EN BANC therein.

On December 4, 1957, respondent intervenors filed a petition in

intervention on the issue for additional compensation for night work. Later,
G.R. No. L-18939             August 31, 1964 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
NATIONAL WATERWORKS and SEWERAGE AUTHORITY, petitioner, more.
vs.
NWSA CONSOLIDATED UNIONS, ET AL., respondents.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts
be admitted and approved by this Honorable Court, without prejudice to the
Govt. Corp. Counsel Simeon M. Gopengco and Asst. Govt. Corp. Counsel parties adducing other evidence to prove their case not covered by this
Arturo B. Santos for petitioner. stipulation of facts. 1äwphï1.ñët
Cipriano Cid and Associates and Israel Bocobo for respondents.
Alfredo M. Montesa for intervenor-respondent.
On February 5, 1958, petitioner filed a motion to dismiss the claim for
overtime pay alleging that respondent Court of Industrial Relations was
BAUTISTA ANGELO, J.: 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
Petitioner National Waterworks & Sewerage Authority is a government- not being the lis mota  therein involved. To this motion the intervenors filed
owned and controlled corporation created under Republic Act No. 1383, an opposition. Thereafter, respondent court issued an order allowing the
while respondent NWSA Consolidated Unions are various labor issue to be litigated. Petitioner's motion to reconsider having been denied, it
organizations composed of laborers and employees of the NAWASA. The filed its answer to the petition for intervention. Finally, on January 16, 1961,
other respondents are intervenors Jesus Centeno, et al., hereinafter referred respondent court rendered its decision stating substantially as follows:
to as intervenors.
The NAWASA is an agency not performing governmental functions and,
Acting on a certification of the President of the Philippines, the Court of therefore, is liable to pay additional compensation for work on Sundays and
Industrial Relations conducted a hearing on December 5, 1957 on the legal holidays conformably to Commonwealth Act No. 444, known as the
controversy then existing between petitioner and respondent unions which Eight-Hour Labor Law, even if said days should be within the staggered five
the latter embodied in a "Manifesto" dated December 51, 1957, namely: work days authorized by the President; the intervenors do not fall within the
implementation of the 40-Hour Week Law (Republic Act No. 1880); alleged category of "managerial employees" as contemplated in Republic Act 2377
violations of the collective bargaining agreement dated December 28, 1956 and so are not exempt from the coverage of the Eight-Hour Labor Law; even
concerning "distress pay"; minimum wage of P5.25; promotional those intervenors attached to the General Auditing Office and the Bureau of
appointments and filling of vacancies of newly created positions; additional Public Works come within the purview of Commonwealth Act No. 444; the
compensation for night work; wage increases to some laborers and computation followed by NAWASA in computing overtime compensation is
employees; and strike duration pay. In addition, respondent unions raised contrary to Commonwealth Act 444; the undertime of a worker should not be
the issue of whether the 25% additional compensation for Sunday work set-off against the worker in determining whether the latter has rendered
should be included in computing the daily wage and whether, in determining service in excess of eight hours for that day; in computing the daily wage of
the daily wage of a monthly-salaried employee, the salary should be divided those employed on daily basis, the additional 25% compensation for Sunday
by 30 days. 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;
On December 13, 1957, petitioner and respondent unions, conformably to a the minimum wage awarded by respondent court way back on November
suggestion of the Court of Industrial Relations, submitted a joint stipulation of 25, 1950 in Case No. 359-V entitled MWD Workers Union v. Metropolitan
facts on the issues concerning the 40-Hour Week Law, "distress pay," Water District, applies even to those who were employed long after the
minimum wage of P5.25, filling of vacancies, night compensation, and salary promulgation of the award and even if their workers are hired only as
adjustments, reserving the right to present evidence on matters not covered 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 9. Considering that the payment of night compensation is not by
those specified in the authorization and should not be extended to others virtue of any statutory provision but emanates only from an award
who are not therein specified; and under the collective bargaining agreement of respondent Court of Industrial Relations, whether the same can
entered into between the NAWASA and respondent unions on December be made retroactive and cover a period prior to the promulgation of
28, 1956, as well as under Resolution No. 29, series of 1957 of the the award;
Grievance Committee, even those who work outside the sewerage
chambers should be paid 25% additional compensation as "distress pay." 10. Whether the minimum wage fixed and awarded by respondent
Court of Industrial Relations in another case (MWD Workers Union
Its motion for reconsideration having been denied, NAWASA filed the v. MWD CIR Case No. 359-V) applies to those employed long after
present petition for review raising merely questions of law. Succinctly, these the promulgation thereof, whether hired as temporary, emergency
questions are: and casual workers for a definite period and for a specific project;

1. Whether NAWASA is performing governmental functions and, 11. How should the collection bargaining agreement of December
therefore, essentially a service agency of the government; 28, 1956 and Resolution No. 29, series of 1957 of the Grievance
Committee be interpreted and construed insofar as the stipulations
2. Whether NAWASA is a public utility and, therefore, exempted therein contained relative to "distress pay" is concerned?; and
from paying additional compensation for work on Sundays and
legal holidays; 12. Whether, under the first indorsement of the President of the
Philippines dated August 12, 1957, which authorizes herein
3. Whether the intervenors are "managerial employees" within the petitioner to stagger the working days of its employees and
meaning of Republic Act 2377 and, therefore, not entitled to the laborers, those whose services are indispensably continuous
benefits of Commonwealth Act No. 444, as amended; throughout the year may be staggered in the same manner as the
pump, valve, filter and chlorine operators, guards, watchmen,
medical services, and those attached to the recreational facilities.
