National Shipyards and Steel Corporation vs. Court of Industrial Relations

Seamen are entitled to overtime compensation only for actual service rendered in excess of eight hours per day, not for every hour they are required to remain on board their vessel beyond regular working hours. The fact that a bargeman must stay aboard his barge for immediate availability does not, without proof of actual work performed, entitle him to overtime pay for the entire period of his stay.

National Shipyards and Steel Corporation (NASSCO), a government-owned and controlled corporation, was engaged in shipbuilding and repair and owned several barges and tugboats used in transporting cargoes and personnel. Its bargemen, including respondent Dominador Malondras, were required to stay aboard their respective barges so they could be called to duty whenever needed; for this reason they were provided living quarters on board and a subsistence allowance of ₱1.50 per day. With prior authority from superior officers, bargemen could leave their barges when the vessels were idle. The governing statute was Commonwealth Act No. 444, the Eight-Hour Labor Law, which defined the legal working day as not more than eight hours daily and excluded from compensable hours those periods when a laborer was not working and could leave his working place and rest completely.

National Shipyards and Steel Corporation (NASSCO), a government-owned and controlled corporation engaged in shipbuilding and repair, owned several barges and tugboats used in transporting cargoes and personnel. Its bargemen, including respondent Dominador Malondras, were required to stay aboard their respective barges so they could be called to duty whenever their services were needed. For this arrangement, they were given living quarters on board and a subsistence allowance of ₱1.50 per day during the time they were on board. With prior authority from superior officers, they could leave their barges when the vessels were idle.

On April 15, 1957, thirty-nine crew members of NASSCO's tugboat service, including Malondras, filed a complaint with the Court of Industrial Relations for payment of overtime compensation (Case No. 1059-V). In the course of the proceedings, the parties entered into a stipulation of facts in which NASSCO recognized and admitted that the crew members had to work in excess of eight hours a day and/or during Sundays and legal holidays when required by the exigencies of service, and that they were paid regular salaries and subsistence allowance without additional compensation for overtime work. Pursuant to this stipulation, the Industrial Court on November 22, 1957 ordered the court examiner to compute the overtime compensation due the claimants.

The examiner's first partial report, submitted on February 14, 1958, covered the period from January 1 to December 31, 1957, and found that the claimants, including Malondras, rendered an average of five overtime hours each day. Upon approval, all claimants were paid. The examiner's second partial report, submitted on April 30, 1958, covered the period from January 1, 1954 to December 31, 1956, again crediting each crewman an average of five overtime hours daily. Malondras was excluded from this report because his daily time sheets were not then available; the other crewmen concerned were paid.

Because of his exclusion, and his time sheets having been located in the meantime, Malondras filed petitions on September 18, 1959 in the same case seeking overtime compensation for the period from January 1, 1954 to December 31, 1956, and from January 1 to April 30, 1957. NASSCO opposed, arguing that its records did not indicate the actual number of working hours rendered by Malondras during the periods in question. The Industrial Court ordered the examiner to examine the log books, daily time sheets, and other pertinent records to determine and compute Malondras's overtime service. The chief examiner's report of January 15, 1960 credited Malondras with 4,349 overtime hours at an average of five hours a day, recommending ₱2,790.90 after deducting subsistence allowance. On February 20, 1960, the Court ordered a re-examination without deducting subsistence allowance. The amended report of April 23, 1960 credited Malondras with an average of sixteen overtime hours a day, recommending ₱15,242.15. This report was approved by the Industrial Court on May 6, 1960 over NASSCO's vigorous objections; the motion for reconsideration was denied en banc with one judge dissenting.

The examiner had relied solely on Malondras's daily time sheets, which, although approved by NASSCO's officers and auditors, did not show the actual number of hours worked each day. The entries indicated only that Malondras was on "Detail" or "Detailed on Board," which the officer in charge explained meant he was on the boat for twenty-four hours. The examiner interpreted this to mean that as long as Malondras was on board for twenty-four hours, he should be paid overtime for sixteen hours—the time in excess of the legal eight working hours during which he could not leave his barge. NASSCO contended that mere presence on board did not entitle him to overtime for sixteen hours, but only for actual service in excess of eight hours that he could prove.

