Juco vs. National Labor Relations Commission

A government-owned or controlled corporation organized under the general Corporation Code—not chartered by special law—is not within the civil service system; its employees are governed by the Labor Code and fall under the jurisdiction of the National Labor Relations Commission.

Petitioner Benjamin C. Juco was employed as a project engineer of respondent National Housing Corporation (NHC), a government-owned corporation incorporated in 1959 under the Corporation Code (Act 1459) pursuant to Executive Order No. 399, with one hundred percent of its shares owned by various government entities. At the time of petitioner's dismissal in 1975, Article 277 of the Labor Code and the 1973 Constitution placed all GOCC employees under the Civil Service Law. The 1987 Constitution, however, introduced a critical textual change: the civil service now embraces GOCCs only "with original charter," thereby excluding corporations organized under the general incorporation statute from the Civil Service's coverage. This constitutional shift is the legal backdrop against which the jurisdictional question must be resolved.

Petitioner Benjamin C. Juco was hired as a project engineer of respondent National Housing Corporation (NHC) on November 16, 1970. On May 14, 1975, he was separated from the service for having been implicated in a crime of theft and/or malversation of public funds. The criminal charges against him were subsequently dismissed by the trial court, which found the charges to be purely fabricated.

On March 25, 1977, petitioner filed a complaint for illegal dismissal against NHC with the Department of Labor. The Labor Arbiter dismissed the complaint on September 17, 1977, on the ground that the NLRC had no jurisdiction. Petitioner elevated the case to the NLRC, which reversed the Labor Arbiter on December 28, 1982. NHC then appealed to the Supreme Court, which on January 17, 1985 granted the petition, set aside the NLRC decision, and reinstated the Labor Arbiter's dismissal for lack of jurisdiction.

Thereafter, on January 6, 1989, petitioner filed a complaint for illegal dismissal with preliminary mandatory injunction with the Civil Service Commission. NHC moved to dismiss, arguing that the CSC had no jurisdiction. On April 11, 1989, the CSC dismissed the complaint, holding that NHC, being a government corporation without an original charter and organized under the Corporation Code, was not within the scope of the civil service under Article IX-B, Section 2(1) of the 1987 Constitution.

On April 28, 1989, petitioner filed a new complaint for illegal dismissal with the NLRC. Labor Arbiter Manuel R. Caday ruled on May 21, 1990 that petitioner was illegally dismissed, finding that the criminal case against him was purely fabricated and that the dismissal was devoid of legal or factual basis. The Labor Arbiter also held that the complaint was not barred by prescription, reasoning that the four-year reglementary period should be reckoned from receipt of the CSC's April 11, 1989 dismissal order, and that the running of the period had been suspended by the filing of the complaint with the CSC, which petitioner had pursued in compliance with the Supreme Court's prior ruling. The Labor Arbiter ordered reinstatement with full back wages and benefits. NHC appealed to the NLRC, which on March 14, 1991 reversed the Labor Arbiter's decision on the ground of lack of jurisdiction, prompting the present petition.

• Jurisdiction of the NLRC: Petitioner contended that the NLRC has jurisdiction over his illegal dismissal complaint because NHC, having been incorporated under the Corporation Code rather than by special law, is a government-owned or controlled corporation without an original charter and therefore outside the civil service system under the 1987 Constitution.
• Prescription: Petitioner maintained that the complaint was not barred by prescription because the reglementary period was suspended during the pendency of his complaint before the Civil Service Commission, which he had filed in compliance with the Supreme Court's earlier directive.

• Lack of NLRC Jurisdiction: Respondent NHC argued that the NLRC had no jurisdiction over the case, maintaining that NHC employees were governed by the Civil Service Law and not the Labor Code.
• Prescription: Respondent NHC contended that petitioner's complaint was already barred by prescription, attributing the delay to petitioner's own failure to file the complaint in the proper forum.

• Jurisdiction: Whether the NLRC has jurisdiction over the illegal dismissal complaint of an employee of NHC, a government-owned corporation organized under the Corporation Code.
• Prescription: Whether the complaint was barred by prescription.

• Jurisdiction: Yes. The NLRC has jurisdiction over petitioner's complaint. Under the 1987 Constitution, the civil service covers only GOCCs "with original charter"; NHC, having been incorporated under the Corporation Code, falls outside the Civil Service and its employees are governed by the Labor Code.
• Prescription: No. The complaint was not barred by prescription. The Labor Arbiter correctly held that the reglementary period was suspended during the pendency of the complaint before the CSC, which petitioner had pursued in good faith compliance with the Supreme Court's prior directive.

• Jurisdiction: The primordial issue was whether the NLRC committed grave abuse of discretion in holding that petitioner was not governed by the Labor Code. Under the laws in force at the time of petitioner's dismissal, Article 277 of the Labor Code and the 1973 Constitution placed all GOCC employees under the Civil Service Law. The Supreme Court had previously so held in National Housing Corporation vs. Juco (134 SCRA 172 [1985]). However, this ruling was supplanted by the 1987 Constitution, which added the qualifying phrase "with original charter" to Article IX-B, Section 2(1). In National Service Corporation (NASECO) vs. National Labor Relations Commission (168 SCRA 122 [1988]), the Court applied the 1987 Constitution to a case that arose under the 1973 Constitution, holding that the Constitution in force at the time of decision governs, and that "with original charter" means GOCCs chartered by special law as distinguished from corporations organized under the Corporation Code. NHC was incorporated in 1959 under the Corporation Code (Act 1459) pursuant to Executive Order No. 399, with all shares owned by government entities. Having been incorporated under the general corporation law rather than by special law, NHC is a GOCC without an original charter; its employees are governed by the Labor Code and fall under NLRC jurisdiction. This conclusion was reinforced by Trade Union of the Philippines and Allied Services (TUPAS) vs. National Housing Corporation (173 SCRA 33 [1989]), which held that NHC is within the jurisdiction of the Department of Labor and Employment.

