PNOC-ENERGY DEVELOPMENT CORPORATION vs.

NLRC
222 SCRA 831

Facts: In November, 1987, while holding the position of Geothermal Construction Secretary,
Engineering and Construction Department, at Tongonan Geothermal Project, Ormoc City, Manuel
S. Pineda decided to run for councilor of the Municipality of Kananga, Leyte, in the local elections
scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position.
Objection to Pineda’s being a candidate while retaining his job in the PNOC-EDC was shortly
thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte.

Section 66 of the Election Code provides among others that officers and employees of GOCCs
are considered as ipso facto resigned upon the filing of their certificate of candidacy.

It was the argument of Pineda that PNOC-EDC was not created through a special law, it is not
covered by the Civil Service Law and, therefore, not contemplated under Section 66 of the
Election Code.

Issue: Whether or not an employee in a government- owned or controlled corporation without an

original charter falls within the scope of Section 66 of the Omnibus Election Code.

Held: Yes. If a corporation’s capital stock is owned by the Government, or it is operated and
managed by officers charged with the mission of fulfilling the public objectives for which it has
been organized, it is a government-owned or controlled corporation even if organized under the
Corporation Code and not under a special statute. Employees thereof, even if not covered by the
Civil Service but by the Labor Code, are nonetheless “employees in government-owned or
controlled corporation,” and come within the letter of Section 66 of the Omnibus Election Code,
declaring them ipso facto resigned from their office upon the filing of their certificate of candidacy.

G.R. No. 113212 December 29, 1995

THE DEPARTMENT OF HEALTH (DR. JOSE N. RODRIGUEZ MEMORIAL HOSPITAL) and

CESAR J. VIARDO, M.D., in his capacity as Director of the Dr. Jose N. Rodriguez
Memorial Hospital, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER CORNELIO L.
LINSANGAN and CEFERINO R. LAUR, respondents.

HERMOSISIMA, JR., J.:

The eternal problem of jurisdiction over Government employees is again posed in this case:
Which Government agency — the National Labor Relations Commission or the Civil Service
Commission — has jurisdiction over contests relating to the civil service?

This is a Petition for Certiorari and Prohibition filed by the Department of Health in behalf of the
Dr. Jose N. Rodriguez Memorial Hospital (DJRMH) and its Director, Cesar J. Viardo, seeking to
review and set aside the Resolution of the National Labor Relations Commission in NLRC NCR
CA No. 002864-92 (NLRC Case No. 00-09-05194-90), dated September 7, 1993, which
dismissed herein petitioners' appeal from the January 2, 1992 Decision of Labor Arbiter
Cornelio L. Linsangan.

The antecedent facts, culled from the assailed Decision rendered by Labor Arbiter Cornelio
Linsangan and that of the NLRC, respectively, as well as from the pleadings of the parties, are
not in dispute:

Private respondent Ceferino R Laur was a patient of the then Tala Leprosarium (now Jose N.
Rodriguez Memorial Hospital), having been admitted thereto in 1951 for treatment of Hansen's
disease, commonly termed leprosy. He was discharged in 1956 after he was deemed to have
been cured of his affliction.
In 1975, he was employed at the DJRMH as a patient-assistant by the then Hospital Director,
Dr. Artemio F. Runez, upon the recommendation of the Barangay Captain of Tala. Specifically
assigned as a member of the Patient-Assistant Police Force, he was accorded a
compensation/salary, initially, in the amount of P110.00. This was gradually increased through
the years, depending upon the availability of funds. His salary was chargeable to the
maintenance and operating expenses of the hospital.

On September 15, 1989, complaints for Alarm and Scandal, Oral Defamation, Grave Threats,
Concealment of Deadly Weapon, Violation of the Code of Ethics of Policemen, and Conduct
Unbecoming of a Police Officer were filed against said private respondent, pursuant to a report
made by his Chief of Police. Upon a finding of guilt of the aforesaid offenses, the said private
respondent was meted the penalty of suspension for sixty (60) days, with a stern warning that a
repetition of the same would result in his outright dismissal by petitioner Dr. Cesar J. Viardo in
his capacity as Chief of Hospital.1

On July 15, 1990, private respondent Laur got involved in the mauling of one, Jake Bondoc,
along with two policemen, Corporal Ferrer and Patrolman Berdon, Private respondent's account
of the incident is to the effect that, while private respondent and his companions were manning
their posts at the hospital's Administration Building, a group of twelve (12) young boys engaged
another group of four male youngsters (4) in a stone-throwing encounter. This resulted in
damage to the windows of the nearby Holy Rosary College. The caretaker of the college,
Agustin Chan, while assessing the damage caused, was chased by the smaller group and threw
stones at him. Agustin Chan ran and took refuge at the administration building where private
respondent and the two policemen were on guard duty. It was at this point that one of the
policemen hit one of the stone throwers with a night stick.2

A complaint filed by a certain Jake Bondoc, one of the young boys, against private respondent
and his companions provoked an investigation conducted on July 27, 1990, during which
complainant Bondoc pointed to private respondent as the party responsible for his injuries even
as Patrolman Berdon admitted to having hit Bondoc.

