G.R. No.

155504 June 26, 2009

PROFESSIONAL VIDEO, INC., Petitioner,
vs.
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY,
Respondent.
D E C I S I O N
BRION, J .:
We resolve the petition filed by Professional Video, Inc. (PROVI)
1
to annul and set aside the
Decision
2
of the Court of Appeals (CA) in CA-G.R. SP No. 67599, and its subsequent Order
denying PROVIs motion for reconsideration.
3
The assailed CA decision nullified:
a. the Order
4
dated July 16, 2001 of the Regional Trial Court (RTC), Pasig City, in Civil Case
No. 68527, directing the attachment/garnishment of the properties of respondent Technical
Education and Skills Development Authority (TESDA) amounting to Thirty Five Million
Pesos (P35,000,000.00); and
b. the RTCs August 24, 2001 Order
5
denying respondent TESDAs motion to discharge/quash
writ of attachment.

THE FACTUAL BACKGROUND
PROVI is an entity engaged in the sale of high technology equipment, information technology
products and broadcast devices, including the supply of plastic card printing and security
facilities.
TESDA is an instrumentality of the government established under Republic Act (R.A.) No.
7796 (the TESDA Act of 1994) and attached to the Department of Labor and Employment
(DOLE) to "develop and establish a national system of skills standardization, testing, and
certification in the country."
6
To fulfill this mandate, it sought to issue security-printed
certification and/or identification polyvinyl (PVC) cards to trainees who have passed the
certification process.
TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public
biddings on June 25, 1999 and July 22, 1999 for the printing and encoding of PVC cards. A
failure of bidding resulted in both instances since only two (2) bidders PROVI and Sirex
Phils. Corp. submitted proposals.
Due to the failed bidding, the PBAC recommended that TESDA enter into a negotiated
contract with PROVI. On December 29, 1999, TESDA and PROVI signed and executed their
"Contract Agreement Project: PVC ID Card Issuance" (the Contract Agreement) for the
provision of goods and services in the printing and encoding of PVC cards.
7
Under this
Contract Agreement, PROVI was to provide TESDA with the system and equipment compliant
with the specifications defined in the Technical Proposal. In return, TESDA would pay PROVI
the amount of Thirty-Nine Million Four Hundred and Seventy-Five Thousand Pesos
(P39,475,000) within fifteen (15) days after TESDAs acceptance of the contracted goods and
services.
On August 24, 2000, TESDA and PROVI executed an "Addendum to the Contract Agreement
Project: PVC ID Card Issuance" (Addendum),
8
whose terms bound PROVI to deliver one
hundred percent (100%) of the enumerated supplies to TESDA consisting of five hundred
thousand (500,000) pieces of security foil; five (5) pieces of security die with TESDA seal;
five hundred thousand (500,000) pieces of pre-printed and customized identification cards; one
hundred thousand (100,000) pieces of scannable answer sheets; and five hundred thousand
(500,000) customized TESDA holographic laminate. In addition, PROVI would install and
maintain the following equipment: one (1) unit of Micropoise, two (2) units of card printer,
three (3) units of flatbed scanner, one (1) unit of OMR scanner, one (1) unit of Server, and
seven (7) units of personal computer.
TESDA in turn undertook to pay PROVI thirty percent (30%) of the total cost of the supplies
within thirty (30) days after receipt and acceptance of the contracted supplies, with the balance
payable within thirty (30) days after the initial payment.
According to PROVI, it delivered the following items to TESDA on the dates indicated:
Date Particulars Amount
26 April 2000 48,500 pre-printed cards P 2,764,500.00
07 June 2000 330,000 pre-printed cards 18,810,000.00
07 August 2000 121,500 pre-printed cards 6,925,500.00
26 April 2000 100,000 scannable answer sheets 600,000.00
06 June 2000 5 Micro-Poise customized die 375,000.00
13 June 2000 35 boxes @ 15,000 imp/box
Custom hologram Foil
10,000,000.00
Total P 39,475,000.00
PROVI further alleged that out of TESDAs liability of P39,475,000.00, TESDA paid PROVI
only P3,739,500.00, leaving an outstanding balance of P35,735,500.00, as evidenced by
PROVIs Statement of Account.
9
Despite the two demand letters dated March 8 and April 27,
2001 that PROVI sent TESDA,
10
the outstanding balance remained unpaid.
On July 11, 2001, PROVI filed with the RTC a complaint for sum of money with damages
against TESDA. PROVI additionally prayed for the issuance of a writ of preliminary
attachment/garnishment against TESDA. The case was docketed as Civil Case No. 68527. In
an Order dated July 16, 2001, the RTC granted PROVIs prayer and issued a writ of
preliminary attachment against the properties of TESDA not exempt from execution in the
amount of P35,000,000.00.
11

TESDA responded on July 24, 2001 by filing a Motion to Discharge/Quash the Writ of
Attachment, arguing mainly that public funds cannot be the subject of garnishment.
12
The RTC
denied TESDAs motion, and subsequently ordered the manager of the Land Bank of the
Philippines to produce TESDAs bank statement for the garnishment of the covered amount.
13

Faced with these rulings, TESDA filed a Petition for Certiorari with the CA to question the
RTC orders, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on
the trial court for issuing a writ of preliminary attachment against TESDAs public funds.
14

The CA set aside the RTCs orders after finding that: (a) TESDAs funds are public in nature
and, therefore, exempt from garnishment; and (b) TESDAs purchase of the PVC cards was a
necessary incident of its governmental function; consequently, it ruled that there was no legal
basis for the issuance of a writ of preliminary attachment/garnishment.
15
The CA subsequently
denied PROVIs motion for reconsideration;
16
hence, the present petition.

THE PETITION
The petition submits to this Court the single issue of whether or not the writ of attachment
against TESDA and its funds, to cover PROVIs claim against TESDA, is valid. The issue
involves a pure question of law and requires us to determine whether the CA was correct in
ruling that the RTC gravely abused its discretion in issuing a writ of attachment against
TESDA.
PROVI argues that the CA should have dismissed TESDAs petition for certiorari as the RTC
did not commit any grave abuse of discretion when it issued the Orders dated July 16, 2001
and August 24, 2001. According to PROVI, the RTC correctly found that when TESDA
entered into a purely commercial contract with PROVI, TESDA went to the level of an
ordinary private citizen and could no longer use the defense of state immunity from suit.
PROVI further contends that it has alleged sufficient ultimate facts in the affidavit it submitted
to support its application for a writ of preliminary attachment. Lastly, PROVI maintains that
sufficient basis existed for the RTCs grant of the writ of preliminary attachment, since
TESDA fraudulently misapplied or embezzled the money earmarked for the payment of the
contracted supplies and services, as evidenced by the Certification as to Availability of Funds.
TESDA claims that it entered the Contract Agreement and Addendum in the performance of its
governmental function to develop and establish a national system of skills standardization,
testing, and certification; in the performance of this governmental function, TESDA is immune
from suit. Even assuming that it had impliedly consented to be sued by entering into a contract
with PROVI, TESDA posits that the RTC still did not have the power to garnish or attach its
funds since these are public funds. Lastly, TESDA points out that PROVI failed to comply
with the elements for the valid issuance of a writ of preliminary attachment, as set forth in
Section 1, Rule 57 of the 1997 Rules of Civil Procedure.
THE COURTS RULING
We find, as the CA did, that the RTCs questioned order involved a gross misreading of the
law and jurisprudence amounting to action in excess of its jurisdiction. Hence, we resolve to
DENY PROVIs petition for lack of merit.
TESDA is an instrumentality of the government undertaking governmental functions.
R.A. No. 7796 created the Technical Education and Skills Development Authority or TESDA
under the declared "policy of the State to provide relevant, accessible, high quality and
efficient technical education and skills development in support of the development of high
quality Filipino middle-level manpower responsive to and in accordance with Philippine
development goals and priorities."
17
TESDA replaced and absorbed the National Manpower
and Youth Council, the Bureau of Technical and Vocational Education and the personnel and
functions pertaining to technical-vocational education in the regional offices of the Department
of Education, Culture and Sports and the apprenticeship program of the Bureau of Local
Employment of the DOLE.
18
Thus, TESDA is an unincorporated instrumentality of the
government operating under its own charter.
Among others, TESDA is empowered to: approve trade skills standards and trade tests as
established and conducted by private industries; establish and administer a system of
accreditation of both public and private institutions; establish, develop and support the
institutions' trainors' training and/or programs; exact reasonable fees and charges for such tests
and trainings conducted, and retain such earnings for its own use, subject to guidelines
promulgated by the Authority; and perform such other duties and functions necessary to carry
out the provisions of the Act, consistent with the purposes of the creation of TESDA.
19

Within TESDAs structure, as provided by R.A. No. 7769, is a Skills Standards and
Certification Office expressly tasked, among others, to develop and establish a national system
of skills standardization, testing and certification in the country; and to conduct research and
development on various occupational areas in order to recommend policies, rules and
regulations for effective and efficient skills standardization, testing and certification system in
the country.
20
The law likewise mandates that "[T]here shall be national occupational skills
standards to be established by TESDA-accredited industry committees. The TESDA shall
develop and implement a certification and accreditation program in which private groups and
trade associations are accredited to conduct approved trade tests, and the local government
units to promote such trade testing activities in their respective areas in accordance with the
guidelines to be set by the TESDA. The Secretary of Labor and Employment shall determine
the occupational trades for mandatory certification. All certificates relating to the national trade
skills testing and certification system shall be issued by the TESDA through its Secretariat."
21

All these measures are undertaken pursuant to the constitutional command that "[T]he State
affirms labor as a primary social economic force," and shall "protect the rights of workers and
promote their welfare";
22
that "[T]he State shall protect and promote the right of all citizens to
quality education at all levels, and shall take appropriate steps to make such education
accessible to all";
23
in order "to afford protection to labor" and "promote full employment and
equality of employment opportunities for all."
24

Under these terms, both constitutional and statutory, we do not believe that the role and status
of TESDA can seriously be contested: it is an unincorporated instrumentality of the
government, directly attached to the DOLE through the participation of the Secretary of Labor
as its Chairman, for the performance of governmental functions i.e., the handling of formal
and non-formal education and training, and skills development. As an unincorporated
instrumentality operating under a specific charter, it is equipped with both express and implied
powers,
25
and all State immunities fully apply to it.
26

TESDA, as an agency of the State, cannot be sued without its consent.
The rule that a state may not be sued without its consent is embodied in Section 3, Article XVI
of the 1987 Constitution and has been an established principle that antedates this
Constitution.
27
It is as well a universally recognized principle of international law that exempts
a state and its organs from the jurisdiction of another state.
28
The principle is based on the very
essence of sovereignty, and on the practical ground that there can be no legal right as against
the authority that makes the law on which the right depends.
29
It also rests on reasons of public
policy that public service would be hindered, and the public endangered, if the sovereign
authority could be subjected to law suits at the instance of every citizen and, consequently,
controlled in the uses and dispositions of the means required for the proper administration of
the government.
30