• Prescription: The Labor Arbiter found that the running of the four-year reglementary period was suspended by the filing of the complaint with the CSC on January 6, 1989, which was dismissed only on April 11, 1989, after which petitioner filed with the NLRC on April 28, 1989. Petitioner had pursued the CSC route because the Supreme Court's January 17, 1985 decision had effectively directed him to that forum. The delay was attributable not to petitioner's neglect but to a "legal knot that has to be untangled." The NLRC did not overturn this finding on appeal, and the Supreme Court found no reason to disturb it.

• GOCC Jurisdictional Distinction Under the 1987 Constitution — Under Article IX-B, Section 2(1) of the 1987 Constitution, the civil service embraces only government-owned or controlled corporations "with original charter," meaning corporations created by special law. GOCCs organized under the general Corporation Code are excluded from the Civil Service; their employees are governed by the Labor Code and fall under the jurisdiction of the NLRC. The Court applied this doctrine to NHC, which was incorporated under the Corporation Code (Act 1459) pursuant to Executive Order No. 399, despite being wholly government-owned.

• Prospective Application of Constitutional Provisions to Pending Cases — The Constitution in force at the time of the Court's decision governs, even if the case arose under a prior Constitution. In NASECO vs. NLRC, the Court applied the 1987 Constitution's "original charter" limitation to a case that arose while the 1973 Constitution was still in effect, on the ground that the Constitution in place at the time of decision controls.

• "Although we had earlier ruled in National Housing Corporation v. Juco, that employees of government-owned and/or controlled corporations, whether created by special law or formed as subsidiaries under the general Corporation Law, are governed by the Civil Service Law and not by the Labor Code, this ruling has been supplanted by the 1987 Constitution." — This passage marks the explicit overruling of the Court's prior holding in NHC vs. Juco and signals the shift brought about by the 1987 Constitution's "original charter" language.

• "Thus, NASECO which had been organized under the general incorporation statute and a subsidiary of the National Investment Development Corporation, which in turn was a subsidiary of the Philippine National Bank, is exluded from the purview of the Civil Service Commission." — This passage, quoting from NASECO vs. NLRC, articulates the canonical formulation of the distinction between GOCCs with original charters and those organized under the Corporation Code.

• "Having been incorporated under the Corporation Law, its relations with its personnel are governed by the Labor Code and come under the jurisdiction of the National Labor Relations Commission." — This is the ratio decidendi applied to NHC, directly tying the mode of incorporation to the applicable labor regime and the proper adjudicative forum.

• National Housing Corporation vs. Juco, 134 SCRA 172 (1985) — The Court's earlier ruling that all GOCC employees, whether created by special law or under the Corporation Code, were governed by the Civil Service Law. This ruling was expressly declared supplanted by the 1987 Constitution.

• National Service Corporation (NASECO) vs. National Labor Relations Commission, 168 SCRA 122 (1988) — Controlling precedent. The Court applied the 1987 Constitution's "original charter" limitation, holding that GOCCs organized under the general incorporation statute are excluded from the Civil Service and fall under the Labor Code. The Court found "no cogent reason to depart from the ruling in the aforesaid case."

• Trade Union of the Philippines and Allied Services (TUPAS) vs. National Housing Corporation, 173 SCRA 33 (1989) — Followed. The Court held that NHC is within the jurisdiction of the Department of Labor and Employment, being a GOCC without an original charter, and that its employees have the right to form unions and hold certification elections under the Labor Code.

• PNOC-Energy Development Corporation vs. NLRC, 201 SCRA 487 (1991) — Cited in the footnote as additional authority supporting the proposition that NHC (now NHA) employees are covered by the Labor Code.

• Article IX-B, Section 2(1), 1987 Constitution — Provides that "[t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government owned or controlled corporations with original charter." The phrase "with original charter" was held to mean corporations chartered by special law, thereby excluding NHC, which was incorporated under the Corporation Code, from the Civil Service.

• Article II-B, Section 1(1), 1973 Constitution — Provided that "[t]he Civil Service embraces every branch, agency, subdivision and instrumentality of the government, including government-owned or controlled corporations." This provision contained no "original charter" limitation and was the basis for the Court's earlier ruling in NHC vs. Juco.

• Article 277, Labor Code (PD 442) — Provided that "[t]he terms and conditions of employment of all government employees, including employees of government-owned and controlled corporations shall be governed by the Civil Service Law, rules and regulations." This provision was in force at the time of petitioner's dismissal but was effectively superseded by the 1987 Constitution's narrower formulation.

Padilla, Bellosillo, Vitug, and Kapunan, JJ., concurred.