G.R. No. L-13806; May 23, 1960
PRICE STABILIZATION CORPORATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and PRISCO WORKER’S UNION, ET AL., respondents.

FACTS

The respondent PRISCO Worker’s Union filed a petition with the Court of Industrial Relations (CIR) against the petitioner Price Stabilization Corporation (PRISCO). The Union sought payment for its member-employees of: (1) basic pay plus at least 25% additional compensation for one hour of overtime work rendered daily as security guards from April 17, 1953, to January 13, 1954; and (2) additional compensation for work on Sundays and legal holidays from March 7, 1954, onward. PRISCO, in its answer, denied liability for the one-hour overtime, claiming it was not authorized, and stated that Sunday/holiday work from March 6, 1954, had already been paid, noting that part of this claim had been withdrawn. After hearing, the CIR ordered PRISCO to pay the basic pay and 25% additional compensation for the one-hour overtime from April 16, 1953, to January 13, 1954, but dismissed the claim for Sunday/holiday pay due to lack of evidence and a withdrawal petition from 59 of the 131 claimants. PRISCO’s motion for reconsideration resulted in a divided CIR en banc vote: two judges voted for denial, two voted to set aside the order for lack of jurisdiction, and one judge concurred in denial on the ground that the jurisdictional issue was not raised in the pleadings. PRISCO then filed this petition for review.

ISSUE

1. Whether the Court of Industrial Relations had jurisdiction over the Union’s claim for overtime pay.
2. Whether the CIR correctly applied Articles 1393 and 1396 of the new Civil Code to the case.

RULING

1. On Jurisdiction: The Supreme Court ruled that the CIR had jurisdiction. The Court clarified the principle governing the CIR’s jurisdiction over money claims: the CIR has jurisdiction over all claims arising out of or in connection with employment, such as those under the Eight-Hour Labor Law, when the employer-employee relationship is still existing or is sought to be reestablished (as when reinstatement is sought). After the relationship is terminated and no reinstatement is sought, such claims become mere money claims falling under the jurisdiction of regular courts. In this case, the claimants were, or at least were at the time of filing their claim, actually in the employ of PRISCO. Therefore, the CIR correctly took cognizance of the case.
2. On Application of the Civil Code: The Supreme Court ruled that the CIR correctly applied Articles 1393 and 1396. The overtime work was required by a memorandum from PRISCO’s Assistant Chief Security Officer. PRISCO contended this memorandum was unauthorized. However, the CIR found that after the security guards protested to PRISCO’s management (including the General Manager), instead of revoking the order, the General Manager justified it, stating it was for discipline and that the extra hour was of no importance. This conduct constituted a tacit ratification by a duly authorized official, curing any initial defect in the memorandum’s authorization. The Court held that the memorandum, though initially possibly unauthorized, was not illegal to the point of being incapable of ratification. It created a supplemental contractual obligation under the original employment contract and the Eight-Hour Labor Law for the additional work to be compensated. Thus, Articles 1393 (on tacit ratification) and 1396 (on ratification cleansing defects) were properly applied.
The decision of the Court of Industrial Relations was affirmed.