 However,
petitioners granted to respondents and other supervisory employees a 10% across-the-
board increase in pay and night shift allowance, in addition to their yearly merit increase
in basic salary, to cushion the impact of the loss. So long as a company's management
prerogatives are exercised in good faith for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, this Court will uphold them. 1 8
WHEREFORE, the petition is GRANTED. The Decision dated 29 August 2001 of
the Court of Appeals in CA-G.R. SP No. 55838 ordering petitioners San Miguel
Corporation, Andres Soriano III, Francisco C. Eizmendi, Jr., and Faustino F. Galang to
pay Numeriano Layoc, Jr. overtime pay and the other respondents nominal damages is
SET ASIDE. The complaint of respondents is DISMISSED.
SO ORDERED.
Quisumbing, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

Footnotes
1. Under Rule 45 of the 1997 Rules of Civil Procedure. CTcSAE

2. Rollo, pp. 370-383. Penned by Associate Justice Bennie A. Adefuin-De La Cruz with Associate
Justices Andres B. Reyes, Jr. and Mercedes Gozo-Dadole, concurring.
3. Id. at 128-135.
4. Id. at 137-146.

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 5. Records, pp. 789-795.
6. Rollo, pp. 371-373.
7. Id. at 135.
8. Id. at 145.

9. Records, p. 795.
10. Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if
they qualify for exemption under the conditions set forth herein:
xxx xxx xxx
(b) Managerial employees, . . .
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary
duty consists of the management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge; or (iii) execute under
general supervision special assignments and tasks; and
(4) Who do not devote more than 20% of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2) and (3) above.
11. Rollo, p. 383.
12. 347 Phil. 122, 136-137 (1997) citing FLORENZ D. REGALADO, REMEDIAL LAW
COMPENDIUM 543-544 (6th ed. 1997).
13. Art. 82. Coverage. — The provisions of this Title [Working Conditions and Rest Periods] shall
apply to employees in all establishments and undertakings whether for profit or not, but
not to government employees, managerial employees, field personnel, members of the
family of the employer who are dependent on him for support, domestic helpers, persons
in the personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of
the management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff.

xxx xxx xxx

14. Article 100. Prohibition Against Elimination or Diminution of Benefits. — Nothing in this
Book [Conditions of Employment] shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of promulgation of
this Code.
15. Records, pp. 131-138.
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 16. See Manila Jockey Club Employees Labor Union — PTGWO v. Manila Jockey Club, Inc., G.R.
No. 167760, 7 March 2007, 517 SCRA 707.
17. See Records, pp. 49-86.

18. San Miguel Brewery Sales Force Union (PTGWO) v. Ople, G.R. No. 53515, 8 February 1989,
170 SCRA 25.

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