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Manila Terminal Co. v.

Court of Industrial Relations and Manila Terminal Relief and Mutual

Aid Association
16 July 1952
Paras, C.J.

 Petitioner Manila Terminal Co. undertook the arrastre service in some of the piers in Manila
at the request and under the control of the US Army right after WWII. Petitioner hired about
30 men as watchmen on 12-hours shifts, compensated at P3/day for the day shift and
P6/day for the night shift.
 Early 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’s salaries were increased to P4/day (day shift) and
P6.25/day (night shift).
 In March and April 1947, several members of the respondent Manila Terminal Relief and
Mutual Aid Association (hereinafter the Association) requested the Department of Labor to
investigate the matter of their overtime pay. However, the Department did nothing.
 On May 27, 1947, petitioner instituted the system of strict 8-hour shifts.
 The Association was granted certification by the Department of Labor and officially
organized only on July 16, 1947. On July 28, they filed a petition with the Court of Industrial
Relations (CIR) praying, among others, that the petitioner be ordered to pay its watchmen
overtime pay from the commencement of their employment.
 On May 9, 1949, the petitioner’s entire police force was consolidated with the Manila Harbor
Police of the Customs Patrol Service by virtue of Customs Administrative Order No. 81 and
EO No. 228.
 The CIR ordered the petitioner to pay its police force regular/base pay and other additional
compensation. However, with respect to the overtime pay after the watchmen had been
integrated into the Manila Harbor Police, the court said that it has no jurisdiction because it
affects the Bureau of Customs. Both parties filed their respective MRs, which were both
denied by the CIR. The petitioner filed the present petition for certiorari with the SC.

1. Does the CIR have jurisdiction to render a money judgment involving obligation in arrears?
2. Does the agreement under which the petitioner’s police force was paid certain specific
wages for 12-hour shifts include overtime compensation?
3. Is the Association barred from recovery by estoppel and laches?
4. Does the nullity/invalidity of the employment contract preclude any recovery by the
5. Does Commonwealth Act No. 4444 authorize recovery of back overtime pay?


1. Yes
 Court already ruled on this issue in the case of Detective & Protective Bureau, Inc. v. CIR
and United Employees Welfare Association.
o “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.”
In fact, the SC had previously upheld a CIR decision requiring the Elks Club to pay to
its employees certain sum of money as overtime back wages.
2. No
 Petitioner asserts that the contract between it and the Association upon commencement
of the employment was to the certain rates of pay, including overtime compensation,
namely P3/day (day shift) and P6/day (night shift) beginning Sept. 1, 1945, and P4/day
(day shift) and P6.25 (night shift) beginning Feb. 1946.
 However, this contention was not shown by the record. The petitioner has relied merely
on the fact that its watchmen had worked on 12-hour shifts at specific wages per day.
 In times when employment is scarce, people go from place to place in search for any
employment, regardless of the terms and conditions. Petitioner’s watchmen must have
railroaded themselves into their employment, but they found themselves required to
work 12 hours a day.
 After the petitioner had instituted the strict 8-hour shifts, no reduction was made in the
salaries which its watchmen received under the 12-hour arrangement. 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 12-hour shifts included overtime pay.
3. No
 It would be contrary to the spirit of the Eight Hour Labor Law, under which the laborers
cannot waive their right to extra compensation.
 The law principally obligates the employer to serve it, so much so that it punishes the
employee 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 estoppel and laches 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.
4. No
 This argument, based on the supposition that the parties are in pari delicto, was turned
down in the case of Gotamo Lumber Co. v. CIR, where the Court ruled that “the present
law [Commonwealth Act No. 444] in effect imposed [the duty to secure the permit from
the Department of Labor] upon the employer. 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.
5. No
 Sections 3 and 5 of C.A. 444 expressly provides for the payment of extra compensation
in cases where overtime services are required, with the result that the employees 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 failing to provide for and pay
overtime compensation.