4. National Sugar Refineries Corp. v.
NLRC (Pat) the managerial staff:
24 March 1993 | J. Regalado | When considered a managerial employee
PETITIONER: National Sugar Refineries Corp.
RESPONDENTS: NLRC and NBSR Supervisory Union, (PACIWU) TUCP
SUMMARY:
The privatized Batangas refinery of NASUREFCO implemented a Job
Evaluation program which resulted in the re-evaluation of the positions of the
employees, including the Union members who were then granted salary
adjustments and increases in benefits commensurate to their actual duties and
functions. 2 years after the JEP implementation, the Union members filed a
complaint for non-payment of overtime, rest day and holiday pay allegedly in
violation of Article 100 of the Labor Code. Both LA and NLRC ruled in favor of
the Union members and held that they were not managerial employees based on
the definition found in Art. 212 (m) of the Labor Code. Hence this petition
before the SC.
NASUREFCO argues that the Union members are considered managerial
employees under Art. 82 and Sec. 2, Rule I, Book III of the LC IRR, which
should be the applicable Labor Code provision (in determining entitlement to the
payments claimed) and not Art. 212 (m). The SC held that the members of the
union discharge duties and responsibilities which ineluctably qualify them as
officers or members of the managerial staff under Art. 82 and Sec. 2, Rule I,
Book III of the LC IRR. The supervisory employees are under the direct
supervision of their respective department superintendents and that generally
they assist the latter in planning, organizing, staffing, directing, controlling
communicating and in making decisions in attaining the company's set goals and
objectives. They are likewise responsible for the effective and efficient operation
of their respective departments. Since they are managerial employees, they are
not entitled to the payments claimed.
DOCTRINE:
Employees with the following functions are qualified as officers or members of
1. their primary duty consists of the performance of work directly related
to management policies of their employer;
2. they customarily and regularly exercise discretion and independent
judgment;
3. They regularly and directly assist the managerial employee whose
primary duty consist of the management of a department of the
establishment in which they are employed
4. they execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; (5)
they execute, under general supervision, special assignments and tasks;
and
5. they do not devote more than 20% of their hours worked in a work-
week to activities which are not directly and clearly related to the
performance of their work hereinbefore described.
FACTS:
1. National Sugar Refineries Corporation (NASUREFCO) is a corporation
fully owned and controlled by the Government. It operates 3 sugar
refineries in Bukidnon, Iloilo and Batangas. The Batangas refinery was
privatized in 1992.
2. The NBSR Supervisory Union (Union) represents the former supervisors
of the NASUREFCO Batangas Sugar Refinery.
3. In 1988, NASUREFCO implemented a Job Evaluation (JE) Program
affecting all employees, from rank-and-file to department heads. It was
designed to rationalize the duties and functions of all positions,
reestablish levels of responsibility, and recognize both wage and
operational structures. Jobs were ranked according to effort,
responsibility, training and working conditions and relative worth of the
job.
4. As a result, all positions were re-evaluated, and all employees including
the members of the Union were granted salary adjustments and increases
in benefits commensurate to their actual duties and functions.
5. For about ten years prior to the JE Program, the members of the Union b. The supervisory employees are merely exercising
were treated in the same manner as rank-and-file employees. As such, recommendatory powers subject to the evaluation, review and
they used to be paid overtime, rest day and holiday pay pursuant to the final action by their department heads; their responsibilities do
provisions of Articles 87, 93 and 94 of the Labor Code as amended. not require the exercise of discretion and independent judgment;
6. The following are the adjustments made under the JEP: they do not participate in the formulation of management
a. Union members were re-classified under levels S-5 to S-8 which policies nor in the hiring or firing of employees; and their main
are considered managerial staff for purposes of compensation function is to carry out the ready policies and plans of the
and benefits; corporation.
b. There was an increase in basic pay of the average of 50% of 10. Hence this petition before the SC. NASUREFCO argues that members of
their basic pay prior to the JEP with the union members now union are members of the managerial staff who are not entitled to
enjoying a wide gap (P1,269.00 per month) in basic pay overtime, rest day and holiday pay.
compared to the highest paid rank-and-file employee;
c. Longevity pay was increased on top of alignment adjustments; ISSUES:
d. They were entitled to increased company COLA of P225.00 per 1. Whether the Union members, as supervisory employees, are to be
month; considered as officers or members of the managerial staff - YES
e. There was a grant of P100.00 allowance for rest day/holiday
work. RATIO:
7. 2 years after the implementation of the JE Program, the Union members
filed a complaint with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100
of the Labor Code.