On August 21, 1990, private respondent was dismissed by the Chief of Hospital, Dr. Cesar J.
Viardo per Office Order No. 101, s-90, on the basis of the Public Assistance Complaints Unit's
(PACU) report/investigation finding private respondent and his companions to have indeed
mauled Jake Bondoc. The two policemen were merely suspended.

Consequently, on September 26, 1990, private respondent filed with the National Labor
Relations Commission a complaint for illegal dismissal with additional claims for payment of
wage differentials, holiday pay, overtime pay and 13th month pay, as well as payment of moral
and exemplary damages, attorney's fees and expenses of litigation and with prayer for
reinstatement without loss of seniority rights against Dr. Jose N. Rodriguez Memorial Hospital
(DJRMH) and Dr. Cesar J. Viardo. This was docketed as "NLRC NCR Case No. 00-09-05194-
90" and subsequently assigned to Labor Arbiter Cornelio Linsangan.

On January 2, 1993, Labor Arbiter Cornelio Linsangan rendered his Decision in private
respondent's favor, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering the respondent hospital to:

1. reinstate complainant to his former position or if not possible, pay him

separation pay equivalent to one month salary for every year of service;

2. pay complainant the amount of P198,000.00 representing underpaid wages,

unpaid overtime, holiday pay and 13th month pay;

3. pay the complainant full backwages which as of this date amounts to

P49,088.00;

4. pay the complainant the amount of P20,000.00 as moral and exemplary

damages; and
 5. pay the complainant attorney's fees equivalent to 10% of the total award. 3

Respondent Labor Arbiter Linsangan so ruled because first, he has determined that, contrary to
the petitioners' position that private respondent's employment was part of his medication and
rehabilitative therapy, private respondent was in truth an employee in contemplation of the
Labor Code, the existence of an employer-employee relationship between petitioner hospital
and private respondent being evident from the fact that private respondent's work is necessary
and desirable for the operation of the hospital. Private respondent was allegedly performing
such functions as were inherent to and undertaken by the members of the regular police force.
This, the respondent Labor Arbiter believes to be an indication that what private respondent was
assigned to do was definitely beyond his rehabilitative therapy. Second, private respondent's
dismissal was illegal because it was not for a just cause. The mauling incident was not
sufficiently established, and, even if so established, the same would not justify his dismissal.
Such dismissal was wanting in due process in view of the non-observance of the procedure
prescribed for a valid exercise of the power to dismiss under Sections 2, 5 and 6 of Rule XIV of
the Rules Implementing B.P. Blg. 130.4

The aforesaid decision was appealed to the NLRC. In its Resolution, dated September 27,
1993, the NLRC dismissed the appeal, the dispositive portion of which reads:

WHEREFORE, respondents appeal is hereby dismissed for its failure to perfect

the same on time. 5

The petitioners, thus, instituted this petition for certiorari.

The principal issue presented in this case is whether or not respondents NLRC and Labor
Arbiter Cornelio L. Linsangan committed serious error in their decisions and acted without
jurisdiction when they took cognizance of the complaint filed by private respondent Ceferino R
Laur before the NLRC instead of the Civil Service Commission.

The petitioners mainly contend that since the DJRMH is a government hospital, its employees
are covered by Civil Service rules and regulations and not by the Labor Code. Therefore, any
controversy concerning the relationship between the employees on the one hand and the
hospital's administration on the other, as is the case of private respondent, comes under the
jurisdiction of the Merit Systems Board and the Civil Service Commission.

We find the petition to be impressed with merit

The petitioner-hospital, the DJRMH, originally known as the Tala Leprosarium, was one of three
leper colonies established under Commonwealth Act No. 161. Maintained to this day as a public
medical center and health facility attached to the Department of Health, the DJRMH exercises
strictly governmental functions relating to the management and control of the dreaded
communicable Hansen's disease, commonly known as leprosy. As it is clearly an agency of the
Government, the DJRMH falls well within the scope and/or coverage of the Civil Service Law in
accordance with paragraph 1., Section 2, Article IX B, 1987 Constitution and the provisions of
Executive Order No. 292, otherwise known as the Administrative Code of 1987 and Presidential
Decree No. 807, otherwise known as the Civil Service Decree of the Philippines.