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 DISCUSSION OF THE ISSUES
was merely dragged into the case by the intervenors;
1. Is NAWASA an agency that performs governmental functions and,
5. Whether those attached to the General Auditing Office and the therefore, essentially a service agency of the government? Petitioner
Bureau of Public Works come within the purview of Commonwealth sustains the affirmative because, under Republic Act No. 1383, it is a public
Act No. 444, as amended; corporation, and such it exist a 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
6. In determining whether one has worked in excess of eight hours, jurisdiction over it in the fixing of rates concerning of the operation of the
whether the undertime for that day should be set off; service. It can also incur indebtedness or issue bonds that are exempt from
taxation which circumstance implies that it is essentially a government-
7. In computing the daily wage, whether the additional function corporation because it enjoys that attribute of sovereignty. Petitioner
compensation for Sunday work should be included; likewise invokes the opinion of the Secretary of Justice which holds that the
NAWASA being essentially a service agency of the government can be
8. What is the correct method to determine the equivalent daily classified as a corporation performing governmental function.
wage of a monthly salaried employee, especially in a firm which is a
public utility?; 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 The same conclusion may be reached by considering the powers, functions
mind that there are two kinds of public corporation, namely, municipal and and activities of the NAWASA which are enumerated in Section 2, Republic
non-municipal. A municipal corporation in its strict is the body politic Act No. 1383, among others, as follows:
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 (e) To construct, maintain and operate mains pipes, water
an agency of the State to assist in the civil government of the country chiefly reservoirs, machinery, and other waterworks for the purpose of
to regulate the local and internal affairs of the city or town that is supplying water to the inhabitants of its zone, both domestic and
incorporated (62 C.J.S., p. 61). Non- municipal corporations, on the other other purposes; to purify the source of supply, regulate the control
hand, are public corporations created as agencies of the State for limited and use, and prevent the waste of water; and to fix water rates and
purposes to take charge merely of some public or state work other than provide for the collection of rents therefor;
community government (Elliot, Municipal Corporations, 3rd ed., p. 7;
McQuillin, Mun. Corp., 3rd ed., Vol. 1, p. 476).
