SECOND DIVISION 

[G.R. No. 182659 : February 24, 2010] 

DAVAO TUGBOAT AND ALLIED SERVICES, INC./CAPT. JOSE F. JORGE, CHIEF PILOT
V. EDUARDO T. VIDAMO 

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated 24 February
2010:

G.R. No. 182659 (Davao Tugboat and Allied Services, Inc./Capt. Jose F. Jorge, Chief Pilot v.
Eduardo T. Vidamo).-

This case addresses the question of whether or not a tugboat captain is entitled to overtime
pay for the period of time he is required to remain on standby duty at the port where he is
assigned.

The Facts and the Case

Petitioner Davao Tugboat and Allied Services, Inc. (the company) operated a tug assistance
service in the Port District of Davao. It hired respondent Eduardo T. Vidamo in May 1996 as a
temporary sailor until it laid him off in November 1996. On December 18, 1996 the company
rehired him as a sailor until he became the captain of the company's tugboat, the
DAVTUGVII, in l997.

As its tugboat captain, petitioner company required respondent Vidamo to remain on standby
duty, 24 hours a day, for six consecutive days at the port where he was stationed. The
company paid him compensation equivalent to 12 hours per day, consisting of eight hours of
basic pay and four hours of overtime pay. After every six workdays, he took two rest days off
with complete overtime pay for one of those two rest days.

Petitioner company claimed that respondent Vidamo often left his post for hours without
permission while on-duty, passing on his responsibilities to his second-in-command. From
1997 to 1998, the company suspended Vidamo thrice for leaving his post during working
hours without permission.

On April 16, 1999, because respondent Vidamo was nowhere to be found, petitioner
company was unable to dispatch DAVTUG VII to assist the vessel 'Asian Brier. He arrived
late. Pursuant to its policies, the company conducted an investigation, resulting in the
imposition of fines on Vidamo and his crew.

On August 7, 2001 respondent Vidamo left his post without permission to go to the Social
Security System's office in Davao City to follow up the release of his salary loan. He went
home afterwards before returning to work. He left his post at around 2:30 p.m. and came
back at around 6:30 p.m. For leaving his post, petitioner company suspended Vidamo for 30
days. He went back to work at the end of 30 days.

On January 24, 2003 respondent Vidamo left his post and went to petitioner company's office
in Davao City to get a loan. After receiving cash at around 4:00 p.m., he told a company
officer that he would just go home to give the money to his wife. But he returned to his ship
only at 7:00 p.m. The next day, petitioner company summoned Vidamo to explain why he
left his post. Finding his explanation unsatisfactory, it again suspended him for 30 days
beginning on January 29, 2003. While serving out his suspension, Vidamo filed a complaint
for illegal suspension against the company before the National Labor Relations Commission
(NLRC) Regional Arbitration Branch XL[1]

Petitioner company claimed that when respondent Vidamo came back on March 1, 2003,
following the end of his suspension, it reminded him not to repeat his offenses or else he
would be dismissed. Vidamo replied, however that he already filed a case against the
company before the NLRC. He proposed that, in exchange for his withdrawal of the case, the
company expunge his previous infractions from his records, give him an additional 12 hours
of overtime pay, and refund the fine that he paid in 1999. When the company did not
accede, he left fuming and never came back to work. Vidamo claimed, on the other hand,
that he reported back to work on March 1, 2003 but the company declined to take him back.

On March 3, 2003, respondent Vidamo amended his complaint before the NLRC to include a
charge of unpaid overtime; illegal deduction; illegal suspension; and illegal dismissal.
Subsequently, the Labor Arbiter granted the reliefs that respondent Vidamo asked, except his
claim for illegal deduction (the fine assessed him for the April 16, 1999 incident) he having
filed it beyond the three-year prescriptive period.

Petitioner company appealed to the NLRC. On August 25, 2004 its Fifth Division[2] issued a
resolution, reversing the Labor Arbiter's decision and dismissing respondent Vidamo's
complaint. Upon Vidamo's appeal to the Court of Appeals (CA),[3] however, the latter
rendered a decision[4] dated April 20, 2007, finding the petition partly meritorious. The CA
held that petitioner company properly suspended Vidamo and that it had just cause to
dismiss him. The CA noted, however, that the company did not accord him due process, thus
entitling him to nominal damages of P25,786.8O.

