Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-24394

August 30, 1968

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.

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.

ANGELES, J.:

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.

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.
1wph1.t

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.

The facts of the case are set forth in the stipulation of facts submitted by the
parties in the lower court, to wit: .

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. "1wph1.t

Juanito Carlos for and in his behalf as petitioner-appellant.

Assistant City Fiscal Olimpio R. Navarro for respondents-appellees.

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;

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 declared1 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: .1wph1.t
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 petitionerappellant 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
ordinance3 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.

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.

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.

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 employeremployee relationship existing between the parties at the time the dispute
arose.

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.

DECISION

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 EightHour 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 nonmunicipal. 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

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

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

"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

"(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

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 8Hour 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, governmentcontrolled 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.

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 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.

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.

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.

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.

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

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.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 75039 January 28, 1988
FRANKLIN BAKER COMPANY OF THE PHILIPPINES, petitioner,
vs.
HONORABLE CRESENCIO B. TRAJANO, DIRECTOR OF BUREAU OF
LABOR RELATIONS, FRANKLIN BAKER BROTHERHOOD ASSOCIATION
(TECHNICAL AND OFFICE EMPLOYEES)-ASSOCIATION OF TRADE
UNIONS (ATU), respondents.

PARAS, J.:
This is a petition for certiorari seeking the annulment of. (a) the Order of
Mediator-Arbiter Conchita J. Martinez of the Ministry of Labor and Employment,
Davao City, dated September 17, 1984 in LRD Case No. R-22 MED-ROXI-UR-

28-84 entitled "In Re: Petition for Certification Election Among the Office and
Technical Employees of Franklin Baker Company of the Philippines, Davao
Plant at Coronan, Sta. Cruz, Davao del Sur, Franklin Baker Company of the
Philippines, Davao Plant, Employer, Franklin Baker Brotherhood Association
(Technical and Office Employees)-Association of Trade Unions (ATU)," insofar
as it includes the managerial employees (inspectors, foremen and supervisors)
in the certification election; (b) the Order of April 7, 1986 of Director Cresencio
B. Trajano, also of the MOLE, dismissing the appeal of aforesaid Order of
September 17, 1985 for lack of merit; and (c) the Order of June 6, 1986 of said
Director denying reconsideration of his Order of April 7, 1986 and affirming the
same in toto (Rollo, p. 90).
In brief, the undisputed facts of this case are as follows:
On April 23, 1984, private respondent Franklin Baker Brotherhood Association(ATU) filed a petition for certification election among the office and technical
employees of petitioner company with the Ministry of Labor and Employment,
Regional Office No. XI, Davao City, docketed as LRD No. R-22, MED-ROXIUR-2884. Among other things, it alleges that Franklin Baker Company of the
Phils. Davao Plant, had in its employ approximately ninety (90) regular
technical and office employees, which group is separate and distinct from the
regular rank and file employees and is excluded from the coverage of existing
Collective Bargaining Agreement.
Petitioner company did not object to the holding of such an election but
manifested that out of the ninety (90) employees sought to be represented by
the respondent union, seventy four (74) are managerial employees while two
(2) others are confidential employees, hence, must be excluded from the
certification election and from the bargaining unit that may result from such
election (Rollo, p. 3).
Hearings were held and thereafter, the parties agreed to file their respective
memoranda. Likewise, petitioner filed a reply to private respondent's
Memorandum (Rollo, p. 4).
Subsequently, on September 17, 1984, Med-Arbiter Conchita J. Martinez
issued an order, the dispositive part of which reads:
Accordingly, the petition is hereby granted and a certification
election among the office and technical employees of Franklin
Baker Company of the Philippines, Davao Plant is ordered
within twenty (20) days from receipt hereof. The choices shall
be the following:
1. Franklin Baker Brotherhood Association-(ATU)

2. No Union
The representation officer assigned shall call the parties for a
pre-election conference at least five (5) days before the date of
the election to thresh out the mechanics of the election, the
finalization of the list of voters, the posting of notices and other
relevant matters.
The company's latest payroll shall be the basis for determining
the office and technical workers qualified to vote.

Let, therefore, the pertinent papers of this case be immediately

forwarded to the Office of origin for the conduct of the
certification election. (Rollo, p. 90).
Hence, this petition.
In the resolution of July 30, 1986, the Second Division of this Court without
giving due course to the petition required the respondents to file their comment
(Rollo, p. 91). On August 28, 1986, public respondent filed its comment (Rollo,
pp. 99 to 102). Likewise private respondent filed its comment on September 5,
1986 (Rollo, pp. 104 to 107).

SO ORDERED. (Rollo, pp. 47-48).

From the aforequoted order petitioner Company appealed to the Bureau of
Labor Relations, docketed as BLR Case No. A-22884, praying that the
appealed order be set aside and another be issued declaring the seventy four
(74) inspectors, foremen and supervisors as managerial employees.
During the pendency of the appeal, sixty one (61) of the employees involved,
filed a Motion to Withdraw the petition for certification election praying therein
for their exclusion from the Bargaining Unit and for a categorical declaration
that they are managerial employees, as they are performing managerial
functions (Rollo, p. 4).
On April 7, 1986, public respondent Bureau of Labor Relations Cresencio B.
Trajano issued a Resolution affirming the order dated September 17, 1984, the
dispositive part of which reads:
WHEREFORE, the appealed Order dated September 17, 1985
is hereby affirmed and the appeal dismissed for lack of merit.
Let the certification election among the office and technical
employees of Franklin Baker Company of the Philippines
proceed without delay.
The latest payrolls of the company shall be used as basis of
determining the list of eligible voters. (Rollo, p. 77),
Petitioner company sought the reconsideration of the aforequoted resolution
but its motion was denied by Director Cresencio B. Trajano in his order dated
June 6, 1986, the dispositive part of which reads:
WHEREFORE, the appeal of respondent company is,
dismissed for lack of merit and the Bureau's Resolution dated
April 1986 affirmed in toto.

In the resolution of September 8, 1986, petitioner was required to file its reply to
public respondent's comment (Rollo, p. 119) which reply was filed on
September 18, 1986 (Rollo, pp. 122-127).
On October 20, 1986, this Court resolved to give due course to the petition and
required the parties to file their respective Memoranda (Rollo, p. 133). In
compliance with said resolution, petitioner and private respondent filed their
Memoranda on December 8, 1986 and December 29, 1986, respectively (Rollo,
pp. 183-187). On the other hand, public respondent filed with this Court a
manifestation (Rollo, p. 153) to the effect that it is adopting as its memorandum
its comment dated August 18, 1986 (Rollo, p. 99) which manifestation was
noted by this Court in its resolution dated November 26, 1986
(Rollo, p. 155).
The lone assignment of error raised by petitioner states:
Public respondent acted with grave abuse of discretion
amounting to lack of jurisdiction when he ruled that the 76
employees subject of this petition are not managerial
employees (inspectors, foremen, supervisors and the like) and
therefore, may participate in the certification election among
the office and technical employees. Such ruling is contrary to
jurisprudence and to the factual evidence presented by
petitioner which was not rebutted by private respondent union
and is therefore patently baseless.
From this assigned error two questions are raised by petitioner, namely: (1)
whether or not subject employees are managerial employees under the purview
of the Labor Code and its Implementing Rules; and (2) whether the Director of
the Bureau of Labor Relations acted with abuse of discretion in affirming the
order of Mediator-Arbiter Conchita J. Martinez.

