G.R. No. L-16223, L-16224, L-16225. February 27, 1962.
FERMIN REOTAN, SILVESTRE REOTAN, and PRAXEDES BALANE, plaintiffs-appellees, vs. NATIONAL RICE AND CORN CORPORATION (NARIC), defendant-appellant.

FACTS

Plaintiffs Fermin Reotan, Silvestre Reotan, and Praxedes Balane were employed as guards-watchmen at different provincial agencies of the National Rice and Corn Corporation (NARIC). Due to staffing constraints, they were required by their immediate superiors to work 12-hour daily shifts to protect NARIC properties, as requests for additional guards were unapproved. They rendered these overtime services from 1946 to 1954. Their demands for overtime pay were unheeded, leading them to file claims with the Wage Administration Service, which ruled in their favor. As NARIC still refused payment, plaintiffs instituted separate actions for overtime compensation, which were jointly tried.
NARIC contested liability, arguing its internal policy, via a Board resolution, prohibited overtime pay unless specifically approved by the General Manager due to “absolute necessity.” It also contended the Eight-Hour Labor Law was inapplicable to it as a government entity, and that a prior Court of Industrial Relations (CIR) case involving NARIC workers had already adjudicated smaller amounts for the plaintiffs. It further sought to deduct periods when plaintiffs were on leave from the overtime computation.

ISSUE

The primary issue is whether NARIC is obligated to pay overtime compensation to its employees despite its internal rule requiring prior managerial approval for such pay, and whether the Eight-Hour Labor Law applies to it as a government-owned corporation.

RULING

The Supreme Court affirmed the lower court’s decision, with modification for leave deductions, holding NARIC liable for overtime pay. The legal logic is clear: internal company rules cannot negate statutory obligations. Commonwealth Act No. 444 (the Eight-Hour Labor Law) mandates overtime compensation, and Section 6 thereof voids any agreement contrary to its provisions. The Court, citing Manila Railroad Co. vs. CIR, ruled that when overtime work is necessary, benefits the company, and is performed upon the order of a competent superior, it is compensable regardless of the lack of prior approval under internal circulars. NARIC’s defense based on its resolution was thus invalid.
On the applicability of the labor law to NARIC, the Court held it was covered. Following precedents like Price Stabilization Corporation vs. CIR, the Court reiterated the doctrine that when the government engages in business, it descends to the level of a citizen and subjects itself to laws governing labor relations. The fact that the Civil Service Law applied to NARIC employees concerned tenure and removal, not the waiver of labor standards like overtime pay. The prior CIR case did not bar the present action, as it involved different parties and a distinct cause of action. Finally, the Court ordered the deduction of the plaintiffs’ documented leave days from the overtime computation, as these were periods no service was rendered. The decision was thus affirmed with this modification.