Finally, the CA ruled that respondent Vidamo was entitled to additional overtime pay of 12
hours a day. It held that since petitioner company required its tugboat crew to be at their
post for 24 hours a day, these constituted hours worked as defined in Article 84 of the Labor
Code. The CA reinstated the award of overtime pay of £254,476.80 as computed by the
Labor Arbiter. The CA denied Davao Tugboat's motion for reconsideration, hence, this appeal.
[5]

Issues Presented

This case presents two issues:

1. Whether or not petitioner Davao Tugboat had justifiable basis for dismissing respondent
Vidamo from his work as tugboat captain; and

2. Whether or not Vidamo is entitled to additional 12-hour overtime pay for each workday he
rendered to Davao Tugboat.

The Court's Rulings

One. The CA pointed out that, taking into account the dialogue that took place between the
parties during the mandatory conference held before the Labor Arbiter on May 27, 2003,
petitioner Davao Tugboat actually dismissed respondent Vidamo. Specifically, the Labor
Arbiter noted that Vidamo asked Davao Tugboat to reconsider its decision to dismiss him
and, instead, reinstate him. The Davao Tugboat's representative rejected the plea, however,
and insisted on proceeding with the case. The CA concluded from this that, although Davao
Tugboat had valid reason to dismiss Vidamo, it did not observe due process in dismissing
him.

But the dialogue mentioned was part of conciliation proceedings. They were, therefore,
inadmissible in evidence as provided by Article 233 of the Labor Code.[6] Besides, respondent
Vidamo had left his post at least five times without prior permission. Yet, after the fifth
offense of the same kind, the company still gave him a chance and merely suspended him for
30 days, indicating that it really wanted to take him back on March 1, 2003 at the end of his
suspension.

But, when the company reminded him on his return not to repeat his offense, he got
unreasonably annoyed and flaunted the fact that he had already filed a complaint against his
employer. He said further that he would settle only if the company would clean up his
records, pay him additional overtime pay, and refund the fine it imposed on him in 1999.
When the company did not accede to his demands, he left fuming and never came back to
work. Surely, the company had the right to treat such positive acts of insolence and refusal
to work, unless his demands were met, acts of resignation. There was nothing vague about
them.

While an employer has the burden of proving that the dismissal was for just cause and with
due process, the employee who claims that he was dismissed must first prove  the  fact of
dismissal. Unfortunately for respondent Vidamo, he has not sufficiently discharged the
burden of establishing this allegation.

Two. Petitioner Davao Tugboat claims that Vidamo worked as a seaman and, based on
prevailing jurisprudence, the company had to compensate him only for time spent doing
actual work. The company alleges that on the average, its tugboat assisted four to five
vessels a day but took it only about an hour at most to do the job for each vessel.
Consequently, Vidamo spent only about five hours of each day doing productive work. Still,
the company paid him for 12 hours to compensate for requiring him to be on standby the
whole day. The Philippine Ports Authority had classified the Davao Pilotage Area as a
Compulsory Tug Assistance Area. Tug assistance needed, therefore, to be available 24 hours
a day.

But petitioner Davao Tugboat cannot compare respondent Vidamo's situation to seafarers
working shifts on board vessels out on the sea for days without touching home port. In those
cases, the seafarers are paid only for the hours they report for duty on board ship. When off
duty, they are free to rest or sleep, read books, play games, watch television, communicate
with their families, and do what pleases them. They are not compensated for their off duty
hours. True, they are far from their homes and could not get off the ship to be with their
families. But this is the place of work they have chosen and they usually get far better wages
than their equivalent on land. This is also the reason regular seamen become entitled to
overtime pay only when they actually render work beyond the regular eight-hour work
schedule.[7]