There is no question that there are in the DAVAO Plant of petitioner company
approximately 90 regular technical and office employees which form a unit,
separate and distinct from the regular rank and file employees and are
excluded from the coverage of existing Collective Bargaining Agreement; that
said group of employees organized themselves as Franklin Baker Brotherhood
Association (technical and office employees) and affiliated with the local
chapter of the Association of trade Unions (ATU), a legitimate labor organization
with Registration Permit No. 8745 (Fed) LC and with office located at the 3rd
Floor of Antwell Bldg., Sta. Ana, Davao City; that petitioner company did not
object to the holding of such certification, but only sought the exclusion of
inspectors, foremen and supervisors, members of Franklin Baker Brotherhood
Association (technical and office employees) numbering 76 from the
certification election on the ground that they are managerial employees.
A managerial employee is defined as one "who is vested with powers or
prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or
to effectively recommend such managerial actions." (Reynolds Phil. Corp. v.
Eslava, 137 SCRA [1985], citing Section 212 (K), Labor Code.
Also pertinent thereto is Section 1 (M) of the Implementing Rules and
Regulations, which is practically a restatement of the above provision of law.
To sustain its posture, that the inspectors, foreman and supervisors numbering
76 are managerial employees, petitioner painstakingly demonstrates that
subject employees indeed participate in the formulation and execution of
company policies and regulations as to the conduct of work in the plant,
exercised the power to hire, suspend or dismiss subordinate employees and
effectively recommend such action, by citing concrete cases, among which are:
(1) Mr. Ponciano Viola, a wet process inspector, who while in the performance
of his duty, found Mr. Enrique Asuncion, a trimmer "forging", falsifying and
simulating a company time card (timesheet) resulting in payroll padding,
immediately recommended the dismissal of said erring employee, resulting in
the latter's discharge. (Employer's Memo, Rollo, p.18); (2) Mr. Manuel Alipio, an
opening inspector, recommended for suspension Nut Operator Ephraim
Dumayos who was caught in the act of surreptitiously transferring to a coworker's bin some whole nuts which act constitutes a violation of company
policy; (3) Mr. Sofronio Abangan, a line inspector, censured and thereafter
recommended the suspension of Mr. Romeo Fullante, for being remiss in the
proper and accurate counting of nuts; (4) Binleader Dionisio Agtang was
required to explain his inefficiency of Mr. Saturnino Bangkas, Bin Loading
Inspector; (5) for disobeying the orders of Bin Loading Inspector Mauricio
Lumanog's order, Macario Mante, Eduardo Adaptor, Rodolfo Irene and George
Rellanos were all recommended for suspension which culminated in an
investigation conducted by Lumanog's higher bosses (Ibid., p. 20).

It has also been shown that subject employees have the power to hire, as
evidenced by the hiring of Rolando Asis, Roy Layson, Arcadio Gaudicos and
Felix Arciaga, upon the recommendation of Opening Inspector Serafin Suelo,
Processing Inspector Leonardo Velez and Laureano C. Lim, Opening Inspector
(Ibid., p. 21).
It will be noted, however, 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 may
be, rests upon the plant personnel 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 Article 212 (k) of the Labor Code and Section 1 (m) of its Implementing Rules
and whether such authority is not merely routinary or clerical in nature, but
requires the use of independent judgment. Thus, where such recommendatory
powers as in the case at bar, are subject to evaluation, review and final action
by the department heads and other higher executives of the company, the
same, although present, are not effective and not an exercise of independent
judgment as required by law (National Warehousing Corp. v. CIR, 7 SCRA 602603 [1963]).
Furthermore, in line with the ruling of this Court, subject employees are not
managerial employees because as borne by the records, they do not
participate in policy making but are given ready policies to execute and
standard practices to observe, thus having little freedom of action (National
Waterworks and Sewerage Authority v. NWSA Consolidated, L-18938, 11
SCRA 766 [1964]).
Petitioner's contention that the Director of the Bureau of Labor Relations acted
with abuse of discretion amounting to lack of jurisdiction in holding that the 76
employees are not managerial employees and must be included in the
certification election has no basis in fact and in law. Neither is its contention that
the use of the word's "and/or" categorically shows that performance of the
functions enumerated in the law qualifies an employee as a managerial
employee.
It is well settled that the findings of fact of the Ministry of Labor and National
Labor Relations Commission are entitled to great respect, unless the findings of
fact and the conclusions made therefrom, are not supported by substantial
evidence, or when there is grave abuse of discretion committed by said public
official (Kapisanan ng Manggagawa sa Camara Shoes, 2nd Heirs of Santos
Camara, et al., 111 SCRA 477 [1982]; International hardwood and Veneer Co.
of the Philippines v. Leonardo, 117 SCRA 967 [1982]; Pan-Phil-Life, Inc. v.
NLRC, 114 SCRA 866 [1982]; Pepsi-Cola Labor Union-BF LUTUPAS Local

Chapter N-896 v. NLRC, 114 SCRA 930 [1982]; Egyptair v. NLRC, 148 SCRA
125 [1987]; RJL Martinez Fishing Corp. v. NLRC, G.R. Nos. 63550-51, 127
SCRA 455 [1984]; and Reyes v. Phil. Duplicators, G.R. No. 54996, 109 SCRA
489 [1981]).
By "grave abuse of discretion" is meant, such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility and must be so
patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined by or to act at all in contemplation of law
(G.R. No. 59880, George Arguelles [Hda. Emma Arguelles v. Romeo Yang,
etc.], September 11, 1987).
Moreover, this Court has ruled that findings of administrative agencies which
have acquired expertise, like the Labor Ministry, are accorded respect and
finality (Special Events and Central Shipping Office Workers Union v. San
Miguel Corp., 122 SCRA 557 [1983] and that the remedy of certiorari does not
lie in the absence of any showing of abuse or misuse of power properly vested
in the Ministry of Labor and Employment (Buiser v. Leogardo, Jr., 131 SCRA
151 [1984]).
After a careful review of the records, no plausible reason could be found to
disturb the findings of fact and the conclusions of law of the Ministry of Labor.
Even if We regard the employees concerned as "managerial employees," they
can still join the union of the rank and file employees. They cannot however
form their own exclusive union as "managerial employees" (Bulletin Publishing
Corporation v. Sanchez, 144 SCRA 628).
PREMISES CONSIDERED, the petition is DISMISSED, and the assailed
resolution and orders are AFFIRMED.
SO ORDERED.

G.R. No. 109210 April 17, 1996

ENGINEER LEONCIO V. SALAZAR, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and H.L.
CARLOS CONSTRUCTION, CO. INC., respondents.

KAPUNAN, J.:p
This is a petition for certiorari * to annul the decision of the National Labor
Relations Commission in NLRC Case No. 002855-92 dated 27 .November
1992 which affirmed in toto the decision of the Labor Arbiter in NLRC NCR-0009-05335-91 dated 29 January 1992 dismissing the complaint filed by petitioner
for lack of merit. The NLRC's resolution dated 22 February 1993 is similarly
impugned for denying petitioner's motion for reconsideration.
The antecedent facts are as follows:
On 17 April 1990, private respondent, at a monthly salary of P4,500.00,
employed petitioner as construction/project engineer for the construction of the
Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral
contract, petitioner would also receive a share in the profits after completion of
the project and that petitioner's services in excess of eight (8) hours on regular
days and services rendered on weekends and legal holidays shall be
compensable overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued by private
respondent's project manager, Engr. Nestor A. Delantar informing him of the
termination of his services effective on 30 April 1991. Reproduced hereunder is
the abovementioned memorandum:
April 16, 1991
MEMORANDUM TO:

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

LEONCIO V. SALAZAR
Project Engineer
MONTE DE PIEDAD BLDG. PROJECT
Quezon City
Due to the impending completion of the aforementioned project
and the lack of up-coming contracted works for our company in

the immediate future, volume of work for our engineering and

technical personnel has greatly been diminished.

He was hired as a project employee and his services were terminated due to
the completion of the project. 4

In view of this, you are hereby advised to wind up all technical

reports including accomplishments, change orders, etc.

The Labor Arbiter, likewise, denied petitioner's claim for a share in the project's
profits, reimbursement of legal expenses and unpaid wages for lack of basis. 5

Further, you are advised that your services are being

terminated effective at the close of office hours on April 30,
1991.

On 14 April 1992, petitioner appealed to the National Labor Relations

Commission (NLRC).

This, however, has no prejudice to your re-employment in this

company in its local and overseas projects should the need for
your services arises.
Thank you for your invaluable services rendered to this
company.

