G.R. No. 209359 - Metroheights Subdivision Homeowners Association, Inc. vs. CMS Construction and Development Corp.

Petitioner National Sugar Refineries Corporation (NASUREFCO) is a government-controlled corporation operating three sugar refineries located at Bukidnon, Iloilo, and Batangas.
The Batangas sugar refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50.

On June 1, 1988, NASUREFCO implemented a JE Program affecting employees at all levels, from rank-and-file to department heads.

The program was designed to rationalize duties and functions, re-establish levels of responsibility, and reorganize wage and operational structures.
Jobs were ranked based on factors such as effort, responsibility, training, working conditions, and the relative worth of the position.

Members of the respondent union (the supervisory employees) were reclassified under levels S-5 to S-8, which the program considered as managerial staff for compensation purposes.
There was an average increase of approximately 50% in basic pay, creating a significant gap compared to the highest-paid rank-and-file employees.
Longevity pay was increased alongside the alignment adjustments.
A company COLA (Cost-of-Living Allowance) of P225.00 per month was granted, plus a P100.00 allowance for rest day/holiday work.

Prior to the JE Program, for about ten years, the supervisors (now members of the respondent union) were treated similarly to rank-and-file employees and hence benefited from statutory overtime, rest day, and holiday pay under Articles 87, 93, and 94 of the Labor Code.

On May 11, 1990, NASUREFCO recognized the respondent union as the bargaining representative for all supervisory employees at the Batangas Sugar Refinery, based on Republic Act No. 6715 which permits supervisory employees to form their own unions.
On June 20, 1990, members of the respondent union filed a complaint for non-payment of overtime, rest day, and holiday pay with an executive labor arbiter.
The complaint alleged that the discontinuation of the regular payment method (in favor of a P100.00 special allowance) amounted to a diminution of benefits compared to what they formerly enjoyed.

The labor arbiter ruled in favor of the union members.
The ruling ordered NASUREFCO to pay individual members the overtime, rest day, and holiday pay they were entitled to, instead of the special allowance.
The arbiter reasoned that the long period of payment had rendered such benefits into a contractual obligation and that the formation of the union did not preclude collective expression of dissent regarding the new compensation package.

The National Labor Relations Commission (NLRC) affirmed the labor arbiter’s decision, holding that the supervisory employees were not managerial employees and were thus entitled to the statutory benefits.
The basis was that these employees exercised recommendatory powers subject to review by their department heads, did not exercise independent judgment in matters such as hiring or firing, and functioned primarily to implement management policies.

NASUREFCO filed a petition for certiorari, alleging grave abuse of discretion by the NLRC in its decision.
The primordial issue was whether the supervisory employees, by virtue of their duties and reclassification under the JE Program, should be regarded as officers or members of the managerial staff and thereby be exempt from receiving overtime, rest day, and holiday pay.
Petitioner contended that while these employees were supervisory in union matters (e.g., formation, bargaining), for purposes of working conditions and benefits they fitted the definition of managerial staff as stipulated in Article 82 of the Labor Code and its implementing rules.

Whether supervisory employees, as defined under Article 212(m) of the Labor Code, should be considered as officers or members of the managerial staff under Article 82 of the Labor Code and its implementing rules.

Does the reclassification under the JE Program change the nature of the supervisory role into one that qualifies as managerial?
Should such reclassification exempt them from entitlement to overtime, rest day, and holiday pay irrespective of their previous practice as rank-and-file employees?
Whether the payment of overtime, rest day, and holiday benefits prior to the JE Program constitutes a contractual obligation that persists after their promotion to managerial positions.