The proscribed suit that the state immunity principle covers takes on various forms, namely: a
suit against the Republic by name; a suit against an unincorporated government agency; a suit
against a government agency covered by a charter with respect to the agencys performance of
governmental functions; and a suit that on its face is against a government officer, but where
the ultimate liability will fall on the government. In the present case, the writ of attachment
was issued against a government agency covered by its own charter. As discussed above,
TESDA performs governmental functions, and the issuance of certifications is a task within its
function of developing and establishing a system of skills standardization, testing, and
certification in the country. From the perspective of this function, the core reason for the
existence of state immunity applies i.e., the public policy reason that the performance of
governmental function cannot be hindered or delayed by suits, nor can these suits control the
use and disposition of the means for the performance of governmental functions. In Providence
Washington Insurance Co. v. Republic of the Philippines,
31
we said:
[A] continued adherence to the doctrine of non-suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss of governmental efficiency and the
obstacle to the performance of its multifarious functions are far greater if such a fundamental
principle were abandoned and the availability of judicial remedy were not thus restricted. With
the well known propensity on the part of our people to go to court, at the least provocation, the
loss of time and energy required to defend against law suits, in the absence of such a basic
principle that constitutes such an effective obstacle, could very well be imagined.
PROVI argues that TESDA can be sued because it has effectively waived its immunity when it
entered into a contract with PROVI for a commercial purpose. According to PROVI, since the
purpose of its contract with TESDA is to provide identification PVC cards with security seal
which TESDA will thereafter sell to TESDA trainees, TESDA thereby engages in commercial
transactions not incidental to its governmental functions.
TESDAs response to this position is to point out that it is not engaged in business, and there is
nothing in the records to show that its purchase of the PVC cards from PROVI is for a business
purpose. While TESDA admits that it will charge the trainees with a fee for the PVC cards, it
claims that this fee is only to recover their costs and is not intended for profit.
We agree with TESDA. As the appellate court found, the PVC cards purchased by TESDA
from PROVI are meant to properly identify the trainees who passed TESDAs National Skills
Certification Program the program that immediately serves TESDAs mandated function of
developing and establishing a national system of skills standardization, testing, and
certification in the country.
32
Aside from the express mention of this function in R.A. No.
7796, the details of this function are provided under DOLE Administrative Order No. 157, S.
1992, as supplemented by Department Order Nos. 3 thru 3-F, S. 1994 and Department Order
No. 13, S. 1994.
33

Admittedly, the certification and classification of trainees may be undertaken in ways other
than the issuance of identification cards, as the RTC stated in its assailed Order.
34
How the
mandated certification is to be done, however, lies within the discretion of TESDA as an
incident of its mandated function, and is a properly delegated authority that this Court cannot
inquire into, unless its exercise is attended by grave abuse of discretion.
That TESDA sells the PVC cards to its trainees for a fee does not characterize the transaction
as industrial or business; the sale, expressly authorized by the TESDA Act,
35
cannot be
considered separately from TESDAs general governmental functions, as they are undertaken
in the discharge of these functions. Along this line of reasoning, we held in Mobil Philippines
v. Customs Arrastre Services:
36

Now, the fact that a non-corporate government entity performs a function proprietary in nature
does not necessarily result in its being suable. If said non-governmental function is undertaken
as an incident to its governmental function, there is no waiver thereby of the sovereign
immunity from suit extended to such government entity.
TESDAs funds are public in character, hence exempt from attachment or garnishment.
Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave
its implied consent to be sued, TESDAs funds are still public in nature and, thus, cannot be the
valid subject of a writ of garnishment or attachment. Under Section 33 of the TESDA Act, the
TESDA budget for the implementation of the Act shall be included in the annual General
Appropriation Act; hence, TESDA funds, being sourced from the Treasury, are moneys
belonging to the government, or any of its departments, in the hands of public officials.
37
We
specifically spoke of the limits in dealing with this fund in Republic v. Villasor
38
when we
said:
This fundamental postulate underlying the 1935 Constitution is now made explicit in the
revised charter. It is therein expressly provided, The State may not be sued without its
consent. A corollary, both dictated by logic and sound sense, from such a basic concept, is that
public funds cannot be the object of garnishment proceedings even if the consent to be sued
had been previously granted and the state liability adjudged. Thus in the recent case of
Commissioner of Public Highways vs. San Diego, such a well-settled doctrine was restated in
the opinion of Justice Teehankee:
The universal rule that where the State gives its consent to be sued by private parties either by
general or special law, it may limit claimant's action 'only up to the completion of proceedings
anterior to the stage of execution' and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized under writs of execution or
garnishment to satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the corresponding appropriation as required
by law. The functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate and specific
objects, as appropriated by law. [Emphasis supplied.]
We reiterated this doctrine in Traders Royal Bank v. Intermediate Appellate Court,
39
where we
said:
The NMPCs implied consent to be sued notwithstanding, the trial court did not have the
power to garnish NMPC deposits to answer for any eventual judgment against it. Being public
funds, the deposits are not within the reach of any garnishment or attachment proceedings.
[Emphasis supplied.]
As pointed out by TESDA in its Memorandum,
40
the garnished funds constitute TESDAs
lifeblood in government parlance, its MOOE
41
whose withholding via a writ of attachment,
even on a temporary basis, would paralyze TESDAs functions and services. As well, these
funds also include TESDAs Personal Services funds from which salaries of TESDA personnel
are sourced. Again and for obvious reasons, the release of these funds cannot be delayed.
PROVI has not shown that it is entitled to the writ of attachment.
Even without the benefit of any immunity from suit, the attachment of TESDA funds should
not have been granted, as PROVI failed to prove that TESDA "fraudulently misapplied or
converted funds allocated under the Certificate as to Availability of Funds." Section 1, Rule 57
of the Rules of Court sets forth the grounds for issuance of a writ of preliminary attachment, as
follows:
SECTION 1. Grounds upon which attachment may issue. A plaintiff or any proper party
may, at the commencement of the action or at any time thereafter, have the property of the
adverse party attached as security for the satisfaction of any judgment that may be recovered in
the following cases:
(a) In an action for recovery of a specified amount of money or damages, other than
moral and exemplary, on a cause of action arising from law, contract, quasi-
contract, delict or quasi-delict against a party who is about to depart from the
Philippines with intent to defraud his creditors;
(b) In an action for money or property embezzled or fraudulently misapplied or
converted to his use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent or clerk, in the course of his employment as such, or
by any other person in a fiduciary capacity, or for a willful violation of duty;
(c) In an action to recover the possession of property unjustly or fraudulently taken,
detained or converted, when the property or any part thereof, has been concealed,
removed or disposed of to prevent its being found or taken by the applicant or an
authorized person;
(d) In an action against a party who has been guilty of fraud in contracting the debt
or incurring the obligation upon which the action is brought, or in concealing or
disposing of the property for the taking, detention or conversion of which the action
is brought;
(e) In an action against a party who has removed or disposed of his property, or is
about to do so, with intent to defraud his creditors;
(f) In an action against a party who does not reside and is not found in the
Philippines, or on whom summons may be served by publication. [Emphasis
supplied.]
Jurisprudence teaches us that the rule on the issuance of a writ of attachment must be construed
strictly in favor of the defendant. Attachment, a harsh remedy, must be issued only on concrete
and specific grounds and not on general averments merely quoting the words of the pertinent
rules.
42
Thus, the applicants affidavit must contain statements clearly showing that the ground
relied upon for the attachment exists.
Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon, applies only where
money or property has been embezzled or converted by a public officer, an officer of a
corporation, or some other person who took advantage of his fiduciary position or who
willfully violated his duty.
PROVI, in this case, never entrusted any money or property to TESDA. While the Contract
Agreement is supported by a Certificate as to Availability of Funds (Certificate) issued by the
Chief of TESDAs Accounting Division, this Certificate does not automatically confer
ownership over the funds to PROVI. Absent any actual disbursement, these funds form part of
TESDAs public funds, and TESDAs failure to pay PROVI the amount stated in the
Certificate cannot be construed as an act of fraudulent misapplication or embezzlement. In this
regard, Section 86 of Presidential Decree No. 1445 (The Accounting Code) provides:
Section 86. Certificate showing appropriation to meet contract. Except in a case of a contract
for personal service, for supplies for current consumption or to be carried in stock not
exceeding the estimated consumption for three months, or banking transactions of government-
owned or controlled banks, no contract involving the expenditure of public funds by any
government agency shall be entered into or authorized unless the proper accounting official or
the agency concerned shall have certified to the officer entering into the obligation that funds
have been duly appropriated for the purpose and that the amount necessary to cover the
proposed contract for the current fiscal year is available for expenditure on account thereof,
subject to verification by the auditor concerned. The certification signed by the proper
accounting official and the auditor who verified it, shall be attached to and become an integral
part of the proposed contract, and the sum so certified shall not thereafter be available for
expenditure for any other purpose until the obligation of the government agency concerned
under the contract is fully extinguished. [Emphasis supplied.]
By law, therefore, the amount stated in the Certification should be intact and remains devoted
to its purpose since its original appropriation. PROVI can rebut the presumption that
necessarily arises from the cited provision only by evidence to the contrary. No such evidence
has been adduced.
Section 1 (d), Rule 57 of the Rules of Court applies where a party is guilty of fraud in
contracting a debt or incurring an obligation, or in concealing or disposing of the property for
the taking, detention or conversion of which the action is brought. In Wee v. Tankiansee,
43
we
held that for a writ of attachment to issue under this Rule, the applicant must sufficiently show
the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from
the debtors mere non-payment of the debt or failure to comply with his obligation. The
affidavit, being the foundation of the writ, must contain particulars showing how the imputed
fraud was committed for the court to decide whether or not to issue the writ. To reiterate, a writ
of attachment can only be granted on concrete and specific grounds and not on general
averments merely quoting the words of the rules.
44

The affidavit filed by PROVI through Elmer Ramiro, its President and Chief Executive
Officer, only contained a general allegation that TESDA had fraudulent misapplied or
converted the amount of P10,975,000.00 that was allotted to it. Clearly, we cannot infer any
finding of fraud from PROVIs vague assertion, and the CA correctly ruled that the lower court
acted with grave abuse of discretion in granting the writ of attachment despite want of any
valid ground for its issuance.1avvphi1
For all these reasons, we support the appellate courts conclusion that no valid ground exists to
support the grant of the writ of attachment against TESDA. The CAs annulment and setting
aside of the Orders of the RTC were therefore fully in order.
WHEREFORE, premises considered, we hereby DENY the petition filed by petitioner
Professional Video, Inc., and AFFIRM the Court of Appeals Decision dated July 23, 2002,
and Resolution of September 27, 2002, in CA-G.R. SP No. 67599. Costs against the petitioner.
SO ORDERED.