On 27 November 1992, the NLRC rendered the assailed decision, the

dispositive portion of which reads as follows:
WHEREFORE, premises considered, the appeal is hereby
Dismissed and the assailed decision is Affirmed en toto.
SO ORDERED. 6
(Sgd.)
On NESTOR
29 January 1993, petitioner filed a motion for reconsideration which the
A. DELANTAR
NLRC denied for lack of merit on 22 February 1993. 7
Project manager

Noted By:
(Sgd.) Mario B. Cornista
Vice President 1
On 13 September 1991, petitioner filed a complaint against private respondent
for illegal dismissal, unfair labor practice, illegal deduction,
non-payment of wages, overtime rendered, service incentive leave pay,
commission, allowances, profit-sharing and separation pay with the NLRC-NCR
Arbitration Branch, Manila. 2
On 29 January 1992, Labor Arbiter Raul T. Aquino rendered a decision, the
dispositive portion of which reads, thus:
WHEREFORE, responsive to the foregoing, the instant case is
hereby DISMISSED for lack of merits.
SO ORDERED. 3
The Labor Arbiter ruled that petitioner was a managerial employee and
therefore exempt from payment of benefits such as overtime pay, service
incentive leave pay and premium pay for holidays and rest days. Petitioner,
Labor Arbiter Aquino further declared, was also not entitled to separation pay.

Hence, the instant petition wherein the following issues were raised:
I. Granting for the sake of argument without conceding, that
complainant-petitioner herein was a managerial employee, was
his verbal contract to be paid his overtime services as stated in
paragraph 2(b) of this Petition invalid? and the payments of
such overtime services as evidenced by Exhibits "B" to "B-24"
(the genuineness and authenticity of which are not disputed)
are they not evidentiary and of corroborative value to the true
unwritten agreement between the parties in this case?
II. Is there any portion of the Labor Code that prohibits
contracts between employer and employee giving the latter the
benefit of being paid overtime services, as in this particular
case?
III. Where an employee was induced to accept a low or
distorted salary or wage level, because of an incentive promise
to receive a bigger compensation than that which would be his
true and correct wage level as shown by documents for the
payment of his distorted wages and overtime services, is it not
legally proper, in the alternative to claim payment of the
differential of his undistorted salary or wage level when the

promised incentive compensation is denied by his employer

after the completion of the job for which he has employed?
IV. Is the Certificate of employment issued to an employee by
his employer, assailable by mere affidavits of denials to the
effect that said Certificate was issued because of the insistence
of the employee that it be made to include a period he did not
work, but which such fact of insistence or request is also
denied by the employee, because he really worked during the
period included in said Certificate?
V. Is the employer liable for the payment of the attorney's pay
incurred by his employee in a work connected criminal
prosecution against him for an act done by another employee
assigned by same employer to do the act which was the
subject of the criminal prosecution? 8
Petitioner prays that judgment be rendered, thus:
1. That the decision of the NLRC and its resolution denying the Motion for
Reconsideration be set aside on grounds of grave abuse of discretion and;
2. That private respondent be ordered to pay petitioner the following:
a. the premium pays for his overtime services of 368 hours on
ordinary days at 25%; 272 hours on Saturdays at 30%; 272
hours on Sundays plus 24 hours on legal holidays at 200%
computed at the rate of P27.85 per hour of undistorted wage
level;

Before proceeding to the merits of the petition, we shall first resolve the
procedural objection raised. Private respondent prays for the outright dismissal
of the instant petition on grounds of wrong mode of appeal, it being in the form
of a petition for review on certiorari (Rule 45 of the Revised Rules of Court) and
not a special civil action for certiorari (Rule 65 thereof) which is the correct
mode of appeal from decisions of the NLRC.
Although we agree with private respondent that appeals to the Supreme Court
from decisions of the NLRC should be in the form of a special civil action for
certiorari under Rule 65 of the Revised Rules of Court, this rule is not inflexible.
In a number of cases, 10 this Court has resolved to treat as special civil actions
for certiorari petitions erroneously captioned as petitions for review on certiorari
"in the interest of justice." In People's Security, Inc. v. NLRC, 11 we elaborated,
thus:
Indeed, this Court has time and again declared that the only
way by which a labor case may reach the Supreme Court is
through a petition for certiorari under Rule 65 of the Rules of
Court alleging lack or excess of jurisdiction or grave abuse of
discretion (Pearl S. Buck Foundation v. NLRC, 182 SCRA 446
[1990]).
This petition should not be dismissed on a mere technicality
however. "Dismissal of appeal purely on technical grounds is
frowned upon where the policy of the courts is to encourage
hearings of appeal on their merits. The rules of procedure
ought not to be applied in a very rigid technical sense, rules of
procedure are used only to help secure, not override
substantial justice. If a technical and rigid enforcement of the
rules is made, their aim would be defeated" (Tamayo v. Court of
Appeals, 209 SCRA 518, 522 [1992] citing Gregorio v. Court of
Appeals, 72 SCRA 120 [1976]). Consequently, in the interest of
justice, the instant petition for review shall be treated as a
special civil action on certiorari. (Emphasis ours.)

b. in the alternative, to pay at least one (1) percent of 4.5

million pesos profit share, or the sum total of the differential of
his salaries, in the amount of P2,184.00 per month, since April
17, 1990 to April 30, 1991, his undistorted salary being
P6,684.00 per month; and to pay his unpaid salary for 15 days
- May 1 to 15, 1991, with his undistorted salary rate;

Moving on to the merits, stated differently, the issues for our resolution are the
following:

c. the amount of P3,000.00 reimbursement for what he paid his

defense counsel in that criminal action which should have
instead been against respondent's general manager;

1) Whether or not petitioner is entitled to overtime pay, premium pay for

services rendered on rest days and holidays and service incentive leave pay,
pursuant to Articles 87, 93, 94 and 95 of the Labor Code;

d. Separation pay of at least one month salary, he having been

terminated unreasonably without cause, and three days service
incentive leave pay; and to pay the costs; 9

2) Whether or not petitioner is entitled to a share in the profits of the

construction project;.

3) Whether or not petitioner rendered services from 1 May to 15 May 1991 and
is, therefore, entitled to unpaid wages;
4) Whether or not private respondent is liable to reimburse petitioner's legal
expenses and;

xxx xxx xxx

(c) Officers or members of a managerial staff if they perform
the following duties and responsibilities:

5) Whether or not petitioner is entitled to separation pay.

(1) The primary duty consists of the

performance of work directly related to
management policies of their employer;

On the first issue, the NLRC concurred with the Labor Arbiter's ruling that
petitioner was a managerial employee and, therefore, exempt from payment of
overtime pay, premium pay for holidays and rest days and service incentive
leave pay under the law. The NLRC declared that:

(2) Customarily and regularly exercise

discretion and independent judgment;

Book III on conditions of employment exempts managerial

employees from its coverage on the grant of certain economic
benefits, which are the ones the complainant-appellant was
demanding from respondent. It is an undisputed fact that
appellant was a managerial employee and such, he was not
entitled to the economic benefits he sought to recover. 12
Petitioner claims that since he performs his duties in the project site or away
from the principal place of business of his employer (herein private
respondent), he falls under the category of "field personnel." However,
petitioner accentuates that his case constitutes the exception to the exception
because his actual working hours can be determined as evidenced by the
disbursement vouchers containing payments of petitioner's salaries and
overtime services. 13 Strangely, petitioner is of the view that field personnel may
include managerial employees.
We are constrained to disagree with petitioner.
In his original complaint, petitioner stated that the nature of his work is
"supervisory-engineering." 14 Similarly, in his own petition and in other pleadings
submitted to this Court, petitioner confirmed that his job was to supervise the
laborers in the construction project 15 Hence, although petitioner cannot strictly
be classified as a managerial employee under Art. 82 of the Labor Code, 16 and
sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code,
1
7 nonetheless he is still not entitled to payment of the aforestated benefits
because he falls squarely under another exempt category "officers or
members of a managerial staff" as defined under sec. 2(c) of the
abovementioned implementing rules:
Sec. 2. Exemption. The provisions of this Rule shall not
apply to the following persons if they qualify for exemption
under the condition set forth herein:

