Duty Free Philippines vs. Mojica

Jurisdiction over illegal dismissal cases involving employees of government-owned or controlled corporations with original charters lies with the Civil Service Commission, not the National Labor Relations Commission.

Duty Free Philippines (DFP) was created under Executive Order No. 46 to augment tourist services and generate revenue, operating under the Department of Tourism through the Philippine Tourism Authority (PTA). The PTA, created under Presidential Decree No. 564, is a corporate body attached to the DOT whose personnel are governed by a merit system under civil service rules. As DFP operates under the exclusive authority of the PTA, its officials and employees are subject to civil service rules and regulations.

• Administrative Charge: On November 28, 1997, the Discipline Committee of Duty Free Philippines (DFP) found Stock Clerk Rossano A. Mojica guilty of Neglect of Duty for causing considerable damage to or loss of DFP materials, assets, and property.
• Penalty: Mojica was considered forcibly resigned from service, with forfeiture of all benefits except his salary and the monetary value of accrued leave credits. He was formally informed of this forced resignation on January 14, 1998.
• Labor Complaint: Mojica filed a complaint for illegal dismissal with prayer for reinstatement, backwages, damages, and attorney's fees against DFP before the NLRC.
• Arbiter Ruling: Labor Arbiter Facundo L. Leda ruled Mojica was illegally dismissed, ordering reinstatement without loss of seniority rights and payment of backwages and attorney's fees.
• NLRC Ruling: The NLRC reversed the Labor Arbiter, finding the dismissal valid and with just cause. Mojica's motion for reconsideration was denied.
• CA Ruling: The Court of Appeals reinstated the Labor Arbiter's decision, agreeing that Mojica was not guilty of gross or habitual negligence warranting dismissal and that no convincing evidence proved he connived with other personnel in pilfering DFP stocks.

• Jurisdiction: Petitioner argued that respondent Mojica is a civil service employee; therefore, jurisdiction over his illegal dismissal complaint is lodged with the Civil Service Commission, not the NLRC.

• Validity of Dismissal: Respondent maintained that his dismissal was illegal because he was not guilty of gross or habitual negligence and there was no evidence of connivance in pilfering stocks.

• Jurisdiction: Whether the National Labor Relations Commission or the Civil Service Commission has jurisdiction over an illegal dismissal complaint filed by an employee of Duty Free Philippines.

• Jurisdiction: Jurisdiction lies with the Civil Service Commission. DFP was created under EO No. 46 and operates under the PTA, which was created under PD No. 564. Because the PTA is a government-owned or controlled corporation with an original charter, its employees, including those of DFP which is under its exclusive authority, are subject to civil service rules. Under Article IX-B, Section 2(1) of the 1987 Constitution and EO No. 292, GOCCs with original charters are part of the civil service. Thus, controversies involving the terms of employment of such officials and employees fall under the jurisdiction of the Merit System Protection Board and the Civil Service Commission, not the labor authorities. The labor arbiter and the NLRC erred in taking cognizance of the complaint, and the Court of Appeals likewise erred in sustaining the labor arbiter.

• Civil Service Jurisdiction over GOCCs with Original Charters — Government-owned or controlled corporations with original charters are part of the Civil Service. Consequently, the hiring, firing, and discipline of their employees are governed by the Civil Service Law and rules, placing jurisdiction over their dismissal cases with the Civil Service Commission, not the NLRC. Applied in this case because DFP operates under the PTA, a GOCC with an original charter (PD No. 564), making Mojica a civil service employee subject to CSC jurisdiction.

• "It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution] government-owned or controlled corporations shall be considered part of the Civil Service only if they have original charters, as distinguished from those created under general law."
• "There is no dispute that petitioner, a water district with an original charter, is a government-owned and controlled corporation. The established rule is that the hiring and firing of employees of government-owned or controlled corporations are governed by provisions of the Civil Service Law and Civil Service Rules and Regulations. Jurisdiction over the strike and the dismissal of private respondents is therefore lodged not with the NLRC but with the Civil Service Commission."

• Zamboanga City Water District v. Buat, G.R. No. 104389, May 27, 1994 — Followed. Established that the hiring and firing of employees of GOCCs with original charters are governed by Civil Service Law, vesting jurisdiction in the CSC, not the NLRC.
• Philippine Amusement and Gaming Corp. v. Court of Appeals, G.R. No. 93396, September 30, 1991 — Followed. Held that GOCCs with original charters belong to the Civil Service, placing controversies concerning employee-management relations under the Merit System Protection Board and CSC.

• Article IX-B, Section 2(1), 1987 Constitution — Provides that the civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. Applied to classify DFP employees as civil service employees.
• Executive Order No. 46 — Created Duty Free Philippines under the DOT through the PTA. Established DFP's relationship to the PTA.
• Presidential Decree No. 564 — Revised the charter of the Philippine Tourism Authority, establishing it as a corporate body attached to the DOT governed by a merit system under civil service rules. Used to determine that PTA is a GOCC with an original charter.
• Presidential Decree No. 807 (The Civil Service Decree of the Philippines) — Declared the CSC as the central personnel agency to enforce laws governing the discipline of civil servants, covering GOCCs whether performing governmental or proprietary functions.
• Executive Order No. 180 — Defined government employees to include those in GOCCs with original charters and provided that Civil Service and labor laws shall be followed in resolving their cases.
• Executive Order No. 292 (The Administrative Code of 1987) — Empowered the CSC to hear and decide administrative cases and provided the procedure for resolving employee complaints and grievances.

Hilario G. Davide, Jr. (Chief Justice), Leonardo A. Quisumbing, Antonio T. Carpio, Adolfo S. Azcuna.