(f) To construct, maintain and operate such system of sanitary
sewers as may be necessary for the proper sanitation of the cities
The National Waterworks and Sewerage Authority was not created for and towns comprising the Authority and to charge and collect such
purposes of local government. It was created for the "purpose of sums for construction and rates for this service as may be
consolidating and centralizing all waterworks, sewerage and drainage determined by the Board to be equitable and just;
system 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 (g) To acquire, purchase, hold, transfer, sell, lease, rent, mortgage,
administer the local affairs of the town, city, or district which is incorporated. encumber, and otherwise dispose of real and personal property,
including rights and franchises, within the Philippines, as authorized
by the purpose for which the Authority was created and reasonably
Moreover, the NAWASA, by its charter, has personality and power separate and necessarily required of the transaction of the lawful business of
and distinct from the government. It is an independent agency of the the same, unless otherwise provided in this Act;
government although it ids placed, for administrative purposes, under the
Department of Public Works and Communications. It has continuous
succession under its corporate name and sue and be sued in court. It has The business of providing water supply and sewerage service, as this Court
corporate power to exercised by its board of directors; it has its own assets held, "may for all practical purposes be likened to an industry engaged in by
and liabilities; and it may charge rates for its services. 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
In Bacani vs. National Coconut Corporation, 53 O.G., 2798, we stated: "To which are aimed at advancing the general interest of society. As such they
recapitulate, we may mention that the term 'Government of the Republic of are optional (Bacani v. National Coconut Corporation, supra). And it has
the Philippines'... refers only to that government entity through which the been held that "although the state may regulate the service and rates of
functions of the government are exercised as an attribute of sovereignty, and water plants owned and operated by municipalities, such property is not
in this are included those arms through which political authority is made employed for governmental purposes and in the ownership operation thereof
effective whether they be provincial, municipal or other form of local the municipality acts in its proprietary capacity, free from legislative
government. These are what we call municipal corporations. They do not interference" (1 McQuillin, p. 683). In Mendoza v. De Leon, 33 Phil., 508,
include government entities which are given a corporate personality 509, this Court also held:
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." 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 3. This issue raises the question whether the intervenors are "managerial
waterworks for the use of the inhabitants, the construction and employees" within the meaning of Republic Act 2377 and as such are not
maintenance of municipal slaughterhouses, markets, stables, entitled to the benefits of Commonwealth Act No. 444, as amended. Section
bathing establishments, wharves, ferries, and fisheries. ... 2 of Republic Act 2377 provides:

On the strength of the foregoing considerations, our conclusions is that the Sec. 2. This Act shall apply to all persons employed in any industry
NAWASA is not an agency performing governmental functions. Rather, it or occupation, whether public or private with the exception of farm
performs proprietary functions, and as such comes within the coverage of laborers, laborers who prefer to be paid on piece work basis,
Commonwealth Act No. 444. managerial employees, outside sales personnel, domestic
servants, persons in the personal service of another and members
2. We agree with petitioner that the NAWASA is a public utility because its of the family of the employer working for him.
primary function is to construct, maintain and operate water reservoirs and
waterworks for the purpose of supplying water to the inhabitants, as well as The term "managerial employee" in this Act shall mean either (a)
consolidate and centralize all water supplies and drainage systems in the any person whose primary duty consists of the management of the
Philippines. We likewise agree with petitioner that a public utility is exempt establishment in which he is employed or of a customarily
from paying additional compensation for work on Sundays and legal holidays recognized department or subdivision thereof, or (b) ally officer or
conformably to Section 4 of Commonwealth Act No. 444 which provides that member of the managerial staff.
the prohibition, regarding employment of Sundays and holidays unless an
additional sum of 25% of the employee's regular remuneration is paid shall One of the distinguishing characteristics managerial employee may be
not apply to public utilities such as those supplying gas, electricity, power, known as expressed in the explanatory note of Republic Act No. 2377 is that
water or providing means of transportation or communication. In other he is not subject to the rigid observance of regular office hours. The true
words, the employees and laborers of NAWASA can be made to work on worth of his service does not depend so much on the time he spends in
Sundays and legal holidays without being required to pay them an additional office but more on the results he accomplishes. In fact, he is free to go out of
compensation of 25%. office anytime.