• Standard for Overtime: Petitioner argued that the mere fact Malondras was required to be on board his barge all day so he could be called to duty when needed does not imply he should be paid overtime for sixteen hours a day; he should receive compensation only for actual service in excess of eight hours that he can prove.
• Deduction of Subsistence Allowance: Petitioner contended that the subsistence allowance received by Malondras should be deducted from his overtime compensation.
• Incorrect Wage Rate for 1954: Petitioner claimed it was error for the examiner to base Malondras's overtime compensation for the whole year 1954 at ₱6.16 a day, when he was appointed in the tugboat service only on October 1, 1954, and before that was a derrick man with a daily salary of ₱6.00.
• Insufficient Records: Petitioner opposed Malondras's petition on the ground that its records did not indicate the actual number of working hours rendered by Malondras during the periods in question.

• Question of Fact: Respondents urged that the number of overtime hours was a question of fact not subject to review by the Supreme Court, there being sufficient evidence to support the Industrial Court's ruling.
• Sixteen-Hour Interpretation: Respondents contended that as long as Malondras was on board his barge for twenty-four hours, he should be paid overtime for sixteen hours a day—the time in excess of the legal eight working hours during which he could not leave his barge.
• Wage Rate for 1954: Respondent Malondras asserted that the examiner's report, based on his time sheets from January 1, 1954, showed he had already been rendering overtime service from that date, without denying that he started receiving ₱6.16 a day only in October 1954.

• Overtime Entitlement Standard: Whether a seaman or bargeman required to stay on board his vessel for twenty-four hours is entitled to overtime compensation for sixteen hours a day, or only for actual service rendered in excess of eight hours.
• Deduction of Subsistence Allowance: Whether the subsistence allowance received by Malondras should be deducted from his overtime compensation.
• Correct Wage Rate for 1954: Whether the examiner erred in computing Malondras's overtime compensation for the entire year 1954 at ₱6.16 a day when he received only ₱6.00 daily before October 1954.

• Overtime Entitlement Standard: No. Malondras was entitled to overtime only for actual service rendered in excess of eight hours, not for every hour he was required to remain on board. The Court credited him with five overtime hours per day, consistent with the award to his co-claimants under identical conditions.
• Deduction of Subsistence Allowance: No. The subsistence allowance was independent of overtime compensation, having been given to bargemen because they were required to stay aboard for immediate availability; it should not be deducted from overtime pay.
• Correct Wage Rate for 1954: Yes, the examiner erred. The records had to be re-examined to determine Malondras's exact daily wage from January to September 1954, since he received only ₱6.00 daily before October 1954 and ₱6.16 thereafter.

• Overtime Entitlement Standard: The Court found that the question of how many overtime hours Malondras was entitled to was a legal question, not merely factual, because it turned on the proper interpretation of "hours of work" under Commonwealth Act No. 444. Section 1 of that law provides that the legal working day is not more than eight hours, and that "when the work is not continuous, the time during which the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest completely, shall not be counted." The Court applied the criterion set in Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, which held that a laborer need not leave the premises of the factory, shop, or boat for his rest period not to be counted; it is enough that he ceases to work, may rest completely, and may leave at his will the spot where he actually stays while working. The Court rejected the examiner's interpretation that "Detail" or "Detailed on Board" meant compensable overtime for all sixteen hours beyond the regular eight. Seamen are required to stay on board by the very nature of their duties, and they receive living quarters and subsistence allowances precisely for this reason. To pay overtime for hours spent resting or sleeping would be absurd. However, since NASSCO had already admitted in the stipulation of facts that Malondras and his co-claimants rendered service beyond eight hours when required, and since Malondras had already been paid for five hours of overtime daily for 1957, and his co-claimants had been paid five hours daily for the same periods in question, the Court found it reasonable to infer that Malondras's overtime service was consistent at five hours per day. No substantial difference existed between his case and that of his co-claimants, who served under the same conditions and period; Malondras's claim was not covered by the earlier award only because his time records had not been found.

