Philippine National Construction Corporation v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: The Philippine National Construction Corporation (PNCC), originally incorporated as CDCP, was granted a franchise to operate toll facilities. Through debt-to-equity conversion, government financing institutions became majority stockholders, leading to a name change to PNCC. PNCC has been granting mid-year bonuses to its employees since 1992, a practice that continued even after the expiration of the Collective Bargaining Agreement (CBA). Procedural History: In 2013, PNCC sought an opinion from the Office of the Government Corporate Counsel (OGCC) regarding the release of the 2013 mid-year bonus. The OGCC advised PNCC to secure approval from the Governance Commission for Government Owned or Controlled Corporations (GCG), citing RA 10149. PNCC's request for approval was denied by the GCG, which deemed the grant legally infirm and its abrogation not a violation of the non-diminution rule. Consequently, PNCC's President issued a memorandum informing employees that the 2013 mid-year bonus would not be released. The employees filed a complaint for non-payment of the bonus and diminution of wages and benefits before the National Labor Relations Commission (NLRC). The Petition: The Labor Arbiter ordered PNCC to release the 2013 mid-year bonus. The NLRC affirmed this ruling, holding that PNCC is a private corporation and thus covered by the Labor Code, not civil service laws. The Court of Appeals (CA) affirmed the NLRC's decision, reiterating that PNCC is a private corporation and that the non-diminution rule was violated. PNCC filed a petition for review on certiorari before the Supreme Court, arguing that it is a GOCC and therefore not governed by the Labor Code, and that RA 10149 does not apply to GOCCs without original charters.
Issue(s)
Whether PNCC is a private corporation or a government-owned and controlled corporation (GOCC). Whether PNCC employees are covered by the provisions of the Labor Code or by the Civil Service Law. Whether PNCC is governed by RA 10149. Whether PNCC violated the non-diminution rule under Article 100 of the Labor Code by not releasing the 2013 mid-year bonus.
Ruling
The petition is GRANTED. The Decision dated July 12, 2018 and Resolution dated July 15, 2019 of the Court of Appeals in CA-G.R. SP No. 139311 are REVERSED and SET ASIDE. The complaint in NLRC NCR Case No. 07-10180-13 is DISMISSED for lack of merit.
Ratio Decidendi
On whether PNCC is a private corporation or a GOCC: The Court definitively ruled that PNCC is a government-owned or controlled corporation (GOCC). It cited previous pronouncements in Strategic Alliance v. Radstock Securities and the preamble of Executive Order No. 331, series of 2014, which placed PNCC under the Department of Trade and Industry (DTI). The Court emphasized that despite being incorporated under the Corporation Code, PNCC's majority ownership by the government and its placement under a government department confirm its status as a GOCC. The Court clarified that PNCC is not an "autonomous entity" simply because it is a non-chartered corporation. On whether PNCC employees are covered by the Labor Code or Civil Service Law: The Court held that PNCC employees are covered by the Labor Code, not by the Civil Service Law. This is because PNCC is a GOCC without an original charter. Article IX-B, Section 2(1) of the 1987 Constitution explicitly states that civil service laws cover only GOCCs with original charters. Since PNCC was incorporated under the Corporation Code, it falls outside this exception, making the Labor Code applicable to its employees. The Court cited Paloma v. Philippine Airlines Inc. as precedent for this classification. On whether PNCC is governed by RA 10149: The Court affirmed that PNCC, as a GOCC, is subject to the provisions of Republic Act No. 10149 (RA 10149). Sections 1 and 4 of RA 10149 clearly state its applicability to all GOCCs, including those without original charters. Section 9 further mandates that no GOCC shall be exempt from the coverage of the Compensation and Position Classification System established under the Act. The Court noted that Section 32 of RA 10149 repeals all inconsistent laws and issuances. On whether PNCC violated the non-diminution rule: The Court ruled that PNCC did not violate the non-diminution rule by ceasing the grant of the mid-year bonus in 2013. While the practice of granting the bonus for over twenty years had ripened into a benefit, the enactment of RA 10149 in 2011 changed the landscape for GOCCs. As a GOCC, PNCC could no longer grant such benefits without securing the requisite authority from the President. Since PNCC failed to obtain this authority due to the GCG's position that the grant was infirm, its desistance from granting the bonus did not constitute a violation of Article 100 of the Labor Code. The Court cited GSIS Family Bank Employees Union v. Villanueva to illustrate the interplay between the Labor Code and RA 10149 for non-chartered GOCCs.
Main Doctrine
A non-chartered government-owned or controlled corporation (GOCC), although covered by the Labor Code, is not exempt from the National Position Classification and Compensation Plan approved by the President and the Compensation and Position Classification System under RA 10149. Therefore, it cannot grant benefits like mid-year bonuses without the requisite authority from the President, and failure to secure such authority means the cessation of the benefit does not violate the non-diminution rule.