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G.R. No. 80887 September 30, 1994 BLISS DEVELOPMENT ORPOR!TION EMPLO"EES #NION $BD E#%&SENTRO NG DEMO'R!TI'ONG M!NGG!G!(!

$SDM%, petitioner, vs. )ON. P#R! *ERRER !LLE+! ,-. BLISS DEVELOPMENT ORPOR!TION, respondents. '!P#N!N, J.: The focal issue in the case at bench is whether or not Bliss Development Corporation (BDC) is a government-owned controlled corporation subject to Civil ervice !aws, rules and regulations. Corollar" to this issue is the #uestion of whether or not petitioner is covered b" $%ecutive &rder 'o. ()* and must register under ection + thereof as a precondition for filing a petition for certification election. The antecedents of the case are, &n &ctober (*, (-)., petitioner, a dul" registered labor union, filed with the Department of !abor, 'ational Capital /egion, a petition for certification election of private respondent Bliss Development Corporation (BDC). Based on the position papers submitted b" the parties, 0ed-1rbiter 'apoleon 2. 3ernando, in an order dated 4anuar" 5., (-)+, dismissed the petition for lac6 of jurisdiction stating that the majorit" of BDC7s stoc6s is owned b" the 8uman ettlement Development Corporation (8 DC), a wholl"-owned government corporation. Therefore, BDC is subject to Civil ervice law, rules and regulations. The pertinent portion of said &rder reads, 9t ma" not be amised (sic) to further state that the upreme Court in its Decision in the case of 'ational 8ousing Corporation versus Benjamin 4uco and the 'ational !abor /elations Commission :-/ .;;(; promulgated on 4anuar" (+, (-)< has pronounced that, There should no longer be an" #uestion at this time that emplo"ees of government owned or controlled corporations are governed b" the Civil ervice /ules and /egulations. Corollar" to the issue of whether or not emplo"ees of BDC ma" form or join labor organi=ations therefore is the issue of whether or not BDC is a government owned corporation. The pertinent law on the matter is >.D. 'o. 5*5- which provides that, ection 5 ? Definition ? 1 corporation whether performing law or if organi=ed under the subsidiar" corporation, to the outstanding voting stoc6. government-owned or controlled corporation is a stoc6 or non-stoc6 government or proprietar" functions, which is directl" chartered b" special general corporation law is owned or controlled b" the government or e%tent of at least a majorit" of its outstanding capital stoc6 or of its

9n the case at bar, it is not disputed that majorit" of the stoc6s of BDC are owned b" 8uman ettlement Development Corporation, a wholl" government owned corporation, hence, this &ffice cannot, but otherwise conclude that Bliss Development Corporation is a government owned corporation whose emplo"ees are governed not b" the !abor Code but b" the Civil ervice law, rules, and regulations. 9ts emplo"ees therefore, are prohibited to join or form labor organi=ation. 3urther, this &ffice is without authorit" to entertain the present petition for obvious lac6 of jurisdiction. 9ndeed, &pinion 'o. -@, series of (-)<, the 0inister of 4ustice has declared,

