3Repnblic of tbe tlbilippine%

~upren1e Qtourt
jflf[anila

SECOND DIVISION

PHlLIPPINE NATIONAL G.R. No. 248401

CONSTRUCTION
Members:
CORPORATION and ATTY.
LUIS F. SISON,
PERLAS-BERNABE, J ., Chairperson
LAZARO-JAVIER,
Petitioners,
LOPEZ, M.,
ROSARIO,
LOPEZ, J ., JJ.
- versus-

NATIONAL LABOR
RELATIONS COMMISSION,
ELIZABETH N. LOPEZ-DE
LEON, JANICE DAY E.
ALEJANDRINO, SABINO B.
BASSIG, CRJSANTO D.
CALIMAG, GEMMA C.
CORDERO, JAll\!IE C. DELA
CRUZ, ROSALYN S.
DELIVIOS, FELIX M. ERECE,
JR., DEMOSTHENES F.
FAMINIANO, LOIDA G.
HERNANDEZ, ALMA S.
HUGO, RONALD E. JAVIER,
MARK D. LAGO, ALVIN
NICOL D. LIBONGCO,
FREDERICK CHARLES Y.
LIM, VIRGINIA G.
MADRONA, ANTONIO C.
MANLA W_E, FLERIDA A.
MEJORADA, RENATO M.
MONSATO, YOLANDA C.
MORTEL, VENJIE E.

I
Decision 2 G.R. No. 248401

NAMOCATCAT, DOLLY C.
NEPOMUCENO, AMANDO M.
ORALLO, VE8NETTE U.
PACO, MOSES M.
PANGILINAN, M.IRIAM M.
PASETES, HENRY B.
SALAZAR, ARNNE NOBERT
C. SILVESTRE, ELMER M.
SIMBULAN, JEAN P.
TALUSAN, SUSAN R. VALES,
AND PAUL C. VICENTE, Promulgated:
JUN
Respondents.

x-------------------------- ------------------------------------------------------ -

DECISION

LAZARO-JAVIER, J.:
The Case

This petition for review on certiorari 1 seeks to reverse and set aside
the fo llow ing dispositions of the Court of Appeals in CA-G.R. SP No.
139311:

a) Decision2 dated July 12, 2018, affirming the pronouncement

of the National Labor and Relations Commission (NLRC)
that petitioner Philippine National Construction Corporation
(PNCC) is not a government-owned and controlled
corporation (GOCC) and its consequent directive fo r PNCC
to release the 2013 mid-year bonus of its employees; and

b) Resolution3 dated July 15, 2019, denying PNCC 's motion for
reconsideration.

Antecedents

In 1966, PNCC was originally incorporated pursuant to the

Corporation Code of the Philippines under the name Construction
Development Corporation of the Philippines (CDCP). On March 3 1, l 977,
Presidential Decree No. 111 34 (PD 111 3) granted CDCP a thirty (30) year
1
Rollo, pp. 12-35.
2
Penned by Associate JL1stice Maria Filomena D. Singh and concurred in by Associate Justices Sesinando
E. Villon and Edwin D. Sorongon; id. at 4 1-50.
3
Penned by Associate Justice Maria Filomena D. Singh and concurred in by Associate Justices Sesinando
E. Villon and Edwin D. Sorongon; id at 52-57.
4
Enti tled "GRANTI NG THE CONSTRUCTION AND DEVELOPMENT CORPORATION OF THE
PHILI PPIN ES (CDCP) A FRANCH ISE TO O PERATE, CONSTRUCT AND MAINTAIN TOLL
FACILITIES IN THE NORTH AND SOUTH LUZON TOLL EXPRESSWAYS AND FOR OTHER
PURPOSES."
 Decision 3 G.R. No. 24840 I

franchise to construct, operate, and maintain toll facilities in the North and
South Luzon Tollways. In December 1983, Presidential Decree No. l 8945
(PD 1894) amend.e d PD 1113 to include the Metro Manila Expressway into
the CDCP's franchise.

