Manila Terminal Co., Inc. v.

CIR

FACTS
MTC undertook arrastre service in some of the piers in Manila's Port Area at the request and under the
control of the United States Army. They hired some 30 watchmen on twelve-hour shifts at a
compensation of P3/day for the day shift and P6/night for the night shift.
o 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/day and
P6.25/night. The private respondent sent a letter to Department of Labor requesting that the
matter of overtime pay be investigated. But nothing was done by the Dept of Labor.
o Later on, MTC instituted the system of strict eight-hour shifts.
The private respondent filed an amended petition with the Court of Industrial Relations praying, among
others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment.
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 (the
Association hereinafter).
CIR: 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;
(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.
but as regards to overtime service after the watchmen had been integrated into the Manila Harbor
Police, said that it 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.
MR by both parties: both denied.
CIR: pay the private respondents their overtime on regular days at the regular rate and additional
amount of 25 percent, overtime on Sundays and legal holidays at the regular rate only, and watchmen
are not entitled to night differential pay for past services.

ISSUE + RULING
Should overtime pay be granted to the workers? YES.
MTC stressed that the contract between it and the Association stipulates 12 hrs a day at certain
rates including overtime, but the record does not bear out these allegations.
o In times of acute employment, people go from office to office to search for work, and the
workers here found themselves required to render 12 hrs a day.
o True, there was an agreement, but did the workers have freedom to bargain much less insist
in the observance of the Eight Hour Labor Law? chos
SC: noted that CIR instituted 8 hr shifts, no reduction was made in salaries, which its watchmen
received under the 12 hr agreement.
MTCs allegation that the Association had acquiesced in the 12 hr shifts for more than 18 mos is not
accurate. Only one of the members entered in September 1945 and the rest followed during the
next few months.
o The Association cant be said to have impliedly waived the right to overtime pay, for the
obvious reason that it could not have expressly waived it.
 o Estoppel and laches cant also be invoked against Association First, it is contrary to spirit
of the Eight Hour Labor Law; Second, law obligates employer to observe it; Third, employee
is at a disadvantage as to be reluctant in asserting any claim.
o The argument that the nullity of the employment contract precludes recovery by the
Association of overtime pay is untenable. The employer may not be heard to plead its own
neglect as exemption or defense.
o Also, CA 444 expressly provides for payment of extra compensation in cases where
overtime services are required.
The point that payment of overtime pay may lead to ruin of the petitioner cant be accepted. It is
significant that not all watchmen should receive back overtime pay for the whole period, since the
members entered the firm in different times.
The Eight-Hour Labor Law was designed not only to 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.
Doctrinal shit:
1. *** 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.
2. The right of employees and laborers to overtime compensation cannot be waived expressly or
impliedly.
3. 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.
4. 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.
5. 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.