/ BLISS V !LLE+!
9n determining whether a corporation created under the Corporation Code is government owned or controlled or not, this ministr" has consistentl" applied the ownership test whereb" a corporation will be deemed owned b" the government if the majorit" of its voting stoc6s are owned b" the government. 9t appearing that 8uman ettlement Development Corporation (8 DC), which is a wholl"-owned government corporation, owns a majorit" of the stoc6s of Bliss Development Corporation (BDC), our conclusion is that BDC is a government-owned corporation subject to the coverage of the Civil ervice law, rules and regulations as pronounced b" the upreme Court in the case of '81 versus 4uco. 1 >etitioner then filed an appeal with the Bureau of !abor /elations. 9n the meantime, or on 4une (, (-)+ $%ecutive &rder 'o. ()* was issued the then >resident Cora=on C. 1#uino e%tending to government emplo"ees the right to organi=e and bargain collectivel". ections ( and + of said &rder provide, ec. (. This $%ecutive &rder applies to all emplo"ees of all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters. . . . ($mphasis supplied) ec. +. :overnment emplo"ees7 organi=ations shall register with the Civil ervice Commission and the Department of !abor and $mplo"ment. The application shall be filed with the Bureau of !abor /elations of the Department which shall process the same in accordance with the provisions of the !abor Code of the >hilippines, as amended. 1pplications ma" also be filed with the /egional &ffices of the Department of !abor and $mplo"ment which shall immediatel" transmit the said applications to the Bureau of !abor /elations within three (;) da"s from receipt hereof. &n 1ugust +, (-)+, Director >ura 3errer-Calleja of the Bureau of !abor /elations issued an &rder dismissing the appeal. aid &rder is reproduced hereunder, 3or disposition is an appeal of the Bliss Development Corporation $mplo"ees Anion entro ng Demo6rati6ong 0anggagawa (BDC$A- D0) from the &rder of the 0ed-1rbiter dismissing its petition for direct certificationBcertification election dated 4anuar" 5., (-)+. &n 4anuar" 5., (-)+, the 0ed-1rbiter issued an &rder dismissing the petition filed b" BDC$A- D0. 8e ruled that the Bliss Development Corporation which is under the then 0inistr" of 8uman ettlement, is a government Corporation where the wor6ers are prohibited from organi=ing and joining labor unions. The 0ed-1rbiter cited &pinion 'o. -@ series of (-)<, of the 0inister of 4ustice which is hereunder #uoted as follows, 9n determining whether a corporation created under the Corporation Code is government-owned or a controlled or not, this 0inistr" has consistentl" applied the ownership test whereb" a corporation will be deemed owned b" the government if all or a majorit" of its stoc6s are owned b" the government, and it will be deemed controlled b" the government, if the majorit" of its voting stoc6s are owned b" the government. 9t appearing that 8 DC, which is a wholl"-owned government corporation, owns a majorit" of the stoc6s of BDC, our conclusion is that BDC is a government-owned corporation subject to the coverage of the Civil ervice !aw and rules as pronounced b" the upreme Court in the case of '81 vs. 4uco. But circumstances have changed. Cith the issuance of $%ecutive &rder 'o. ()* dated 4une (, (-)+, government emplo"ees are now given the right to organi=e and bargain collectivel". This, therefore, renders academic the order subject of the appeal.

Conse#uentl", this Bureau hereb" enjoins the >etitioner to register in accordance with the aforecited provision. 0eantime, the petition is dismissed without prejudice to its refiling after petitioner is granted registration to avoid legal complications. C8$/$3&/$, in view of the foregoing, the case is hereb" dismissed without prejudice. &/D$/$D. 0 Ta6ing e%ception to the Director7s &rder, petitioner brought the instant petition to annul the same on the following grounds, 9T8$ D9/$CT&/ :/12$!D 1BA $D 8$/ D9 C/$T9&' 10&A'T9': T& !1CE &3 4A/9 D9CT9&' C8$' 8$ &/D$/$D >$T9T9&'$/ T& /$:9 T$/ A'D$/ $CT9&' + &3 $F$CAT92$ &/D$/ '&. ()* C89C8 D&$ '&T C&2$/ >$T9T9&'$/G 99T8$ D9/$CT&/ :/12$!D 1BA $D 8$/ D9 C/$T9&' C8$' 8$ 9' 9 T$D &' $'3&/C9': 1' &>9'9&' &3 T8$ 09'9 T$/ &3 4A T9C$ C89C8 /$ >&'D$'T BDC 9T $!3 81 C&' 9 T$'T!D 9:'&/$D 1'D C&'T9'A$ T& 9:'&/$ 1'D C89C8 T8$ $'T9/$ :&2$/'0$'T D&$ '&T C1/$ T& $'3&/C$. 3 9n a resolution dated 0a" 5-, (-)- the Court gave due course to the petition and re#uired the parties to file their respective memoranda which was complied with. The olicitor :eneral begged leave to be relieved from filing a comment on the petition and a memorandum, averring that he could not sustain the position of respondent Director. The petition is impressed with merit. ection ( of $%ecutive &rder 'o. ()* e%pressl" limits its application to onl" government-owned or controlled corporations with original charters. 8ence, public respondent7s order dated 1ugust +, (-)+ re#uiring petitioner to register in accordance with ection + of e%ecutive &rder 'o. ()* is without legal basis. Cithout categoricall" sa"ing so, public respondent sustained the 0ed-1rbiter7s invocation of the case ofNational Housing Corporation v. Juco, 4 which rules that the inclusion of Hgovernment-owned or controlled corporationsH within the embrace of the civil service shows a deliberate effort of the framers of the (-+; Constitution to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full conse#uences of the all encompassing coverage of the civil service s"stem. 9n said case, we stressed that, ection ( of 1rticle F99-B, Constitution uses the word Hever"H to modif" the phrase Hgovernment-owned or controlled corporation.H $ver" means each one of a group, without e%ception. 9t means all possible and all, ta6en one b" one. &f course, our decision in this case refers to a corporation created as a government-owned or controlled entit". . . . . / 8owever, our ruling in NHC v. Juco 1 case, which was decided under the (-+; Constitution, lost its applicabilit" with the advent of the (-)+ Constitution. Thus, in National Service Corporation v. NLRC, 7 we held that, . . . (9)n the matter of coverage b" the civil service of government-owned or controlled corporations, the (-)+ Constitution star6l" varies from the (-+; Constitution, upon which 'ational 8ousing Corporation vs. 4uco is based. Ander the (-+; Constitution, it was provided that,

