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,vsCOURTOFAPPEALSandGLORIAC.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) WHETHERORNOTTHEAPPRENTICESHIPAGREEMENTWASVALIDANDBINDINGBETWEENTHEPARTIES
2) WHETHERORNOTPALADWASILLEGALLYDISMISSEDBYTHEPETITIONER

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 core maker 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 premises 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 nation 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.


Franklin Baker V. Trajano 157 SCRA 416

Facts: This is a petition for certiorari seeking the annulment of the order of Mediator-Arbiter Conchita Martinez of Ministry of
Labor and Employment and Dir Cresencio Trajano of MOLE. On April 23, 1984 Franklin Baker Brotherhood Association filed a
petition for certification election among the office and technical employees of the petitioner company with the Ministry of
Labor and Employment Davao. It alleges that 90 employees in the Davao plant which is distinct from the regular rank and file
employees is excluded from the coverage of the existing CBA. Petitioner company did not object on the election but
manifested that out of 90 employees 74 are managerial employees and 2 are confidential employees. Med-Arbiter Martinez
issued an order dated Sept. 17, 1984 granting the petition and certification election among the office and technical employees
of the Davao plant. The petitioner company appealed to the Bureau of Labor Relations for the order be set aside and declare
the 74 employees as managerial employees. During the pendency of the appeal, 61 employees involved filed a Motion to
Withdraw the petition for certification election praying for their exclusion from the bargaining unit because they are
managerial employees as they are performing managerial functions. April 7, 1986 Cresencio Trajano of Bureau of Labor
Relations issued a resolution affirming the order of Med-Arbiter Conchita Martinez.

Issue: Whether or Not the subject employees are managerial employees under the purview of the Labor Code and it's
Implementing Rules.
Held: A managerial employee is defined as one "who is vested with powers or prerogative to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign, or discipline employees or to effectively
recommend such managerial actions." It will be noted that in the performance of their duties and functions and in the exercise
of their recommendatory powers, subject employees may only recommend, as the ultimate power to hire, fire or suspend as
the case maybe rests upon the plant manager. The test of "supervisory" or managerial status" depends on whether a person
possesses authority to act in the interest of his employer in the matter specified in Art. 212(k) of the Labor Code and Sec. 1(m)
of its Implementing Rules and whether such authority is not merely routinary or clerical in nature, but requires the use of
independent judgement. The subject employees are not managerial employees because as borne by the records, they do not
participate in the policy making but given ready policies to execute and standard practice to observe, thus having little freedom
of action. Premises Considered, the petition is dismissed, and the assailed resolution and orders are Affirmed. So Ordered.