327 Cases Penned by Associate Justice Amy Lazaro-Javier: 2025 Bar Examination
Can a government-owned and controlled corporation (GOCC)
organized under the Corporation Code of the Philippines lawfully refuse to
grant a mid-year bonus to its employees without violating the non-diminution
clause under the Labor Code?
Facts of the Case:
The Philippine National Construction Corporation (PNCC) was
originally incorporated in 1966 as the Construction Development Corporation of
the Philippines (CDCP) under the Corporation Code of the Philippines. Through
various Presidential Decrees and executive orders, the government became a
majority stockholder of PNCC, making it subject to government oversight.
However, despite being government-controlled, the PNCC continued to operate as
a private corporation.
In 1992, PNCC began granting its employees a mid-year bonus
under a Collective Bargaining Agreement (CBA). This practice continued even
after the expiration of the CBA until 2012. In 2013, PNCC's CEO, Atty. Luis F.
Sison, sought the opinion of the Office of the Government Corporate Counsel
(OGCC) regarding the legality of the mid-year bonus under Presidential Decree
No. 1597 and Republic Act No. 10149, which require GOCCs to obtain approval
from the President for such bonuses. The Governance Commission for Government-Owned
or Controlled Corporations (GCG) advised that the bonus could not be granted
without the President’s approval.
As a result, PNCC refused to release the 2013 mid-year
bonus, prompting the employees to file a complaint before the National Labor
Relations Commission (NLRC) for non-payment of the bonus and diminution of
benefits. The Labor Arbiter ruled in favor of the employees, ordering PNCC to
release the mid-year bonus. The NLRC affirmed this decision, holding that PNCC,
despite being government-controlled, is a private corporation governed by the
Labor Code.
PNCC challenged the NLRC's ruling before the Court of
Appeals, which upheld the decision. The appellate court held that PNCC, even if
considered a GOCC, is not subject to Presidential Decree No. 1597 and Republic
Act No. 10149 as it was organized under the Corporation Code, making it a
private corporation under the Labor Code. PNCC appealed this ruling to the
Supreme Court.
Primary Legal Issue:
Can PNCC, a government-owned and controlled corporation
organized under the Corporation Code, lawfully refuse to grant a mid-year bonus
to its employees without violating the non-diminution clause under the Labor
Code?
Supreme Court Decision:
The Supreme Court ruled that PNCC is a government-owned and
controlled corporation (GOCC), though it is organized under the Corporation
Code and thus does not possess an original charter. Nevertheless, the Court
clarified that even though PNCC is governed by the Labor Code, as a GOCC, it is
not exempt from the Compensation and Position Classification System mandated by
Republic Act No. 10149, which requires Presidential approval for bonuses and
other compensation.
The Court further held that while PNCC had granted mid-year
bonuses for over 20 years, the passage of Republic Act No. 10149 in 2011
rendered such bonuses subject to Presidential approval. Since PNCC did not
secure the necessary authorization, it did not violate the non-diminution rule
by refusing to grant the bonus in 2013. Thus, the Supreme Court reversed the
decisions of the NLRC and the Court of Appeals and dismissed the employees'
complaint.
Dispositive Portion:
"ACCORDINGLY, the petition for review is GRANTED. The
Decision dated July 12, 2018, and Resolution dated July 15, 2019, of the Court
of Appeals in CA-G.R. SP No. 139311 are REVERSED and SET ASIDE. The complaint
in NLRC NCR Case No. 07-10180-13 is DISMISSED for lack of merit. SO
ORDERED."
Given the ruling that GOCCs without original charters are
still subject to government compensation rules, should government financial
control extend to all private corporations with significant government
ownership?
Important Doctrines:
- Non-Diminution
of Benefits Doctrine (Article 100, Labor Code): Benefits that have
become customary over time cannot be reduced or eliminated unless
authorized by law. However, this principle does not apply when a
superseding law (like Republic Act No. 10149) imposes new requirements for
granting such benefits.
- GOCC
without Original Charter: A corporation organized under the
Corporation Code but with majority government ownership is considered a
GOCC. However, GOCCs without original charters are governed by the Labor
Code but remain subject to compensation and classification regulations as per
Republic Act No. 10149.
- Republic
Act No. 10149: This law requires all GOCCs, whether chartered or not,
to adhere to the Compensation and Position Classification System, which
includes securing Presidential approval for any bonuses or compensation
beyond the standard salary.