CENTURYCANNINGCORPORATION, vsCOURT OF APPEALSand GLORIAC. PALAD(G.R. No.
152894)

The Facts
cralawOn 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad
(Palad) as fish cleaner at petitioners tuna and sardines factory. Palad signed on 17 July 1997 an
apprenticeship agreement with petitioner. Palad received an apprentice allowance of P138.75
daily. On 25 July 1997, petitioner submitted its apprenticeship program for approval to the
Technical Education and Skills Development Authority (TESDA) of the Department of Labor
and Employment (DOLE). On 26 September 1997, the TESDA approved petitioners
apprenticeship program. According to petitioner, a performance evaluation was conducted on
15 November 1997, where petitioner gave Palad a rating of N.I. or needs improvement since
she scored only27.75% based on a 100% performance indicator. Furthermore, according to the
performance evaluation, Palad incurred numerous tardiness and absences. As a consequence,
petitioner issued a termination notice dated 22 November 1997 to Palad, informing her of her
termination effective at the close of business hours of 28 November 1997. Palad then filed a
complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated 13
th

month pay for the year 1997.

ISSUES:
1) WHETHER OR NOT THE APPRENTICESHIP AGREEMENT WAS VALID AND
BINDINGBETWEENTHEPARTIES
2) WHETHER ORNOTPALADWASILLEGALLYDISMISSEDBYTHEPETITIONER

HELD:

The Court held that the apprenticeship agreement which Palad signed was not valid and
binding because it was executed more than two months before the TESDA approved
petitioners apprenticeship program. The Court cited Nitto Enterprises v. National Labor
Relations Commission, where it was held that an apprenticeship program should first be
approved by the DOLE before an apprentice may be hired, otherwise the person hired will be
considered a regular employee. It is mandated that apprenticeship agreements entered into by
the employer and apprentice shall be entered only in accordance with the apprenticeship
program duly approved by the Minister of Labor and Employment. Prior approval by the
Department of Labor and Employment of the proposed apprenticeship program is, therefore, a
condition
sine qua non before an apprenticeship agreement can be validly entered into. The Labor Code
defines an apprentice as a worker who is covered by a written apprenticeship agreement with
an employer. Since Palad is not considered an apprentice because the apprenticeship agreement
was enforced before the TESDAs approval of petitioners apprenticeship program, Palad is
deemed a regular employee performing the job of a fish cleaner. Clearly, the job of a fish
cleaner is necessary in petitioners business as a tuna and sardines factory. Under Article 280 of
the Labor Code, an employment is deemed regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer.2)

Under Article 279 of the Labor Code, an employer may terminate the services of an employee
for just causes or for authorized causes. under Article 277(b) of the Labor Code, the employer
must send the employee who is about to be terminated, a written notice stating the causes for
termination and must give the employee the opportunity to be heard and to defend himself.
Thus, to constitute valid
dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or
authorized cause; and (2) the employee must be afforded an opportunity to be heard and to
defend himself. Palad was not accorded due process. Even if petitioner did conduct a
performance evaluation on Palad, petitioner failed to warn Palad of her alleged poor
performance. In fact, Palad denies any knowledge of the performance evaluation conducted
and of the result thereof. Petitioner likewise admits that Palad did not receive the notice of
termination because Palad allegedly stopped reporting for work. The records are bereft of
evidence to show that petitioner ever gave Palad the opportunity to explain and defend herself.
Clearly, the two requisites for a valid dismissal are lacking in this case.

Atlanta Industries, Inc. And/Or Robert Chan, v. Aprilito R. Sebolino, Khim V. Costales, Et. Al.
G.R. No. 187320, January 26, 2011 Brion, J.:

FACTS: Atlanta Industries, Inc. (petitioner) is a domestic corporation engaged in the
manufacture of steel pipes. Almoite and Costales (respondents) were employed by petitioner
as early as December 2003, while Sebolino and Sagun were employed as early as March 2004.
Respondents occupied positions such as machine operator, extruder operator and scaleman.
Two apprenticeship agreements were entered between Atlanta Industries, Inc. and private
respondents, one in 2004 and the other in 2005. After the second apprenticeship agreement
expired the respondents were dismissed, hence they filed a case for illegal dismissal. In
defense, Atlanta Industries, Inc. argued that the workers were not entitled to regularization
and to their money claims because they were engaged as apprentices under a government-
approved apprenticeship program. The company offered to hire them as regular employees in
the event vacancies for regular positions occur in the section of the plant where they had
trained. They also claimed that their names did not appear in the list of employees (Master
List) prior to their engagement as apprentices.

ISSUE: 1) Whether or not the apprenticeship agreements were valid.
3) Whether or not respondents were already employees when they were required to
undergo apprenticeship.
4) Whether or not the petition may be dismissed for failure to attach to the petition a
copy of the Production and Work Schedule and the compromise agreement.



1) HELD: NO. The first and second apprenticeship agreements were defective as they
were executed in violation of the law and the rules. The agreements did not
indicate the trade or occupation in which the apprentice would be trained; neither
was the apprenticeship program approved by the Technical Education and Skills
Development Authority (TESDA). Moreover, with the expiration of the first
agreement and the retention of the employees, the employer, to all intents and
purposes, recognized the completion of their training and their acquisition of a
regular employee status. To foist upon them the second apprenticeship agreement
for a second skill which was not even mentioned in the agreement itself, is a
violation of the Labor Codes implementing rules and is an act manifestly unfair to
the employees.

2) HELD: YES. The respondent employees were already rendering service to the
company when they were made to undergo apprenticeship. The respondent were
regular employees because they occupied positions such as machine operator,
scaleman and extruder operator tasks that are usually necessary and desirable in
petitioner employers usual business or trade as manufacturer of plastic building
materials. These tasks and their nature characterized the respondents as regular
employees under Article 280 of the Labor Code. Thus, when they were dismissed
without just or authorized cause, without notice, and without the opportunity to
be heard, their dismissal was illegal under the law.

3) HELD: NO. The Court, in addressed the issue arising from Section 2(d), Rule 42 of
the Rules of Court, held that the phrase of the pleadings and other material
portions of the record xxx as would support the allegation of the petition clearly
contemplates the exercise of discretion on the part of the petitioner in the
selection of documents that are deemed to be relevant to the petition. The crucial
issue to consider then is whether or not the documents accompanying the petition
sufficiently supported the allegations therein. The Court finds that the documents
attached to the petition sufficiently support the petitioners allegations. If any, the
defect in the petition lies in the petitioners failure to provide legible copies of
some of the material documents mentioned, especially several pages in the
decisions of the labor arbiter and of the NLRC. This defect, however, is not fatal as
the challenged CA decision clearly summarized the labor tribunals rulings. We,
thus, find no procedural obstacle in resolving the petition on the merits.

G.R. No. 114337 NITTO ENTERPRISES vs. NLRC and ROBERTO CAPILI

September 29, 1995

FACTS:

Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum
products, hi red Roberto Capi l i someti me i n May 1990 as an apprenti ce
machi ni st, mol der and coremaker as evidenced by an apprenticeship agreement 2for a
period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of
P66.75 which was 75% of the applicable minimum wage. On August 2, 1990, Roberto Capili
who was handling a piece of glass which he was working on, accidentally hit and injured the
leg of an office secretary who was treated at a nearby hospi tal . Further, Capi l i entered
a workshop wi thi n the offi ce premi ses whi ch was not hi s work station. There, he
operated one of the power press machines without authority and in the process i nj ured
hi s l eft thumb. The fol l owi ng day he was asked to resi gn. Three days after, ,
private respondent formally filed before the NLRC Arbitration Branch, National Capital Region
a complaint for illegal dismissal and payment of other monetary benefits.

The Labor Arbi ter rendered hi s deci si on fi ndi ng the termi nati on of
pri vate respondent as val i d and dismissing the money claim for lack of merit. On
appeal, NLRC issued an order reversing the decision of the Labor Arbiter. The NLRC declared
that Capili was a regular employee of Nitto Enterprises and not an apprentice. Consequently,
Labor Arbiter issued a Writ of Execution orderi ng for the rei nstatement of Capi l i
and to col l ect hi s back wages. Peti ti oner, Ni tto Enterprises filed a case to the
Supreme Court.

ISSUE: Does the NLRC correctly rule that Capili is a regular employee and not an apprentice of
Nitto Enterprises?

LAW: Article 280 of the Labor Code

RULING:

Yes. The apprenti ceshi p agreement between peti ti oner and pri vate
respondent was executed on May 28, 1990 al l egedl y empl oyi ng the l atter
as an apprenti ce i n the trade of "care maker/molder. However, the apprenticeship
Agreement was filed only on June 7, 1990.Notwithstanding the absence of approval by the
Department of Labor and Employment, the apprenticeship agreement was enforced the day it was
signed. The act of fi l i ng the proposed apprenti ceshi p program wi th the
Department of Labor and Employment is a preliminary step towards its final approval
and does not instantaneously give rise to an employer-apprentice relationship.

Ni tto Enterpri ses di d not compl y wi th the requi rements of the l aw. I t i s
mandated that apprenticeship agreements entered into by the employer and apprentice
shall be entered only in accordance with the apprenticeship program duly approved by the
Minister of Labor and Employment. Thus, the apprenticeship agreement has no force and
effect; and Capili is considered to be a regular employee of the company.

OPINION:

I concur with the Courts findings that since the apprenticeship agreement between
petitioner and private respondent have no force and effect in the absence of a valid
apprenticeship program duly approved by the DOLE, private respondent's assertion that he
was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves
credence. He should rightly be considered as a regular employee of petitioner as defined by
Article 280 of the Labor Code.

G.R. No. 122917 MARITES BERNARDO et al. vs. NLRCTHIRD DIVISION /
PANGANIBAN, J.
July 12, 1999 Series: 7FACTS:
The 43 petitioners are deaf-mutes who were hired on various periods from 1988 to 1993 by
respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly
worded agreement called "Employment Contract for Handicapped Workers". The said
agreement provides for the manner of how they are hired and be rehired, the amount of their
wages (P118.00 per day), period of employment (5 days a week, 8 hours a day, training for 1
month, 6 months period) and the manner and methods of how their works are to be done (Sort
out bills according to color; Count each denomination per hundred, either manually or with the
aid of a counting machine; Wrap and label bills per hundred; Put the wrapped bills into
bundles; and Submit bundled bills to the bank teller for verification.) Many of their
employments were renewed every six months. Claiming that they should be considered as
regular employees they filed a complaint for illegal dismissal and recovery of various benefits.
Labor arbiters decision: complaint is dismissed for lack of merit (the terms of the contract
shall be the law between the parties.). Affirmed by the NLRC (Art. 280 is not controlling
herein but Art. 80) (the Magna Carta for Disabled Persons was not applicable, "considering the
prevailing circumstances of the case.") and denied motion for reconsideration.

ISSUES: Does petitioners considered as regular employees?

LAW:Art.78 & 80 of the Labor Code and the Magna Carta for Disabled Persons.

