Price Stabilization Corporation vs Court of Industrial Relations and PRISCOs Worker Union (GR No.

L-13806, May 23, 1960)

Facts: PRISCO Worker's Union (the union) filed with the CIR a petition praying that PRISCO be ordered to pay its present employees to pay its present employees, claimants-members of the said Union, (1) their basic pay and at least 25 per cent additional compensation for one hour overtime work they had previously rendered as security guards of petitioner, from April 17, 1953 to January 13, 1954, and (2) the additional compensation of at least 25 per cent for the work they have been rendering on Sundays and legal holidays, from March 7, 1954 and on. PRISCO filed an answer denying Union's claim and asserted that such overtime, if rendered, was not authorized; some claimants that had rendered work in Sundays and legal holidays had already been paid; and that some claims have been withdrawn. CIR - issued an order requiring petitioner to pay the claimants, members of the Union, their basic pay and 25 percent additional compensation for one hour overtime work they had rendered from April 16, 1953 to January 13, 1954 (to the security guards). However, for lack of evidence and some claimants withdrawing their claim for pay for work performed on Sundays and legal holidays, the court dismissed this second claim. Petitioner filed for motion of reconsideration but was denied (3 voted for denial - 2 voted to set aside the order due to lack of jurisdiction by the court) Issues: 1) Whether the CIR has jurisdiction over the present claim 2) Whether the CIR correctly applied Articles 1393 and 1396 of the New Civil Code to the case Held: CIR decision affirmed Ratio: 1) In the case of PAFLU vs Tan, the CIR has jurisdiction over cases when: the dispute affects an industry which is indispensable in the national interest and is so certified by the President to the industrial court, when the controversy refers to the minimum wage under the Minimum Wage Law, when it involves hours of employment under the Eight-Hour Labor Law, and when it involves an unfair labor practice. In the case of Detective and Protective Bureau Incorporated vs Felipe Guevarra, et al, the Court held that the CIR has jurisdiction inasmuch as the claimants were all employees at the time of the filing of their claims. One significant principle in determining CIR's jurisdiction is that where the employeremployee relationship is still existing or is sought to be reestablished because of its wrongful severance, the CIR has jurisdiction over all claims arising out of, or in connection with employment. After the termination of the relationship and no reinstatement is sought, such claims become mere money claims, and come within the jurisdiction of the regular courts. In the present case, the claimants are, or at least were, at the time of presenting their claims, actually in the employ of PRISCO, therefore the CIR correctly took cognizance of the case. 2) In this case, the security guards who were employed were divided into three shifts of 8 hours each. They received a memorandum from the Assistant Chief Security Officer of PRISCO, directing them to reports for duty 2 hours in advance, until the order was revoked after a change of management. Petitioner contends that the said memorandum was issued without authority and they are not bound to pay for the alleged overtime. CIR found that after the enforcement of the memorandum, the guards protested to the management and instead of revoking said memorandum on the grounds that it was unauthorized, General Manager De la Cruz told the guards why it was being enforced, being a was to discipline them and that their work was only light and that 1 hour is of no importance. CIR held that it amounted to a tacit ratification of the memorandum, and applying Articles 1393 and 1396 of the New Civil Code, that any defect in the memorandum was corrected by that ratification. Petitioner urges that these articles refer to voidable contracts. SC states that a contract of employment exists between parties. When the guards were required to render an additional hour work, and complying (non-compliance was punishable by disciplinary action), a supplemental contractual obligation was created both under the terms of the original contract of employment and of the Eight-Hour Labor Law, that such additional work was to be compensated. The memorandum was originally authorized and was not illegal to the extent of not being capable of ratification by the General manager. Therefore, the CIR correctly applied Articles 1393 and 1396. Article 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right. (1311a) Article 1396. Ratification cleanses the contract from all its defects from the moment it was constituted. (1313)