National Housing Corporation v. Benjamin Juco and the National Labor Relations Commission
REITERATIONFacts
The Antecedents: Benjamin C. Juco was employed by the National Housing Corporation (NHC) as a project engineer from November 16, 1970, to May 14, 1975. His services were terminated effective May 14, 1975, due to alleged implication in the theft and/or malversation of public funds involving 214 pieces of scrap G.I. pipes. Juco filed a complaint for illegal dismissal against NHC, professing innocence and claiming the charges were fabricated to harass him for being a witness in a theft case against NHC officials. He sought reinstatement with back wages and benefits. Procedural History: The complaint was filed with the Regional Office No. 4 of the Department of Labor, which certified it for compulsory arbitration to the National Labor Relations Commission (NLRC). The parties submitted position papers. The NHC argued that the NLRC lacked jurisdiction as NHC is a government-owned and controlled corporation, and even if it had jurisdiction, Juco was validly dismissed for selling company properties. The NLRC, in a previous case (Fernandez v. Cedro), had ruled NHC as a government-owned or controlled corporation but opted to take a contrary stand in this case to serve the ends of justice, setting aside the Labor Arbiter's decision and remanding the case for resolution of the illegal dismissal issue. The Petition: The NHC filed a petition questioning the NLRC's jurisdiction and its decision to remand the case, asserting that NHC is a government-owned corporation whose employees are governed by civil service law, not the Labor Code.
Issue(s)
Whether employees of the National Housing Corporation (NHC) are covered by the Labor Code or by laws and regulations governing the civil service. Whether the National Labor Relations Commission (NLRC) has jurisdiction over cases involving employees of the NHC.
Ruling
The petition is GRANTED. The questioned decision of the respondent National Labor Relations Commission is SET ASIDE. The decision of the Labor Arbiter dismissing the case before it for lack of jurisdiction is REINSTATED.
Ratio Decidendi
On the issue of whether employees of the National Housing Corporation (NHC) are covered by the Labor Code or by laws and regulations governing the civil service: The Supreme Court held that employees of government-owned or controlled corporations are governed by the Civil Service Law and rules. This is explicitly provided for in Section 1, Article XII-B of the Constitution, which states that the Civil Service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation. The Court emphasized that the inclusion of government-owned or controlled corporations within the Civil Service was a deliberate effort to plug loopholes and ensure broad coverage. Presidential Decree No. 807 and Article 277 of the Labor Code itself unequivocally state that the terms and conditions of employment of all government employees, including those of government-owned and controlled corporations, shall be governed by the Civil Service Law, rules, and regulations. The NHC, being a 100% government-owned corporation organized under Executive Order No. 399 and whose shares are owned by government financial institutions, falls squarely within this constitutional and statutory mandate. The Court rejected the argument that only corporations created by special law are covered, citing the word "every" in the Constitution and the intent to prevent circumvention of civil service coverage by creating subsidiary corporations under the general Corporation Code. On the issue of whether the National Labor Relations Commission (NLRC) has jurisdiction over cases involving employees of the NHC: Consequently, since employees of the NHC are covered by the Civil Service Law, their employment disputes fall under the jurisdiction of the Civil Service Commission, not the Ministry of Labor and Employment (now Department of Labor and Employment) or the NLRC. The NHC performs governmental functions, further solidifying its status as an instrumentality of the government subject to civil service rules. The NLRC's decision to assume jurisdiction and remand the case was therefore an act without or in excess of its jurisdiction. The Court reinstated the Labor Arbiter's decision dismissing the case for lack of jurisdiction, affirming that the proper forum for such disputes is within the civil service system.
Main Doctrine
Employees of government-owned or controlled corporations, including those organized under the Corporation Code, are covered by the Civil Service Law and rules, not the Labor Code, as they are considered part of the Civil Service embracing every branch, agency, subdivision, and instrumentality of the Government.