RULING: Yes.
The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employment was illegal. The stipulations in the employment contracts indubitably conform
with Article 80, however, the application of Article 280 of the Labor Code is justified because
of the advent of RA No. 7277 (the Magna Carta for Disabled Persons) which mandates that a
qualified disabled employee should be given the same terms and conditions of employment as
a qualified able-bodied person (compensation, privileges, benefits, fringe benefits, incentives
or allowances) 27 of the petitioners are considered regular employees by provision of law
regardless of any agreement between the parties as embodied in article280 in relation to article
281 of the Labor Code. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. Hence, the employment is considered regular, but only
with respect to such activity, and while such activity exist. Without a doubt, the task of
counting and sorting bills is necessary and desirable to the business of respondent bank. When
the bank renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees. No employer is allowed to determine
indefinitely the fitness of its employees. Those who have worked for only 6 months and
employments were not renewed are not considered regular employees.

OPINION:
The Court correctly finds that 27 of the handicapped workers are regular employees. The test is
whether the activity is usually necessary or desirable in the usual business or trade of the
employer. The employment is considered regular, but only with respect to such activity, and
while such activity exist. Without a doubt, the task of counting and sorting bills is necessary
and desirable to the business of respondent bank. As regular employees, the twenty-seven
petitioners are entitled to security of tenure; that is, their services may be terminated only for a
just or authorized cause.

G.R. No. L-24394, Carlos v. Villegas, Samio and Cudiamat, 24 SCRA 831
EN BANC
August 30, 1968
G.R. No. L-24394
JUANITO CARLOS, petitioner-appellant,
vs.
ANTONIO J. VILLEGAS, as Mayor, City of Manila and/or EULOGIO SAMIO, as
Chief, Manila Fire Department and/or MANUEL CUDIAMAT, as Treasurer, City of
Manila, respondents-appellees.
Juanito Carlos for and in his behalf as petitioner-appellant.
Assistant City Fiscal Olimpio R. Navarro for respondents-appellees.
ANGELES, J .:
This is an appeal from the decision of the Court of First Instance of Manila dismissing the
petition for mandamus (Civil Case No. 53514) seeking to order the respondents to cause the
City of Manila to pay petitioner and other members of the Uniformed Force Division of the
Manila Fire Department (MFD) for overtime services rendered from January 1, 1962, up to the
date when the petition was filed January 4, 1963; to enforce immediately the 40-Hour a Week
Work Law to petitioner and said other members of the MFD; and to pay damages sustained by
them as a consequence of the acts complained of.
The facts of the case are set forth in the stipulation of facts submitted by the parties in the
lower court, to wit:
1. Under Sec. 15 of the Revised Charter of the City of Manila (Rep. Act 409, as amended),
"there shall be a chief of the Fire Department, ... who shall have the management and control
of all matters relating to the administration of said department, and the organization,
government, discipline, and disposition of fire forces; ... [Emphasis supplied]
2. Pursuant to the foregoing provision, from September 16, 1957, to the present, the petitioner
and other members of the Uniformed Force Division of the Manila Fire Department have been
required and ordered by the Chief of the Manila Fire Department, upon approval of the City
Mayor, the Commissioner of the Civil Service and the Office of the President, to be 24 hours
on duty and 24 hours off duty, alternately; that is, a member of the MFD Uniformed Force
Division reports to his station at 8:00 o'clock in the morning and continues on duty until 8:00
o'clock of the following morning for 24 hours; he is then off duty for the next 24 hours
immediately thereafter; this schedule continuous throughout the days of the week regardless of
Saturdays, Sundays and holidays; for an average of eighty-four (84) hours a week the firemen
stay at the station and while there, their duties are to clean and maintain the station, fire engines
or apparatuses and equipment to respond to fire and to perform other duties required by
ordinances and laws; during the 24 hours' stay in the station, unless they are out working to
fight and extinguish fires, the firemen are given time to rest from 12:00 noon to 4:00 o'clock in
the afternoon, and time to sleep from 9:00 o'clock in the evening to 6:00 o'clock the following
morning.
3. On July 10, 1957, the Chief of the Manila Fire Department requested the Office of the
President for authority, in the interest of the service, for the members of the Uniformed Force
Division and of the Fire Alarm and Radio Division of the department to render service without
overtime pay beyond the 40-hour-5-day a week requirement of the law.
4. On December 9, 1962, a petition was addressed to the Mayor, City of Manila, through the
Chief, Fire Department, Manila, claiming payment for overtime services rendered effective
January 1, 1962 and demanding the enforcement of the 40-hour a week work law with respect
to the Uniformed Force Division of the Manila Fire Department, and the reply thereto was that
services rendered beyond a regular period fixed by R.A. No. 1880 will not entitle the employee
to overtime pay as a matter of legal right, citing Opinion No. 218, Series of 1957, of the
Secretary of Justice.
5. On December 26, 1962, petitioner addressed a petition to His Excellency, the President of
the Philippines, petitioning also the latter to order the City of Manila to pay petitioner and other
members of the MFD Uniformed Force Division for overtime services rendered during 1962
and caused to be enforced the 40-hour a week law and there was no favorable reply. "6. The
parties herein reserve the right to submit additional evidence should a necessity therefor arise. "
No additional evidence was submitted thereafter, and upon the foregoing stipulation of facts
and the law applicable thereon, the lower court dismissed the petition.
The issue for adjudication is whether the petitioner-appellant and other firemen similarly
situated are entitled to collect overtime pay for overtime services rendered by them since
January 1, 1962.
The provisions of law that resolve the issue are neither those of Republic Act 1880, otherwise
known as the Forty Hour Week Work Law, nor Commonwealth Act 444, the Eight-Hour Labor
Law, as suggested by the petitioner-appellant, but the following sections of the Revised
Administrative Code, to wit:
SEC. 566. Extension of hours and requirement of overtime work. When the interests of the
public service so require, the head of any Department, Bureau, or Office may extend the daily
hours of labor, in what manner so ever fixed, for any or all of the employees under him, and
may likewise require any or all of them to do overtime work not only on work days but also on
holidays.".
SEC. 259. Inhibition against payment of extra compensation. In the absence of special
provision, persons regularly and permanently appointed under the Civil Service Law or whose
salary, wages or emoluments are fixed by law or regulation shall not, for any service rendered
or labor done by them on holidays or for other overtime work, receive or be paid any additional
compensation; nor, in the absence of special provision, shall any officer or employee in an
branch of the Government service receive additional compensation on account of the discharge
of duties pertaining to the position of another or for the performance of any public service
whatever, whether such service is rendered voluntarily or exacted of him under authority of
law." .
The petitioner-appellant contends that the above-quoted portions of the Revised Administrative
Code have been repealed by the provisions of Commonwealth Act 444, in so far as the
provisions of the former are inconsistent with the latter. The contention is erroneous. This
Court has explicitly declared
[[1]]
that the Eight-Hour Labor Law was not intended to apply to
civil service employees who are still governed by the above provisions of the Revised
Administrative Code. As there appears to be no debate over the employment of petitioner-
appellant and the other firemen similarly situated as falling under the civil service, they being
employees of the City of Manila, a municipal corporation, in its governmental capacity, We
perceive no reason to deviate from said ruling. And as We hold that the above sections of the
Revised Administrative Code are still legally in force, it necessarily follows that Rule XV,
section 3 of the Civil Service Rules, a similar provision promulgated pursuant to that of
Section 16(e) of the Civil Service Act of 1959 (Republic Act No. 2260) is likewise applicable
to petitioner-appellant. Said provision reads:
SEC. 3. When the nature of the duties to be performed or the interest of the public service so
requires, the head of any Department or agency may extend the daily hours of work specified
for any or all the employees under him, and such extension shall be without additional
compensation unless otherwise provided by law. Office and employees may be required by the
head of the Department or agency to work on Saturdays, Sundays and public holidays also,
without additional compensation unless otherwise specifically authorized by law.
It needs no lengthy explanation that the nature of work of a fireman requires him to be always
on the alert to respond to fire alarms which may occur at any time of the day, for the exigency
of the service necessitates a round-the-clock observance of his duties, which situation excepts
him from the applicability of Section 562 of the Revised Administrative Code, as amended by
Republic Act 18809 the Forty-Hour a Week Work Law, which provides, in part:
Such hours, except for schools, courts, hospitals and health clinics or where the exigencies of
service so require, shall be as prescribed in the Civil Service Rules and as otherwise from time
to time disposed in temporary executive orders in the discretion of the President of the
Philippines but shall be eight (8) hours a day, for five (5) days a week or a total of forty (40)
hours a week, exclusive of the time for lunch. [Emphasis supplied].
Parallel to the instant case are the circumstances obtaining in Department of Public Services
Labor Union vs. CIR, et al.,
[[2]]
where this Court held that in view of the exigency of the
service, garbage collectors in Manila are not entitled to the benefits of the Forty-Hour a Week
Work Law.
In the light of the foregoing, the conclusion is inevitable that the petitioner-appellant and other
firemen of his situation are not entitled to overtime pay and to the coverage of the said Forty-
Hour a Week Work Law.
Parenthetically, a side issue has come up in this appeal during its pendency, and that is whether
or not the City Fiscal of Manila should continue his appearance for the respondents-appellees,
despite the creation of the office and subsequent appointment of a City Legal Officer of
Manila, pursuant to Republic Act 5185, known as the Decentralization Act of 1967, to take
charge of civil cases concerning the City. We believe this is not the proper forum to first pass
upon the question since the motion for withdrawal of appearance filed by the City Fiscal and
the opposition thereto put at issue the validity of an ordinance
[[3]]
passed by the City Council of
Manila which is alleged to be in conflict with the said Decentralization Act. Anyway, the said
motion for withdrawal of appearance was filed only on May 19, 1968, long after August 18,
1965, when the case had been rested for resolution and when there was no more need for
further representation in behalf of the parties.
IN VIEW OF THE FOREGOING, the decision appealed from is hereby affirmed. For
equitable considerations, no costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez. Castro and Fernando,
JJ., concur.

EN BANC

[G.R. No. L-18938. August 31, 1964.]

NATIONAL WATERWORKS & SEWERAGE AUTHORITY, Petitioner, v. NWSA
CONSOLIDATED UNIONS, ET AL., Respondents.

Govt. Corp. Counsel Simeon M. Gopengco and Asst. Govt. Corp. Counsel Arturo B.
Santos for Petitioner.

Cipriano Cid & Associates and Israel Bocobo for Respondents.

Alfredo M. Montesa for intervenor-respondent.

SYLLABUS

1. PUBLIC CORPORATIONS; NAWASA DOES NOT PERFORM GOVERNMENTAL
BUT ONLY PROPRIETARY FUNCTION. The National Waterworks and Sewerage
Authority is a government corporation performing not governmental but proprietary functions,
and as such comes within the coverage of Commonwealth Act No. 444.

