BLISS DEVELOPMENT CORPORATION EMPLOYEES UNION (BDCEU)-FDTU SENTRO NG DEMOKRATIKONG MANGGAGAWA (SDM), PETITIONER, VS. HON. PURA FERRER CALLEJA AND BLISS DEVELOPMENT CORPORATION, …

The focal issue in the case at bench is whether or not Bliss
Development Corporation (BDC) is a government-owned or controlled corporation
subject to Civil Service laws, rules and regulations. Corollary to this issue is the question of whether or not
petitioner is covered by Executive Order No. 180 and must register under
Section 7 thereof as a pre­condition for filing a petition for certification
election.

The antecedents of the case are:

On October 10, 1986, petitioner, a duly registered labor union,
filed with the Department of Labor, National Capital Region, a petition for
certification election of private respondent Bliss Development Corporation
(BDC).

Based on the position papers submitted by the parties,
Med-Arbiter Napoleon V. Fernando, in an order dated January 26, 1987, dismissed
the petition for lack of jurisdiction stating that the majority of BDC’s stocks
is owned by the Human Settlement Development Corporation (HSDC), a wholly-owned
government corporation. Therefore, BDC
is subject to Civil Service law, rules and regulations. The pertinent portion of said Order reads:

It may not be amised (sic) to further state that the Supreme Court
in its Decision in the case of National Housing Corporation versus Benjamin
Juco and the National Labor Relations Commission G-R 63313 promulgated on
January 17, 1985 has pronounced that:

There should no longer be any question at this time that employees
of government owned or controlled corporations are governed by the Civil
Service Rules and Regulations.’

Corollary to the issue of whether or not employees of BDC may form
or join labor organizations therefore is the issue of whether or not BDC is a
government owned corporation.

The pertinent law on the matter is P. D. No. 2029 which provides
that:

Section 2 – Definition – A government-owned or controlled
corporation is a stock or non-stock corporation whether performing government
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 or subsidiary corporation, to the extent of at least a majority of
its outstanding capital stock or of its outstanding voting stock.

In the case at bar, it is not disputed that majority of the stocks
of BDC are owned by Human Settlement Development Corporation, a wholly
government owned corporation, hence, this Office cannot, but otherwise
conclude, that Bliss Development Corporation is a government owned corporation
whose employees are governed not by the Labor Code but by the Civil Service
law, rules, and regulations. Its
employees therefore, are prohibited to join or form labor organization. Further, this Office is without authority to
entertain the present petition for obvious lack of jurisdiction.

Indeed, Opinion No. 94, series of 1985, the Minister of Justice has
declared:

In determining whether a corporation created under the Corporation
Code is government owned or controlled or not, this ministry has consistently
applied the ownership test whereby a corporation will be deemed owned by
the government if the majority of its voting stocks are owned by the
government.

It appearing that Human Settlement Development Corporation (HSDC),
which is a wholly-owned government corporation, owns a majority of the stocks
of Bliss Development Corporation (BDC), our conclusion is that BDC is a
government-owned corporation subject to the coverage of the Civil Service law,
rules and regulations as pronounced by the Supreme Court in the case of NHA
versus Juco.^[1]

Petitioner then filed an appeal with the Bureau of Labor
Relations.

In the meantime, or on June 1, 1987 Executive Order No. 180 was issued
by the then President Corazon C. Aquino extending to government employees the
right to organize and bargain collectively. Sections 1 and 7 of said Order provide:

Section 1. This Executive
Order applies to all employees of all branches, subdivisions,
instrumentalities, and agencies of the government, including government-owned
or controlled corporations with original charters. x x x (Emphasis supplied)

Section 7. Government
employees’ organizations shall register with the Civil Service Commission and
the Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the
Department which shall process the same in accordance with the provisions of
the Labor Code of the Philippines, as amended. Applications may also be filed with the Regional Offices of the
Department of Labor and Employment which shall immediately transmit the said
applications to the Bureau of Labor Relations within three (3) days from
receipt hereof.

On August 7, 1987, Director Pura Ferrer-Calleja of the Bureau of
Labor Relations issued an Order dismissing the appeal. Said Order is reproduced hereunder:

For disposition is an appeal of the Bliss Development Corporation
Employees Union Sentro ng Demokratikong Manggagawa (BDCEU-­SDM) from the Order
of the Med-Arbiter dismissing its petition for direct
certification/certification election dated January 26, 1987.

On January 26, 1987, the Med-Arbiter issued an Order dismissing the
petition filed by BDCEU-SDM. He ruled
that the Bliss Development Corporation which is under the then Ministry of
Human Settlement, is a government corporation where the workers are prohibited
from organizing and joining labor unions. The Med-Arbiter cited Opinion No. 94 series of 1985, of the Minister of
Justice which is hereunder quoted as follows:

In determining whether a corporation created under the Corporation
Code is government-owned or a controlled or not, this Ministry has consistently
applied the ownership test whereby a corporation will be deemed owned by the government
if all or a majority of its stocks are owned by the government, and it will be
deemed controlled by the government, if the majority of its voting stocks are
owned by the government.

It appearing that HSDC, which is a wholly-owned government corporation,
owns a majority of the stocks of BDC, our conclusion is that BDC is a
government-owned corporation subject to the coverage of the Civil Service Law
and rules as pronounced by the Supreme Court in the case of NHA vs. Juco.

But circumstances have changed. With the issuance of Executive Order No. 180 dated June 1, 1987,
government employees are now given the right to organize and bargain
collectively. This, therefore, renders
academic the order subject of the appeal.

x x x

Consequently, this Bureau hereby enjoins the Petitioner to register
in accordance with the aforecited provision. Meantime, the petition is dismissed without prejudice to its refiling
after petitioner is granted registration to avoid legal complications.