It is to be noted, however, that in the case at bar it has been stipulated that On the other hand, in the Fair Labor Standards Act of the United States,
prior to the enactment of Republic Act No. 1880, providing for the which was taken into account by the sponsors of the present Act in defining
implementation of the 40-Hour Week Law, the Metropolitan Water District the degree of work of a managerial employee, we find interesting the
had been paying 25% additional compensation for work on Sundays and following dissertation of the nature of work o a managerial employee:
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 Decisions have consumed and applied a regulation in substance
bargaining agreement entered into between the NAWASA and respondent providing that the term "professional" employee shall mean any
unions it was agreed that all existing benefits enjoyed by the employees and employee ... who is engaged in work predominantly intellectual and
laborers prior to its effectivity shall remain in force and shall form part of the varied in character, and requires the consistent exercise of
agreement, among which certainly is the 25% additional compensation for discretion and judgment in its performance and is of such a
work on Sundays and legal holidays therefore enjoyed by said laborers and character that the output produced or the result accomplished
employees. It may, therefore, be said that while under Commonwealth Act cannot be standardized in relation to a given period of time, and
No. 444 a public utility is not required to pay additional compensation to its whose hours of work of the same nature as that performed by non-
employees and workers for work done on Sundays and legal holidays, there exempt employees do not exceed twenty percent of the hours
is, however, no prohibition for it to pay such additional compensation if it worked in the work week by the non-exempt employees, except
voluntarily agrees to do so. The NAWASA committed itself to pay this where such work is necessarily incident to work of a professional
additional compensation. It must pay not because of compulsion of law but nature; and which requires, first, knowledge of an advanced type in
because of contractual obligation. a field of science or learning customarily acquired by a prolonged
course or specialized intellectual instruction and study, or, second, The philosophy behind the exemption of managerial employees from the 8-
predominantly original and creative in character in a recognized Hour Labor Law is that such workers are not usually employed for every
field of artistic endeavor. Stranger v. Vocafilm Corp., C.C.A. N.Y., hour of work but their compensation is determined considering their special
151 F. 2d 894, 162 A.L.R. 216; Hofer v. Federal Cartridge Corp., training, experience or knowledge which requires the exercise of discretion
D.C. Minn. 71 F. Supp. 243; Aulen v. Triumph Explosive, D.C. Md., and independent judgment, or perform work related to management policies
58 P. Supp. 4." (56 C.J.S., p. 666). 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
Under the provisions of the Fair Labor Standards Act 29 U.S.C.A., maximum hours of labor.
Section 23 (a) (1), executive employees are exempted from the
statutory requirements as to minimum wages and overtime pay. ... 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
Thus the exemption attaches only where it appears that the the general manager. Another is a public relations officer, and many other
employee's primary duty consists of the management of the chiefs of divisions or sections and others are supervisors and overseers.
establishment or of a customarily recognized department or Respondent court, however, after examining carefully their respective
subdivision thereof, that he customarily and regularly directs the functions, duties and responsibilities found that their primary duties do not
work of other employees therein, that he has the authority to hire or bear any direct relation with the management of the NAWASA, nor do they
discharge other employees or that his suggestions and participate in the formulation of its policies nor in the hiring and firing of its
recommendations as to the hiring or discharging and as to the employees. The chiefs of divisions and sections are given ready policies to
advancement and promotion or any other change of status of other execute and standard practices to observe for their execution. Hence, it
employees are given particular weight, that he customarily and, concludes, they have little freedom of action, as their main function is merely
regularly exercises discretionary powers, ... . (56 C.J.S., pp. 666- to carry out the company's orders, plans and policies.
668.)
To the foregoing comment, we agree. As a matter of fact, they are required
The term "administrative employee" ordinarily applies only to an to observe working hours and record their time work and are not free to
employee who is compensated for his services at a salary or fee of come and go to their offices, nor move about at their own discretion. They do
not less than a prescribed sum per month, and who regularly and not, therefore, come within the category of "managerial employees" within
directly assists an employee employed in a bona fide executive or the meaning of the law.
administrative capacity, where such assistance is nonmanual in
nature and requires the exercise of discretion and independent 4. Petitioner's claim is that the issue of overtime compensation not having
judgment; or who performs under only general supervision, been raised in the original case but merely dragged into it by intervenors,
responsible non-manual office or field work, directly related to respondent court cannot take cognizance thereof under Section 1, Rule 13,
management policies or general business operations, along of the Rules of Court.
specialized or technical lines' requiring special training experience,
or knowledge, and the exercise of discretion and independent Intervenors filed a petition for intervention alleging that being employees of
judgment; ... . (56 C.J.S., p. 671.) petitioner who have worked at night since 1954 without having been fully
compensated they desire to intervene insofar as the payment of their night
The reason underlying each exemption  is in reality apparent. work is concerned. Petitioner opposed the petition on the ground that this
Executive, administrative and professional workers are not usually matter was not in the original case since it was not included in the dispute
employed at hourly wages nor is it feasible in the case of such certified by the President of the Philippines to the Court of Industrial
employees to provide a fixed hourly rate of pay nor maximum hours Relations. The opposition was overruled. This is now assigned as error.
of labor, Helena Glendale Perry Co. v. Walling, C.C.A. Ark. 132 F.