2. ID.; SUPPLY OF WATER AND SEWERAGE SERVICE ARE MINISTRANT
FUNCTIONS. The business of providing water supply and sewerage service are but
ministrant functions of government.

3. LABOR RELATIONS; PUBLIC UTILITY OBLIGED TO PAY DIFFERENTIAL SUM
UNDER COLLECTIVE BARGAINING AGREEMENT. The NAWASA is a public utility.
Although pursuant to Section 4 of Commonwealth Act 444, it is not obliged to pay an
additional sum of 25% to its laborers for work done on Sundays and legal holidays, yet it must
pay said additional compensation by virtue of the contractual obligation it assumed under the
collective bargaining agreement.

4. ID.; NON-MANAGERIAL EMPLOYEES COVERED BY COMMONWEALTH ACT NO.
444. Employees who have little freedom of action and whose main function is merely to
carry out the companys orders, plans and policies, are not managerial employees and hence
are covered by Commonwealth Act No. 444.

5. ID.; JURISDICTION OF COURT OF INDUSTRIAL RELATIONS DETERMINED AT
TIME DISPUTE AROSE. The Court of Industrial Relations has jurisdiction to adjudicate
overtime pay where there was employer- employee relationship existing between the parties at
the time the dispute arose.

6. ID.; EMPLOYEES OF OTHER OFFICES ASSIGNED TO NAWASA NOT EMPLOYEES
OF LATTER. The GAO employees assigned to work in the NAWASA even if they were
paid out of the latters funds cannot be regarded as employees of the NAWASA on matters
relating to compensation. They are employees of the national government and are not covered
by the Eight- Hour Labor Law. The same may be said of the Bureau of Public Works assigned
to work in the NAWASA.

7. ID.; OFFSETTING OVERTIME WITH UNDERTIME WHEN UNFAIR. The method
used by the NAWASA in offsetting the overtime with the undertime and at the same time
charging said undertime to the accrued leave is unfair.

8. ID.; DIFFERENTIAL PAY FOR SUNDAYS IS PART OF LEGAL WAGE. The
differential pay for Sundays is a part of the legal wage. Hence, it was correctly included in
computing the weekly wages of those employees and laborers who worked seven days a week
and were regularly receiving the 25% salary differential for a period of three months prior to
the implementation of Republic Act 1880. This is so even if petitioner is a public utility in
view of the contractual obligation it has assumed on the matter.

9. ID.; DIFFERENT COMPUTATION OF DAILY WAGES OF GOVERNMENT AND
NON-GOVERNMENT EMPLOYEES. In the computation of daily wages of employees
paid by the month distinction should be made between government employees like the GAO
employees and those who are not. The computation for government employees is governed by
Section 254 of the Revised Administrative Code while for others the correct computation is the
monthly salary divided by the actual number of working hours in the month or the regular
monthly compensation divided by the number of working days in the month.

10. ID.; NIGHT COMPENSATION TO BE PAID FROM TIME SERVICES WERE
RENDERED. The laborers must be compensated for nighttime work as of the date the same
was rendered.

11. ID.; MINIMUM WAGES RATES APPLICABLE ALSO TO EMPLOYEES HIRED
SUBSEQUENT TO DATE OF DECISION. The rates of minimum pay fixed in a CIR case
are applicable not only to those who were already in the service as of the date of the decision
but also to those who were employed subsequent to said date.

12. ID.; "DISTRESS PAY" APPLICABLE TO ALL EMPLOYEES WHOSE WORK HAVE
TO DO WITH THE SEWERAGE CHAMBERS. All the laborers, whether assigned to the
sewerage division or not who are actually working inside or outside the sewerage chambers,
are entitled to distress pay.

13. ID.; STAGGERING NOT REQUIRED WHERE WORK NOT CONTINUOUS.
Staggering of working hours is not required where the evidence shows that the work is not
continuous.

D E C I S I O N

BAUTISTA ANGELO, J .:

Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled
corporation created under Republic Act No. 1383, while respondent NWSA Consolidated
Unions are various labor organizations composed of laborers and employees of the NAWASA.
The other respondents are intervenors Jesus Centeno, Et Al., hereinafter referred to as
intervenors.

Acting on a certification of the President of the Philippines, the Court of Industrial Relations
conducted a hearing on December 5, 1957 on the controversy then existing between petitioner
and respondent unions which the latter embodied in a "Manifesto" dated December 5, 1957,
namely: implementation of the 40-Hour Week Law (Republic Act No. 1880); alleged
violations of the collective bargaining agreement dated December 28, 1956 concerning
"distress pay" ; minimum wage of P5.25; promotional appointments and filling of vacancies of
newly created positions; additional compensation for night work; wage increases to some
laborers and employees; and strike duration pay. In addition, respondent unions raised the issue
of whether the 25% additional compensation for Sunday work should be included in computing
the daily wage and whether, in determining the daily wage of a monthly salaried employee, the
salary should be divided by 30 days.

On December 13, 1957, petitioner and respondent unions, conformably to a suggestion of the
Court of Industrial Relations, submitted a joint stipulation of facts on the issues concerning the
40-Hour Week Law, "distress pay," minimum wage of P5.25, filling of vacancies, night
compensation, and salary adjustments, reserving the right to present evidence on matters not
covered therein. On December 4, 1957, respondent intervenors filed a petition in intervention
on the issue of additional compensation for night work. Later, however, they amended their
petition by including a new demand for overtime pay in favor of Jesus Centeno, Cesar Cabrera,
Feliciano Duiguan, Cecilio Remotigue, and other employees receiving P4,200.00 per annum or
more.chanrobles.com : virtual law library

On February 5, 1958, petitioner filed a motion to dismiss the claim for overtime pay alleging
that respondent Court of Industrial Relations was without jurisdiction to pass upon the same
because, as mere intervenors, the latter cannot raise new issues not litigated in the principal
case, the same not being the lis mota therein involved. To this motion the intervenors filed an
opposition. Thereafter, respondent court issued on order allowing the issue to be litigated.
Petitioners motion to reconsider having been denied, it filed its answer to the petition for
intervention. Finally, on January 16, 1961, respondent court rendered its decision stating
substantially as follows:chanrob1es virtual 1aw library

The NAWASA is an agency not performing governmental functions and, therefore, is liable to
pay additional compensation for work on Sundays and legal holidays conformably to
Commonwealth Act No. 444, known as the Eight-Hour Labor Law, even if said days should be
within the staggered five-work days authorized by the President; the intervenors do not fall
within the category of "managerial employees" as contemplated in Republic Act 2377 and so
are not exempt from the coverage of the Eight-Hour Labor Law; even those intervenors
attached to the General Auditing Office and the Bureau of Public Works come within the
purview of Commonwealth Act No. 444; the computation followed by NAWASA in
computing overtime compensation is contrary to Commonwealth Act 444; the undertime of a
worker should not be set-off against the worker in determining whether the latter has rendered
service in excess of eight hours for that day; in computing the daily wages of those employed
on daily basis, the additional 25% compensation for Sunday work should be included; the
computation used by the NAWASA for monthly salaried employees, to wit, dividing the
monthly basic pay by 30 is erroneous; the minimum wage awarded by respondent court
wayback on November 25, 1950 in Case No. 359-V entitled MWD Workers Union v.
Metropolitan Water District, applies even to those who were employed long after the
promulgation of the award and even if the workers are hired only as temporary, emergency and
casual workers for a definite period and for a particular project; the authority granted to
NAWASA by the President to stagger the working days of its workers should be limited
exclusively to those specified in the authorization and should not be extended to others who are
not therein specified; and under the collective bargaining agreement entered into between the
NAWASA and respondent unions on December 28, 1956, as well as under Resolution No. 29,
series of 1957 of the Grievance Committee, even those who work outside the sewerage
chambers should be paid 25% additional compensation as "distress pay."cralaw virtua1aw
library

Its motion for reconsideration having been denied, NAWASA filed the present petition for
review raising merely questions of law. Succinctly, these questions are:chanrob1es virtual 1aw
library

1. Whether NAWASA is performing governmental functions and, therefore, essentially a
service agency of the government;

2. Whether NAWASA is a public utility and therefore, exempted from paying additional
compensation for work on Sundays and legal holidays;

3. Whether the intervenors are "managerial employees" within the meaning of Republic Act
2377 and, therefore, not entitled to the benefits of Commonwealth Act No. 444, as amended;

4. Whether respondent Court of Industrial Relations has jurisdiction to adjudicate overtime pay
considering that this issue was not among the demands of respondent union in the principal
case but was merely dragged into the case by the intervenors;

5. Whether those attached to the General Auditing Office and the Bureau of Public Works
come within the purview of Commonwealth Act No. 444, as amended;

6. In determining whether one has worked in excess of eight hours, whether the undertime for
that day should be set-off;

7. In computing the daily wage, whether the additional compensation for Sunday work should
be included;

8. What is the correct method to determine the equivalent daily wage of a monthly-salaried
employee, especially in a firm which is a public utility?;

9. Considering that the payment of night compensation is not by virtue of any statutory
provision but emanates only from an award of respondent Court of Industrial Relations,
whether the same can be made retroactive and cover a period prior to the promulgation of the
award;

10. Whether the minimum wage fixed and awarded by respondent Court of Industrial Relations
in another case (MWD Workers Union v. MWD, CIR Case No. 359-V) applies to those
employed long after the promulgation thereof, whether hired as temporary, emergency and
casual workers for a definite period and for a specific project;

11. How should the collective bargaining agreement of December 28, 1956 and Resolution No.
29, series of 1957 of the Grievance Committee be interpreted and construed insofar as the
stipulations therein contained relative to "distress pay" is concerned?; and

12. Whether, under the first indorsement of the President of the Philippines dated August 12,
1957, which authorizes herein petitioner to stagger the working days of its employees and
laborers, those whose services are indispensably continuous throughout the year may be
staggered in the same manner as the pump, valve, filter and chlorine operators, guards,
watchman, medical services, and those attached to the recreational facilities.

DISCUSSION OF THE ISSUES

1. Is NAWASA an agency that performs governmental functions and, therefore, essentially a
service agency of the government? Petitioner sustains the affirmative because, under Republic
Act No. 1383, it is a public corporation, and as such it exists as an agency independent of the
Department of Public Works of our government. It also contends that under the same Act the
Public Service Commission does not have control, supervision or jurisdiction over it in the
fixing of rates concerning the operation of the service. It can also incur indebtedness or issue
bonds that are exempt from taxation which circumstance implies that it is essentially a
government-function corporation because it enjoys that attribute of sovereignty. Petitioner
likewise invokes the opinion of the Secretary of Justice which holds that the NAWASA being
essentially a service agency of the government can be classified as a corporation performing
governmental function.