(3) [i] Regularly and directly assist a proprietor

or a managerial employee whose primary duty
consists of the management of the
establishment in which he is employed or
subdivision thereof; or [ii] execute under
general supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or [iii] execute
under general supervision special assignments
and tasks; and
(4) who do not devote more than 20 percent of
their hours worked in a work-week to activities
which are not directly and closely related to the
performance of the work described in
paragraphs (1), (2), and (3) above.
A case in point is National Sugar Refineries Corporation v. NLRC. 18 On the
issue of "whether supervisory employees, as defined in Article 212 (m), Book V
of the Labor Code, should be considered as officers or members of the
managerial staff under Article 82, Book III of the same Code and hence not
entitled to overtime, rest day and holiday pay," 19 this Court ruled:
A cursory perusal of the Job Value Contribution Statements of
the union members will readily show that these supervisory
employees are under the direct supervision of their respective
department superintendents and that generally they assist the
latter in planning, organizing, staffing, directing, controlling,
communicating and in making decisions in attaining the
company's set goals and objectives. These supervisory
employees are likewise responsible for the effective and
efficient operation of their respective departments. . . .

xxx xxx xxx

From the foregoing, it is apparent that the members of
respondent union discharge duties and responsibilities which
ineluctably qualify them as officers or members of the
managerial staff, as defined in Section 2, Rule I, Book III of the
aforestated Rules to Implement the Labor Code, viz.: (1) their
primary duty consists of the performance of work directly
related to management policies of their employer; (2) they
customarily and regularly exercise discretion and independent
judgment; (3) they regularly and directly assist the managerial
employee whose primary duty consists of the management of a
department of the establishment in which they are employed;
(4) they execute, under general supervision, work along
specialized or technical lines requiring special training,
experience, or knowledge; (5) they execute, under general
supervision, special assignments and tasks; and (6) they do
not devote more than 20% of their hours worked in a workweek to activities which are not directly and clearly related to
the performance of their work hereinbefore described.
Under the facts obtaining in this case, we are constrained to
agree with petitioner that the union members should be
considered as officers or members of the managerial staff and
are, therefore, exempt from the coverage of Article 82.
Perforce, they are not entitled to overtime, rest day and holiday
pay. 20
The aforequoted rationale equally applies to petitioner herein considering in the
main his supervisory duties as private respondent's project engineer, duties
which, it is significant to note, petitioner does not dispute.
Petitioner, likewise, claims that the NLRC failed to give due weight and
consideration to the fact that private respondent compensated him for his
overtime services as indicated in the various disbursement vouchers he
submitted as evidence.
Petitioner's contention is unmeritorious. That petitioner was paid overtime
benefits does not automatically and necessarily denote that petitioner is entitled
to such benefits. Art. 82 of the Labor Code specifically delineates who are
entitled to the overtime premiums and service incentive leave pay provided
under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As
previously determined, petitioner falls under the exemptions and therefore has
no legal claim to the said benefits. It is well and good that petitioner was
compensated for his overtime services. However, this does not translate into a

right on the part of petitioner to demand additional payment when, under the
law, petitioner is clearly exempted therefrom.
Going to the second issue, petitioner insists that private respondent promised
him a share in the profits after completion of the construction project. It is
because of this oral agreement, petitioner elucidates, that he agreed to a
monthly salary of P4,500.00, an amount which he claims is too low for a
professional civil engineer like him with the rank of project engineer.
Arguing further, petitioner states that payment of his overtime services, as
shown by the aforementioned disbursement vouchers, proves the existence of
this verbal agreement since payment of his overtime services constitutes part of
this so-called understanding.
We cannot accede to petitioner's demand. Nowhere in the disbursement
vouchers can we find even the remotest hint of a profit-sharing agreement
between petitioner and private respondent. Petitioner's rationalization stretches
the imagination way too far.
Thus, we concur with the ruling of the Labor Arbiter:
As to the issue of profit sharing, we simply cannot grant the
same on the mere basis of complainant's allegation that
respondent verbally promised him that he is entitled to a share
in the profits derive(d) from the projects. Benefits or privileges
of this nature (are) usually in writing, besides complainant
failed to (establish) that said benefits or privileges (have) been
given to any of respondent('s) employees as a matter of
practice or policy. 21 (Words in parenthesis supplied.)
Anent the third issue, petitioner alleges that on 30 April 1991, before closing
hours, private respondent's project manager, Engineer Nestor Delantar advised
him to continue supervising the "finishing touches on many parts of the building
which took him and the assisting laborers until 15 May 1991." 22
As proof of his extended service, petitioner presented the certificate of service
issued by Engr. Delantar attesting to petitioner's employment as project
engineer from April 1990 to May 1991. 23
In contrast, private respondent argues that the abovementioned certificate was
issued solely to accommodate petitioner who needed the same for his work
application abroad. It further stressed that petitioner failed to prove he actually
worked during the aforestated period.

On this score, we rule for the petitioner. The purpose for which the said
certificate was issued becomes irrelevant. The fact remains that private
respondent knowingly and voluntarily issued the certificate. Mere denials and
self-serving statements to the effect that petitioner allegedly promised not to
use the certificate against private respondent are not sufficient to overturn the
same. Hence, private respondent is estopped from assailing the contents of its
own certificate of service.
During the construction of the Monte de Piedad building, a criminal complaint
for unjust vexation was filed by one Salvador Flores against the officers of the
Monte de Piedad & Savings Bank, the owner thereof, for constructing a
bunkhouse in front of his (Flores) apartment and making it difficult for him to
enter the same.
Petitioner avers that he was implicated in the complaint for the sole reason that
he was the construction engineer of the project. Hence, private respondent,
being the employer, is obligated to pay petitioner's legal expenses, particularly,
reimbursement of the fees petitioner paid his counsel amounting to P3,000.00.
Petitioner argues that private respondent's act of giving allowances to enable
petitioner to attend the hearings, as shown in the disbursement voucher
submitted as evidence, 24 constitutes an admission of the aforestated obligation.

period or undertaking the completion or termination of which

has been determined at the time of the engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of
the season. (Emphasis ours.) 25
In the case at bench, it was duly established that private respondent hired
petitioner as project or construction engineer specifically for its Monte de
Piedad building project. In his own words, petitioner declared:
xxx xxx xxx
2. That complainant-petitioner herein, by virtue of an oral
agreement entered into with private respondent herein through
its proprietor, president and general manager, Engr. Honorio L.
Carlos, on April 17, 1990, began to work as a licensed Civil
Engineer as construction or engineer of its contracted project,
the Monte de Piedad Bank Building, at Cubao, Quezon City, on
the following terms and conditions, to wit:
..
.
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s.
)

We agree with petitioner. Although not directly implicated in the criminal

complaint, private respondent is nonetheless obligated to defray petitioner's
legal expenses. Petitioner was included in the complaint not in his personal
capacity but in his capacity as project engineer of private respondent and the
case arose in connection with his work as such. At the construction site,
petitioner is the representative of private respondent being its employee and he
acts for and in behalf of private respondent. Hence, the inclusion of petitioner in
the complaint for unjust vexation, which was work-related, is equivalent to
inclusion of private respondent itself.
On the last issue, we rule that petitioner is a project employee and, therefore,
not entitled to separation pay.

26

The applicable provision is Article 280 of the Labor Code which defines the
term "project employee," thus:
Art. 280. Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment
shall be deemed to be 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,
except where the employment has been fixed for a specific

Accordingly, as project employee, petitioner's services are deemed coterminous

with the project, that is, petitioner's services may be terminated as soon as the
project for which he was hired is completed. 27
There can be no dispute that petitioner's dismissal was due to the completion of
the construction of the Monte de Piedad building. Petitioner himself stated that
it took him and his assisting laborers until 15 May 1991 to complete the
"finishing touches" on the said building. 28

Petitioner, thus, has no legal right to demand separation pay. 29 Policy

Instruction No. 20 entitled "Stabilizing Employer-Employee Relations in the
Construction Industry" explicitly mandates that:
xxx xxx xxx
Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any
phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a
particular construction company. Moreover, the company is not
required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the
company is a report to the nearest Public Employment Office
for statistical purposes.
xxx xxx xxx
Department Order No. 19 of the Department of Labor and Employment (DOLE)
entitled "Guidelines Governing the Employment of Workers in the Construction
Industry" promulgated on 1 April 1993, reiterates the same rule. 30
WHEREFORE, premises considered, the assailed decision is hereby
MODIFIED as follows:
1) Private respondent is ordered to pay petitioner for services rendered from 1
May to 15 May 1991; and,
2) Private respondent is ordered to reimburse petitioner's legal expenses in the
amount of P3,000.00.
In all other respects, the impugned decision is hereby AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 86200 February 25, 1992

APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SANDIGAN NG
MANGGAGAWANG PILIPINO, represented by RANULFO PEDRERA,
President, respondents.
Gerardo C. Olaguer for petitioner.
Antonio Billiones, Sr. and Antonio Jolejole for private respondent.