The situation in this case is different. Although respondent Vidamo was a captain in
command of a tugboat, he was actually based on land and did no more than an hour of tug
service at a time when he had to assist a vessel approach the port and get tied to the docks
or maneuver to leave the port. After the short maneuver, the tugboat was back in anchor. It
was perfectly possible for petitioner Davao Tugboat to assign another captain and set of crew
to relieve Vidamo and his men after 12 hours of work so they can get off duty and go home
to their families. But it had chosen instead to place them on duty for 24 hours each workday
for six days. They were not then free to leave the company premises. Indeed, the company
disciplined Vidamo five times for leaving his post without prior permission while on such
duty.
In determining the number of hours worked, the Labor Code and its Implementing Rules
provides:

"ART. 84. Hours worked. - Hours worked shall include (a) all time during which an
employee is required to be on duty or to be at a prescribed workplace, and (b) all
time during which an employee is suffered or permitted to work.

Rest periods of short duration during working hours shall be counted as hours
worked."[8](Underscoring supplied)

xxxx

"SEC. 5. Waiting time. - (a) Waiting time spent by an employee shall be considered

as working time if waiting is an integral part of his work or the employee is
required or engaged by the employer to wait.

(b) An employee who is required to remain on call in the employer's premises or so

close thereto that he cannot use the time effectively and gainfully for his own
purpose shall be considered as working while on call. An employee who is not
required to leave word at his home or with company officials where he may be
reached is not working while on call."[9](Underscoring supplied)

Clearly, working hours included the time when the company required respondent Vidamo to
be on duty at his place of work. He was unable to use the time for his own purpose while
waiting for random calls for tugboat service.

Petitioner Davao Tugboat finally alleges that, as a tugboat captain, respondent Vidamo takes
command of the vessel and the three other crew members assigned to him. He should, thus,
be regarded as a managerial employee, exempt from the provisions of the Labor Code on
overtime pay.

But petitioner Davao Tugboat did not raise this defense before the Labor Arbiter, the NLRC,
or the CA. It did so for the first time already before this Court and only in its reply. Besides,
Davao Tugboat has consistently admitted paying respondent Vidamo 4 hours of overtime pay
every day of his work. This is an admission that the company did not treat him as a
manager.

In view of the three-year prescriptive period of money claims, the Labor Arbiter computed
the award of unpaid overtime at 36 months. Notably, however, Vidamo was suspended
without pay for 30 days in August 2001 and again in January 2003. So instead of 36 months,
the unpaid overtime should only be computed at 34 months. Further, he took two rest days
off after six days of work with complete overtime pay for one of those two rest days. His
overtime pay should be recomputed taking these circumstances into account.

WHEREFORE, the Court REVERSES the decision of the Court of Appeals in CA-G.R. SP

00241 dated April 20, 2007 insofar as a) it found petitioner Davao Tugboat and Allied
Services, Inc. liable for dismissing respondent Eduardo T. Vidamo without due process and b)
awarded him nominal damages of P25,786.80. The Court, however, AFFIRMS the rest of
that decision with the MODIFICATION that the award of overtime pay be recomputed upon
remand to the Labor Arbiter, taking into account the circumstances mentioned above.

SO ORDERED.

WITNESS the Honorable Antonio T. Carpio, Chairperson, Honorable Arturo D. Brion, Mariano
C. Del Castillo, Roberto A. Abad and Jose P. Perez, Members, Second Division, this 24th day
of February, 2010.

Very truly yours,

 (Sgd.) MA. LUISA L. LAUREA 
Clerk of Court

Endnotes:

[1]
 Docketed as Case RAB-XI-02-00138-03.

[2]
 Docketed as NLRC CAM-008041-2004.

[3]
 Under Rule 65, docketed as CA-G.R. SP 00241,

[4]
 Penned by Associate Justice Teresita Dy-Liacco Flores and concurred in by Associate
Justices Romulo V. Borja and Jane Aurora C. Lantion.

[5]
 Under Rule 45 of the Rules of Court.

[6]
 Pentagon Steel Corporation v. Court of Appeals, G.R. No. 174141, June 26, 2009.

[7]
 Cagampan v. National Labor Relations Commission, G.R. Nos. 85122-24, March 22, 1991,
195 SCRA 533, 542.

[8]
 Presidential Decree 442. 

