JESUS RAMOS, ET AL., PETITIONERS, VS. COURT OF INDUSTRIAL RELATIONS, RICE AND CORN ADMINISTRATION (RCA), AND NARIC WORKERS’ UNION, RESPONDENTS.

Ramos versus Court of Industrial Relations

The Case

This is a petition brought by one hundred forty-seven laborers and employees against the Court of Industrial Relations, the Rice and Corn Administration, and the Naric Workers' Union. The petitioners ask the Supreme Court to set aside the dismissal of their claim for additional compensation for overtime work, night work, and work on Sundays and legal holidays, which the old National Rice and Corn Corporation had been ordered to pay under a partial judgment of 1953. The case matters because it fixes the rule on whether a new government agency created by statute succeeds to the continuing monetary obligations of the corporation it abolished, and it shows how the Court uses executive construction to resolve that question.

Procedural History

The petitioners filed their petition with the Court of Industrial Relations in February 1963, seeking to compel the Rice and Corn Administration to comply with the partial judgment of February 16, 1953 from June 1962 onward, and to pay attorneys' fees. The Naric Workers' Union was allowed to intervene and moved to dismiss on the ground of the pendency of another action, an incidental case filed ten days after the petition and seeking the same relief. The Court of Industrial Relations, through Associate Judge Arsenio I. Martinez, sustained the motion to dismiss on December 6, 1963. On motion for reconsideration, the Court of Industrial Relations en banc affirmed the order on February 27, 1964, with Presiding Judge Jose S. Bautista dissenting. That resolution finally disposed of the case, and the petitioners elevated the matter to the Supreme Court by appeal.

Facts

The National Rice and Corn Corporation was a corporation. In a case before the Court of Industrial Relations, a partial judgment rendered on February 16, 1953 directed the National Rice and Corn Corporation to pay twenty-five percent additional compensation for overtime work, night work, and work on Sundays and legal holidays rendered by its laborers and employees. That judgment rested on an agreement between the corporation and its workers.

On June 14, 1962, Congress approved Republic Act 3452. The law abolished the National Rice and Corn Corporation and created the Rice and Corn Administration in its place, transferring to the new Administration the assets, liabilities, functions, powers not inconsistent with the new law, and personnel of the abolished corporation. The Rice and Corn Administration is not a stock corporation for profit. It is an office directly under the Office of the President of the Philippines, performing primarily governmental functions to stabilize the price of palay, rice, and corn, and it depends for its yearly operations on appropriations set aside in the General Appropriations Act.

Almost ten years after the partial judgment, the petitioners sued to make the Rice and Corn Administration answer for the continuing obligation from June 1962. Some petitioners were former employees of the abolished corporation; others were newly hired by the Administration and had never served the old corporation. The Administration disclaimed liability, arguing that it answers only for liabilities incurred by the old corporation before its abolition, and that the terms of employment of its own personnel are governed by the civil service and the budget law, not by the Eight Hour Labor Law. The Court of Industrial Relations dismissed the petition on the ground of pendency of another action, and the case reached the Supreme Court.

Issues

• Whether or not the Court of Industrial Relations correctly dismissed the petition on the ground of pendency of another action.
• Whether or not the Rice and Corn Administration is liable for the continuing obligation created by the partial judgment of 1953 from and after its creation on June 14, 1962.
• Whether or not the additional compensation decreed in the partial judgment is inconsistent with the provisions of Republic Act 3452, such that it was not transferred to the Rice and Corn Administration.

Applicable Provisions

Section 13 of Republic Act 3452 provides:

Section 13. The National Rice and Corn Corporation is hereby abolished and all its assets, liabilities, functions, powers which are not inconsistent with the provisions of this Act, and all personnel are transferred to the Administration.

This is the provision on which the petitioners plant their claim, and its limiting clause is the very language the Court construes.

Section 1 of Republic Act 3452 provides:

Section 1. It is hereby declared to be the policy of the Government that in order to stabilize the price of palay, rice and corn, it shall engage in the purchase of these basic foods directly from those tenants, farmers, growers, producers and landowners in the Philippines who wish to dispose of their produce at a price that will afford them a fair and just return for their labor and capital investment and whenever circumstances brought about by any cause, natural or artificial, should so require, shall sell and dispose of these commodities to the consumers at areas of consumption at a price that is within their reach.

This declaration shows that the Rice and Corn Administration is a governmental machinery to carry out a public policy, not a profit-making corporation.

Section 14 of Republic Act 3452 provides:

Section 14. The sum of one hundred million pesos is hereby appropriated, out of any funds in the National Treasury not otherwise appropriated, for the capitalization of the Administration: Provided, That the annual operational expenses of the Administration shall not exceed three million pesos of the said amount: Provided, further, That the budget of the Rice and Corn Administration for the fiscal year nineteen hundred and sixty-three to nineteen hundred and sixty-four and the years thereafter shall be included in the General Appropriations submitted to Congress.