The civil service embraces ever" branch, agenc", subdivision, and instrumentalit" of the :overnment, including ever" government-owned or controlled corporation. . . . IConstitution, (-+;, 1rt. 99-B, ec. 9(()J &n the other hand, the (-)+ Constitution provides that, The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the :overnment, including government-owned or controlled corporations with original charter. ($mphasis supplied) IConstitution ((-)+), 1rt. 9F-B, ec. 5((). Thus the situations sought to be avoided b" the (-+; Constitution and e%pressed b" the Court in the National Housing Corporation case in the following manner ? The infirmit" of the respondents7 position lies in its permitting a circumvention or emasculation of ection (, 1rticle F99-B of the Constitution. 9t would be possible for a regulate ministr" of government to create a host of subsidiar" corporations under the Corporation Code funded b" a willing legislature. 1 governmentowned corporation could create several subsidiar" corporations. These subsidiar" corporations would enjo" the best of two worlds. Their officials and emplo"ees would be privileged individuals, free from the strict accountabilit" re#uired b" the Civil ervice Decree and the regulations of the Commission on 1udit. Their incomes would not be subject to the competitive restrains of the open mar6et nor to the terms and conditions of civil service emplo"ment. Conceivabl", all government-owned or controlled corporations could be created, no longer b" special charters, but through incorporations under the general law. The Constitutional amendment including such corporations in the embrace of the civil service would cease to have application. Certainl", such a situation cannot be allowed to e%ist. I(;@ C/1 ()5-();J appear relegated to relative insignificance b" the (-)+ Constitutional provision that the Civil ervice embraces government-owned or controlled corporations with original charterG and, therefore, b" clear implication, the Civil ervice does not include government-owned or controlled corporations which are organi=ed as subsidiaries of government-owned or controlled corporations under the general corporation law. 8 1 corporation is created b" operation of law. 9t ac#uires a judicial personalit" either b" special law or a general law. The general law under which a private corporation ma" be formed or organi=ed is the Corporation Code, the re#uirements of which must be complied with b" those wishing to incorporate. &nl" upon such compliance will the corporation come into being and ac#uire a juridical personalit", thus giving rise to is right to e%ist and act as a legal entit". &n the other hand, a government corporation is normall" created b" special law, referred to often as a charter. 9 BDC is a government-owned corporation created under the Corporation !aw. 9t is without a charter, governed b" the !abor Code and not b" the Civil ervice !aw hence, $%ecutive &rder 'o. ()* does not appl" to it. Conse#uentl", public respondent committed grave abuse of discretion in ordering petition to register under ection +, of $%ecutive &rder 'o. ()* as a precondition for filing a petition for certification election. C8$/$3&/$, the instant petition is hereb" :/1'T$D. The order of public respondent dated 1ugust +, (-)+ is $T 1 9D$ and the Director of !abor /elations is hereb" directed to give due course of petitioner7s application for certification election. & &/D$/$D.

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