Clark Development Corporation vs. Association of CDC Supervisory Personnel Union

The economic terms of a collective bargaining agreement granting additional benefits to employees of a government-owned and controlled corporation are void when executed in violation of the moratorium imposed by Section 9 of Executive Order No. 7, Series of 2010, absent specific authorization from the President.

Clark Development Corporation (CDC) is the operating arm of the Bases Conversion Development Authority (BCDA), tasked to manage the Clark Special Economic Zone. The Association of CDC Supervisory Personnel (ACSP) is the union of CDC's supervisory employees. The Governance Commission for Government-Owned and-Controlled Corporations (GCG) is the central advisory, monitoring, and oversight body authorized to formulate, implement, and coordinate policies for GOCCs. Executive Order (EO) No. 7, Series of 2010, directed the rationalization of the compensation and position classification system in all GOCCs and imposed a moratorium on increases in salaries, allowances, incentives, and other benefits unless specifically authorized by the President. Republic Act (RA) No. 10149, the "GOCC Governance Act of 2011," authorized the GCG to develop a compensation and position classification system for GOCCs for the President's approval.

On March 20, 2012, Clark Development Corporation (CDC) executed a renegotiated collective bargaining agreement (CBA) with the Association of CDC Supervisory Personnel (ACSP), the union of its supervisory employees. The CBA granted the supervisory employees additional benefits, including increased union leave, bereavement leave, free use of CDC guesthouses, use of a service vehicle, salary increases of 8% in the first year and 4% in the second year, additional uniform allowance, additional monthly Personal Economic Relief Allowance (PERA), and a one-time signing bonus.

The Governance Commission for Government-Owned and-Controlled Corporations (GCG) opined that the CBA violated Section 9 of Executive Order (EO) No. 7, Series of 2010, which imposed a moratorium on increases in salaries, allowances, incentives, and other benefits in GOCCs unless specifically authorized by the President. The President had not given CDC the authority to renegotiate the CBA and grant the increases. Meanwhile, the Bases Conversion Development Authority (BCDA) recommended the deferment or renegotiation of the CBA unless CDC could prove the financial sustainability of its economic terms.

When CDC failed to implement the CBA, ACSP filed a complaint against it before the National Conciliation and Mediation Board on August 1, 2012. On November 5, 2012, the Accredited Voluntary Arbitrator (AVA) ruled in favor of ACSP, pointing out that Section 10 of EO No. 7 only suspended the grant of allowances to members of the boards of directors of GOCCs until December 31, 2010. The AVA also presumed the President's approval of the economic provisions pursuant to the rule on liberal construction in favor of labor.

Aggrieved, CDC elevated the case to the Court of Appeals (CA). On April 8, 2013, the CA affirmed the AVA's findings, explaining that EO No. 7 did not apply to CDC since it is a GOCC without an original charter, nor to ACSP because it is composed of supervisory employees. The CA likewise presumed the President's approval in line with the principle that all doubts should be resolved in favor of labor. CDC's motion for reconsideration was denied, prompting the present petition. Meanwhile, GCG moved to intervene, alleging that the CBA contravened EO No. 7 and Republic Act No. 10149, and that the moratorium remained effective pending the promulgation of the compensation and position classification system for GOCCs.

• Invalidity of CBA Economic Terms: CDC maintained that the CBA's economic terms were invalid and unenforceable because they were renegotiated without the President's approval and the favorable recommendations of the GCG and BCDA.
• Presidential Authority over Compensation: CDC argued that Republic Act No. 10149, the "GOCC Governance Act of 2011," gave the President the authority to fix the GOCCs' compensation framework, and thus the President's approval of additional benefits could not be presumed.
• Intervention of GCG: GCG alleged that the CBA contravened EO No. 7 and RA No. 10149, asserting that the moratorium on the grant of additional benefits remained effective pending the promulgation and approval of the compensation and position classification system for GOCCs, and that there were no factual and legal bases to presume the President's consent.

