BOY SCOUTS OF THE PHILIPPINES, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, FORTUNATO ESGUERRA, ROBERTO MALABORBOR, ESTANISLAO MISA, VICENTE EVANGELISTA, AND MARCELINO G…

Boy Scouts of the Philippines versus National Labor Relations Commission

The Case

This is a petition for certiorari filed by the Boy Scouts of the Philippines against the National Labor Relations Commission and five of its former rank-and-file employees. The employees had been dismissed after they refused a transfer, and the labor tribunals ruled in their favor. The case matters because the Supreme Court does not decide who was right about the dismissal. Instead, it asks a deeper question: is the Boy Scouts of the Philippines a government-controlled corporation with an original charter, so that its employees belong to the Civil Service and the labor arbiters have no jurisdiction over them at all? The answer reshapes the entire dispute.

Procedural History

The five employees first filed a complaint for illegal transfer with the Sub-Regional Arbitration Branch of the then Ministry of Labor and Employment in San Pablo City, Laguna. They later amended it to include illegal dismissal and unfair labor practice. The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the National Labor Relations Commission reversed the Labor Arbiter and held that the employees had been illegally dismissed, ordering reinstatement with full back wages. The Boy Scouts then came to the Supreme Court on a petition for certiorari, challenging the Commission's decision and its later resolution denying reconsideration. While the case was pending, the Supreme Court required the parties, the Office of the Solicitor General, and the Office of the Government Corporate Counsel to comment on whether the Boy Scouts is in fact a government-owned or controlled corporation.

Facts

The five private respondents were rank-and-file employees of the Boy Scouts of the Philippines, stationed at its camp in Makiling, Los Baños, Laguna. In October 1984, the Secretary-General issued special orders transferring them to the Boy Scouts land grant in Asuncion, Davao del Norte, effective 20 November 1984. The employees opposed the transfer and appealed to the National President. At a pre-transfer briefing in Manila, they were assured there would be no diminution in salary and that each would receive a relocation allowance equal to one month's basic pay. They remained opposed.

In November 1984, they filed a complaint for illegal transfer, seeking to stop the special orders. On the day after the scheduled transfer date, the camp manager required them to explain why they should not be charged with insubordination, because two days earlier they had refused to accept their boat tickets and relocation allowances. The National President informed them that their refusal was rank disobedience. Warnings of possible termination followed, yet they continued to disobey the transfer orders.

The Boy Scouts imposed a five-day suspension on all five. In February 1985, the Secretary-General issued a special order terminating their services effective 15 February 1985. The employees amended their complaint to include illegal dismissal and unfair labor practice. The Labor Arbiter dismissed the complaint, but the National Labor Relations Commission reversed and found the dismissal illegal.

Issues

• Whether or not the Boy Scouts of the Philippines is a government-owned or controlled corporation with an original charter, and therefore embraced within the Civil Service under the Constitution.
• Whether or not the Labor Arbiter and the National Labor Relations Commission had jurisdiction over the complaint for illegal transfer and illegal dismissal filed by the private respondents.

Applicable Provisions

Article Nine, Section Two, Number One of the 1987 Constitution provides:

The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.

This is the constitutional yardstick: if the Boy Scouts falls within this embrace, its employees are governed by the Civil Service Law and not by the Labor Code.

Section Two of Presidential Decree Number 2029 defines a government-owned or controlled corporation:

A government-owned or controlled corporation is a stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital stock.

The Boy Scouts was directly chartered by Commonwealth Act Number 111, as amended, which brings it within this definition.

Section Two, Number Five of the Introductory Provisions of the Administrative Code of 1987 defines an instrumentality:

Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations.

The Court uses this definition to treat the Boy Scouts as a government instrumentality as well.

Ruling

On the first issue, the Court held that the Boy Scouts is a government-controlled corporation with an original charter within the meaning of the Constitution. The Court weighed three considerations. First, its functions have a public aspect, relating to citizenship, patriotism, and the moral development of the youth, which the Constitution itself recognizes. Second, there is substantial government participation in its governance: seven Cabinet Secretaries sit on its National Executive Board, and the appointments of most board members are subject to ratification and confirmation by the Chief Scout, who is the President of the Philippines. Third, although its funds are largely private, its charter expressly contemplates donations from the Government. The Court also noted that the Administrative Code of 1987 lists the Boy Scouts as an attached agency of the Department of Education, Culture and Sports. It is therefore both a government-controlled corporation with an original charter and an instrumentality of the Government.

On the second issue, the Court held that the Labor Arbiter and the National Labor Relations Commission had no jurisdiction over the complaint. The employees of the Boy Scouts are embraced within the Civil Service and are governed by the Civil Service Law and Regulations. The Court added that even before the 1987 Constitution took effect, employees of government-owned or controlled corporations were already covered by the Civil Service, as held in National Housing Corporation versus Juco. Since the complaint was filed in November 1984, when the 1973 Constitution was still in force, that ruling applied. The Court also stressed that the absence of jurisdiction may be raised by the Court itself, even if no party pleaded it.

Doctrine

A government-owned or controlled corporation with an original charter is embraced within the Civil Service, and its employees are governed by the Civil Service Law rather than the Labor Code. The test is not whether the entity earns profit or performs proprietary functions, but whether it is directly chartered by special law and whether the Government substantially participates in its governance. Where such coverage exists, the labor arbiters and the National Labor Relations Commission have no jurisdiction over employment disputes involving its employees. Lack of jurisdiction may be noticed by the Court on its own motion at any stage.

Disposition

The Boy Scouts won. The Supreme Court set aside the Labor Arbiter's decision and the National Labor Relations Commission's decision and resolution, along with all other orders and resolutions in the case, for lack of jurisdiction.

Remember This

Memorize this line: the Boy Scouts of the Philippines is a government-controlled corporation with an original charter, so its employees are in the Civil Service and labor tribunals have no jurisdiction over them. Examiners use this case to test jurisdiction over government-owned or controlled corporations and the effect of an original charter on labor disputes.