San Miguel Corporation vs. Layoc, Jr.

Employer (D) vs. Supervisory Security Guard (P)
GR 149640, October 19, 2007	[T]

Summary: A "no time card policy" for supervisory security guards was implemented thereby eliminating the recording of overtime hours. It is being challenged as a diminution of benefits.

Rule of Law: Article 82 of the Labor Code provides that working conditions and rest periods shall not apply to managerial employees.

Facts: Layoc (P) was among the “Supervisory Security Guards” of the Beer Division of the San Miguel Corporation. From the start of their employment, Layoc (P) and other supervisory security guards were required to punch their time cards for purposes of determining the time they would come in and out of the company’s work place.

Then, San Miguel Corporation (D) embarked on a Decentralization Program and implemented a “no time card policy” whereby supervising security guards of the Beer Division were no longer required to use time cards. In lieu of the overtime pay and the premium pay, the personnel of the Beer Division affected were given a 10% across-the-board increase on their basic pay while the supervisors who were assigned in the night shift were given night shift allowance ranging from P2,000.00 to P2,500.00 a month.

The labor arbiter ruled that there is a diminution of benefits. The NLRC affirmed this ruling. The appellate court affirmed the decision with modifications.

Issues: Is the present case an exception to the rule that supervisory employees are not entitled to overtime pay?

Ruling: No. Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not apply to managerial employees. It is thus clear that, generally, managerial employees such as respondents are not entitled to overtime pay for services rendered in excess of eight hours a day. Layoc (P) failed to show that the circumstances of the present case constitute an exception to this general rule.

Layoc (P) was not able to prove that SMC (D) were obliged to permit them to render overtime work and give them the corresponding overtime pay. Even if SMC (D) did not have a “no time card policy,” Layoc (P) could not demand overtime pay if they did not render overtime work. The requirement of rendering additional service differentiates overtime pay from benefits such as 13th month pay or yearly merit increase. These benefits do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code.