[9]
 Implementing Rules of Book III, Rule I.
 FIRST DIVISION

[G.R. No. 119205.  April 15, 1998]

SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION (2ND DIVISION) and SIME
DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-
TUCP), respondents.

DECISION
BELLOSILLO, J.:

Is the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of
automotive tires, tubes and other rubber products.  Sime Darby Salaried
Employees Association (ALU-TUCP), private respondent, is an association of
monthly salaried employees of petitioner at its Marikina factory.  Prior to the
present controversy, all company factory workers in Marikina including members
of private respondent union worked from7:45 a.m. to 3:45 p.m. with a 30 minute
paid “on call” lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based
employees advising all its monthly salaried employees in its Marikina Tire Plant,
except those in the Warehouse and Quality Assurance Department working on
shifts, a change in work schedule effective 14 September 1992 thus –

TO: ALL FACTORY-BASED EMPLOYEES

RE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule

factory office will be as follows:

7:45 A.M. – 4:45 P.M. (Monday to Friday)

7:45 A.M. – 11:45 P.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. –10:30 A.M. and

2:30 P.M. –3:30 P.M.

Lunch break will be between:

12:00 NN –1:00 P.M. (Monday to Friday).

Excluded from the above schedule are the Warehouse and QA

employees who are on shifting.  Their work and break time
schedules will be maintained as it is now.[1]
Since private respondent felt affected adversely by the change in the work
schedule and discontinuance of the 30-minute paid “on call” lunch break, it filed
on behalf of its members a complaint with the Labor Arbiter for unfair labor
practice, discrimination and evasion of liability pursuant to the resolution of this
Court in Sime Darby International Tire Co., Inc. v. NLRC. [2] However, the Labor
Arbiter dismissed the complaint on the ground that the change in the work
schedule and the elimination of the 30-minute paid lunch break of the factory
workers constituted a valid exercise of management prerogative and that the new
work schedule, break time and one-hour lunch break did not have the effect of
diminishing the benefits granted to factory workers as the working time did not
exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would be justly
enriched if they continued to be paid during their lunch break even if they were
no longer “on call” or required to work during the break.  He also ruled that the
decision in the earlier Sime Darby case[3] was not applicable to the instant case
because the former involved discrimination of certain employees who were not
paid for their 30-minute lunch break while the rest of the factory workers were
paid; hence, this Court ordered that the discriminated employees be similarly
paid the additional compensation for their lunch break.
Private respondent appealed to respondent National Labor Relations
Commission (NLRC) which sustained the Labor Arbiter and dismissed the
appeal.[4] However, upon motion for reconsideration by private respondent, the
NLRC, this time with two (2) new commissioners replacing those who earlier
retired, reversed its arlier decision of 20 April 1994 as well as the decision of the
Labor Arbiter.[5] The NLRC considered the decision of this Court in the Sime
Darby case of 1990 as the law of the case wherein petitioner was ordered to pay
“the money value of these covered employees deprived of lunch and/or working
time breaks.”  The public respondent declared that the new work schedule
deprived the employees of the benefits of time-honored company practice of
providing its employees a 30-minute paid lunch break resulting in an unjust
diminution of company privileges prohibited by Art. 100 of the Labor Code, as
amended.  Hence, this petition alleging that public respondent committed grave
abuse of discretion amounting to lack or excess of jurisdiction:  (a) in ruling that
petitioner committed unfair labor practice in the implementation of the change in
the work schedule of its employees from 7:45 a.m. – 3:45 p.m. to 7:45 a.m. –
4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding
that there was diminution of benefits when the 30-minute paid lunch break was
eliminated; (c) in failing to consider that in the earlier Sime Darby case affirming
the decision of the NLRC, petitioner was authorized to discontinue the practice of
having a 30-minute paid lunch break should it decide to do so; and (d) in ignoring
petitioner’s inherent management prerogative of determining and fixing the work
schedule of its employees which is expressly recognized in the collective
bargaining agreement between petitioner and private respondent.
The Office of the Solicitor General filed in lieu of comment a manifestation
