Red V Coconut Products, Ltd. vs. Court of Industrial Relations

Workers paid on a piece-work basis but whose working hours are fixed by the employer are entitled to the night shift differentials stipulated in a collective bargaining agreement, because they do not fall within the exclusion of piece-workers from the Eight-Hour Labor Law, that exclusion being premised on the worker's freedom from fixed hours of work.

Red V Coconut Products, Ltd. is a corporation with its principal office and desiccated coconut factory in Lucena City, employing several hundred workers, approximately 800 of whom are members of the labor union Tanglaw ng Paggawa. The union and the company entered into a collective bargaining agreement on July 15, 1958, and a subsequent one on October 5, 1961, to expire on October 31, 1965. Both agreements provided for the payment of shift differentials to night shift workers — ₱0.35 for the second shift and ₱0.55 for the third shift. The factory operated under two work groups: Group A, on three eight-hour shifts, and Group B, on two twelve-hour shifts, with workers in Group B alternating between the first shift (4 A.M. to 4 P.M.) and the second shift (4 P.M. to 4 A.M.) every week.

Red V Coconut Products, Ltd. operates a desiccated coconut factory in Lucena City, employing several hundred workers, about 800 of whom are members of the labor union Tanglaw ng Paggawa. The union and the company executed a collective bargaining agreement on July 15, 1958, and a subsequent one on October 5, 1961, set to expire on October 31, 1965. Both agreements provided for the payment of shift differentials to night shift workers, stipulating ₱0.35 for the second shift and ₱0.55 for the third shift.

The factory maintained two groups of workers. Group A worked three eight-hour shifts: the first from 4 A.M. to 12 noon (no differential), the second from 12 noon to 8 P.M. (₱0.35 differential), and the third from 8 P.M. to 4 A.M. (₱0.55 differential). Group B worked two twelve-hour shifts: the first from 4 A.M. to 4 P.M. (no differential) and the second from 4 P.M. to 4 A.M. (₱0.55 differential). Workers in Group B — shellers, parers, counters, and haulers — changed shift assignments every week, such that each worked the first shift for two alternate weeks per month and the second shift for two alternate weeks per month.

On January 17, 1962, Tanglaw ng Paggawa and some 300 Group B workers filed a petition in the Court of Industrial Relations, alleging that their night work from 4 P.M. to 4 A.M. was equivalent to the combined second and third shifts of Group A, for which Group A workers received a total differential of ₱0.90 (₱0.55 plus ₱0.35). Since Group B workers received only ₱0.55 for the same night hours, they claimed an additional ₱0.35 per night, computed at ₱186.90 per worker, or a total of approximately ₱65,228.10, covering the period from July 15, 1958 to the date of the petition. The company moved to dismiss on January 28, 1962, contending the CIR lacked jurisdiction because the claim was a simple money claim involving interpretation of a collective bargaining agreement, which pertained to the regular courts.

The CIR denied the motion to dismiss on February 17, 1962, characterizing the claim as one for unpaid overtime pay of laborers still employed by the company. After trial, the CIR found that the workers were engaged on a pakiao or piece-work basis and therefore not entitled to overtime pay under the Eight-Hour Labor Law, but held that the claim for night shift differentials under the CBA was meritorious, reasoning that since the company paid night differentials indiscriminately to both Group A and Group B night workers, the payments should be uniform and equal — that is, ₱0.90. The CIR accordingly ordered payment of the deficiency differentials to Group B workers.

• Jurisdiction: Petitioner contended that the case involved a mere money claim over which the Court of Industrial Relations had no jurisdiction, relying on rulings such as PRISCO vs. PRISCO Workers Union, SMB vs. Betia, and Tiberio vs. Manila Pilots Assn.

• Jurisdiction: Whether the Court of Industrial Relations had jurisdiction over the petition for shift differential pay, given petitioner's contention that the claim was a simple money claim involving interpretation of a collective bargaining agreement.
• Entitlement to Differentials: Whether Group B workers, paid on a piece-work basis, are entitled to the full night shift differential of ₱0.90 stipulated in the collective bargaining agreement for 12 hours of night work, despite the Eight-Hour Labor Law's exclusion of piece-workers.

• Jurisdiction: Yes. Jurisdiction is determined by the allegations in the petition, which showed employed workers claiming differential pay for 12-hour shifts, bringing the claim within the CIR's jurisdiction as one for overtime pay by workers still employed by the company.
• Entitlement to Differentials: Yes. The workers, though paid on a piece-work basis, had fixed hours set by the employer, distinguishing them from the pure piece-workers contemplated by the Eight-Hour Labor Law's exclusion, and the company freely adhered to the CBA's shift differential provisions by actually paying differentials, albeit not in full.

• Jurisdiction: It is axiomatic that jurisdiction is determined by the allegations in the petition or complaint. Although the petition did not expressly mention the Eight-Hour Labor Law, it clearly alleged that the petitioners-laborers "are working in the Red V Coconut Products, Ltd." and "work in two (2) shifts consisting of approximately 12 hours each shift." From these allegations, the petition was properly regarded as one for overtime pay by workers still employed by the company, falling within the CIR's jurisdiction rather than being a simple money claim for the regular courts. The fact that evidence adduced during trial showed the workers were on a piece-work basis did not affect jurisdiction, which was already acquired, as jurisdiction once acquired continues until final adjudication.