2d 616, 619. (56 C.J.S., p. 664.) 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 The inclusion of their items in the PRISCO budget should be
application of the 8-Hour Labor Law are within the jurisdiction of the Court of viewed as no more than a designation by the national government
Industrial Relations if they arise while the employer-employee relationship of the fund or source from which their emoluments are to be drawn,
still exists, it is clear that the matter subject of intervention comes within the and does not signify that they are thereby made PRISCO
jurisdiction of respondent court.1 The fact that the question of overtime employees.
payment is not included in the principal casein the sense that it is not one of
the items of dispute certified to by the President is of no moment, for it The GAO employees assigned to the NAWASA are exactly in the same
comes within the sound discretion of the Court of Industrial Relations. position regarding their status, compensation and right to overtime pay as
Moreover, in labor disputes technicalities of procedure should as much as the rest of the GAO employees assigned to the defunct PRISCO, and
possible be avoided not only in the interest of labor but to avoid multiplicity of following our ruling in the PRISCO case, we hold that the GAO employees
action. This claim has no merit. herein are not covered by the 8-Hour Labor Law, but by other pertinent laws
on the matter.
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 The same thing may be said with regard to the employer of the Bureau of
either by the Auditor General or by the Secretary of Public Works and, Public Works assigned to, and working in, the NAWASA. Their position is
consequently, they are not officers of the NAWASA but of the insular the same as that of the GAO employees. Therefore, they are not also
government, and as such are not covered by the Eight-Hour Labor Law. covered by the 8-Hour Labor Law.

The status of the GAO employees assigned to, and working in, government- The respondent court, therefore, erred in considering them as employees of
controlled corporations has already been decided by this Court in National the NAWASA for the mere reason that they are paid out of its fund and are
Marketing Corporation, et al. v. Court of Industrial Relations, et al., L-17804, subject to its administration and supervision.
January 31, 1963. In said case, this Court said:
6. A worker is entitled to overtime pay only for work in actual service beyond
We agree with appellants that members of the auditing force can eight hours. If a worker should incur in undertime during his regular daily
not be regarded as employees of the PRISCO in matters relating to work, should said undertime be deducted in computing his overtime work?
their compensation. They are appointed and supervised by the Petitioner sustains the affirmative while respondent unions the negative, and
Auditor General, have an independent tenure, and work subject to respondent court decided the dispute in favor of the latter. Hence this error.
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 There is merit in the decision of respondent court that the method used by
demands, as a matter of policy, that their positions be completely petitioner in offsetting the overtime with the undertime and at the same time
independent from interference or inducement on the part of the charging said undertime to the accrued leave of the employee is unfair, for
supervised management, in order to assure a maximum of under such method the employee is made to pay twice for his undertime
impartiality in the auditing functions. Both independence and because his leave is reduced to that extent while he was made to pay for it
impartiality require that the employees in question be utterly free with work beyond the regular working hours. The proper method should be
from apprehension as to their tenure and from expectancy of to deduct the undertime from the accrued leave but pay the employee the
benefits resulting from any action of the management, since in overtime to which he is entitled. This method also obviates the irregular
either case there would be an influence at work that could possibly schedule that would result if the overtime should be set off against the
lead, if not to positive malfeasance, to, laxity and indifference that undertime for that would place the schedule for working hours dependent on
would gradually erode and endanger the critical supervision the employee.
entrusted to these auditing employees.
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 next issue refers to the method of computing the daily rate of a monthly-
the basic wage, without including the automatic increase of 25% salaried employee. Petitioner in computing this daily rate divides the monthly
corresponding to the Sunday differential. To include said Sunday differential basic pay of the employee by 30 in accordance with Section 254 of the
would be to increase the basic pay which is not contemplated by said Act. Revised Administrative Code which in part provides that "In making payment
Respondent court disagrees with this manner of computation. It holds that for part of a month, the amount to be paid for each day shall be determined
Republic Act 1880 requires that the basic weekly wage and the basic by dividing the monthly pay into as many parts as there are days in the
monthly salary should not be diminished notwithstanding the reduction in the particular month." The respondent court disagrees with this method and
number of working days a week. If the automatic increase corresponding to holds that the way to determine the daily rate of a monthly employee is to
the salary differential should not be included there would be a diminution of divide the monthly salary by the actual number of working hours in the
the weekly wage of the laborer concerned. Of course, this should only month. Thus, according to respondent court, Section 8 (g) of Republic Act
benefit those who have been working seven days a week and had been No. 1161, as amended by Republic Act 1792, provides that the daily rate of
regularly receiving 25% additional compensation for Sunday work before the compensation is the total regular compensation for the customary number of
effectivity of the Act. hours worked each day. In other words, according to respondent court, the
correct computation shall be (a) the monthly salary divided by the actual of
It is evident that Republic Act 1880 does not intend to raise the wages of the working hours in a month or (b) the regular monthly compensation divided by
employees over what they are actually receiving. Rather, its purpose is to the number of working days in a month.