WHEREFORE, in view of the foregoing, the case is hereby dismissed
without prejudice.

SO ORDERED.^[2]

Taking exception to the Director’s Order, petitioner brought the
instant petition to annul the same on the following grounds:

I

THE DIRECTOR GRAVELY ABUSED HER DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN SHE ORDERED PETITIONER TO REGISTER UNDER SECTION 7 OF
EXECUTIVE ORDER NO. 180 WHICH DOES NOT COVER PETITIONER;

II

THE DIRECTOR GRAVELY ABUSED HER DISCRETION WHEN SHE INSISTED ON
ENFORCING AN OPINION OF THE MINISTER OF JUSTICE WHICH RESPONDENT BDC ITSELF HAS
CONSISTENTLY IGNORED AND CONTINUES TO IGNORE AND WHICH THE ENTIRE GOVERNMENT
DOES NOT CARE TO ENFORCE.^[3]

In a resolution dated May 29, 1989 the Court gave due course to
the petition and required the parties to file their respective memoranda which
was complied with. The Solicitor
General 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.

Section 1 of Executive Order No. 180 expressly limits its
application to only government-owned or controlled corporations with
original charters. Hence,
public respondent’s order dated August 7, 1987 requiring petitioner to register
in accordance with Section 7 of Executive Order No. 180 is without legal basis.

Without categorically saying so, public respondent sustained the
Med-Arbiter’s invocation of the case of National Housing Corporation v.
Juco,^[4]
which ruled that the inclusion of “government-owned or controlled
corporations” within the embrace of the civil service shows a deliberate
effort of the framers of the 1973 Constitution to plug an earlier loophole
which allowed government-owned or controlled corporations to avoid the full
consequences of the all encompassing coverage of the civil service system. In said case, we stressed that:

Section 1 of Article XII-B, Constitution uses the word ‘every’ to
modify the phrase “government-owned or controlled corporation.”

‘Every’ means each one of a group, without exception. It means all possible and all, taken one by
one. Of course, our decision in this
case refers to a corporation created as a government-owned or controlled
entity. x x x.^[5]

However, our ruling in NHC v. Juco^[6]
case, which was decided under the 1973 Constitution, lost its applicability
with the advent of the 1987 Constitution. Thus, in National Service Corporation v. NLRC,^[7]
we held that:

x x x (I)n the matter of coverage by the civil service of
government-owned or controlled corporations, the 1987 Constitution starkly
varies from the 1973 Constitution, upon which National Housing Corporation
vs. Juco is based. Under the 1973
Constitution, it was provided that:

The civil service embraces every branch, agency, subdivision, and
instrumentality of the Government, including every government-owned or
controlled corporation. x x x
[Constitution, 1973, Art. II-B, Sec. I(1)]

On the other hand, the 1987 Constitution provides that:

The civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-owned
or controlled corporations with original charter. (Italics suplied) [Constitution (1987), Art.
IX-B, Sec. 2 (1).

Thus, the situations sought to be avoided by the 1973 Constitution
and expressed by the Court in the National Housing Corporation case in
the following manner –

The infirmity of the respondents’ position lies in its permitting a
circumvention or emasculation of Section 1, Article XII-B of the
Constitution. It would be possible for a regular ministry of
government to create a host of subsidiary corporations under the Corporation
Code funded by a willing legislature. A
government-owned corporation could create several subsidiary corporations. These subsidiary corporations would enjoy
the best of two worlds. Their officials
and employees would be privileged individuals, free from the strict
accountability required by the Civil Service Decree and the regulations of the
Commission on Audit. Their incomes
would not be subject to the competitive restrains of the open market nor to the
terms and conditions of civil service employment. Conceivably, all government-owned or controlled corporations
could be created, no longer by 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. Certainly, such a situation cannot be allowed to exist. [134 SCRA 182-183]

appear relegated to relative insignificance
by the 1987 Constitutional provision that the Civil Service embraces
government-owned or controlled corporations with original charter; and,
therefore, by clear implication, the Civil Service does not include
government-owned or controlled corporations which are organized as subsidiaries
of government-owned or controlled corporations under the general corporation
law.^[8]

A corporation is created by operation of law. It acquires a juridical personality either
by special law or a general law. The
general law under which a private corporation may be formed or organized is the
Corporation Code, the requirements of which must be complied with by those
wishing to incorporate. Only upon such
compliance will the corporation come into being and acquire a juridical
personality, thus giving rise to its right to exist and act as a legal
entity. On the other hand, a government
corporation is normally created by special law, referred to often as a charter.^[9]

BDC is a government-owned corporation created under the
Corporation Law. It is without a
charter, governed by the Labor Code and not by the Civil Service Law hence,
Executive Order No. 180 does not apply to it.

Consequently, public respondent committed grave abuse of
discretion in ordering petitioner to register under Section 7, of Executive
Order No. 180 as a precondition for filing a petition for certification
election.

WHEREFORE, the instant petition is hereby GRANTED. The Order of public respondent dated August 7,
1987 is SET ASIDE and the Director of Labor Relations is hereby directed to
give due course to petitioner’s application for certification election.

SO ORDERED.

Cruz, (Chairman), Davide, Jr., Bellosillo, and Quiason, JJ., concur.

^[1]
Rollo, pp. 58-59.

^[2]
Id., at pp. 11-12.

^[3]
Id., at pp. 3-4.

^[4]
134 SCRA 173.

^[5]
Id., at p. 182.

^[6]
Supra.

^[7]
168 SCRA 122.

^[8]
Id., at pp. 133-134.

^[9]
Campos, Jr., The Corporation Code,
Comments, Notes and Selected Cases, Vol I, p. 2 (1990).