• Entitlement to Differentials: Although the Eight-Hour Labor Law excludes workers who prefer to be paid on a piece-work basis (Section 2, CA 444), nothing in the law precludes an agreement for the payment of overtime compensation to piece-workers. By agreeing to the shift differential provisions in the collective bargaining agreements and actually paying differentials — though not in full — the company freely adhered to an application of the Eight-Hour Labor Law's objectives to these workers. While the CBA speaks of differentials for the "second shift" and "third shift" and Group B has no third shift, Group B's second shift performs work equivalent to the corresponding night shifts of Group A combined. The workers are also not strictly under the full concept of piece-workers as contemplated by law, because their 12-hour shifts are fixed by the employer. As ruled in Lara vs. Del Rosario, the philosophy underlying the exclusion of piece-workers is that they are paid depending on the work done "irrespective of the amount of time employed" in doing said work. Since the Group B workers' hours are fixed by the employer, they do not enjoy the freedom as to hours of work that characterizes true piece-workers, and should be deemed pro tanto within the scope of the law for the purpose of recovering the full differential pay stipulated in the CBA.

• Determination of Jurisdiction by Allegations in the Complaint — Jurisdiction is determined by the allegations in the petition or complaint, not by the evidence adduced during trial. If the allegations show a claim within the tribunal's competence, jurisdiction is acquired and continues until final adjudication, regardless of subsequent developments such as evidence revealing a different character of employment.
• Piece-Worker Exclusion from the Eight-Hour Labor Law — The exclusion of piece-workers from the Eight-Hour Labor Law (Section 2, CA 444) is premised on the philosophy that piece-workers are paid depending on the work they do, irrespective of the time employed. Workers whose hours are fixed by the employer do not fall squarely within this exclusion and may be deemed within the law's scope pro tanto, at least for purposes of recovering differential pay stipulated in a collective bargaining agreement.
• Jurisdiction Once Acquired Continues — Jurisdiction, once acquired by a court or tribunal over a case, continues until the final adjudication of the litigation, and is not defeated by facts subsequently disclosed during trial.

• "It is exiomatic that to determine the issue of jurisdiction resort is to be made to the allegations in the petition or complaint." — This passage states the controlling rule for determining jurisdiction, which the Court applied to hold that the CIR properly took cognizance of the claim based on the petition's allegations showing employed workers seeking differential pay for 12-hour shifts.
• "the laborers in question are not strictly under the full concept of piece-workers as contemplated by law for the reason that their hours of work — that is, 12 hours per shift — are fixed by the employer." — This passage articulates the ratio decidendi for the second issue, distinguishing the Group B workers from true piece-workers and establishing that fixed hours of work bring them within the protective scope of the Eight-Hour Labor Law for purposes of claiming CBA-stipulated differentials.
• "Such freedom as to hours of work does not obtain in the case of the laborers herein involved, since they are assigned by the employer to work in two shifts for 12 hours each shift. Thus it cannot be said that for all purposes these workers fall outside the law requiring payment of compensation for work done in excess of eight hours." — This passage applies the Lara vs. Del Rosario rationale to the facts, explaining why the piece-worker exclusion does not fully apply to workers whose shifts are fixed by the employer.

• Lara vs. Del Rosario, 94 Phil. 780 (1954) — Followed. The Court relied on this case for the principle that the exclusion of piece-workers from the Eight-Hour Labor Law is premised on the worker's freedom from fixed hours, as piece-workers are paid irrespective of time employed. This rationale was applied to distinguish Group B workers, whose hours were fixed by the employer, from true piece-workers.
• Pamintuan vs. Tiglao, 53 Phil. 1 — Followed. Cited for the doctrine that jurisdiction, once acquired, continues until final adjudication of the litigation.
• PLASLU vs. CIR, 93 Phil. 747 — Followed. Cited in support of the principle that jurisdiction once acquired is not lost.
• PRISCO vs. CIR, L-18306, May 23, 1960 — Distinguished. Petitioner relied on PRISCO vs. PRISCO Workers Union and related cases to argue the CIR lacked jurisdiction, but the Court found the allegations in the petition brought the claim within the CIR's jurisdiction as one for overtime pay by employed workers.

• Section 2, Commonwealth Act No. 444 (Eight-Hour Labor Law) — This provision excludes from the Eight-Hour Labor Law workers who prefer to be paid on a piece-work basis. The Court held that while this exclusion applies to true piece-workers — those paid irrespective of time employed — it does not fully apply to workers whose hours are fixed by the employer, and nothing in the law precludes an agreement for overtime compensation to piece-workers.

Concepcion, C.J., and Justices Reyes (J.B.L.), Barrera, Dizon, Regala, Makalintal, Zaldivar, and Sanchez concurred.