As the central personnel agency of the Government, the Civil Service Commission administers
the Civil Service Law. It is, therefore, the single arbiter of all contests relating to the civil
service.6 The discharge of this particular function was formerly lodged in one of its offices, the
Merit Systems Protection Board (MSPB) which was vested with the power, among others, "to
hear and decide on appeal administrative cases involving officials and employees of the civil
service and its decision shall be final except those involving dismissal or separation from the
service which may be appealed to the Commission".7 However, with the issuance of Civil
Service Commission Resolution No. 93-2387 on June 29, 1993, such appeals shall now be filed
directly with the Civil Service Commission. Pertinent portion of said resolution reads:

xxx xxx xxx

 NOW, THEREFORE, pursuant to the provisions of Section 17 of Book V of the
Administrative Code of 1987 which authorizes the Commission, as an
independent constitutional body, to effect changes in its organization as the need
arises, the Commission Resolves as it is hereby Resolved to effect the following
changes:

1. Decisions in administrative cases involving officials and employees of the civil

service appealable to the Commission pursuant to Section 47 of Book V of the
Code including personnel actions such as contested appointments shall now be
appealed directly to the Commission and not the MSPB; 8

xxx xxx xxx

Worthy to note in this connection is the fact that the Labor Code itself provides that "the terms
and conditions of employment of government employees shall be governed by the Civil Service
Law, rules and regulations".9

Conformably to the foregoing, it is, indeed, the Civil Service Commission which has jurisdiction
over the present controversy. Its decisions are subject to review by the Supreme Court. 10

Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide
one. 11 Consequently, it was incorrect for the respondent labor arbiter to have proceeded to hear
the case, simply because private respondent Ceferino Laur happened to lodge his complaint
before his office, 12 or to hold that petitioners are estopped from assailing the respondent labor
authorities' jurisdiction over the present case simply because the petitioners have earlier
submitted themselves to the said jurisdiction by virtue of their participation in all the stages of
the proceedings in the office of respondent Labor Arbiter Linsangan and in the NLRC, and that
they failed to raise the issue of jurisdiction in the said proceedings. 13

Considering that the decision of a tribunal not vested with appropriate jurisdiction is null and
void, 14 the respondent labor arbiter's finding of an employer-employee relationship between the
petitioner government agency and the private respondent should serve no purpose whatsoever.
Respondent labor arbiter's order of payment of private respondent's monetary claims is likewise
null and should not be given effect.

WHEREFORE, finding the Dr. Jose N. Rodriguez Memorial Hospital to be within the scope of
the Civil Service Law and not of the Labor Code, the questioned decision of the respondent
labor arbiter dated January 2, 1992 and the resolution of the NLRC, dated September 7, 1993,
are hereby REVERSED and SET ASIDE for having been rendered without jurisdiction. The
Temporary Restraining Order issued on February 28, 1994 is hereby made permanent.

SO ORDERED.

MENDOZA, J.:
This is a petition for certiorari[1] under Rule 64 of the Revised Rules of Court seeking to reverse
and set aside the October 28, 2010 Decision[2] and the June 6, 2014 Resolution[3] of the
Commission on Audit (COA) which affirmed the October 14, 2008 Decision[4] of the Legal and
Adjudication Sector, Legal and Adjudication Office-Corporate (LAO).

Petitioner Zamboanga City Water District (ZCWD) is a government-owned and/and controlled

corporation (GOCC) which was created pursuant to the provisions of Presidential
Decree (P.D.) No. 198 or the Provincial Water Utilities Act of 1973 (PWUA), as amended by
Republic Act (R.A.) No. 9286.[5]

On January 9, 2007, Catalino S. Genel, Audit Team Leader for ZCWD, Zamboanga City, issued
the following Notices of Disallowance (ND) for ZCWD's various payments:[6]