This case falls under Labor Law as it concerns
employment benefits and the application of the Labor Code to employees of a
government-controlled entity.
From <https://chatgpt.com/c/66f01520-57ec-800a-af7f-127ca117eda8>
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🎓 Magandang araw sa lahat
ng mga law students, bar reviewees, and fellow baristas! This content is part
of our continuing effort to help you master jurisprudence through digestible
summaries of landmark Supreme Court decisions.
Today, we will be discussing a significant labor law case:
📌 Title: Philippine
National Construction Corporation and Atty. Luis F. Sison vs. National Labor
Relations Commission et al.
📌 G.R. No.: 248401
📌 Date of
Promulgation: June 23, 2021
📌 Nature of the Case:
Labor Law – Non-diminution of benefits, status of GOCCs under RA 10149
This jurisprudence tackles an important legal issue: Can
a GOCC, organized under the Corporation Code, refuse to grant long-practiced
bonuses to employees without violating the non-diminution clause of the Labor
Code?
The case centered on the Philippine National Construction
Corporation (PNCC), which stopped granting its long-practiced mid-year bonus in
2013 due to the lack of Presidential approval as required by Republic Act No.
10149. The employees argued it was a violation of the Labor Code, particularly
Article 100 on non-diminution of benefits.
The Supreme Court ruled in favor of PNCC, clarifying
that GOCCs without original charters are still subject to the Labor Code,
but their compensation packages are covered by RA 10149, which mandates
Presidential approval for such benefits. Hence, the non-diminution rule was not
violated when the bonus was withheld.
💬 If a
government-owned company gives a benefit for 20 years, should it automatically
become a right—even if a newer law imposes limits? Share your insights in
the comments!
📌 10 Important Doctrines
from PNCC v. NLRC
(G.R. No. 248401, June 23, 2021 – Source: Supreme CourtE-Library)
- GOCC
Definition under RA 10149
Even if a corporation is created under the Corporation Code, it becomes a GOCC if the government owns the majority of its stock. (See: RA 10149, Sec. 3[o]) - GOCCs
without Original Charter Are Governed by the Labor Code
Only GOCCs with original charters are covered by Civil Service laws. Others are under the Labor Code. (Art. IX-B, Sec. 2(1), 1987 Constitution) - RA
10149 Applies to All GOCCs – Chartered or Not
The Supreme Court affirmed that the compensation system under RA 10149 covers both chartered and non-chartered GOCCs. (See: Decision, pp. 25–28) - Non-Diminution
of Benefits Is Not Absolute
Article 100 of the Labor Code protects long-practiced benefits, but exceptions apply when new laws validly revoke such benefits. (See: Decision, p. 30) - Presidential
Approval Is Required for Additional GOCC Benefits
Under RA 10149, all forms of compensation must be approved by the President, regardless of internal company practices. (RA 10149, Sec. 9) - GOCC
Employees Cannot Bargain Economic Terms Freely
Economic benefits (bonuses, allowances) are subject to compensation regulations and are not negotiable via CBA. (Citing: GSIS Family Bank Employees Union v. Villanueva) - Past
Practice Does Not Override Statutory Mandate
Even if bonuses were given for 20 years, that practice cannot continue if a law prohibits it without required approvals. (Decision, p. 31) - GCG’s
Disapproval Validates Non-Granting of Benefit
GCG’s refusal to forward PNCC's request for bonus approval to the President was a legal basis for halting the benefit. (Decision, p. 13–14) - Labor
Arbiter and NLRC Decisions May Be Set Aside for Grave Error
The SC ruled that the NLRC and Court of Appeals erred in disregarding RA 10149. (Decision, pp. 32–33) - RA
10149 Supersedes Prior Practices
The SC emphasized that once RA 10149 was enacted, all GOCC benefits must align with its provisions, repealing inconsistent prior issuances. (RA 10149, Sec. 32)
⚠️ DISCLAIMER:
This video is for educational purposes only. While
based on official jurisprudence, it does not guarantee infallibility and
was created using premium AI assistance. Viewers are encouraged to
consult the full decision and professional legal guidance.
❓ FREQUENTLY ASKED QUESTIONS
(FAQs):
Q1: Is PNCC a private company or a GOCC?
🅰️ It is a GOCC
without an original charter, organized under the Corporation Code, but majority-owned
by the government.
Q2: Are PNCC employees covered by the Civil Service Law?
🅰️ No. Since PNCC is a
non-chartered GOCC, its employees are covered by the Labor Code.