This provision confirms that the Administration depends on yearly legislative appropriations for its continuous operation.

Section 5 of Republic Act 3452 provides in part:

He shall fix the number and, subject to WAPCO salary plan allowed by the Civil Service, salaries of, and appoint, subject to the Civil Service Law and with the consent of the Board of Administrators, such subordinate employees as may be necessary for the proper discharge of the duties of the Administration. He shall suspend or otherwise discipline, for cause and subject to Civil Service Law, any subordinate employee of the Administration with the consent of the Board of Administrators and perform such other duties as may be assigned by the Board.

This provision places the terms and conditions of employment of the Administration's personnel under the civil service and the salary plan, and not under a collective agreement.

Section 259 of the Revised Administrative Code provides:

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.

This is the general rule of no extra pay for civil service personnel, subject only to a special provision.

Paragraph 32, Section 7-I of Commonwealth Act 246, the Budget Act, provides:

Additional compensation for overtime service. Officers and employees of the National Government, except secretaries and undersecretaries of departments, chiefs of bureaus and offices, and those occupying positions of similar category, when working overtime on Saturdays, Sundays, holidays, or during half-day sessions, and after five o'clock post meridian on regular working days to finish work that must be completed within a specified time, when authorized by the President, may be paid from any unexpended balance of the appropriation for salaries and wages authorized in any annual General Appropriation Act, compensation at rates to be fixed by the heads of departments concerned, with the approval of the President, which shall not exceed the rate of their regular compensation. Such additional compensation shall not exceed, for any one month, the equivalent of the regular compensation, nor shall it exceed, for any one year, fifty per centum of such regular compensation.

This is the special provision that governs overtime pay of national government employees, and it makes such pay dependent on presidential authority and available funds.

Ruling

On the first issue, the Court held that the dismissal on the ground of pendency of another action was wrong. The action in the earlier incidental case was filed ten days after the present petition, and the earlier case sprang from the 1953 judgment against the abolished corporation. The identity of the respondent in the 1953 case and in the present case demanded explicit determination. If any case should be held in abeyance, it is the later one. The Court, however, affirmed the dismissal on a different ground, as it may affirm a challenged order upon grounds other than those relied upon below.

On the second and third issues, the Court held that the Rice and Corn Administration is not liable for the continuing obligation under the 1953 judgment from June 14, 1962. The Administration conceded that it answers for liabilities contracted by the abolished corporation before its abolition, but the claim here is for compensation accruing after the new agency was created. The Court stressed the limiting clause of Section 13 of Republic Act 3452, that the liabilities transferred are those not inconsistent with the provisions of the new law, and held that the obligation under the 1953 judgment is inconsistent with that law. The old corporation was a corporation that could validly bind itself by agreement on extra compensation. The new Administration is a mere instrumentality of the national government performing primarily governmental functions, and the terms and conditions of employment of its personnel are governed by law, by the civil service rules, and by the salary plan.

The Court then turned to the protection Congress gave these workers. Section 259 of the Revised Administrative Code withholds additional compensation in the absence of a special provision, and the special provision is paragraph 32, Section 7-I of the Budget Act, under which overtime pay requires presidential authority and is limited in amount. The Court reviewed the successive authorizations granted by the President from 1962 onward, covering overtime work in procurement, warehousing, milling, distribution, inspection, and inventory, subject to the availability of funds and the statutory ceilings. These facts, the Court said, prove the consistent administrative interpretation by the Office of the President of what may be granted for overtime work. The Court held that executive construction, while not necessarily binding on courts, is entitled to great weight and consideration because it comes from the branch of government called upon to implement the law. It would be incongruous for the former employees of the abolished corporation to recover under the 1953 judgment and at the same time reap the benefits of the Budget Act.

Doctrine

A successor government agency created by statute is bound only by those liabilities of the abolished corporation that are not inconsistent with the law of its creation. Where the new agency is a mere instrumentality of the national government performing governmental functions, the terms and conditions of employment of its personnel are governed by the civil service law and the budget law, not by a collective agreement confirmed in a judgment against the old corporation. Overtime compensation for national government employees is not a matter of right; it rests on the special provision of the Budget Act and requires presidential authority, subject to the statutory ceilings. Executive construction of a statute by the branch of government tasked to implement it is not necessarily binding on courts, but it is entitled to great weight and consideration.

Disposition

The Supreme Court affirmed the order of dismissal and the resolution en banc, holding that the petitioners have no cause of action against the Rice and Corn Administration, with no costs allowed.

Remember This

Memorize the line that the liabilities transferred to a successor agency are only those not inconsistent with the law of its creation, so a governmental agency is not bound by a collective agreement confirmed in a judgment against the abolished corporation. Examiners use this case on succession of government agencies, on the nature of overtime pay for civil service personnel, and on the weight given to executive construction of a statute.