• Deduction of Subsistence Allowance: The Court held that the subsistence allowance should not be deducted from overtime compensation. The stipulation of facts showed that the allowance was independent of overtime pay; it was given because bargemen were required to stay aboard their barges for immediate availability. NASSCO had already paid Malondras and his companions overtime for 1957 without deducting subsistence allowances, and had paid the other crewmen overtime for the other years likewise without deduction. There was no valid reason to single out Malondras and deduct his subsistence allowance from the overtime compensation still due him.

• Correct Wage Rate for 1954: The Court found that the examiner had based Malondras's overtime compensation for the entire year 1954 on a daily wage of ₱6.16, but Malondras was appointed to the tugboat service only on October 1, 1954, and before that was a derrick man earning ₱6.00 daily. Malondras did not deny this. The Court therefore ordered a re-examination of the records to determine his exact daily wage from January 1 to September 1954, and to compute his overtime compensation for those months on the basis of the correct wage rate.

• Overtime Pay for Seamen — Actual Service Required — Seamen or bargemen required to remain on board their vessels are entitled to overtime compensation only for actual service rendered in excess of eight hours per day, not for every hour they are confined on board beyond regular working hours. The nature of seafaring work requires staying aboard, for which living quarters and subsistence allowances are provided; mere presence on board without actual work does not constitute compensable overtime. The Court applied this by reducing Malondras's overtime credit from sixteen to five hours per day, consistent with the award to his co-claimants under identical conditions.

• Working Place and Rest Period Under Commonwealth Act No. 444 — Under Section 1 of the Eight-Hour Labor Law, time during which a laborer is not working and can leave his working place and rest completely shall not be counted as compensable hours. A laborer need not leave the premises of the factory, shop, or boat for rest periods not to be counted; it suffices that he ceases to work, may rest completely, and may leave at his will the spot where he actually stays while working. This criterion applies equally to seamen and land-based laborers.

• Subsistence Allowance Independent of Overtime Pay — A subsistence allowance given to seamen because they are required to stay aboard their vessels for immediate availability is independent of and has no relation to overtime compensation; it may not be deducted from overtime pay due to the employee.

• "Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. It could not have been the purpose of our law to require their employers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk, after his regular tour of duty." — This passage articulates the ratio decidendi: the distinction between mere presence on board and actual service rendered, establishing the controlling standard for seamen's overtime entitlement.

• "The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours." — This is the canonical formulation of the rule, frequently cited in subsequent labor jurisprudence on overtime for seamen.

• "a laborer need not leave the premises of the factory shop or boat in order that his period of rest shall not be counted, it being enough that he 'cease to work', may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat." — This passage, quoted from Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, defines the scope of "working place" under Commonwealth Act No. 444 and clarifies when rest periods are excluded from compensable hours.

• Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, et al., L-9265, April 29, 1957 — Controlling precedent followed. The Court relied on this case for the proposition that the definition of "hours of work" under Commonwealth Act No. 444 applies equally to seamen and land-based laborers, and that a laborer need not leave the premises for rest periods not to be counted, so long as he ceases to work, may rest completely, and may leave at his will the spot where he actually stays while working.

• Section 1, Commonwealth Act No. 444 (Eight-Hour Labor Law) — Provides that the legal working day for any person employed by another shall be not more than eight hours daily, and that when work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted. The Court applied this provision to seamen, holding that mere presence on board without actual work does not constitute compensable hours, and that the term "working place" includes the boat or vessel.
• Sections 4 and 5, Chapter III, Article 1, Code of Rules and Regulations to implement the Minimum Wage Law — Referenced as contemporary administrative regulations implementing the requisites of Section 1 of Commonwealth Act No. 444.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, and De Leon, JJ., concurred.