• CBA as Law Between Parties: ACSP contended that the CBA was the law between the parties and must be respected.
• Right to Collective Bargaining: ACSP argued that the CBA was renegotiated consistent with the employees' constitutional rights to organization and collective bargaining.
• Inapplicability of EO No. 7: ACSP reiterated that EO No. 7, Series of 2010, was not applicable to GOCCs without an original charter and that RA No. 10149 recognized the vested rights of government employees to their salaries.

• Validity of CBA Economic Terms: Whether the economic terms of the renegotiated CBA between CDC and ACSP are valid and enforceable despite the lack of the President's specific authorization.
• Applicability of EO No. 7: Whether EO No. 7, Series of 2010, applies to CDC, a GOCC without an original charter, and to ACSP, a union of supervisory employees.
• Presumption of Presidential Approval: Whether the President's approval of the additional benefits in the CBA can be presumed under the rule on liberal construction in favor of labor.

• Validity of CBA Economic Terms: No. The economic terms of the CBA are void for violating Section 9 of EO No. 7, Series of 2010, because the moratorium on increases in salaries and benefits remained effective absent specific authorization from the President.
• Applicability of EO No. 7: Yes. EO No. 7, Series of 2010, applies to all GOCCs regardless of the manner of creation, as the law makes no distinction between GOCCs with an original charter and those incorporated under the Corporation Code.
• Presumption of Presidential Approval: No. The President's approval cannot be presumed because the language of Section 9 of EO No. 7 is unambiguous, and the rule on liberal construction in favor of labor only applies when there are doubts in the interpretation of the Labor Code.

• Validity of CBA Economic Terms: Section 9 of EO No. 7, Series of 2010, imposed a moratorium on increases in the rates of salaries and the grant of new increases in allowances, incentives, and other benefits in GOCCs until specifically authorized by the President. The prohibition is broadly worded to halt the grant of additional salaries and allowances to GOCC employees and officers. The only exception is when the increase is pursuant to the Salary Standardization Law (SSL), which does not cover the renegotiated economic provisions of the CBA. The clause "until specifically authorized by the President" denotes that the moratorium continues until the President authorizes anew the grant of the prohibited increases. Since the President never lifted the moratorium, the economic terms of the CBA executed on March 20, 2012, are void. Furthermore, RA No. 10149 removed the authority of GOCCs to determine their own compensation system, authorizing the GCG to develop a compensation and position classification system for the President's approval. The GCG did not give its favorable recommendation to CDC and ACSP before they renegotiated the CBA.
• Applicability of EO No. 7: The CA and the AVA erred in declaring that EO No. 7 does not cover CDC since it is a GOCC without an original charter. There is nothing in the law that makes any express distinction between GOCCs with an original charter and those incorporated under the Corporation Code. Applying the principle "Ubi lex non distinguit nec nos distinguire debemus," EO No. 7 applies to all GOCCs regardless of the manner of creation. Additionally, the CA and AVA's reliance on Section 10 of EO No. 7 was misplaced, as Section 10 pertains to the suspension of allowances for members of the GOCCs' Board of Directors/Trustees, which is distinct from Section 9's moratorium on increases for employees. ACSP is a union of supervisory employees, not board members.
• Presumption of Presidential Approval: There are no factual and legal bases to presume that the President approved the renegotiated economic provisions of the CBA. The construction in favor of labor under Article 4 of the Labor Code only applies when there are doubts in the interpretation and implementation of the Labor Code and its implementing rules. The language of Section 9 of EO No. 7 on the moratorium is unambiguous; thus, the law must be interpreted following its plain and obvious meaning. The law requires the President's consent to lift the moratorium, and any presumption of such approval is unwarranted.

