Philippine National Construction Corp. vs. NLRC, G.R. No. 248401, June 23, 2021, Second Division, Lazaro-Javier, J. [Case Digest]

 

Philippine National Construction Corp. vs. NLRC,

G.R. No. 248401, June 23, 2021,

Second Division, Lazaro-Javier, J.

Topic:

                        Bonus

 

Facts:

                        In 1992, PNCC started giving mid-year bonuses to its employees every fifteenth (15th) of May pursuant to a Collective Bargaining Agreement (CBA) with its then employees' union. Long after the CBA expired though, the grant of mid-year bonus to the employees continued until 2012.

            Atty. Luis F. Sison, then PNCC President and Chief Executive Officer sought the opinion of PNCC's statutory counsel, the Office of the Government Corporate Counsel (OGCC) on the release of mid-year bonus for the year 2013 pursuant to Presidential Decree No. 1597. Under Letter dated May 29, 2013, PNCC sought GCG's approval for the grant of mid-year bonus to is employees.

            In its Letter-Reply dated June 20, 2013, the GCG advised PNCC that it was not forwarding the request for approval to then President Benigno Aquino III because the grant was legally infirm and its abrogation does not violate the non-diminution rule.  Pursuant thereto, Atty. Sison circulated a memorandum to all PNCC employees informing them that the 2013 Mid-year Bonus shall not be released.

            PNCC employees filed before the NLRC Arbitration Branch a complaint for non-payment of mid-year bonus and diminution of wages and benefits.

            LA ordered PNCC to give respondents their mid-year bonus for 2013, and every year thereafter in the amount equivalent to one month of their respective salaries. The labor arbiter held that the practice of granting mid-year bonus to PNCC employees since 1992 had ripened into a benefit or supplement which may not be reduced, diminished, discontinued, or eliminated in accordance with Article 100 of the Labor Code on non-diminution of benefits. NLRC affirmed the decision of LA. NLRC held that PNCC is not a GOCC since - it was created under the Corporation Code of the Philippines. Too, PNCC remains to be a private corporation despite the fact that the government is its majority stockholder. As such, it is covered by the provisions of the Labor Code, not by the Civil Service laws.

            Court of Appeals dismissed the petition on the ground that PNCC failed to file a motion for reconsideration of the assailed ruling of the NLRC. CA affirmed the status of PNCC as a private corporation. It further pronounced that even assuming PNCC to be a GOCC, PD 1597 and RA 10149 are inapplicable to GOCCs without original charter, like PNCC.

 

Issue 1:

            Whether PNCC a private corporation or a government owned and controlled corporation (GOCC).

 

Held:

            PNCC is a non-chartered government owned and controlled corporation. n Strategic Alliance v. Radstock Securities, the Court pronounced with finality that PNCC is a GOCC: The PNCC is not 'just like any other private corporation precisely because it is not a private corporation' but indisputably government owned corporation. Neither is PNCC "an autonomous entity" considering that PNCC is under the Department of Trade and Industry, over which the President exercises control. To claim that PNCC is an "autonomous entity" is to say that it is a lost command in the Executive branch, a concept that violates the President's constitutional power or control over the entire Executive branch of government.

            The Court emphasized that PNCC is 90.3% owned by the government and may not be considered an autonomous entity just because it got incorporated under the Corporation Code. Additionally, Executive Order No. 331, series of 2014 has placed the PNCC under the Department of Trade and Industry (DTI), thus, confirming its character as a GOCC

 

Issue 2:

            Whether PNCC employees covered by the provisions of the Labor Code or by the Civil Service Law.

 

Held:

            Being a GOCC without original charter, PNCC is covered by the Labor Code.  Under Article IX-B, Section 2, paragraph 1 of the 1987 Constitution, only GOCCs with original charters are covered by civil service laws. Since PNCC is a non-chartered GOCC, incorporated under the Corporation Code, it is governed by the Labor Code, not by the Civil Service Law.

 

Issue 3:

            Whether PNCC governed by RA 10149.

 

Held:

            Yes; although governed by the Labor Code, as a GOCC, PNCC is not exempt from the coverage of the National Position Classification and Compensation Plan approved by the President.

            In GSIS Family Bank Employees Union v. Villanueva, the Court had the occasion to illustrate the interplay between the provisions of the Labor Code and the provisions of RA 10149 on the life of a non-chattered GOCC.  In that case, employees of GSIS Family Bank demanded for the payment of their Christmas bonus which had been annually given them pursuant to their CBA with GSIS Family Bank, a non-chartered GOCC. GSIS Family Bank was advised by the Governance Commission that in view of the enactment of RA 10149, GSIS Family Bank should no longer grant any additional benefits to its employees without the requisite authority from the President. Thenceforth, GSIS Family Bank stopped granting Christmas bonus to its employees. The Court ruled that while GOCCs without original chatters are covered by the Labor Code, employees of GOCCs are bereft of any right to negotiate the economic terms of their employment, i.e. salaries, emoluments, incentives and other benefits, with their employers since these matters are covered by compensation and position standards issued by the Department of Budget and Management and applicable laws. GSIS clarified that RA 10149 applies to both chartered and non-chartered GOCCs.

            Consequently, therefore, PNCC did not violate the non-diminution rule when it desisted from granting mid-year bonus to its employees starting 2013. True, between 1992 and 2011, PNCC invariably granted this benefit to its employees and never before revoked this grant in strict adherence to the non-diminution rule under Article 100 of the Labor Code. Nonetheless, with the subsequent enactment of RA 10149 in 2011, PNCC may no longer grant this benefit without first securing the requisite authority from the President. As borne by the records, PNCC failed to obtain this authority in view of the position taken by the GCG not to forward the request to the President. GCG cited as reasons the infirmity of the grant and the extraneous application of the non-diminution rule thereto.