Q3: Why was the mid-year bonus stopped?
🅰️ Because RA 10149
requires Presidential approval for GOCC compensation. GCG refused to
endorse PNCC's request.
Q4: Did the Supreme Court find a violation of the
non-diminution rule?
🅰️ No. The SC ruled that RA
10149 lawfully curtailed the bonus practice, making the non-diminution rule
inapplicable.
Q5: Does RA 10149 apply to all GOCCs?
🅰️ Yes. It covers both chartered
and non-chartered GOCCs, except those explicitly excluded.
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From <https://chatgpt.com/c/66f01520-57ec-800a-af7f-127ca117eda8>
🎓 Magandang araw, mga future attorneys! Welcome to another episode of our Supreme Court Case Quizzer Series, designed to help you strengthen your recall and deepen your understanding of landmark jurisprudence.
Today’s quizzer is based on a Labor Law case recently
promulgated by the Supreme Court:
📌 Case Title: Philippine
National Construction Corporation and Atty. Luis F. Sison vs. National Labor
Relations Commission et al.
📌 G.R. No.: 248401
📌 Date of
Promulgation: June 23, 2021
📌 Nature of the Case:
Labor Law – involving the non-diminution of benefits, GOCC
classification, and application of RA 10149 on compensation
standards.
🔍 Brief Summary of the
Case:
In this case, the Philippine National Construction
Corporation (PNCC), a government-controlled corporation, ceased granting a
mid-year bonus that it had given employees for over 20 years. The reason? PNCC
failed to obtain the necessary Presidential approval, as now required by RA
10149. Employees filed complaints for non-payment and alleged diminution of
benefits.
The lower courts ruled in favor of the employees. However,
the Supreme Court reversed these rulings, holding that although PNCC is
governed by the Labor Code, it is still a GOCC subject to RA 10149, and
therefore bound by the compensation rules that require Presidential approval
for such bonuses. As such, PNCC’s withholding of the 2013 bonus was not a
violation of labor law.
📢 Stay until the end
of this video for the answer key!
📝 QUIZZER: EASY-HOTS
MULTIPLE CHOICE QUESTIONS (No Answers Yet)
- Which
characteristic primarily qualifies PNCC as a government-owned and
controlled corporation?
- A.
It was created by a special law.
- B.
It was funded through public taxation.
- C.
It is majority-owned by the government.
- D.
It was formed for a public welfare purpose.
- What
was the reason given by PNCC for ceasing the mid-year bonus in 2013?
- A.
The company was bankrupt.
- B.
The bonus was not included in the new CBA.
- C.
There was no Presidential approval.
- D.
Employees had already received other incentives.
- What
legal framework governs the compensation and benefits of GOCCs like PNCC?
- A.
Civil Code
- B.
Revised Corporation Code
- C.
Government Service Insurance System Law
- D.
GOCC Governance Act
- What
did the Supreme Court ultimately rule regarding PNCC’s decision to stop
the bonus?
- A.
It was illegal and a violation of employee rights.
- B.
It was valid due to compliance with updated legal requirements.
- C.
It required approval from the Senate.
- D.
It was unconstitutional.
- Why
did the Court hold that PNCC employees are covered by the Labor Code?
- A.
PNCC is a private company.
- B.
PNCC was not yet reclassified.
- C.
PNCC has no original charter.
- D.
PNCC was under the judiciary.
- Which
entity refused to endorse PNCC’s request for bonus approval to the
President?
- A.
Department of Budget and Management
- B.
Commission on Audit
- C.
Governance Commission for GOCCs
- D.
Office of the President
- What
was the long-standing employee benefit at issue in this case?
- A.
Transportation allowance
- B.
Mid-year bonus
- C.
Housing subsidy
- D.
Performance incentive pay
- What
principle were the employees invoking when they filed the complaint?
- A.
Equal protection of laws
- B.
Right to due process
- C.
Security of tenure
- D.
Non-diminution of benefits
- What
did the Court say about the relevance of past practice in light of new
laws?
- A.
Practice must prevail over law.
- B.
Practice is irrelevant.
- C.
Practice must yield to updated statutory requirements.
- D.
Practice should always be preserved.
- What
was the final ruling of the Supreme Court regarding the employees’
complaint?
- A.
The complaint was granted and reinstated.
- B.
The Court deferred judgment.
- C.
The complaint was dismissed for lack of merit.
- D.
The Court remanded the case to the NLRC.
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