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 This finding of respondent court should be modified insofar as the
which was previously received. The question then to be determined is: what employees of the General Auditing Office and of the Bureau of Public Works
is meant by weekly or daily wage? Does the regular wage include differential assigned to work in the NAWASA are concerned for, as already stated, they
payments for work on Sundays or at nights, or is it the total amount received are government employees and should be governed by Section 254 of the
by the laborer for whatever nature or concept? Revised Administrative Code. This section provides that in making payments
for part of a month, the amount to be paid for each day shall be determined
It has been held that for purposes of computing overtime compensation a by dividing the monthly pay. Into as many parts as there are days in the
regular wage includes all payments which the parties have agreed shall be particular month. With this modification we find correct the finding of the
received during the work week, including piece work wages, differential respondent court on this issue.
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 9. The Court of Industrial Relations awarded an additional 25% night
employee (Walling v. Yangermah-Reynolds Hardwook Co., 325 U.S. 419; compensation to some, workers with retroactive effect, that is, effective even
Walling v. Harischfeger Corp., 325 U.S. 427.) The "regular rate" of pay also before the presentation of the claim, provided that they had been given
ordinarily includes incentive bonus or profit-sharing payments made in authorization by the general manager to perform night work. It is petitioner's
addition to the normal basic pay (56 C.J.S., pp. 704-705), and it was also theory that since there is no statute requiring payment of additional
held that the higher rate for night, Sunday and holiday work is just as much a compensation for night work but it can only be granted either by the
regular rate as the lower rate for daytime work. The higher rate is merely an voluntary act of the employer or by an award of the industrial court under its
inducement to accept employment at times which are not as desirable from compulsory arbitration power, such grant should only be prospective in
a workman's standpoint (International L. Ass'n v. National Terminals Corp. operation, and not retroactive, as authorized by the court.
C.C. Wise, 50 F. Supp. 26, affirmed C.C.A. Carbunao v. National Terminals
Corp. 139 F. 2d 853). 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
Respondent court, therefore, correctly included such differential pay in courage to confront his employer with the demand for payment for it for fear
computing the weekly wages of those employees and laborers who worked of possible reprisal. It happens that many months or years are allowed to
seven days a week and were continuously receiving 25% Sunday differential pass by before he could be made to present such claim against his
for a period of three months immediately preceding the implementation of employer, and so it is neither fair nor just that he be deprived of what is due
Republic Act 1880. 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 under Section 17 of Commonwealth Act No. 103, and such is what said
make the payment of such night compensation retroactive to the date when court has done when it made the award extensive to the new employees,
the work was actually performed. more so when they are similarly situated. To do otherwise would be to foster
discrimination.
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 11. This issue has to do with the meaning of "distress pay." Paragraph 3,
has been recognized by this Court (Luzon Stevedoring Co., Inc. v. Luzon Article VIII, of the collective bargaining agreement entered into between the
Marine Department Union, et al., L-9265, April 29, 1957). The same reasons employer and respondent unions, provides:
given therein for the retroactivity of overtime compensation may also be
given for the retroactivity of payment of night compensation, as such Because of the peculiar nature of the function of those employees
reasoning runs along the line already above-stated. and laborers of the Sewerage Division who actually work in the
sewerage chambers, causing "unusual distress" to them, they shall
10. The Court of Industrial Relations in its resolution dated November 25, receive extra compensation equivalent to twenty-five (25%) of their
1950 issued in Case No. 359-V entitled MWD Workers Union, et al. v. basic wage.
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 Pursuant to said agreement, a grievance committee was created composed
Quezon City; and P4.00 for those working in Ipo. Montalban and Balara. It of representatives of management and labor which adopted the following
appears that in spite of the notice to terminate said award filed with the court resolution:
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 Resolution No. 9
temporary workers and it is now contended that said rates cannot apply to Series of 1957
these workers.