and motion recommending that the petition be granted, alleging that the 14
August 1992 memorandum which contained the new work schedule was not
discriminatory of the union members nor did it constitute unfair labor practice on
the part of petitioner.
We agree, hence, we sustain petitioner.  The right to fix the work schedules
of the employees rests principally on their employer.  In the instant case
petitioner, as the employer, cites as reason for the adjustment the efficient
conduct of its business operations and its improved production. [6] It rationalizes
that while the old work schedule included a 30-minute paid lunch break, the
employees could be called upon to do jobs during that period as they were “on
call.”  Even if denominated as lunch break, this period could very well be
considered as working time because the factory employees were required to
work if necessary and were paid accordingly for working.  With the new work
schedule, the employees are now given a one-hour lunch break without any
interruption from their employer.  For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this hour not only for eating but also for
their rest and comfort which are conducive to more efficiency and better
performance in their work.  Since the employees are no longer required to work
during this one-hour lunch break, there is no more need for them to be
compensated for this period.  We agree with the Labor Arbiter that the new work
schedule fully complies with the daily work period of eight (8) hours without
violating the Labor Code.[7] Besides, the new schedule applies to all employees in
the factory similarly situated whether they are union members or not. [8]
Consequently, it was grave abuse of discretion for public respondent to
equate the earlier Sime Darby case[9] with the facts obtaining in this case.  That
ruling in the former case is not applicable here.  The issue in that case involved
the matter of granting lunch breaks to certain employees while depriving the
other employees of such breaks.  This Court affirmed in that case the NLRC’s
finding that such act of management was discriminatory and constituted unfair
labor practice.
The case before us does not pertain to any controversy involving
discrimination of employees but only the issue of whether the change of work
schedule, which management deems necessary to increase production,
constitutes unfair labor practice.  As shown by the records, the change effected
by management  with regard to working time is made to apply to all factory
employees engaged in the same line of work whether or not they are members of
private respondent union.  Hence, it cannot be said that the new scheme adopted
by management prejudices the right of private respondent to self-organization.
Every business enterprise endeavors to increase its profits.  In the process, it
may devise means to attain that goal.  Even as the law is solicitous of the welfare
of the employees, it must also protect the right of an employer to exercise what
are clearly management prerogatives. [10]Thus, management is free to regulate,
according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers. [11] Further, management retains the prerogative,
whenever exigencies of the service so require, to change the working hours of its
employees.  So long as such prerogative is exercised in good faith for the
advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise. [12]
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every dispute will
be automatically decided in favor of labor.  Management also has right which, as
such, are entitled to respect and enforcement in the interest of simple fair
play.  Although this Court has inclined more often than not toward the worker and
has upheld his cause in his conflicts with the employer, such as favoritism has
not blinded the Court to the rule that justice is in every case for the deserving, to
be dispensed in the light of the established facts and the applicable law and
doctrine.[13]
WHEREFORE, the Petition is GRANTED.  The Resolution of the National
Labor Relations Commission dated 29 November 1994 is SET ASIDE and the
decision of the Labor Arbiter dated 26 November 1993 dismissing the complaint
against petitioner for unfair labor practice is AFFIRMED.
SO ORDERED.
Davide, Jr., (Chairman), Vitug, Panganiban, and Quisumbing, JJ., concur.

[1]
 Rollo, p. 34.
[2]
 G.R. No. 87838, 26 February 1990.
[3]
 Id.
[4]
 Rollo, p. 70.
[5]
 Rollo, p. 26.
[6]
 Rollo, p. 11.
[7]
 Rollo, p. 36.
[8]
 Rollo, p. 42.
[9]
 See Note 2.
[10]
 San Miguel Brewery Sales Force v. Ople, G.R. No. 53515. 8 February 1989, 170 SCRA 25;
Abbot Laboratories v. NLRC, 154 S 713.
[11]
 NLU v. Insular Yebana Co., L-15363, 31 July 1961, 2 SCRA 924.
[12]
 Union Carbide Labor Union v. Union Carbide Phils., Inc., G.R. No. 41314, 13 November 1992,
215 SCRA 554.
[13]
 Cruz v. Medina, G.R. No. 73053, 15 September 1989, 177 SCRA 565.