National Waterworks v. NLRC

G.R. No. 121910 (July 3, 1996)

SC upheld labor arbiter's wage increase; emphasized honoring contracts and employee rights.

Facts:

The case involves a dispute between the National Waterworks and Sewerage Authority (NAWASA), now known as the Metropolitan Waterworks and Sewerage System (MWSS), and its employees represented by the Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa NWSA (PAFLU). The controversy began with a Return-to-Work Agreement executed on July 1, 1965, which stipulated a wage increase of P2.25 per day or P49.50 per month for employees. This increase was implemented from July 1, 1965, until December 31, 1965, but was unilaterally discontinued by NAWASA starting January 1, 1966.

Despite a judgment from the Court of Industrial Relations in 1974 that reaffirmed the wage increase, NAWASA failed to restore the salary increase, leading to private respondents staging protests and filing a motion for restoration of the wage increase in July 1988. NAWASA opposed this motion, claiming the demand was barred by prescription and lacked authority from the claimants.

On March 22, 1989, Labor Arbiter Evangeline S. Lubaton denied NAWASA's motion to dismiss and ordered the restoration of the wage increase. NAWASA appealed this decision to the National Labor Relations Commission (NLRC), which affirmed the labor arbiter's order on June 21, 1995. NAWASA subsequently filed a petition for certiorari under Rule 65 of the Rules of Court, seeking to annul the NLRC's resolution.

Legal Issues:

  1. Whether the NLRC had jurisdiction over the case, given NAWASA's claim that employment was governed by civil service laws.
  2. Whether the claims of the private respondents were barred by prescription.
  3. Whether the wage increase was enforceable as part of the Return-to-Work Agreement.

Arguments:

  • Petitioner (NAWASA):

    • Argued that the NLRC lacked jurisdiction based on the precedent set in MWSS vs. Hernandez, asserting that employment in MWSS was governed by civil service laws and not the Labor Code.
    • Contended that the claims were barred by prescription, as the wage increase was not part of the judgment rendered in 1974.
    • Claimed that the private respondents lacked authority to file the motion for restoration of the wage increase.

  • Respondents (PAFLU):

    • Asserted that the obligations arising from the Return-to-Work Agreement predated the establishment of MWSS and thus fell under the jurisdiction of the NLRC.
    • Argued that the claims were not barred by prescription due to repeated demands for payment and NAWASA's acknowledgment of its obligations.
    • Maintained that the wage increase was part of the Return-to-Work Agreement and enforceable as a judgment by compromise.

Court's Decision and Legal Reasoning:

The Supreme Court dismissed NAWASA's petition and affirmed the NLRC's resolution. The Court held that:

  1. The jurisdiction of the NLRC was valid as the obligations from the Return-to-Work Agreement arose before MWSS was constituted as a government corporation. The employees had vested rights that could not be impaired by subsequent legislation.
  2. The claims were not barred by prescription. The Court noted that the period of prescription was interrupted by the private respondents' repeated demands and NAWASA's requests for deferment of payment.
  3. The wage increase was enforceable as part of the Return-to-Work Agreement, which had been submitted for approval to the Court of Industrial Relations. The agreement was treated as a judgment by compromise, thus making it enforceable.

The Court also addressed procedural issues, stating that arguments raised for the first time on appeal could not be considered, reinforcing the principle of judicial economy and the importance of raising all relevant issues at the earliest opportunity.

Significant Legal Principles Established:

  • The jurisdiction of the NLRC can extend to cases involving agreements made prior to the establishment of a government corporation, especially when vested rights are involved.
  • The interruption of the prescriptive period can occur through repeated demands for payment and acknowledgment of obligations by the debtor.
  • The enforceability of wage increases agreed upon in a compromise agreement is upheld, reinforcing the binding nature of such agreements in labor relations.