FELICIANO, J.:
Respondent Sandigan ng Manggagawang Pilipino ("Sandigan") filed before the
Labor Arbiter a claim for Emergency Cost of Living Allowance ("ECOLA")
differential against petitioner Apex Mining Company, Inc. ("Apex") alleging that
Apex had paid its employees in its Maco, Davao del Norte operations, between
1 November 1954 until 28 March 1985, an aggregate cumulative daily ECOLA
of only P15.00 which was P2.00 below the cumulative minimum ECOLA of
P17.00 (for non-agricultural workers) established under Wage Order No. 6; and
that petitioner had belatedly granted the additional P2.00 starting on 29 March
1985 only.
Apex denied having failed to comply with Wage Order No. 6, contending that it
had, by previous agreement, incorporated the alleged P2.00 deficiency into the
basic salary of its employees. In turn, Sandigan denies that such an agreement
had been made, but conceded that a P2.00 increase in basic salary had been
made by Apex, in compliance with a provision of the Collective Bargaining
Agreement ("CBA") then in force between Apex and Sandigan, and not in
fulfillment of Apex's obligation under Wage Order No. 6. Sandigan pointed out
that Wage Order No. 6 had taken effect on 1 November 1984, several months
after the P2.00 had been integrated by Apex into the basic salary of its
employees.
In a supplemental memorandum, Apex reiterated that the daily salary increase
of P2.00 provided for in the then current CBA, to take effect on 1 February
1984, had been subsequently credited as partial compliance with the P5.00
increment mandated by Wage Order No. 5 (which took effect on 16 June 1984).
Thus, Apex, in compliance with Wage Order No. 5, accordingly increased the
daily ECOLA of its workers by P3.00 only (from P9.00 to P12.00), or P2.00 less

than the legislated ECOLA increase of P5.00 (which would have increased the
total daily ECOLA from P9.00 to P14.00). Petitioner Apex added that the
integration of P2.00 allowance into the basic salary provided for in the CBA had
been conformed to by Vicente Arniego, National President of Sandigan, and
that in any event, Wage Order No. 5 had itself authorized such integration.
Since petitioner Apex had integrated P2.00 (out of the P5.00) ECOLA provided
for in Wage Order No. 5, when Apex complied with the additional ECOLA
increase mandated by Wage Order No. 6, the resulting figure for the total or
cumulative ECOLA paid by Apex appeared to be only P15.00, until one took
into account the P2.00 (out of the P5.00 ECOLA increase mandated by Wage
Order No. 5) integrated into the employees' basic salary. Finally, petitioner Apex
explained, it had granted members of Sandigan an additional P2.00 effective 29
March 1985 not as an admission that it had previously failed to pay something
legally due, but only as a measure to diffuse the tense atmosphere between
management and the union created by the misunderstanding over the
ostensible (as distinguished from the real) total increase paid by petitioner Apex
to its employees.
In a decision dated 19 May 1987, the Labor Arbiter held that the wage increase
given in accordance with the CBA could not be credited as compliance with
increases mandated in the Wage Orders, and ordered petitioner Apex to pay
respondent Sandigan the claimed ECOLA differential of P2.00 for the period
from 1 November 1984 until 28 March 1985.
On appeal, the National Labor Relations Commission ("NLRC") affirmed the
Labor Arbiter's ruling.
There is no dispute that petitioner Apex, as the Labor Arbiter had found out, had
paid a P2.00 wage increase effective on 1 February 1984. There is also no
question that Apex raised the ECOLA of its workers by P3.00 starting on the
effectivity date of Wage Order No. 6 on November 1984. The question to be
resolved is whether or not Apex complied with the increases mandated by
Wage Orders Nos. 5 and 6. Resolution of this issue in turn hinges on the
question of whether or not the P2.00 per day increase in basic salary effective
starting on 1 February 1984 granted by petitioner Apex pursuant to the CBA,
was lawfully credited towards compliance with increases in ECOLA required
under Wage Orders Nos. 5 and 6.
1. The P2.00 increase integrated in the basic salary of Apex's, employees,
effective on and after 1 February 1984, was concededly given under the
provisions of the CBA. Section 4 of Article VI of the CBA provided as follows:
It is understood that the grant of these general increases shall
be as part of any increase in basic pay and/or allowance that
may hereafter be decreed or imposed by law.

Both Wage Order No. 5 and Wage Order No. 6 expressly allowed the crediting
of increases in wages or allowances granted under collective bargaining
agreements towards compliance with increases in ECOLA requirements
prescribed by those Wage Orders. Section 7 o f Wage Order No. 5 provided as
follows:
All increases in wages and/or allowances granted by
employers between February 1, 1984 and the effectivity of this
order [16 June 1984] shall be credited as compliance with the
minimum wage and allowance adjustments prescribed
herein . . .
Such increases shall not include anniversary wage increases
provided in collective bargaining agreements unless the
agreements expressly provide otherwise.
xxx xxx xxx
(Emphasis and brackets supplied)
Section 4 of Wage Order No. 6 had very similar language:
All increases in wages and/or allowances granted by
employers between June 17, 1984 and the effectivity of this
order [November 1, 1984] shall be credited as compliance with
the minimum wage and allowance adjustments prescribed
herein, provided that where the increases are less than the
applicable amount provided in this order, the employer shall
pay the difference. Such increases shall not include
anniversary wage increases provided in collective bargaining
agreements unless the agreements expressly provide
otherwise.
This Section shall not apply to merit wage increases and those
resulting from the regularization or promotion of employees.
(Emphasis and brackets supplied)
It is important to note that the creditability provisions in Wage Orders Nos. 5
and 6 (as well as the parallel provisions in Wage Orders Nos. 2, 3 and 4) are
grounded in an important public policy. That public policy may be seen to be the
encouragement of employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or
administrative regulation. To obliterate the creditability provisions in the Wage
Orders through interpretation or otherwise, and to compel employers simply to
add on legislated increases in salaries or allowances without regard to what is

already being paid, would be to penalize employers who grant their workers
more than the statutorily prescribed minimum rates of increases. Clearly, this
would be counter-productive so far as securing the interests of labor is
concerned. The creditability provisions in the Wage Orders prevent the
penalizing of employers who are industry leaders and who do not wait for
statutorily prescribed increases in salary or allowances and pay their workers
more than what the law or regulations require.
2. Sandigan, however, argues that to consider the P2.00 increase in basic
salary effective 1 February 1984 provided by the CBA as compliance with the
requirements of Wage Orders Nos. 5 and 6, would be to violate Article 100 of
the Labor Code as well as Section 6 of the Rules Implementing Wage Order
No. 6. These provisions read, respectively:
Art. 100. Prohibition against elimination or diminution of
benefits Nothing in (Book Three Conditions of
Employment) shall be construed to eliminate or in any way
diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code. (Emphasis
supplied)
Sec. 6. Non-diminution of benefits. The statutory minimum
wage rates shall be exclusive of whatever supplements and
other benefits the workers are enjoying without cost at the time
of the effectivity of this Order. (Emphasis supplied)
Clearly, the prohibition against elimination or diminution of benefits set out in
Article 100 of the Labor Code is specifically concerned with benefits already
enjoyed at the time of the promulgation of the Labor Code. Article 100 does not,
in other words, purport to apply to situations arising after the promulgation date
of the Labor Code. Section 6 of the Rules Implementing Wage Order No. 6
relates to "supplements and other benefits" which employees are already
"enjoying without cost at the time of the effectivity of [Wage] Order [No. 6]."
Such benefits which employees are already enjoying "without cost" could not,
under Section 6, suddenly be ascribed monetary value so as to offset or
diminish increases in the minimum wage rates prescribed by statute. Clearly,
once more, Section 6 does not relate to the problem at hand.
3. Sandigan further contends that the 1 February 1984 P2.00 increase in basic
salary was actually an "anniversary wage increase," and therefore not
creditable under Section 7 of Wage Order No. 5 and under Section 4 of Wage
Order No. 6.
The P2.00 increase was given by petitioner Apex under Section 3, Rule VI of
the CBA which reads as follows:

Sec. 3. The COMPANY agrees to grant general wage

increases to all employees within bargaining unit as follows:
a) Two Pesos (P2.00) general increase per day upon the
effectivity of this Agreement (February 1, 1984);
b) One Peso and Fifty Centavos (P1.50) general increase per
day effective on the first anniversary date of this Agreement
(February 1, 1985);
c) One Peso and Fifty Centavos (P1.50) general increase per
day effective on the second anniversary date of this Agreement
(February 1, 1986). 1 (Emphasis supplied)
It appears clear to the Court from an inspection of the above-quoted Section 3
that the P2.00 increase effective on 1 February 1984 was distinguishable from
the two (2) increases of P1.50 each, the first being effective on the first
anniversary date of the CBA (1 February 1985) and the second being effective
on the second anniversary date (1 February 1986). In other words, the two (2)
increases of 1.50 each, one being effective on 1 February 1985 and the second
effective on 1 February 1986, were precisely the non-creditable "anniversary
wage increases." Even if it be assumed, however, that the 1 February 1984
P2.00 increase were regarded (improperly) as an "anniversary wage increase"
still that P2.00 increase would be creditable towards the statutorily mandated
increases. For Wage Orders Nos. 5 and 6 themselves allowed crediting of
"anniversary wage increases" stipulated in a CBA towards statutory increases,
if the CBA itself (as here) expressly allowed such crediting. Section 4, Article VI
of the CBA, quoted earlier, authorized the crediting of "general increases"
towards statutorily mandated increases in basic pay or allowance. At the same
time, Section 3 of Article VI of the CBA, quoted above, described the two (2)
anniversary wage increases of P1.50 each, and the one-time P2.00 increase,
as each constituting a "general increase."
4. What petitioner Apex did may perhaps be most economically presented in
the following tabular form:
ECOLA Increases Statutorily Mandated
by Wage Orders Nos. 4, 5, and 6
(For non-agricultural workers outside
Metro Manila)
Wage Mandatory Cumulated Apparent Actual Actual
Order Increase Increase Cumulated Cumulated Differential
No. (P0.00) (0.00) Increase 2 Increase 3 (0.00)
(P0.00) (P0.00)

499990
5 5 14 12 14 0
6 3 17 15 17 0
The respondent Sandigan did not question the fact that petitioner Apex was in
compliance with the requirements of Wage Order No. 4.
In respect of Wage Order No. 5, Apex credited the P2.00 increase in basic
salary, effective 1 February 1984, towards compliance with the statutorily
prescribed ECOLA increase of P5.00. Thus, the apparent cumulated increase
in ECOLA, as shown in Apex's books, was only P12.00. However, the actual
increases the composite of basic salary and ECOLA aggregated P14.00.
Since such crediting was expressly allowed under Wage Order No. 5, it follows
that petitioner Apex was in compliance with Wage Order No. 5. No differential
was therefore due thereunder.
When Wage Order No. 6 was promulgated, it prescribed an increase of P3.00
in ECOLA. Apex paid this mandatory increase and denominated all of it as
ECOLA. Thus, the apparent cumulated increase was P15.00. Since, however,
Apex had previously increased the basic salary by P2.00 effective 1 February
1984, the aggregate actual increase (in basic salary plus ECOLA) was P17.00,
the same total or cumulated increase contemplated by Wage Orders Nos. 5
and 6. Thus, again, Apex was actually in compliance with the requirements of
Wage Order No. 6, with the result that no differential was actually due from it.
It remains only to note that Section 7 of Wage Order No. 5 and section 4 of
Wage Order No. 6 expressly authorized the crediting of all the increases "in
wages" or "allowances." Thus, the fact that Apex had denominated the P2.00
increase effective 1 February 1984, as an increase in basic salary, rather than
in ECOLA, made no legal difference so far as concerns the creditability of such
increase. Indeed, integration of the P2.00 into the basic salary of the
employees was more beneficial to them than granting the P2.00 as part of their
ECOLA: the integration increased the base wage for purposes of computation
of such items as overtime and premium pay, fringe benefits and maternity pay.
In fact, the Implementing Rules of Wage Order No. 5, and Wage Order No. 6
itself, 4 expressly authorized increases in basic salary in lieu of increases in
ECOLA, provided the amounts thereof were not less than the amounts required
by the Wage Orders.
5. Lastly, Sandigan invokes Filipino Pipe Workers Union (NLU) v. Batario, Jr., 5
where the Court, through its Third Division, made the broad statement that
statutory wage increases are to be considered separate from increases granted
through the medium of CBAs.

In Filipino Pipe Workers, the NLRC ordered the inclusion in its award in favor of
the union of a wage increase of P3.00 per day mandated by Wage Order Nos.
2 and 3, which took effect after the finality of the Labor Arbiter's decision but
pending its execution. In sustaining the award of the NLRC, the Court, through
former Chief Justice Fernan, said:
In his Comment on the petition, the Solicitor General stated
that the said P3.00 a day increase was made pursuant to
Wage Orders Nos. 2 and 3, which took effect after the finality
of the Labor Arbiter's decision but pending its execution. A
common section found in both Wage Orders Nos. 2 and 3, as
well as in the subsequent Wage Orders Nos. 5 and 6 uniformly
provides that all increases and/or allowances granted by
employers within a specified period "shall be credited as
compliance with the minimum wage and allowance
adjustments prescribed herein, provided that where the
increases are less than the applicable amount provided in this
Order, the employer shall pay the difference. Such increases
shall not include anniversary wage increases provided in
collective bargaining agreements unless the agreement
expressly provide otherwise." (Emphasis in the original)
We interpret the above section to mean that every grant of
daily increase in statutory minimum wage rates and living
allowance must be considered as independent, separate or
apart from the wage increases in the collective bargaining
agreement and must be integrated into the salary scale of the
employees to the end that the desired rates decreed by the
National Wages Council are attained. 6 (Emphasis supplied)
It is apparent from the foregoing that the issue of creditability of an increase in
basic salary or allowance given pursuant to a CBA towards compliance with a
statutorily prescribed increase in emergency cost of living allowances (ECOLA)
was not at all involved and that the Court was not striking down the creditability
provisions in Wage Orders Nos. 2. 3, 5 and 6. All that the NLRC was saying
was that a wage increase which had come into effect after the Labor Arbiter's
decision could be included in the award and execution for the aggregate
amounts due obtained. In fact, the above underscored paragraph was entirely
obiter in character.
Petitioner Apex having lawfully credited the P2.00 increase in basic salary
towards compliance of the increase in ECOLA prescribed by Wage Orders Nos.
5 and 6, it follows that respondent Sandigan's ,claim to a differential in ECOLA
lacks basis in fact and in law.

ACCORDINGLY, the Court Resolved to GRANT the Petition for Certiorari. The
Decision of the NLRC in Case No. 2915-MC-XI-86, dated 9 September 1988,
and its Resolution dated 28 October 1988, denying petitioner's motion for
reconsideration, are hereby SET ASIDE and ANNULLED. No pronouncement
as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 94951 April 22, 1991

APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO,
respondents.
Bernabe B. Alabastro for petitioner.
Angel Fernandez for private respondent.