With this contention, we disagree. While under Republic Act No. 1383 the NAWASA is
considered as a public corporation it does not show that it was so created for the government of
a portion of the State. It should be borne in mind that there are two kinds of public
corporations, namely, municipal and non-municipal. A municipal corporation in its strict sense
is the body politic constituted by the inhabitants of a city or town for the purpose of local
government thereof. It is the body politic established by law particularly as an agency of the
State to assist in the civil government of the country chiefly to regulate the local and internal
affairs of the city or town that is incorporated (62 C.J.S., p. 61). Non-municipal corporations,
on the other hand, are public corporations created as agencies of the State for limited purposes
to take charge merely of some public or state work other than community government (Elliot,
Municipal Corporations, 3rd ed., p. 7; McQuillin, Mun. Corp. 3rd ed., Vol. 1, p. 476).

The National Waterworks & Sewerage Authority was not created for purposes of local
government. It is not a municipal corporation. It was created "for the purpose of consolidating
and centralizing all waterworks, sewerage and drainage systems in the Philippines under one
control and direction and general supervision. "The NAWASA, therefore, though a public
corporation, is not a municipal corporation, because it is not an agency of the State to regulate
or administer the local affairs of the town, city, or district which is incorporated.

Moreover, the NAWASA, by its charter, has personality and power separate and distinct from
the government. It is an independent agency of the government although it is placed, for
administrative purposes, under the Department of Public Works and Communications. It has
continuous succession under its corporate name and may sue and be sued in court. It has
corporate powers to be exercised by its board of directors; it has its own assets and liabilities;
and it may charge rates for its services.

In Bacani v. National Coconut Corporation, 53 O.G., 2798, we stated: "To recapitulate, we
may mention that the term Government of the Republic of the Philippines . . . refers only to
that government entity through which the functions of the government are exercised as an
attribute of sovereignty, and in this are included those arms through which political authority is
made effective whether they be provincial, municipal or other form of local government. These
are what we call municipal corporations. They do not include government entities which are
given a corporate personality separate and distinct from the government and which are
governed by the Corporation Law. Their powers, duties and liabilities have to be determined in
the light of that law and of their corporate charter."cralaw virtua1aw library

The same conclusion may be reached by considering the powers, functions and activities of the
NAWASA which are enumerated in Section 2, Republic Act No. 1383, among others, as
follows:jgc:chanrobles.com.ph

"(e) To construct, maintain and operate mains, pipes, water reservoirs, machinery, and other
waterworks for the purpose of supplying water to the inhabitants of its zone, both domestic and
other purposes; to purify the source of supply, regulate the control and use, and prevent the
waste of water; and to fix water rates and provide for the collection of rents therefor;

"(f) To construct, maintain and operate such system of sanitary sewers as may be necessary for
the proper sanitation of the cities and towns comprising the Authority and to charge and collect
such sums for construction and rates for this service as may be determined by the Board to be
equitable and just;

"(g) To acquire, purchase, hold, transfer, sell, lease, rent, mortgage, encumber, and otherwise
dispose of real and personal property, including rights and franchises, within the Philippines, as
authorized by the purposes for which the Authority was created and reasonably and necessarily
required for the transaction of the lawful business of the same, unless otherwise provided in
this Act;"

The business of providing water supply and sewerage service, as this Court held, "may for all
practical purposes be likened to an industry engaged in by coal companies, gas companies,
power plants, ice plants, and the like" (Metropolitan Water District v. Court of Industrial
Relations, Et Al., L-4488, August 27, 1952). These are but mere ministrant functions of
government which are aimed at advancing the general interest of society. As such they are
optional (Bacani v. National Coconut Corporation, supra). And it has been held that "although
the state may regulate the service and rates of water plants owned and operated by
municipalities, such property is not employed for governmental purposes and in the ownership
operation thereof the municipality acts in its proprietary capacity, free from legislative
interference" (1 McQuillin, p. 683). In Mendoza v. De Leon, 33 Phil., 508, 509, this Court also
held:jgc:chanrobles.com.ph

"Municipalities of the Philippine Islands organized under the Municipal Code have both
governmental and corporate or business functions. Of the first class are the adoption of
regulations against fire and disease, preservation of the public peace, maintenance of municipal
prisons, establishment of primary schools and post-offices, etc. Of the latter class are the
establishment of municipal waterworks for the use of the inhabitants, the construction and
maintenance of municipal slaughterhouses, markets, stables, bathing establishments, wharves,
ferries, and fisheries . . ."cralaw virtua1aw library

On the strength of the foregoing considerations, our conclusion is that the NAWASA is not an
agency performing governmental functions. Rather, it performs proprietary functions, and as
such comes within the coverage of Commonwealth Act No. 444.

2. We agree with petitioner that the NAWASA is a public utility because its primary function
is to construct, maintain and operate water reservoirs and waterworks for the purpose of
supplying water to the inhabitants, as well as to consolidate and centralize all water supplies
and drainage systems in the Philippines. We likewise agree with petitioner that a public utility
is exempt from paying additional compensation for work on Sundays and legal holidays
conformably to Section 4 of Commonwealth Act No. 444 which provides that the prohibition
regarding employment on Sundays and holidays unless an additional sum of 25% of the
employees regular remuneration is paid shall not apply to public utilities such as those
supplying gas, electricity, power, water or providing means of transportation or
communication. In other words, the employees and laborers of NAWASA can be made to
work on Sundays and legal holidays without being required to pay them an additional
compensation of 25%.

It is to be noted, however, that in the case at bar it has been stipulated that prior to the
enactment of Republic Act No. 1880, providing for the implementation of the 40-Hour Week
Law, the Metropolitan Water District had been paying 25% additional compensation for work
on Sundays and legal holidays to its employees and laborers by virtue of Resolution No. 47,
series of 1948, of its Board of Directors, which practice was continued by the NAWASA when
the latter took over the service. And in the collective bargaining agreement entered into
between the NAWASA and respondent unions it was agreed that all existing benefits enjoyed
by the employees and laborers prior to its effectivity shall remain in force and shall form part
of the agreement, among which certainly is the 25% additional compensation for work on
Sundays and legal holidays therefore enjoyed by said laborers and employees. It may,
therefore, be said that while under Commonwealth Act No. 444 a public utility is not required
to pay additional compensation to its employees and workers for work done on Sundays and
legal holidays, there is, however, no prohibition for it to pay such additional compensation if it
voluntarily agrees to do so. The NAWASA committed itself to pay this additional
compensation. It must pay not because of compulsion of law but because of contractual
obligation.

3. This issue raises the question whether the intervenors are "managerial employees" within the
meaning of Republic Act 2377 and as such are not entitled to the benefits of Commonwealth
Act No. 444, as amended. Section 2 of Republic Act 2377 provides.chanrobles virtual
lawlibrary

"Sec. 2. This Act shall apply to all persons employed in any industry or occupation, whether
public or private, with the exception of farm laborers, laborers who prefer to be paid on piece
work basis, managerial employees outside sales personnel, domestic servants persons in the
personal service of another and members of the family of the employer working for him.

"The term managerial employee in this Act shall mean either (a) any person whose primary
duty consists of the management of the establishment in which he is employed or of a
customarily recognized department or subdivision thereof, or (b) any officer or member of the
managerial staff."cralaw virtua1aw library

One of the distinguishing characteristics by which a managerial employee may be known as
expressed in the explanatory note of Republic Act No. 2377 is that he is not subject to the rigid
observance of regular office hours. The true worth of his service does not depend so much on
the time he spends in office but more on the results he accomplishes. In fact, he is free to go
out of office anytime.

On the other hand, in the Fair Labor Standards Act of the United States, which was taken into
account by the sponsors of the present Act in defining the degree of work of a managerial
employee, we find interesting the following dissertation of the nature of work of a managerial
employee.

"Decisions have construed and applied a regulation in substance providing that the term
professional employee shall mean any employee . . . who is engaged in work predominantly
intellectual and varied in character, and requires the consistent exercise of discretion and
judgment in its performance, and is of such a character that the output produced or the result
accomplished cannot be standardized in relation to a given period of time, and whose hours of
work of the same nature as that performed by nonexempt employees, except where such work
is necessarily incident to work of a professional nature; and which requires, first, knowledge of
an advanced type in a filed of science or learning customarily acquired by a prolonged course
or specialized intellectual acquired by a prolonged course or specialized intellectual instruction
and study, or, second, predominantly original and creative in character in a recognized filed of
artistic endeavor. Stranger v. Vocafilm Corp., C.C.A. N.Y., 151 F. 2d 894, 162 A.L.R. 216;
Hofer v. Federal Cartridge Corp., D.C. Minn 71 F. Supp. 243; Aulen v. Triumph Explosive,
D.C. Md., 58 F. Supp. 4." (56 C.J.S., p. 666).

"Under the provisions of the Fair Labor Standards Act 29 U.S.C.A., Section 23 (a) (1),
executive employees are exempted from the statutory requirements as to minimum wages
overtime pay . . .

"Thus the exemption attaches only where it appears that the employees primary duty consists
of the management of the establishment or of a customarily recognized department or
subdivision thereof, that he customarily and regularly directs the work of other employees
therein, that he has the authority to hire or discharge other employees or that his suggestions
and recommendations as to the hiring or discharging and as to the advancement and promotion
or any other change of status of other employees are given particular weight, that he
customarily and regularly exercises discretionary powers, . . ." (56 C.J.S., pp. 666-668.)

"The term administrative employee ordinarily applies only to an employee who is
compensated for his services at a salary or fee of not less than a prescribed sum per month, and
who regularly and directly assists an employee employed in a bona fide executive or
administrative capacity, where such assistance is nonmanual in nature and requires the exercise
of discretion and independent judgment; or who performs under only general supervision,
responsible nonmanual office or filed work, directly related to management policies or general
business operations, along specialized or technical lines requiring special training experience,
or knowledge, and the exercise of discretion and independent judgment; . . ." (56 C.J.S., p.
671.)

"The reason underlying each exemption is in reality apparent. Executive, administrative and
professional workers are not usually employed at hourly wages nor is it feasible in the case of
such employees to provide a fixed hourly rate of pay nor maximum hours of labor, Helena
Glendale Ferry Co. v. Walling, C.C.A. Ark. 132 F. 2d 616, 619," (56 C.J.S., p. 664.)

The philosophy behind the exemption of managerial employees from the 8-Hour Labor Law is
that such workers are not usually employed for every hour of work but their compensation is
determined considering their special training, experience or knowledge which requires the
exercise of discretion and independent judgment, or perform work related to management
policies or general business operations along specialized or technical lines. For these workers it
is not feasible to provide a fixed hourly rate of pay or maximum hours of labor.

The intervenors herein are holding position of responsibility. One of them is the Secretary of
the Board of Directors. Another is the private secretary of the general manager. Another is a
public relations officer, and many chiefs of divisions or sections and others are supervisors and
overseers. Respondent court, however, after examining carefully their respective functions,
duties and responsibilities found that their primary duties do not bear any direct relation with
the management of the NAWASA, nor do they participate in the formulation of its policies nor
in the hiring and firing of its employees. The chiefs of divisions and sections are given ready
policies to execute and standard practices to observe for their execution. Hence, it concludes,
they have little freedom of action, as their main function is merely to carry out the companys
orders, plans and policies.