8. Labor Arbiter → ordered NASUREFCO to pay because
a. The long span of time during which benefits were paid to the
supervisors has ripened into a contractual obligation
b. Union cannot be estopped from questioning the validity of the
new compensation package despite the benefits received
because the union was formed only a year after the JEP was
implemented (and thus the supervisors were not able to express
collective response)
9. NLRC → affirmed LA on the following grounds
a. Union members are not managerial employees based on the
definition in Art. 212(m) of the Labor Code
 1. Don’t use Art. 212(m)1 in defining managerial employees. The applicable
provisions of law are found in Art. 82 2 of the Labor Code & Section 2,
Rule I, Book III of the Rules to Implement the Labor Code.3
1 Art. 212(m). "(m) 'Managerial employee' is one who is vested with powers or
prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharged, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer effectively
recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees
not falling within any of those above definitions are considered rank-and-file employees of
this Book."
2 Art. 82. Coverage. — The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government
employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the personal
service of another, and workers who are paid by results as determined by the Secretary of
Labor in Appropriate regulations.
As used herein, 'managerial employees' refer to those whose primary duty
consists of the management of the establishment in which they are employed or of a
department or subdivision thereof, and to other officers or members of the
managerial staff.
3 Sec. 2. Exemption. — The provisions of this rule shall not apply to the following
persons if they qualify for exemption under the condition set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in
which they are employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees
therein:
(3) They have the authority to hire or fire other employees of lower rank; or
their suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other
employees are given particular weight.
2. A cursory perusal of the Job Value Contribution Statements of the union
members will readily show that these supervisory employees are under
the direct supervision of their respective department superintendents
and that generally they assist the latter in planning, organizing,
staffing, directing, controlling communicating and in making
decisions in attaining the company's set goals and objectives. These
supervisory employees are likewise responsible for the effective and
efficient operation of their respective departments.
3. It is apparent that the members of the union discharge duties and
responsibilities which ineluctably qualify them as officers or members of
the managerial staff, as defined in Section 2, Rule I Book III of the
aforestated Rules to Implement the Labor Code.
4. The union members should be considered as officers and members of the
5. managerial staff and are, therefore, exempt from the coverage of Article
82. Perforce, they are not entitled to overtime, rest day and holiday.
6. Prior to the JE Program, the union members, while being supervisors,
received benefits similar to the rank-and-file employees such as
overtime, rest day and holiday pay, simply because they were treated in
the same manner as rank-and-file employees, and their basic pay was
nearly on the same level as those of the latter, aside from the fact that
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee
whose primary duty consists of the management of the establishment in which
he is employed or subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special training, experience,
or knowledge; or (iii) execute under general supervision special assignments and
tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a work-
week to activities which are not directly and closely related to the performance of
the work described in paragraphs (1), (2), and above.
 their specific functions and duties then as supervisors had not been
properly defined and delineated from those of the rank-and-file.
7. After the JE Program there was an ascent in position, rank and salary.
This in essence is a promotion which is defined as the advancement from
one position to another with an increase in duties and responsibilities as
authorized by law, and usually accompanied by an increase in salary.
8. With the promotion of the union members, they are no longer entitled to
the benefits which attach and pertain exclusively to their positions.
9. If the union members really wanted to continue receiving the benefits
which attach to their former positions, there was nothing to prevent them
from refusing to accept their promotions and their corresponding
benefits.
10. Promotion of its employees is one of the jurisprudentially-recognized
exclusive prerogatives of management, provided it is done in good faith.
In the case at bar, the union has miserably failed to convince this Court
that NASUREFCO acted in bad faith in implementing the JE Program.
There is no showing that the JE Program was intended to circumvent the
law and deprive the members of respondent union of the benefits they
used to receive.

SEPARATE OPINIONS: None