BE IT RESOLVED, That the employees and laborers of the
The Court of Industrial Relations, however, held that the discontinuance of Sewerage Division who actually work in the sewerage chambers
this minimum wage rate was improper and ordered the payment of the causing unusual distress to them, be paid extra compensation
difference to said workers from the date the payment of said rates was equivalent to 25% of their basic wage, as embodied in Article VIII,
discontinued, advancing, among others, the following reasons: that the Paragraph 3 of the Collective Bargaining Agreement; PROVIDED,
resolution of November 25, 1950 is applicable not only to those laborers however, that any employee who may be required to work actually
already in the service but also to those who may be employed thereafter; the in the sewerage chambers shall also be paid 25% extra
notice of determination of said award given on December 29, 1953 is not compensation and, PROVIDED FURTHER, that the term
legally effective because the same was given without hearing and the "sewerage chambers" shall include pits, trenches, and other
employer continued paying the minimum wages even after the notice of excavations that are necessary to tap the sewer line, and
termination; and there is no showing that the minimum wages violate Civil PROVIDED FINALLY that this will not prejudice any laborer or
Service Law or the principles underlying the WAPCO. 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.
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 And in a conference held between management and labor on November 25,
reason is seen why such award should not apply to those who may be 1957, the following was agreed upon: "Distress Management agreed to pay
employed after its approval by the court there being nothing therein that may effective October 1, 1956 25% additional compensation for those who
prevent its extension to them. Moreover, the industrial court can at any time actually work in and outside sewerage chambers in accordance with
during the effectiveness of an award or reopen any question involved therein Resolution No. 9 of the Grievance Committee."
The question that arose in connection with this distress pay is with regard to screen protecting the pump is being performed, and go also to the dry pit
the meaning of the phrase "who actually work in and outside sewerage abutting the wet pit to make repairs in the breakdown of the pumps.
chambers." Petitioner contends that the distress pay should be given only to Although the operators used to stay near the motor which is but a few
those who actually work inside the sewerage chambers while the union meters from the pump, they unavoidably smell the foul odor emitting from
maintains that such pay should be given to all those whose work have to do the pit. Thesewerage attendants go down and work in the wet pit containing
with the sewerage chambers, whether inside or outside. The Court of sewerage materials in order to clean the screen.
Industrial Relations sustained the latter view holding that the distress pay
should be given to those who actually work in and outside the sewerage A group assigned to the cleaning and maintenance of the sewer mains
chambers effective October 1, 1956. This view is now disputed by petitioner. 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
The solution of the present issue hinges upon the interpretation of paragraph going inside the manholes, operation of the window glass, bailing out from
3, Article VIII of the collective bargaining agreement, copied above, as the main to the manhole and in supplying the water service as necessity
explained by Resolution No. 9, and the agreement of November 25, 1957, demand. These attendants come into contact with dirt, stink, and smell,
also copied above, which stipulation has to be interpreted as a whole darkness and heat inside and near the sewage pipes. The capataz  goes
pursuant to Article 1374 of the Civil Code. As thus interpreted, we find that from one manhole to another seeing to it that the work is properly performed
those who are entitled to the distress pay are those employees and laborers and as such also suffers unusual distress although to a lesser degree.
who work in the sewerage chambers whether they belong to the sewerage
division or not, and by sewerage chambers should be understood to The group resigned to the third kind of activity is also usually composed of
mean as the surroundings where the work is actually done, not necessarily a capataz and four attendants. Their work is to connect sewer pipes from
"inside the sewerage chambers." This is clearly inferred from the conference houses to the sewer mains and to do this they excavate the trench across
held in the Department of Labor on November 25, 1957 where it was agreed the street from the proper line to the sewer main and then they install the
that the compensation should be paid to those who work "in and outside" the pipe after tapping the sewer main. In the tapping, the sewer pipe is opened
sewerage chambers in accordance with the terms of Resolution No. 9 of the and so the sewerage gets out and fills up the trench and the men have to
Grievance Committee. It should be noted that according to said resolution, wade in and work with the sewerage water. The capataz  has to go near the
sewerage chambers include "pits, trenches, and other excavations that are filthy excavations or trenches full of filthy sewerage, matter to aid the
necessary to tap the sewer lines." And the reason given for this extra attendants in making pipe connections, especially when these are
compensation is the "unusual distress" that is caused to the laborers by complicated.
working in the sewerage chambers in the form and extent above-mentioned.
It cannot therefore be gainsaid that all there laborers suffer unusual distress.