To the foregoing comment, we agree. As a matter of fact, they are required to observe working
hours and record their time work and are not free to come and go to their offices, nor move
about at their own discretion. They do not, therefore, come within the category of "managerial
employees" within the meaning of the law.

4. Petitioners claim is that the issue of overtime compensation not having been raised in the
original case but merely dragged into it by intervenors, respondent court cannot take
cognizance thereof under Section 1, Rule 13, of the Rules of Court.

Intervenors filed a petition for intervention alleging that being employees of petitioner who
have worked at night since 1954 without having been fully compensated they desire to
intervene insofar as the payment of their night work is concerned. Petitioner opposed the
petition on the ground that this matter was not in the original case since it was not included in
the dispute certified by the President of the Philippines to the Court of Industrial Relations. The
opposition was overruled. This is now assigned as error.

There is no dispute that the intervenors were in the employ of petitioner when they intervened
and that their claim refers to the 8- Hour Labor Law and since this Court has held time and
again that disputes that call for the application of the 8-Hour Labor Law are within the
jurisdiction of the Court of Industrial Relations if they arise while the employer-employee
relationship still exists, it is clear that the matter subject of intervention comes within the
jurisdiction of respondent court. 1 The fact that the question of overtime payment is not
included in the principal case in the sense that it is not one of the items of dispute certified to
by the President is of no moment, for it comes within the sound discretion of the Court of
Industrial Relations. Moreover, in labor disputes technicalities of procedure should as much as
possible be avoided not only in the interest of labor but to avoid multiplicity of action. This
claim has no merit.

5. It is claimed that some intervenors are occupying positions in the General Auditing Office
and in the Bureau of Public Works for they are appointed either by the Auditor General or by
the Secretary of Public Works and, consequently, they are not officers of the NAWASA but of
the insular government, and as such are not covered by the Eight-Hour Labor Law.

The status of the GAO employees assigned to, and working in, government-controlled
corporations has already been decided by this Court in National Marketing Corporation, Et. Al.
v. Court of Industrial Relations, Et Al., L-17804, January 31, 1963. In said case, this Court
said:jgc:chanrobles.com.ph

"We agree with appellants that members of the auditing force can not be regarded as
employees of the PRISCO in matters relating to their compensation. They are appointed and
supervised by the Auditor General, have an independent tenure, and work subject to his orders
and instructions, and not to those of the management of appellants. Above all, the nature of
their functions and duties, for the purpose of fiscal control of appellants operations,
imperatively demands, as a matter of policy, that their positions be completely independent
from interference or inducement on the part of the supervised management, in order to assure a
maximum of impartiality require that the employees in question be utterly free from
apprehension as to their tenure and from expectancy of benefits resulting from any action of
the management, since in either case there would be an influence at work that could possibly
lead, if not to positive malfeasance, to laxity and indifference that would gradually erode and
endanger the critical supervision entrusted to these auditing employees.

"The inclusion of their items in the PRISCO budget should be viewed as no more than a
designation by the national government of the fund or source from which their emoluments are
to be drawn, and does not signify that they are thereby made PRISCO employees."cralaw
virtua1aw library

The GAO employees assigned to the NAWASA are exactly in the same position regarding
their status, compensation and right to overtime pay as the rest of the GAO employees assigned
to the defunct PRISCO, and following our ruling in the PRISCO case, we hold that the GAO
employees herein are not covered by the 8-Hour Labor Law, but by other pertinent laws on the
matter.

The same thing may be said with regard to the employees of the Bureau of Public Works
assigned to, and working in, the NAWASA. Their position is the same as that of the GAO
employees. Therefore, they are not also covered by the 8-Hour Labor Law.

The respondent court, therefore, erred in considering them as employees of the NAWASA for
the mere reason that they are paid out of its fund and are subject to its administration and
supervision.

6. A worker is entitled to overtime pay only for work in actual service beyond eight hours. If a
worker should incur in undertime during his regular daily work, should said undertime be
deducted in computing his overtime work? Petitioner sustains the affirmative, while respondent
unions the negative, and respondent court decided the dispute in favor of the latter. hence this
error.

There is merit in the decision of respondent court that the method used by petitioner in
offsetting the overtime with the undertime and at the same time charging said undertime to the
accrued leave of the employee is unfair, for under such method the employee is made to pay
twice for his undertime because his leave is reduced to that extent while he was made to pay
for it with work beyond the regular working hours. The proper method should be to deduct the
undertime from the accrued leave but pay the employee the overtime to which he is entitled.
This method also obviates the irregular schedule that would result if the overtime should be set
off against the undertime for that would place the schedule for working hours dependent on the
employee.

7. and 8. How is a daily wage of a weekly employee computed in the light of Republic Act
1880?

According to petitioner, the daily wage should be computed exclusively on the basic wage
without including the automatic increase of 25% corresponding to the Sunday differential. To
include said Sunday differential would be to increase the basic pay which is not contemplated
by said Act. Respondent court disagrees with this manner of computation. It holds that
Republic Act 1880 requires that the basic weekly wage and the basic monthly salary should not
be diminished notwithstanding the reduction in the number of working days a week. If the
automatic increase corresponding to the salary differential should not be included there would
be a diminution of the weekly wage of the laborer concerned. Of course, this should only
benefit those who have been working seven days a week and had been regularly receiving 25%
additional compensation for Sunday work before the effectivity of the Act.

It is evident that Republic Act 1880 does not intend to raise the wages of the employees over
what they are actually receiving. Rather, its purpose is to limit the working days in a week to
five days, or to 40 hours without however permitting any reduction in the weekly or daily wage
of the compensation which was previously received. The question then to be determined is:
What is meant by weekly or daily wage? Does the regular wage include differential payments
for work on Sundays or at nights, or is it the total amount received by the laborer for whatever
nature or concept?

It has been held that for purposes of computing overtime compensation a regular wage includes
all payments which the parties have agreed shall be received during the work week, including
piece- work wages, differential payments for working at undesirable times, such as at night or
on Sundays and holidays, and the cost of board and lodging customarily furnished the
employee (Walling v. Yangerman-Reynolds Hardwook Co., 325 U. S. 419, Walling v.
Harischfeger Corp., 325 U.S. 427). The "regular rate" of pay also ordinarily includes incentives
bonus or profit-sharing payments made in addition to the normal basic pay (56 C.J.S., pp. 704-
705), and it was also held that the higher rate for night, Sunday and holiday work is just as
much a regular rate as the lower rate for daytime work. The higher rate is merely an
inducement to accept employment at times which are not as desirable from a workmans
standpoint (International L. Assn. v. National Terminals Corp. C. C. Wisc. 50 F. Supp. 26,
affirmed C.C.A. Carbunao v. National Terminals Corp. 139 F. 2d 853).

Respondent court, therefore, correctly included such differential pay in computing the weekly
wages of those employees and laborers who worked seven days a week and were continuously
receiving 25% Sunday differential for a period of three months immediately preceding the
implementation of Republic Act 1880.

The next issue refers to the method of computing the daily rate of a monthly salaried employee.
Petitioner in computing this daily rate divides the monthly basic pay of the employee by 30 in
accordance with Section 254 of the Revised Administrative Code which in part provides that
"In making payment for part of a month, the amount to be paid for each day shall be
determined by dividing the monthly pay into as many parts as there are days in the particular
month." The respondent court disagrees with this method and holds that the way to determine
the daily rate of a monthly employee is to divide the monthly salary by the actual number of
working hours in the month. Thus, according to respondent court, Section 8(g) of Republic Act
No. 1161, as amended by Republic Act 1792, provides that the daily rate of compensation is
the total regular compensation for the customary number of hours worked each day. In other
words, according to respondent court, the correct computation shall be (a) the monthly salary
divided by the actual number of working hours in a month or (b) the regular monthly
compensation divided by the number of working days in a month.

This finding of respondent court should be modified insofar as the employees of the General
Auditing Office and of the Bureau of Public Works assigned to work in the NAWASA are
concerned for, as already stated, they are government employees and should be governed by
Section 254 of the Revised Administrative Code. This section provides that in making payment
for part of a month, the amount to be paid for each day shall be determined by dividing the
monthly pay into as many parts as there are days in the particular month. With this
modification we find correct the finding of the respondent court on this issue.

9. The Court of Industrial Relations awarded an additional 25% night compensation to some
workers with retroactive effect, that is, effective even before the presentation of the claim,
provided that they had been given authorization by the general manager to perform night work.
It is petitioners theory that since there is no statute requiring payment of additional
compensation for night work but it can only be granted either by the voluntary act of the
employer or by an award of the industrial court under its compulsory arbitration power, such
grant should only be prospective in operation, and not retroactive, as authorized by the court.

It is of common occurrence that a working man who has already rendered night time service
takes him a long time before he can muster enough courage to confront his employer with the
demand for payment for it for fear of possible reprisal. It happens that many months or years
are allowed to pass by before he could be made to present such claim against his employer, and
so it is neither fair nor just that he be deprived of what is due him simply because of his silence
for fear of losing the means of his livelihood. Hence, it is not erroneous for the Court of
Industrial Relations to make the payment of such night compensation retroactive to the date
when the work was actually performed.

The power of the Court of Industrial Relations to order the payment of compensation for
overtime service prior to the date of the filing of the claim has been recognized by this Court
(Luzon Stevedoring Co., Inc. v. Luzon Marine Department Union, Et Al., L-9265, April 29,
1957). The same reasons given therein for the retroactivity of overtime compensation may also
be given for the retroactivity of payment of night compensation, as such reasoning runs along
the line already abovestated.

10. The Court of Industrial Relations in its resolution dated November 25, 1950 issued in Case
No. 359-V entitled MWD Workers Union, Et. Al. v. Metropolitan Water District, fixed the
following rates of minimum daily wage: P5.25 for those working in Manila and suburbs; P4.50
for those working in Quezon City; and P4.00, for those working in Ipo, Montalban and Balara.
It appears that in spite of the notice to terminate said award filed with the court on December
29, 1953, the Metropolitan Water District continued paying the above wages and the
NAWASA which succeeded it adopted the same rates for sometime. In September, 1955, the
NAWASA hired the claimants as temporary workers and it is now contended that said rates
cannot apply to these workers.

The Court of Industrial Relations, however, held that the discontinuance of this minimum wage
rates was improper and ordered the payment of the difference to said workers from the date the
payment of said rates was discontinued, advancing, among others, the following reasons: that
the resolution of November 25, 1950 is applicable not only to those laborers already in the
service but also to those who may be employed thereafter; the notice of termination of said
award given on December 29, 1953 is not legally effective because the same was given without
hearing and the employer continued paying the minimum wages even after the notice of
termination; and there is no showing that the minimum wages violate Civil Service Law or the
principles underlying the WAPCO.