In the course of its operations, CDCP obtained loans from various

Government Financing Institutions (GFis). On February 23, 1983, President
Ferdinand E. Marcos issued Letter of Instruction No. 1295 (LOI 1295),
directing the GFis to convert all CDCP's unpaid obligations to them into
shares of stock. 6 The implementation of said LOI thus made the GFis
majority stock.holders of PNCC. By virtue of the debt-to-equity conversion
of CDCP loans, CDCP's Articles of Incorporation and By-Laws were later
amended to change its corporate name from CDCP to PNCC to reflect the
extent of the Government's equity investment in the company. 7

In 1986, pursuant to the government's privatization program,

President Corazon C. Aquino issued Presidential Proclamation No. 50 (PP
50) creating the Asset Privatization Trust (APT), now known as the
Privatization and Management Office (PMO), as trustee of the equity shares
of the GFis in PNCC . . Subsequently, President Gloria Macapagal-Arroyo
issued Executive Order No. 331 (EO 331), placing PNCC under the
Department of Trade and Industry (DTI). 8

In 1992, PNCC started giving mid-year bonuses to its employees

every fifteenth (15 th) 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. 9

Meantime, on April 30, 2013, petitioner 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 10 pursuant to Presidential
Decree No. 1597 (PD l 597). 11

By Letter dated May l 0, 2013, the OGCC advised PNCC to secure the
approval of the ·Governance Commission for Government Owned or
5
Entitled "A MENDING THE FRANCHI SE OF THE PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION TO CONSTRUCT, MAINTA IN AND OPERATE TOLL FAC ILITIES IN THE NORTH
LUZON AND SOUTH LU ZON EXPRESSWAYS TO INC LUDE THE METRO MANILA
EXPRESSWAY TO SERVE AS AN ADDITIONAL ARTERY IN THE TRANSPORTATION OF
TRADE AND COMMERCE IN THE METRO MANILA AREA."
6
Rollo, pp. 42-43.
7
Alejandrina v. CUA, G.R. No. 245400, November 12, 2019.
~ Id.
9
Rollo, p. 43.
10 Id.
11
Entitled "FURTHER RATIONALIZING THE SYSTEM OF COMPENSATION AND POSITION
CLASS IFICATION IN THE NATIONAL GOVERNMENT." Section I of wh ich provides:
Section I. Statement of Policy. It is hereby declared policy that the officials and employees of the national
government, including the .ludiciary, the Career Executive Service, the Foreign Service, the Armed Forces,
subordinate officia ls of Constitutional Comm issions, government owned o r controlled corporations. and
state colleges an d uni versities, shall be compensated in accordance with a National Position Classificati on
and Compensation Plan approved by the President.

;/
Decision 4 G.R. No. 24840 I

Controlled Corporations (GCG), citing Section 8 of Republic Act No. l 0 149

(RA 10149). 12

Consequently, under Letter dated May 29, 2013, PNCC sought

GCG 's approval for the grant of mid-year bonus to i~s employees. 13

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 rul e. 14

Pursuant thereto, Atty. Sison circulated a memorandum to all PNCC

employees informing them that the 2013 Mid-year Bonus shall not be
released. 15

Acting thereon, the PNCC employees filed before the NLRC

Arbitration Branch a complaint for non-payment of mid-year bonus and
diminution of wages and benefits. 16

The Ruling of the Labor Arbiter

By Decision 17 dated January 29, 2014, Labor Arbiter Romelita

Rioflorido ordered PNCC to g ive respondents their mid-year bonus for 2013,
and every year thereafter in the amount equi valent to one month of their
respective salaries, viz.:

WHEREFORE, a decision is hereby rendered finding the respondent

Philippine National Construction Corporation to have violated the non-
diminution clause under Article 100 of the Labor Code o f the Philippines
and hereby ordered to give all complainants their annual mid-year bonus fo r
the year 20 13, and every year thereafter, in the amount equivalent to one ( I)
month of their respective salaries.

SO ORDERED. 18

The labor arbiter held that the practice of granting mid-year bonus to
PNCC employees since J992 had ripened into a benefit or supplement which
may not be reduced, diminished, discontinued, or eliminated in accordan ce
with Article l 00 of the Labor Code on non-diminution of benefits. 19

12
SEC. 8. Coverage of the Comp ensation and Position Class(ftcation Sys/em. - The GCG. after
conducting a compensation study, shall develop a Compensation and Position Classification System wh ich
shall app ly to all officers and employees of the GOCCs whether under the Salary Standardi zation Law or
exempt therefrom and shall consist of classes of positions grouped into such categories as the GCG may
determine, subject to approva l of the President. Rollo. p. 16.
1.1 Id.
1~ Id
is Id
16
Id. at 44.
17
Id at I 13- 119.
18
hi. at I 19.
19
Id. al I 18.
Decision 5 G.R. No. 24840 1

The Ruling of the NLRC

In its Decision 20 dated June 6, 2014, the NLRC affirmed. It held that
a
PNCC is not 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 C ivil Service laws. Too, the grant
need not be subject to the approval by the President as required under PD
1567 and RA 10149. 21

PNCC moved for reconsideration 22 which was denied under

Resolution 23 dated December 19, 2014.

