METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS), PETITIONER, VS. HON. BIENVENIDO S. HERNANDEZ, LABOR ARBITER, NATIONAL LABOR RELATIONS COMMISSION, LEMUEL B. ALEGADO, DANILO S…

Metropolitan Waterworks and Sewerage System versus Hernandez

The Case

This is a special civil action for certiorari and prohibition brought by the Metropolitan Waterworks and Sewerage System, commonly called the MWSS, against Labor Arbiter Bienvenido Hernandez, the National Labor Relations Commission, and a group of private respondents led by Lemuel Alegado who sued for themselves and on behalf of roughly 2,500 workers. The workers filed a money claim for unpaid wage differentials, allowances, and other benefits. The MWSS answered that it is a government-owned and controlled corporation, so the labor arbiter had no jurisdiction, and that in any event the terms of its contractual workers are fixed by their contracts. The case matters because it settles, cleanly and for all time, that employment in a government-owned or controlled corporation is governed by the civil service law and not by the Labor Code, and that the labor tribunals have no power over controversies arising from that employment.

Procedural History

The workers filed their complaint with the Arbitration Branch of the National Labor Relations Commission in the National Capital Region. On June 5, 1985, the labor arbiter rendered judgment against the MWSS. He reasoned that while regular employees of the MWSS fall under the civil service, the complainants were contractual workers hired for a limited period, and so their dispute fell within the labor arbiter's competence. He also held that the Civil Service Decree does not provide for monetary claims, and that as to those claims the Labor Code governs. A subsequent order directed execution of that decision. The MWSS then came directly to the Supreme Court on certiorari and prohibition, asking that the arbiter's decision, the execution order, and all further proceedings be invalidated.

Facts

The MWSS was created by Republic Act Number 6234 as a government corporation known as the Metropolitan Waterworks and Sewerage System. It employed the private respondents as contractual workers, hired for a limited period or until completion of a particular project. When those workers demanded wage differentials, allowances, and other monetary benefits, they filed a class complaint before the labor arbiter.

The MWSS raised two defenses. First, being a government-owned and controlled corporation, it claimed that the labor arbiter had no jurisdiction. Second, it argued that the terms and conditions of contractual employees are governed by their respective contracts.

The labor arbiter ruled against the MWSS, drawing a distinction between regular and contractual employees, and between civil service matters and monetary claims. The MWSS elevated the matter to the Supreme Court, and the sole question became whether MWSS employees are covered by the Labor Code or by the civil service law.

Issues

• Whether or not employees of the Metropolitan Waterworks and Sewerage System, a government-owned and controlled corporation, are governed by the Labor Code or by the civil service law, rules, and regulations.
• Whether or not the labor arbiter may take cognizance of a dispute between the MWSS and its contractual or non-regular employees, as distinguished from its regular employees.
• Whether or not the labor arbiter may apply the Labor Code to monetary claims of government employees on the theory that the civil service law does not provide for such claims.

Applicable Provisions

Section 4 of the Civil Service Law, as discussed in the decision, classifies positions in the civil service, and it provides:

Positions in the civil service are classified into career and non-career service.

This classification defeats the arbiter's distinction, because contractual personnel are themselves part of the civil service.

Section 16 of the Civil Service Law, as quoted in the decision, describes contractual personnel within the non-career service:

Contractual personnel or those whose employment in the government is in accordance with a special contract to undertake a specific work or job, requiring special or technical skills not available in the employing agency, to be accomplished within a specific period, which in no case shall exceed one year, and performs or accomplishes the specific work or job, under his own responsibility with a minimum of direction and supervision from the hiring agency.

This shows that the very contractual workers the arbiter excluded are covered by the civil service, not by the Labor Code.

Ruling

On the first issue, the Court held that employment in the MWSS is governed not by the Labor Code but by the civil service law, rules, and regulations, and that controversies arising from or connected with that employment are not cognizable by the National Labor Relations Commission. The Court relied on its earlier ruling in National Housing Corporation versus Juco, where it held that employees of government-owned or controlled corporations are governed by the civil service law, and that the labor arbiter correctly dismissed the case for lack of jurisdiction. The Court noted that the character of the MWSS as a government-owned or controlled corporation is not contested and cannot be gainsaid, since Republic Act Number 6234 created it as a government corporation.

On the second issue, the Court rejected as sophistical the arbiter's distinction between regular and contractual employees. There is no legal or logical justification for it, and it is ruled out by the fact that positions in the civil service are classified into career and non-career service, with the non-career service expressly including contractual personnel.

On the third issue, the Court found the arbiter's postulation that the civil service law governs all aspects except monetary claims, and that the Labor Code applies to those, to be even more patently illogical and deserving of no confutation. The Court likewise dismissed as absurd the private respondents' claim that they are not employees of the MWSS, and that the existence of an employer-employee relationship is not per se equivalent to being a government employee.

Doctrine

Employees of government-owned or controlled corporations are governed by the civil service law and civil service rules and regulations, not by the Labor Code. Controversies arising from or connected with that employment are outside the jurisdiction of the National Labor Relations Commission. The distinction between regular and contractual employees is untenable, because the civil service itself classifies positions into career and non-career service, and the non-career service expressly includes contractual personnel. There is no exception for monetary claims; the civil service law governs the employment relationship in all its aspects.

Disposition

The Court granted the petition, declared void and set aside the labor arbiter's decision and execution order for having been rendered without jurisdiction, and enjoined the arbiter to take no further action except to dismiss the case, with costs against the private respondents.

Remember This

Memorize this line: employment in a government-owned or controlled corporation is governed by the civil service law, not the Labor Code, and the labor arbiter has no jurisdiction over it. Examiners use this case to test jurisdiction over government corporate employees and to expose the false regular-versus-contractual distinction.