On December 18, 1987, while she was attending to her assigned task and she
was hanging her laundry, she accidentally slipped and hit her back on a stone.
She reported the accident to her immediate supervisor Mila de la Rosa and to
the personnel officer, Florendo D. Asirit. As a result of the accident she was not
able to continue with her work. She was permitted to go on leave for
medication. De la Rosa offered her the amount of P 2,000.00 which was
eventually increased to P5,000.00 to persuade her to quit her job, but she
refused the offer and preferred to return to work. Petitioner did not allow her to
return to work and dismissed her on February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance with the
Department of Labor and Employment. After the parties submitted their position
papers as required by the labor arbiter assigned to the case on August 24,
1988 the latter rendered a decision, the dispositive part of which reads as
follows:
WHEREFORE, Conformably With The Foregoing, judgment is
hereby rendered ordering the respondent, Apex Mining
Company, Inc., Masara, Davao del Norte, to pay the
complainant, to wit:
1 Salary
Differential P16,289.20
2. Emergency Living
Allowance 12,430.00
3. 13th Month Pay

GANCAYCO, J.:p
Is the househelper in the staff houses of an industrial company a domestic
helper or a regular employee of the said firm? This is the novel issue raised in
this petition.
Private respondent Sinclita Candida was employed by petitioner Apex Mining
Company, Inc. on May 18, 1973 to perform laundry services at its staff house
located at Masara, Maco, Davao del Norte. In the beginning, she was paid on a
piece rate basis. However, on January 17, 1982, she was paid on a monthly
basis at P250.00 a month which was ultimately increased to P575.00 a month.

Differential 1,322.32
4. Separation Pay
(One-month for
every year of
service [1973-19881) 25,119.30
or in the total of FIFTY FIVE THOUSAND ONE HUNDRED
SIXTY ONE PESOS AND 42/100 (P55,161.42).

SO ORDERED. 1
Not satisfied therewith, petitioner appealed to the public respondent National
Labor Relations Commission (NLRC), wherein in due course a decision was
rendered by the Fifth Division thereof on July 20, 1989 dismissing the appeal
for lack of merit and affirming the appealed decision. A motion for
reconsideration thereof was denied in a resolution of the NLRC dated June 29,
1990.
Hence, the herein petition for review by certiorari, which appopriately should be
a special civil action for certiorari, and which in the interest of justice, is hereby
treated as such. 2 The main thrust of the petition is that private respondent
should be treated as a mere househelper or domestic servant and not as a
regular employee of petitioner.
The petition is devoid of merit.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms
"househelper" or "domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to the
term "domestic servant" and shall refer to any person, whether
male or female, who renders services in and about the
employer's home and which services are usually necessary or
desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of
the employer's family. 3
The foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employer's home to minister exclusively to the
personal comfort and enjoyment of the employer's family. Such definition
covers family drivers, domestic servants, laundry women, yayas, gardeners,
houseboys and other similar househelps.
The definition cannot be interpreted to include househelp or laundrywomen
working in staffhouses of a company, like petitioner who attends to the needs of
the company's guest and other persons availing of said facilities. By the same
token, it cannot be considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its premises. They
may not be considered as within the meaning of a "househelper" or "domestic
servant" as above-defined by law.

staffhouse may be similar in nature, the difference in their circumstances is that

in the former instance they are actually serving the family while in the latter
case, whether it is a corporation or a single proprietorship engaged in business
or industry or any other agricultural or similar pursuit, service is being rendered
in the staffhouses or within the premises of the business of the employer. In
such instance, they are employees of the company or employer in the business
concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is
assigned to certain aspects of the business of the employer that such
househelper or domestic servant may be considered as such as employee. The
Court finds no merit in making any such distinction. The mere fact that the
househelper or domestic servant is working within the premises of the business
of the employer and in relation to or in connection with its business, as in its
staffhouses for its guest or even for its officers and employees, warrants the
conclusion that such househelper or domestic servant is and should be
considered as a regular employee of the employer and not as a mere family
househelper or domestic servant as contemplated in Rule XIII, Section l(b),
Book 3 of the Labor Code, as amended.
Petitioner denies having illegally dismissed private respondent and maintains
that respondent abandoned her work. This argument notwithstanding, there is
enough evidence to show that because of an accident which took place while
private respondent was performing her laundry services, she was not able to
work and was ultimately separated from the service. She is, therefore, entitled
to appropriate relief as a regular employee of petitioner. Inasmuch as private
respondent appears not to be interested in returning to her work for valid
reasons, the payment of separation pay to her is in order.
WHEREFORE, the petition is DISMISSED and the appealed decision and
resolution of public respondent NLRC are hereby AFFIRMED. No
pronouncement as to costs.
SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

The criteria is the personal comfort and enjoyment of the family of the employer
in the home of said employer. While it may be true that the nature of the work of
a househelper, domestic servant or laundrywoman in a home or in a company

G.R. No. L-75038 August 23, 1993

ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD,
BENJAMIN BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID
ORO, NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA CABANIG, and
DOMINGO SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) and
BROAD STREET TAILORING and/or RODOLFO ZAPANTA, respondents.
Balguma, Macasaet & Associates for petitioners.
Teresita Gandionco Oledan for private respondents.

NOCON, J.:
A basic factor underlying the exercise of rights and the filing of claims for
benefits under the Labor Code and other presidential issuances or labor
legislations is the status and nature of one's employment. Whether an
employer-employee relationship exist and whether such employment is
managerial in character or that of a rank and file employee are primordial
considerations before extending labor benefits. Thus, petitioners in this case
seek a definitive ruling on the status and nature of their employment with Broad
Street Tailoring and pray for the nullification of the resolution dated May 12,
1986 of the National Labor Relations Commissions in NLRC Case No. RB-IV21558-78-T affirming the decision of Labor Arbiter Ernilo V. Pealosa dated
May 28, 1979, which held eleven of them as independent contractors and the
remaining one as employee but of managerial rank.
The facts of the case shows that petitioner Elias Villuga was employed as cutter
in the tailoring shop owned by private respondent Rodolfo Zapanta and known
as Broad Street Tailoring located at Shaw Boulevard, Mandaluyong, Metro
Manila. As cutter, he was paid a fixed monthly salary of P840.00 and a monthly
transportation allowance of P40.00. In addition to his work as cutter, Villuga was
assigned the chore of distributing work to the shop's tailors or sewers when
both the shop's manager and assistant manager would be absent. He saw to it
that their work conformed with the pattern he had prepared and if not, he had
them redone, repaired or resewn.
The other petitioners were either ironers, repairmen and sewers. They were
paid a fixed amount for every item ironed, repaired or sewn, regardless of the
time consumed in accomplishing the task. Petitioners did not fill up any time
record since they did not observe regular or fixed hours of work. They were

allowed to perform their work at home especially when the volume of work,
which depended on the number of job orders, could no longer be coped up
with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work
allegedly due to illness. For not properly notifying his employer, he was
considered to have abandoned his work.
In a complaint dated March 27, 1978, filed with the Regional Office of the
Department of Labor, Villuga claimed that he was refused admittance when he
reported for work after his absence, allegedly due to his active participation in
the union organized by private respondent's tailors. He further claimed that he
was not paid overtime pay, holiday pay, premium pay for work done on rest
days and holidays, service incentive leave pay and 13th month pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro
also claimed that they were dismissed from their employment because they
joined the Philippine Social Security Labor Union (PSSLU). Petitioners Andres
Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela, Flora Escobido, Justilita
Cabaneg and Domingo Saguit claimed that they stopped working because
private respondents gave them few pieces of work to do after learning of their
membership with PSSLU. All the petitioners laid claims under the different labor
standard laws which private respondent allegedly violated.
On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision
ordering the dismissal of the complaint for unfair labor practices, illegal
dismissal and other money claims except petitioner Villuga's claim for 13th
month pay for the years 1976, 1977 and 1980. The dispositive portion of the
decision states as follows:
WHEREFORE, premises considered, the respondent Broad
Street Tailoring and/or Rodolfo Zapanta are hereby ordered to
pay complainant Elias Villuga the sum of ONE THOUSAND
TWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-SIX
CENTAVOS (P1,248.66) representing his 13th month pay for
the years 1976, 1977 and 1978. His other claims in this case
are hereby denied for lack of merit.
The complaint insofar as the other eleven (11) complainants
are concerned should be, as it is hereby dismissed for want of
jurisdiction. 1
On appeal, the National Labor Relations Commission affirmed the questioned
decision in a resolution dated May 12, 1986, the dispositive portion of which
states as follows:

WHEREFORE, premises considered, the decision appealed

from is, as it is hereby AFFIRMED, and the appeal dismissed.