PNCC, thereafter, filed a petition for certiorari against the foregoing

dispositions of the NLRC through CA-G.R. SP No. 139311 .24

Meantime, the employees moved for execution pending appeal which

the labor arbiter granted25 and the NLRC subsequently affirmed by
Resolution 26 dated March 30, 20 15. Thus, PNCC went back to the Court of
Appeals through CA-G.R. SP No. 140997 questioning the grant of the
motion for execution pending appeal.

Proceedings Before the Court of Appeals

CA-G.R. SP No. 139311 and CA-G.R. SP No. 140997 got

consolidated, albeit subsequently, the cases were separately disposed of by
the appellate court.

In CA-G.R. SP No. 140997, the Cou1i of Appeals dismissed the

petition on the ground that PNCC failed to file a motion for reconsideration
of the assailed ruling of the NLRC. 27 PNCC moved for reconsideration
which was denied under Resolution28 dated March 3 1, 2016. ln G.R. Nos.
223867-68, the Court affirmed the foregoing dispositions, with finality under
Resolution29 dated October 12, 2016.

Meantime, in CA-G .R. SP No. 13931 l , the Court of Appeals rendered

its Decision 30 dated July 12, 2018, affirming the status of PNCC as a private
corporation. It further pronounced that even assuming PNCC to be a GOCC,

20
Penned by Commiss ioner Dolores M. Peralta-Beley: id. at 98-112.
21
Id. at 103- 104.
22 Id. at 144-152.
D Id. at 107-11 2.
24
Id. at 78-96.
25
Id. at 166-183.
2<, Id. at 186-193.
27
Id. at 18.
1~ Id.
29
Id. at 19.
30
Penned by Associate Justice Maria Filomena D. Singh and concurred in by Associate Justices Ses inando
L. Villon and Edwin D. Sorongon; id. at 4 t-50.

I
 Decision 6 G.R. No. 24840 I

PD 1597 and RA 10149 are inapplicable to GOCCs without original charter,

like PNCC. 31

Citing PNCC v. Pabion 32 and Cuenca v. Hon. Altas,33 the Court of

Appeals held that PNCC is an acquired asset corporation and not a GOCC.
Notwithstanding the fact that the government is the majority stock.holder of
PNCC, the latter remains to be a private corporation within the coverage of
the Labor Code, not the Civil Service Law. 34

Further, the Cou1i of Appeals ruled that the fai lure of PNCC to release
the employees' 2013 mid-year bonus violated the non-diminution clause
under A1iicle 100 of the Labor Code. 35

By Resolution 36 dated July 15, 2019, PNCC's motion for

reconsideration 37 was denied.

The Present Petition

PNCC now asks the Court to reverse and set aside the questioned
rulings of the Court of Appeals. PNCC posits that the 1999 case of PNCC v.
Pabion is no longer relevant in determining the real status of PNCC.

For while PNCC was organized under the Corporation Code, 1t 1s a

GOCC, as ordained by Section 3 (o) and (p) of RA 10149. 38 As such, it is
not governed by the Labor Code, hence, it may validly refuse to grant the
mid-year bonus without violating the non-diminution clause under the Labor
Code.

In their Comment39 dated January 29, 2021, respondents riposte that

as enunciated in Pabion, PNCC remains to be a private corporation
notwithstanding that majority of its shares of stock is owned by the
government. As a private entity, its expenditures and disbursements are not

JI /c/. at. 45-46.

31
377 Phi l. 1019 (1999) .
.n 561 Phil. 186 (2007).
4
J /d. at 47.
Js Id. at 48.
36
Penned by Associate .Justice Maria Filomena D. Singh and concurred in by Associate Justices Sesinando
L. Villon and Edwin D. Sorongon; id. at 52-57.
37
Id. at 58-7 1.
38
Section 3. xx x
xxxx
(o) Government-Owned or -Controlled Corporation (GOCC) refers to any agency organized as a stock or
nonstock corporation, vested with functions relating to public needs whether governmenta l or proprietary in
nature, and owned by the Government of the Republic of the Philippines directly or through its
instrumentalities either wholly or, where applicable as in the case of stock corporations, to the extent o f at
least a majority of its outstanding capital stock: Providel/, however, That for purposes of this Act, the term
"GOCC"- shall include GICP/GCE and GFI as defined herein.
(p) Nonchartered GOCC refers to a GOCC organized and operating under Batas Pambansa Bilang 68. or
"The Corporation Code oftlie Philippines"; ro/lo, pp. 26-27.
3
., Id. at 274-298.
 Decision 7 G.R. No. 24840 I

subject to the guidelines and requirements under PD 1597 and RA 10 l 49;

and PNCC employees are covered by the provisions of the Labor Code. 40

Granting for the sake of argument that PNCC is not contractually

bound to give the bonus in question, the fact that for no less than twenty (20)
uninterrupted years, it was granted to the employees as part of an established
company practice; the same has become part of the employees' salary or
wage. To cease this grant amounts to diminution of benefits in violation of
Article I 00 of the Labor Code.41

Issues

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 govetned by RA 10149?