• Limitations on the Right to Collective Bargaining of Government Employees — The right of government employees to self-organization and collective bargaining is not as extensive as that of private employees. Only the terms and conditions of government employment not fixed by law can be negotiated. In this case, the economic terms of the CBA were fixed by law through the moratorium under EO No. 7 and the compensation framework under RA No. 10149, rendering the renegotiated benefits void.
• Ubi Lex Non Distinguit Nec Nos Distinguire Debemus — When the law does not distinguish, we must not distinguish. The Court applied this principle to hold that EO No. 7, Series of 2010, applies to all GOCCs regardless of whether they have an original charter or are incorporated under the Corporation Code, since the law made no such distinction.
• Construction in Favor of Labor — All doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor. The Court held this principle inapplicable here because the language of Section 9 of EO No. 7 was clear and unambiguous, leaving no room for doubt that would trigger the rule of liberal construction.

• "The only exception is when the increase of salary is pursuant to the implementation of the first and second tranches of the Salary Standardization Law (SSL). Obviously, the renegotiated economic provisions of the CBA between CDC and ACSP are outside the SSL." — This passage clarifies the narrow scope of the exception to the moratorium under EO No. 7, emphasizing that CBA-negotiated benefits fall outside it.
• "When the law does not distinguish, we must not distinguish." — This is the canonical formulation of the principle of statutory construction applied to reject the distinction between GOCCs with and without original charters under EO No. 7.
• "To be sure, the construction in favor of labor only applies when there are doubts in the interpretation and implementation of the provisions of the Labor Code and its implementing rules and regulations." — This limits the application of the labor-favorable construction rule, holding it inapplicable when the governing law is clear and unambiguous.

• Small Business Corporation vs. Commission on Audit, 819 Phil. 233 (2017) — Followed. The Court relied on this case to explain that the clause "until specifically authorized by the President" in EO No. 7 provides the situation where the President deems it proper to lift the moratorium, rather than being an exception to it.
• Social Housing Employees Association, Inc. vs. Social Housing Finance Corp., G.R. No. 237729, October 14, 2020 — Followed. The Court cited this analogous case where the revocation of a CBA's economic provisions for violating EO No. 7 and RA No. 10149 was upheld, and the employees were not entitled to the new benefits.
• Philippine National Construction Corporation vs. National Labor Relations Commission, G.R. No. 248401, June 23, 2021 — Followed. The Court used this case to support the ruling that desisting from granting a mid-year bonus without the President's approval did not violate the non-diminution rule.
• Kida vs. Senate of the Phils., 683 Phil. 198 (2012) — Cited for the principle "Ubi lex non distinguit nec nos distinguire debemus."

• Section 9, Executive Order No. 7, Series of 2010 — Imposed a moratorium on increases in the rates of salaries and the grant of new increases in allowances, incentives, and other benefits in GOCCs until specifically authorized by the President. The Court held that the renegotiated CBA's economic terms violated this provision.
• Section 10, Executive Order No. 7, Series of 2010 — Suspended the grant of allowances, bonuses, and incentives to members of the board of directors/trustees of GOCCs until December 31, 2010. The Court found this provision inapplicable to ACSP, as it pertains to board members, not supervisory employees.
• Republic Act No. 10149 (GOCC Governance Act of 2011) — Authorized the GCG to develop a compensation and position classification system for GOCCs for the President's approval. The Court noted that this law removed the authority of GOCCs to determine their own compensation system.
• Section 2, Executive Order No. 203, Series of 2016 — Provided that the Governing Boards of covered GOCCs may not negotiate with their officers and employees the economic terms of their CBAs. The Court cited this to support the position that the moratorium remained effective pending the promulgation of the compensation framework.
• Article 4, Labor Code — Provides that all doubts in the implementation and interpretation of the Labor Code shall be resolved in favor of labor. The Court held this inapplicable because the language of EO No. 7 was unambiguous.

Leonen (Chairperson), Lazaro-Javier, J. Lopez, and Kho, Jr., JJ., concurred.