Presiding Commissioner Guillermo C. Medina merely concurred in the result

while Commissioner Gabriel M. Gatchalian rendered a dissenting opinion which
states as follows:
I am for upholding employer-employee relationship as argued
by the complainants before the Labor Arbiter and on appeal.
The further fact that the proposed decision recognizes
complainant's status as piece-rate worker all the more
crystallizes employer-employee relationship the benefits
prayed for must be granted. 3
Hence, petitioners filed this instant certiorari case on the following grounds:
1. That the respondent National Labor Relations Commission
abused its discretion when it ruled that petitioner/complainant,
Elias Villuga falls within the category of a managerial
employee;
2. . . . when it ruled that the herein petitioners were not
dismissed by reason of their union activities;
3. . . . when it ruled that petitioners Andres Abad, Benjamin
Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia
Brizuela, Flora Escobido, Justilita Cabaneg and Domingo
Saguit were not employees of private respondents but were
contractors.
4. . . . when it ruled that petitioner Elias Villuga is not entitled to
overtime pay and services for Sundays and Legal Holidays;
and
5. . . . when it failed to grant petitioners their respective claims
under the provisions of P.D. Nos. 925, 1123 and 851. 4
Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code,
to be a member of a managerial staff, the following elements must concur or
co-exist, to wit: (1) that his primary duty consists of the performance of work
directly related to management policies; (2) that he customarily and regularly
exercises discretion and independent judgment in the performance of his
functions; (3) that he regularly and directly assists in the management of the
establishment; and (4) that he does not devote his twenty per cent of his time to
work other than those described above.

Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that
his primary work or duty is to cut or prepare patterns for items to be sewn, not
to lay down or implement any of the management policies, as there is a
manager and an assistant manager who perform said functions. It is true that in
the absence of the manager the assistant manager, he distributes and assigns
work to employees but such duty, though involving discretion, is occasional and
not regular or customary. He had also the authority to order the repair or
resewing of defective item but such authority is part and parcel of his function
as cutter to see to it that the items cut are sewn correctly lest the defective
nature of the workmanship be attributed to his "poor cutting." Elias Villuga does
not participate in policy-making. Rather, the functions of his position involve
execution of approved and established policies. In Franklin Baker Company of
the Philippines v. Trajano, 5 it was held that employees who do not participate in
policy-making but are given ready policies to execute and standard practices to
observe are not managerial employees. The test of "supervisory or managerial
status" depends on whether a person possesses authority that is not merely
routinary or clerical in nature but one that requires use of independent
judgment. In other words, the functions of the position are not managerial in
nature if they only execute approved and established policies leaving little or no
discretion at all whether to implement said policies or not. 6
Consequently, the exclusion of Villuga from the benefits claimed under Article
87 (overtime pay and premium pay for holiday and rest day work), Article 94,
(holiday pay), and Article 95 (service incentive leave pay) of the Labor Code, on
the ground that he is a managerial employee is unwarranted. He is definitely a
rank and file employee hired to perform the work of the cutter and not hired to
perform supervisory or managerial functions. The fact that he is uniformly paid
by the month does not exclude him from the benefits of holiday pay as held in
the case of Insular Bank of America Employees Union v. Inciong. 7 He should
therefore be paid in addition to the 13th month pay, his overtime pay, holiday
pay, premium pay for holiday and rest day, and service incentive leave pay.
As to the dismissal of the charge for unfair labor practices of private respondent
consisting of termination of employment of petitioners and acts of discrimination
against members of the labor union, the respondent Commission correctly held
the absence of evidence that Mr. Zapanta was aware of petitioners' alleged
union membership on February 22, 1978 as the notice of union existence in the
establishment with proposal for recognition and collective bargaining
negotiation was received by management only an March 3, 1978. Indeed, selfserving allegations without concrete proof that the private respondent knew of
their membership in the union and accordingly reacted against their
membership do not suffice.
Nor is private respondent's claim that petitioner Villuga abandoned his work
acceptable. For abandonment to constitute a valid cause for dismissal, there
must be a deliberate and unjustified refusal of the employee to resume his

employment. Mere absence is not sufficient, it must be accompanied by overt

acts unerringly pointing to the fact that the employee simply does not want to
work anymore. 8 At any rate, dismissal of an employee due to his prolonged
absence without leave by reason of illness duly established by the presentation
of a medical certificate is not justified. 9 In the case at bar, however, considering
that petitioner Villuga absented himself for four (4) days without leave and
without submitting a medical certificate to support his claim of illness, the
imposition of a sanction is justified, but surely, not dismissal, in the light of the
fact that this is petitioner's first offense. In lieu of reinstatement, petitioner
Villuga should be paid separation pay where reinstatement can no longer be
effected in view of the long passage of time or because of the realities of the
situation. 10 But petitioner should not be granted backwages in addition to
reinstatement as the same is not just and equitable under the circumstances
considering that he was not entirely free from blame. 11
As to the other eleven petitioners, there is no clear showing that they were
dismissed because the circumstances surrounding their dismissal were not
even alleged. However, we disagree with the finding of respondent Commission
that the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are
generally considered: "(1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to
control the employee's conduct." 12
Noting that the herein petitioners were oftentimes allowed to perform their work
at home and were paid wages on a piece-rate basis, the respondent
Commission apparently found the second and fourth elements lacking and
ruled that "there is no employer-employee relationship, for it is clear that
respondents are interested only in the result and not in the means and manner
and how the result is obtained."
Respondent Commission is in error. The mere fact that petitioners were paid on
a piece-rate basis is no argument that herein petitioners were not employees.
The term "wage" has been broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission
basis. . . ." The facts of this case indicate that payment by the piece is just a
method of compensation and does not define the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not
likewise imply absence of control and supervision. The control test calls merely
for the existence of a right to control the manner of doing the work, not the
actual exercise of the right. 14

In determining whether the relationship is that of employer and employee or

one of an independent contractor, "each case must be determined on its own
facts and all the features of the relationship are to be considered." 15
Considering that petitioners who are either sewers, repairmen or ironer, have
been in the employ of private respondent as early as 1972 or at the latest in
1976, faithfully rendering services which are desirable or necessary for the
business of private respondent, and observing management's approved
standards set for their respective lines of work as well as the customers'
specifications, petitioners should be considered employees, not independent
contractors.
Independent contractors are those who exercise independent employment,
contracting to do a piece of work according to their own methods and without
being subjected to control of their employer except as to the result of their work.
By the nature of the different phases of work in a tailoring shop where the
customers' specifications must be followed to the letter, it is inconceivable that
the workers therein would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar
workers hired in the tailoring department, although paid weekly wages on piece
work basis, are employees not independent contractors. Accordingly, as regular
employees, paid on a piece-rate basis, petitioners are not entitled to overtime
pay, holiday pay, premium pay for holiday/rest day and service incentive leave
pay. Their claim for separation pay should also be defined for lack of evidence
that they were in fact dismissed by private respondent. They should be paid,
however, their 13th month pay under P.D. 851, since they are employees not
independent contractors.
WHEREFORE, in view of the foregoing reasons, the assailed decision of
respondent National Labor Relations Commission is hereby MODIFIED by
awarding
(a) in favor of petitioner Villuga, overtime pay, holiday pay, premium pay for
holiday and rest day, service incentive leave pay and separation pay, in addition
to his 13th month pay; and
(b) in favor of the rest of the petitioners, their respective 13th month pay.
The case is hereby REMANDED to the National Labor Relations Commission
for the computation of the claims herein-above mentioned.
SO ORDERED.