We find no valid reason to disagree with the foregoing finding of the Court of Industrial
Relations considering that the award continued to be valid and effective in spite of the notice of
termination given by the employer. No good reason is seen why such award should not apply
to those who may be employed after its approval by the court there being nothing therein that
may prevent its extension to them. Moreover, the industrial court can at any time during the
effectiveness of an award alter and modify in whole or in part said award or reopen any
question involved therein under Section 17 of Commonwealth Act No. 103, and such is what
said court has done when it made the award extensive to the new employees, more so when
they are similarly situated. To do otherwise would be to foster discrimination.

11. This issue has to do with the meaning of "distress pay." Paragraph 3, Article VIII, of the
collective bargaining agreement entered into between the employer and respondent unions,
provides:jgc:chanrobles.com.ph

"Because of the peculiar nature of the function of those employees and laborers of the
Sewerage Division who actually work in the sewerage chambers, causing Unusual distress to
them, they shall receive extra compensation equivalent to twenty-five percent (25%) of their
basic wage."cralaw virtua1aw library

Pursuant to said agreement, a grievance committee was executed composed of representatives
of management and labor which adopted the following resolution:jgc:chanrobles.com.ph

"Resolution No. 9

Series of 1957

BE IT RESOLVED, That the employees and laborers of the Sewerage Division who actually
work in the sewerage chambers causing unusual distress to them, be paid extra compensation
equivalent to 25% of their basic wage, as embodied in Article VIII, Paragraph 3 of the
Collective Bargaining Agreement; PROVIDED, however, that any employee who may be
required to work actually in the sewerage chambers shall also be paid 25% extra compensation
and, PROVIDED FURTHER, that the term sewerage chamber shall include pits, trenches,
and other excavations that are necessary to tap the sewer line, and PROVIDED FINALLY that
this will not prejudice any laborer or employee who may be included in one way or another in
the term unusual distress within the purview of Paragraph 3 of Article VIII, of the Collective
Bargaining Agreement."cralaw virtua1aw library

And in a conference held between management and labor on November 25, 1957, the
following was agreed upon "Distress-Management agreed to pay effective October 1, 1956
25% additional compensation for those who actually work in and outside sewerage chamber in
accordance with Resolution No. 9 of the Grievance Committee."cralaw virtua1aw library

The question that arose in connection with this distress pay is with regard to the meaning of the
phrase "who actually work in and outside sewerage chambers." Petitioner contends that the
distress pay should be given only to those who actually work inside the sewerage chambers
while the union maintains that such pay should be given to all those whose work have to do
with the sewerage chambers, whether inside or outside. The Court of Industrial Relations
sustained the latter view holding that the distress pay should be given to those who actually
work in and outside the sewerage chambers effective October 1, 1956. This view is now
disputed by petitioner.chanrobles virtual lawlibrary

The solution of the present issue hinges upon the interpretation of paragraph 3, Article VIII of
the collective bargaining agreement, copied above, as explained by Resolution No. 9, and the
agreement of November 25, 1975, also copied above, which stipulation has to be interpreted as
a whole pursuant to Article 1374 of the Civil Code. As thus interpreted, we find that those who
are entitled to the distress pay are those employees and laborers who work in the sewerage
chambers whether they belong to the sewerage division or not, and by sewerage chambers
should be understood to mean as the surroundings where the work is actually done, not
necessarily "inside the sewerage chambers." This is clearly inferred from the conference held
in the Department of Labor on November 25, 1957 where it was agreed that the compensation
should be paid to those who work "in and outside" the sewerage chambers in accordance with
the terms of Resolution No. 9 of the Grievance Committee. It should be noted that, according
to said resolution, sewerage chambers include "pits, trenches, and other excavations that are
necessary to tap the sewer lines." And the reason given for this extra compensation is the
"unusual distress" that is caused to the laborers by working in the sewerage chambers in the
form and extent abovementioned.

It is clear then that all the laborers whether of the sewerage division or not assigned to work in
and outside the sewerage chambers and suffering unusual distress because of the nature of their
work are entitled to the extra compensation. And this conclusion is further bolstered by the
findings of the industrial court regarding the main activities of the sewerage division.

Thus, the Court of Industrial Relations found that the sewerage division has three main
activities, to wit: (a) cooperation of the sewerage pumping stations; (b) cleaning and
maintenance of sewer mains; and (c) installation and repairs of house sewer connections.

The pump operators and the sewer attendants in the seven pumping stations in Manila,
according to the industrial court, suffer unusual distress. The pump operators have to go to the
wet pit to see how the cleaning of the screen protecting the pump is being performed, and go
also to the dry pit abutting the wet pit to make repairs in the breakdown of the pumps.
Although the operators used to stay near the motor which is but a few meters from the pump,
they unavoidably smell the foul odor emitting from the pit. The sewerage attendants go down
and work in the wet pit containing sewerage materials in order to clean the screen.

A group assigned to the cleaning and maintenance of the sewer mains which are located in the
middle of the streets of Manila is usually composed of a capataz and four sewerage attendants.
These attendants are rotated in going inside the manholes, operation of the window glass,
bailing out from the main to the manhole and in supplying the water service as necessity
demands. These attendants come into contact with dirt, stink and smell, darkness and heat
inside and near the sewage pipes. The capataz goes from one manhole to another seeing to it
that the work is properly performed and as such also suffers unusual distress although to a
lesser degree.

The group assigned to the third kind of activity is also usually composed of a capataz and four
attendants. Their work is to connect sewer pipes from houses to the sewer mains and to do this
they excavate the trench across the street from the proper line to the sewer main and then they
install the pipe after tapping the sewer main. In the tapping, the sewer pipe is opened and so the
sewerage gets out and fills up the trench and the men have to wade in and work with the
sewerage water. The capataz has to go near the filthy excavations or trenches full of filthy
sewerage matter to aid the attendants in making pipe connections, especially when these are
complicated.

It cannot therefore be gainsaid that all these laborers suffer unusual distress. The wet pits,
trenches, manholes, which are full of sewage matters, are filthy sources of germs and different
diseases. They emit foul and filthy odor dangerous to health. Those working in such places are
exposed directly to the distress of contamination.

Premises considered, the decision of the Court of Industrial Relations in this respect should be
modified in the sense that all employees and laborers, whether or not they belong to the
sewerage division, who actually work in and outside the sewerage chambers, should be paid
the distress pay or the extra compensation equivalent to 25% of their basic wage effective
October 1, 1956.

12. On August 6, 1957, the NAWASA requested the President of the Philippines for exemption
from Executive Order No. 251 which prescribes the office hours to be observed in government
and government-owned or controlled corporations in order that it could stagger the working
hours of its employees and laborers. The request is based on the fact that there are essential and
indispensable phases in the operation of the NAWASA that are required to be attended to
continuously for twenty-four hours for the entire seven days of the week without interruption
some of which being the work performed by pump operators, valve operators, filter operators,
chlorine operators, watchmen and guards, and medical personnel. This request was granted
and, accordingly, the NAWASA staggered the work schedule of the employees and laborers
performing the activities abovementioned. Respondent unions protested against this staggering
schedule of work and this protest having been unheeded, they brought the matter to the Court
of Industrial Relations.

In resolving this issue, the industrial court justified the staggering of the work days of those
holding positions as pump operators, valve operators, filter operators, chlorine operators,
watchmen and guards, and those in the medical service for the reason that the same was made
pursuant to the authority granted by the President who in the valid exercise of the powers
conferred upon him by Republic Act No. 1880 could prescribe the working days of employees
and laborers in government-owned and controlled corporations depending upon the exigencies
of the service. The court, however, stated that the staggering should not apply to the personnel
in the construction, sewerage, maintenance, machineries and shops because they work below
365 days a year and their services are not continuous to require staggering. From this portion of
the decision, the petitioner appeals.

Considering that respondent court found that the workers in question work less than 365 days a
year and their service are not continuous to require staggering, we see no reason to disturb this
finding. This is contrary to the very essence of the request that the staggering should be made
only with regard to those phases of the operation of the NAWASA that have to be attended to
continuously for twenty-four hours without interruption which certainly cannot apply to the
workers mentioned in the last part of the decision of the respondent court on the matter.

RECAPITULATION

In resum, this Court holds:chanrob1es virtual 1aw library

(1) The NAWASA, though a public corporation, does not perform governmental functions. It
performs proprietary functions, and hence, it is covered by Commonwealth Act No. 444;

(2) The NAWASA is a public utility. Although pursuant to Section 4 of Commonwealth Act
444 it is not obliged to pay an additional sum of 25% to its laborers for work done on Sundays
and legal holidays, yet it must pay said additional compensation by virtue of the contractual
obligation it assumed under the collective bargaining agreement;

(3) The intervenors are not "managerial employees" as defined in Republic Act No. 2377,
hence they are covered by Commonwealth Act No. 444, as amended;

(4) The Court of Industrial Relations has jurisdiction to adjudicate overtime pay in the case at
bar there being an employer- employee relationship existing between intervenors and
petitioner;

(5) The GAO employees assigned to work in the NAWASA cannot be regarded as employees
of the NAWASA on matters relating to compensation. They are employees of the national
government and are not covered by the Eight-Hour Labor Law. The same may be said of the
employees of the Bureau of Public Works assigned to work in the NAWASA;

(6) The method used by the NAWASA in offsetting the overtime with the undertime and at the
same time charging said undertime to the accrued leave is unfair;

(7) The differential pay of Sundays is a part of the legal wage. Hence, it was correctly included
in computing the weekly wages of those employees and laborers who worked seven days a
week and were regularly receiving the 25% salary differential for a period of three months
prior to the implementation of Republic Act 1880. This is so even if petitioner is a public
utility in view of the contractual obligation it has assumed on the matter;

(8) In the computation of the daily wages of employees paid by the month distinction should be
made between government employees like the GAO employees and those who are not. The
computation for government employees is governed by Section 254 of the Revised
Administrative Code while for others the correct computation is the monthly salary divided by
the actual number of working hours in the month or the regular monthly compensation divided
by the number of working days in the month;

(9) The Court of Industrial Relations did not err in ordering the payment of night compensation
from the time such services were rendered. The laborer must be compensated for nighttime
work as of the date the same was rendered;

(10) The rates of minimum pay fixed in a CIR Case No. 359-V are applicable not only to those
who were already in the service as of the date of the decision but also to those who were
employed subsequent to said date;

(11) All the laborers, whether assigned to the sewerage division or not who are actually
working inside or outside the sewerage chambers, are entitled to distress pay; and

(12) There is no valid reason to disturb the finding of the Court of Industrial Relations that the
work of the personnel in the construction, sewerage, maintenance, machineries and shops of
petitioner is not continuous as to require staggering.

CONCLUSION

With the modification indicated in the above resum as elaborated in this decision, we hereby
affirm the decision of respondent court in all other respects, without pronouncement as to
costs.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Paredes, Regala and Makalintal, JJ., concur.