Ruling

PNCC is a non-chartered
government owned and
controlled corporation

In Strategic Alliance v. Radstock Securities,42 the Court pronounced

with finality that PNCC is a GOCC, viz.:

The PNCC is not 'just like any other private corporation

precisely because it is not a private corporation' but indisputably a
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.
(Emphasis supplied)

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.

40
Id. at 296.
41
Id. at 29 1.
42
622 Phil. 43 I. 507 (2009).

f
Decision 8 G. R. No. 24840 1

Additionally, Executive Order No. 331, series of 20 14 has placed the

PNCC under the Department of Trade and Industry (DTI), thus, confirming
its characte r as a GOCC, viz.:

WHEREAS, the Department of Trade and Industry (DTI) is the

primary coordinative, promotive, facilitative and regulatory arm of the
Executive Branch of government in the area of trade, industry and
investment;

WHEREAS, the Philippine National Construction Corporation

(PNCC) holds the franchise to operate the North Luzon and South Luzon
Expressways;

WHEREAS, the development of expressways requires huge

investments, and it is necessary to p lace the PNCC under the DTl;

WHEREAS, the Government of the Republic o f the Philippines

and/or government financial institutions have maj ority ownership of the
PNCC, which pursuant to PNCC vs. Pabion (320 SCRA 188), may be
considered as a government owned and/or contro lled corporation;

xxxx

Further, Section 6 of PD 1597 ordains that GOCCs are subject to

such guidelines and policies as may be issued by the President governing
position classifications, salary rates, levels of allowances, project and other
honoraria, ove11ime rates, and other forms of compensation and fri nge
benefits. GOCCs organized under the Corporation Code like PNCC are not
excluded from the coverage of PD 1597, thus :

SECTION 6. Exemplions.fi'om OCPC Rules and Regulations. - Agencies

pos itions, or groups of otlicials and employees of the nationa l
government including government owned or contro lled corporations, who
are hereafter exempted by law from OCPC coverage, shall observe such
guidelines and policies as may be issued by the President governing
position classification, salary rates, levels of a llowances, project and other
honoraria, overtime rates, and other forms of compensation and fringe
benefits. Exemptions notwithstanding, agencies shall report to the
President, through the Budget Commission, on their position classification
and compensation plans, poli cies, rates and other re lated details fo llowing
such specifications as may be prescribed by the President.

Verily, therefore, the status of PNCC as a GOCC should now be put

to rest.

Being a GOCC without original

charter, PNCC is covered by
the Labor Code

The next question: As a GOCC without original charter, 1s PNCC

governed by the Labor Code or the Civ il Service Law?
Decision 9 G.R. No. 248401

Under Article lX-B, Section 2, paragraph I of the 1987

Constitution, only GOCCs with original charters are covered by civil
service laws, viz.:

SECTION 2. ( I) The civi l service embraces all branches,

subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters.
(emphasis supplied)

Where a statute, by its terms, is expressly limited to certain matters,

it may not, by interpretation or construction, be extended to others.43 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.

ln Paloma v. Philippine Airlines Inc. ,44 the Court pronounced that

prior to the privatization of the Philippine Airlines Inc. (PAL), it was a
non-chartered GOCC in the sense that the GSIS owned majority of its
stock.holdings. Consequently, PAL personnel were covered by the Labor
Code, not by the Civil Service Law. The same rule app lies to PNCC
employees.

