G.R. No. 248401 , June 23, 2021
Philippine National Construction Corporation and Atty. Luis F. Sison, Petitioners, vs. National Labor Relations Commission, Elizabeth N. Lopez-De Leon, et al., Respondents.

FACTS

Petitioner Philippine National Construction Corporation (PNCC) was originally incorporated under the Corporation Code as Construction Development Corporation of the Philippines (CDCP). Through a debt-to-equity conversion of its loans from Government Financing Institutions (GFIs) pursuant to Letter of Instruction No. 1295, the GFIs became majority stockholders, and the corporate name was changed to PNCC. It was later placed under the Asset Privatization Trust (now Privatization and Management Office) and subsequently under the Department of Trade and Industry (DTI) by Executive Order No. 331. Since 1992, PNCC had been granting mid-year bonuses to its employees, a practice that continued even after the expiration of the governing Collective Bargaining Agreement. In 2013, PNCC’s President sought the opinion of the Office of the Government Corporate Counsel (OGCC) on the release of the mid-year bonus. The OGCC advised that approval from the Governance Commission for Government Owned or Controlled Corporations (GCG) was required under Republic Act No. 10149 . The GCG subsequently denied the request, stating the grant was legally infirm and its abortation did not violate the non-diminution rule. Consequently, PNCC informed its employees that the 2013 mid-year bonus would not be released. The employees filed a complaint for non-payment and diminution of benefits. The Labor Arbiter ruled in favor of the employees, ordering PNCC to pay the bonus, a decision affirmed by the National Labor Relations Commission (NLRC). The NLRC held PNCC was a private corporation, not a government-owned and controlled corporation (GOCC), and thus covered by the Labor Code. The Court of Appeals affirmed the NLRC’s decision. PNCC now petitions the Supreme Court, arguing it is a GOCC governed by RA 10149 and not by the Labor Code.

ISSUE

1. Is PNCC a private corporation or a government-owned and controlled corporation (GOCC)?
2. Are PNCC employees covered by the provisions of the Labor Code or by the Civil Service Law?
3. Is PNCC governed by RA 10149?

RULING

1. PNCC is a non-chartered government-owned and controlled corporation (GOCC). The Supreme Court ruled that PNCC is a GOCC, citing its final pronouncement in Strategic Alliance v. Radstock Securities which stated PNCC is “indisputably [a] government owned corporation.” The Court emphasized that PNCC is 90.3% owned by the government and is under the Department of Trade and Industry (DTI), confirming its character as a GOCC. It is classified as a non-chartered GOCC under Section 3(p) of RA 10149, meaning it is organized under the Corporation Code but owned by the government to the extent of at least a majority of its capital stock.
2. PNCC employees are covered by the Labor Code, not the Civil Service Law. The Court held that employees of GOCCs without original charters, like PNCC, are covered by the Labor Code. This is consistent with the ruling in Philippine National Oil Company-Energy Development Corporation v. Hon. Leogardo, Jr., which stated that employees of government-owned or controlled corporations created under the general corporation law are governed by the Labor Code. The Civil Service Law applies only to government-owned or controlled corporations with original charters.
3. PNCC is governed by RA 10149 (The GOCC Governance Act of 2011). The Court ruled that PNCC, as a non-chartered GOCC, is covered by RA 10149. Section 8 of RA 10149 requires the GCG to develop a Compensation and Position Classification System for all GOCCs, subject to the President’s approval. Furthermore, Presidential Decree No. 1597, which rationalizes the compensation system for national government officials and employees, including those in GOCCs, applies to PNCC. Therefore, PNCC’s grant of bonuses and other compensation is subject to the guidelines and approval processes under these laws. However, the Court also ruled that the unilateral withdrawal of the mid-year bonus, which had been given for twenty uninterrupted years, constituted a diminution of benefits in violation of Article 100 of the Labor Code. The bonus had ripened into a company practice and became part of the employees’ wage or salary. Thus, PNCC was ordered to release the 2013 mid-year bonus to its employees.