It is clear then that all the laborers whether of the sewerage division or not The wet pits, trenches, manholes, which are full of sewage matters, are filthy
assigned to work in and outside the sewerage chambers and suffer in sources of germs and different diseases. They emit foul and filthy odor
unusual distress because of the nature of their work are entitled to the extra dangerous to health. Those working in such places and exposed directly to
compensatory. And this conclusion is further bolstered by the findings of the the distress of contamination.
industrial court regarding the main activities of the sewerage division.
Premises considered, the decision of the Court of Industrial Relations in this
Thus, the Court of Industrial Relations found that the sewerage division has respect should be modified in the sense that all employees and laborers,
three main activities, to wit: (a) cooperation of the sewerage pumping whether or not they belong to the sewerage division, who actually work in
stations; (b) cleaning and maintenance of sewer mains; and (c) installation and outside the sewerage chambers, should be paid the distress pay or the
and repairs of house sewer connections. 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. 12. On August 6, 1957, the NAWASA requested the President of the
The pump operators have to go to the wet pit to see how the cleaning of the Philippines for exemption from Executive Order No. 251 which prescribes
the office hours to be observed in government and government-owned or (2) The NAWASA is a public utility. Although pursuant to Section 4
controlled corporations in order that it could stagger the working hours of its of Commonwealth Act 444 it is not obliged to pay an additional sum
employees and laborers. The request is based on the fact that there are of 25% to its laborers for work done on Sundays and legal holidays,
essential and indispensable phases in the operation of the NAWASA that yet it must pay said additional compensation by virtue of the
are required to be attended to continuously for twenty-four hours for the contractual obligation it assumed under the collective bargaining
entire seven days of the week without interruption some of which being the agreement;
work performed by pump operators, valve operators, filter operators, chlorine
operators, watchmen and guards, and medical personnel. This request was (3) The intervenors are not "managerial employees" as defined in
granted and, accordingly, the NAWASA staggered the work schedule of the Republic Act No. 2377, hence they are covered by Commonwealth
employees and laborers performing the activities above-mentioned. Act No. 444, as amended;
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. (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;
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 (5) The GAO employees assigned to work in the NAWASA cannot
medical service for the reason that the same was made pursuant to the be regarded as employees of the NAWASA on matters relating to
authority granted by the President who in the valid exercise of the powers compensation. They are employees of the national government and
conferred upon him by Republic Act No. 1880 could prescribe the working are not covered by the Eight-Hour Labor Law. The same may be
days of employees and laborers in government-owned and controlled said of the employees of the Bureau of Public Works assigned to
corporations depending upon the exigencies of the service. The court, work in the NAWASA;
however, stated that the staggering should not apply to the personnel in the
construction, sewerage, maintenance, machineries and shops because they (6) The method used by the NAWASA in off-setting the overtime
work below 365 days a year and their services are not continuous to require with the undertime and at the same time charging said undertime to
staggering. From this portion of the decision, the petitioner appeals. the accrued leave is unfair;

Considering that respondent court found that the workers in question work (7) The differential pay for Sundays is a part of the legal wage.
less than 365 days a year and their services are not continuous to require Hence, it was correctly included in computing the weekly wages of
staggering, we see no reason to disturb this finding. This is contrary to the those employees and laborers who worked seven days a week and
very essence of the request that the staggering should be made only with were regularly receiving the 25% salary differential for a period of
regard to those phases of the operation of the NAWASA that have to be three months prior to the implementation of Republic Act 1880. This
attended to continuously for twenty-four hours without interruption which is so even if petitioner is a public utility in view of the contractual
certainly cannot apply to the workers mentioned in the last part of the obligation it has assumed on the matter;
decision of the respondent court on the matter.
(8) In the computation of the daily wages of employees paid by the
RECAPITULATION month distinction should be made between government employees
like the GAO employees and those who are not. The computation
In resume, this Court holds: 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
(1) The NAWASA, though a public corporation, does not perform working hours in the month or the regular monthly compensation
governmental functions. It performs proprietary functions, and divided by the number of working days in the month;
hence, it is covered by Commonwealth Act No. 444;
 (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 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 continous as to require staggering.

CONCLUSION

With the modification indicated in the above resume as  elaborated in this

decision, we hereby affirm the decision of respondent court in all other
respects, without pronouncement as to costs.

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

JJ., concur.