G.R. No. 173120 - Spouses Yu vs. Ayala Land, Inc.

Petitioner: Metropolitan Waterworks and Sewerage System (MWSS), a government-owned and controlled corporation created under Republic Act No. 6234.
Respondents: Labor Arbiter Bienvenido S. Hernandez, the National Labor Relations Commission (NLRC), and other private respondents representing approximately 2,500 contractual employees/workers.
Nature of the Proceedings: A class suit filed by Lemuel B. Alegado, Danilo S. Lopez, and Fortunato L. Madrona on behalf of around 2,500 employees alleging wilful failure by MWSS to pay wage differentials, allowances, and other monetary benefits.

MWSS asserted that, as a government-owned and controlled corporation, it is governed by the civil service laws and therefore is not within the jurisdiction of the NLRC.
The contention was that controversies involving government employees or workers under standardized terms (such as those governed by civil service rules) should not come under the purview of the NLRC.

MWSS argued that, even assuming the NLRC’s jurisdiction, the terms and conditions of the contractual employees were defined by their respective employment contracts.
This argument was intended to limit the application of statutory labor provisions and monetary benefits claims to what was stipulated in the contracts.

The case was brought before the Arbitration Branch of the NLRC in the National Capital Region.
On June 5, 1985, the Labor Arbiter rendered a judgment adverse to MWSS.
The Labor Arbiter’s Observations

Initially, he recognized that if the complainants were regular employees governed by standardized Civil Service rules, the NLRC would have no jurisdiction.
However, after reviewing the records, he noted that the complainants were not regular employees but rather hired personnel on a contractual basis, engaged only for a limited period upon the completion of a specific project.

The Labor Arbiter attempted to distinguish between regular and non-regular (contractual) employees to justify the NLRC’s jurisdiction over contractual employees while excluding disputes with regular employees.
He argued that while controversies relating to employment conditions of regular employees were beyond his jurisdiction, those involving monetary claims of contractual employees could fall within his competence.
In reliance on Article 277 of the Labor Code, MWSS emphasized that the provision governing the rights and privileges of government employees related solely to civil service matters and did not extend to monetary claims.

The Court examined similar issues raised in the case of National Housing Corporation vs. Juco, where it was held that government-owned or controlled corporations, and their employees, are governed by civil service laws and regulations.
The Court noted that the precedent clearly stated that disputes involving government employees—whether regular or contractual—are under the governance of the Civil Service Law, not the Labor Code.
The Labor Arbiter’s attempt to limit NLRC jurisdiction only to contractual employees was characterized by the Court as sophistical and lacking a legal or logical basis.
The decision reiterated that positions in the civil service are classified into career and non-career service, with the latter including contractual personnel, thereby reinforcing that the entire workforce of a government-owned corporation falls under the civil service system.

The Court ruled that employment in MWSS, regardless of the nature of the personnel (regular or contractual), is governed by the Civil Service Law, rules, and regulations.
Controversies arising from such employment, including monetary claims, are not cognizable by the NLRC.
Consequently, the decision rendered by the Labor Arbiter and his subsequent order were declared void and set aside.
The Labor Arbiter was enjoined from taking any further action on the case, and costs were ordered against the private respondents.

Whether the NLRC had jurisdiction over the claims involving monetary benefits and wage differentials for employees of MWSS, given its status as a government-owned and controlled corporation.
Whether the distinction made by the Labor Arbiter between regular and contractual employees affects the application of the Civil Service Law versus the Labor Code.

Whether the employment of MWSS employees is governed by the Civil Service Law and related rules and regulations or by the Labor Code.
Whether the contractual terms purportedly governing the relationships between MWSS and its contractual employees can override the mandatory provisions of the applicable civil service rules.

The implications of the National Housing Corporation vs. Juco decision on the jurisdiction of the NLRC and the applicability of civil service laws to government-owned corporations.