But PNCC is not exempt from

the National Position
Classification and
Compensation Plan approved
by the President, as well as the
Compensation and Position
Classification System

A lthough governed by the Labor Code, as a GOCC, PNCC is not

exempt from the coverage of the National Position C lassification and
Compensation Plan approved by the President. Sections 1 and 4 of RA
10149 state :

Section 1. Statement ul Policy. It is hereby declared policy that the

officials and employees of the national government, including the
Judiciary, the Career Executive Service, the Foreign Service, the Armed
Forces, subordinate onicials of Constitutional Commissions, government
owned or controlled corporations, and state colleges and univers ities,
shall be compensated in accordance with a National Pos ition
C lassification and Compensation Plan approved by the President.
(emphasis supplied.)

xxxx

Section 4. Coverage. - This Act shall be applicable to all

GOCCs, GICPs/GCEs, and government financial institutions, including

4
J Rom11aldez v. Hon. f\,farcelo, 529 Phil. 90, 109 (2006).
44
580 Phil. 88 (2008).
Decision 10 G.R. No. 248401

their subsidiaries, but excluding the Bangko Sentral ng Pilipinas, state

universities and colleges, cooperatives, local water districts, economic
zone authorities and research institutions: Provided. That in economic
zone authorities and research institutions, the President shall appoint one-
third (1/3) of the board members from the list submitted by the GCG.
(emphasis supplied)

Further, Section 9 of the same law ordains that no GOCC shall be

exempt from the coverage of the Compensation and Position Classification
System, thus:

SEC. 9. Position Titles and Salary Grades. - All pos1t1ons in the

Positions C lassification System, as determine by the GCG and as
approved by the President, shall be allocated to the ir proper position titles
and salary grades in accordance with n Index of Occupational Services,
Position Titles and Salary Grades of the Compensation and Position
Classification System, which shall be prepared by the GCG and approved
by the President.

xxxx

Any law to the contrary notwithstanding, no GOCC shall be exempt from

the coverage of the Compensation and Position Classification System
developed by the GCG under this Act.

Notably, Section 32 of RA 10149 expressly repeals all decrees and

issuances inconsistent with its provisions, thus:

SEC. 32. Repealing Clause. - The charters of the GOCCs under

existing laws and all other laws, executive orders including Executive
Order No. 323, Series of 2000, administrative orders, rules, regulations,
decrees and other issuances or parts thereof which are inconsistent with
the provisions of this Act are hereby revoked, repealed or modified
accordingly.

In GSIS Fami(v Bank Employees Union v. Villanueva,45 the Cou1t

had the occasion to illustrate the interplay between the provisions of the
Labor Code and the provisions of RA l O149 on the life of a non-chartered
GOCC.

In that case, employees of GSIS Family Bank demanded for the

payment of their Christmas bonus which had been annually g iven 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 l O149, 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 w ithout original
chatiers are covered by the Labor Code, employees of GOCCs are bereft of
any right to negotiate the economic terms of their employment, i. e. salari es,

45 G.R. No. 2 10773. January 23, 201 9.

Decision 11 G.R. No. 24840 I

emoluments, incentives and other benefits, w ith their employers since these
matters are covered by compensation and position standards issued by the
Department of Budget and Management and applicable laws. GSJS c larified
that RA IO 149 applies to both chartered and non-chartered GOCCs.

More, citing PCSO vs. Pulido-Tan,46 GSIS reiterated that the power
of a government-owned or controlled corporation to fix salaries or _
allowances of its employees is subj ect to and must conform to the
compensation and classification standards laid down by app li cable laws. For
RA 10149 does not differentiate between chartered and non-chartered
government-owned or controlled corporations; hence, the provisions of this
law equally apply to all GOCCs.

Consequently, therefore, PNCC did not v iolate 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 g rant in strict adherence to
the non-diminution rule under Artic le 100 of the Labor Code. Nonetheless,
with the subsequent enactment of RA l 0 l 49 in 2011, PNCC may no longe r
grant this benefit without first securing the requisite authority from the
President. As borne by the records, PNCC failed to obtain this authority in
v iew 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
app lication of the non-diminution rule thereto.

All told, the labor arbiter, the NLRC, and the Cou1i of Appeals each
gravely e rred when they peremptori ly compe lled PNCC to rel ease the
questioned mid-year bonus to the employees.

ACCORDINGLY, the petition for review is GRANTED. The

Decision dated Jul y 12, 2018 and Resolution dated July 15, 2019 of the
Court of Appeals in CA-G.R. SP No. 139311 a re REVERSED and SET
ASIDE. The complaint in NLRC NCR Case No. 07-10180-13 is
DISMISSED for lack of merit.

SO ORDERED.

'1 L
AM ! tfA;_ARO-JA VIER
"'~essociate Justice

"' 785 Phil. 266. 277-278(2016).

Decision 12 G.R. No. 248401

WE CONCUR:

ESTELA M.~~ERNABE
Chairperson

RICARD OSARIO
Assoc ·ate Justice

JHOSE~OPEZ
Associate Justice

ATTESTATION

I attest that the conclusion in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

ESTELA M. ~ ~ R N A B E
Senior Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the

Division Chairperson's Attestation, I ce1iify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Divis ion.