ND No. Particulars Amount

 Claim for salary increase of GM Juanita L. Bucoy lacks
the Department of Budget and
2006-001 (2005) P523.760.00
Management (DBM) guideline and is over and above the
DBM approved rate per audited plantilla.
Claim of Representation Allowance and Transportation
Allowance (RATA) is not in accordance with DBM-
2006-002 (2005) approved rates pursuant to the General Appropriations P88,911.60
Act (GAA), Republic Act (R.A.) Nos. 8760 and 9206 and
DBM Circulars
Computation of monetization of leave credits is without
2006-003 (2005) legal basis being based on the new rate instead of the P21,910.28
standardized rate under the DBM audited plantilla
Payment of back Cost of Living Allowance (COLA) and
Amelioration Allowance (AA) is in violation of Section 12,
2006-004 (2005) R.A. No. 6758, and DBM Budget Circular Nos. 2001-02 P15,435,121.92
and 2005-02, dated November 12, 2001 and October 24,
2005, respectively
Payment of one month Mid-year incentive has no legal
basis pursuant to R.A. No. 6886, as amended by R.A.
No. 8441. The Civil Service Commission (CSC) has no
jurisdiction to determine the rates of government
personnel, for the same is vested with the DBM. Further,
2006-005 (2005) the said benefit is not among those contemplated in P3,915,068.00
Sections 5 to 7 of the Implementing Rules and
Regulations (IRR) of Rule X, Book V, Executive
Order (E.O.) No. 292, which is the basis of the CSC in
adopting the Program on Awards and Incentives for
Service Excellence (PRAISE)
Payment of 14th month pay has no legal basis pursuant
to R.A. No. 6886, as amended. The CSC has no
jurisdiction to determine the rates of government
personnel, for the same is vested with the DBM. Further,
2006-006 (2005) P3,964,770.00
the said benefit is not among those contemplated in
Sections 5 to 7 of the IRR of Rule X, Book V, E.O. No.
292, which is the basis of the CSC in adopting the
PRAISE
The grant of Collective Negotiation
Agreement (CNA) incentive does not conform with the
provisions of Public Sector Labor Management
Council (PSLMC)Resolution No. 2, series of 2003. The
grant of CNA incentives does not show any proof of cost
2006-007(2005) P1,680,000.00
cutting measures adopted by management and the
union, and the savings generated as the sole source of
the incentives as required under the said resolution. The
amount of incentive should not be predetermined and
should be given only at year end
Payment of per diem of the members of the Board of
P301,440.00
2006-008 (2005) toDirectors (BOD) is in excess of what is allowed under
(Total - 1,507,
2006-012 (2005) Section 3, (c-III), Administrative Order (A.O.) No. 103,
200.00)
dated August 31, 2004
Excess payment of Representation Allowance (RA) in
violation of DBM Budget Circular Nos. 18 and 498, dated
November 18, 2000 and April 11, 2005, respectively.
2006-013 (2005) Claims of RATA based on 40% basic pay under Letter of P22,014.60
Implementation (LOImp) No. 97 shall no longer be valid
and payment thereof shall not be allowed pursuant to
Section 40, R.A. No. 9206, dated August 12, 2003.
Availment of a separate life insurance program other than
that of the Government Service Insurance
2006-14 (2005) P134,865.00
System (GSIS) is contrary to the principle of prudent
spending of government funds
The NDs covered the disbursements made during the tenure of then General Manager Juanita
L. Bucoy (GM Bucoy).[7] On April 12, 2007, ZCWD filed its omnibus appeal before the LAO.[8]

The LAO Ruling

On October 14, 2008, the LAO rendered a decision upholding all the NDs in the aggregate
amount of P27,293,621.40.

First, the LAO disagreed with the contention of the ZCWD that its Board of Directors (BOD) had
the right to fix the compensation of its GM pursuant to R.A. No. 9286.[9] It stated that the
compensation of the GMs of Local Water Districts (LWDs) was still subject to the provisions of
R.A. No. 6758 or the Salary Standardization Law (SSL). Further, it emphasized that any salary
increase of government employees must be authorized through a legislative enactment or
pronouncement from the President, through the DBM.

Second, the LAO opined that the payment of the Representation Allowance and Transportation
Allowance (RATA) of the GM and the Representation Allowance (RA) of the Assistant GMs and
the back payment of the Cost of Living Allowance (COLA) and the Amelioration
Allowance (AA) were correctly disallowed because LWDs were not covered by Letter of
Implementation (LOI) No. 97. Further, even if LWDs were covered by LOI No. 97, the payment
of RATA and RA should still be disallowed because they were receiving the RATA at the rate of
20% of their basic salary, and not the rate provided for by LOI No. 97.

Third, the LAO also insisted that the payments corresponding to the midyear incentive and the
Collective Negotiation Agreement (CNA)incentives were improper because they were without
basis. It opined that ZCWD could not rely on the CSC approval[10] of its Program on Awards and
Incentives for Service Excellence (PRAISE) because it had no authority to do so. Likewise, it
noted that ZCWD failed to establish compliance with Public Sector Labor Management
Council (PSLMC) Resolution No. 2 to warrant the payment of CNA incentives. Moreover, the
LAO pointed out that the payment of life insurance benefits other than that provided by the GSIS
was contrary to Section 28(b) of Commonwealth Act (C.A.) No. 186,[11] as amended by R.A.
No.4968.

Lastly, the LAO found that the per diems paid to the BOD, as well as the 141 month pay given
to ZCWD employees, were in excess of the amount allowed by law. The LOA stated that the per
diems granted to the members of the BOD were in excess of the amount allowed by
Administrative Order (A.O.) No. 103 and the 14th month pay was in excess of the amount
authorized under R.A. No. 8441.

Undaunted, ZCWD appealed before the COA.

The COA Ruling

On October 28, 2010, the COA rendered the assailed decision affirming the LAO ruling. The
dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the herein appeal is hereby DENIED and ND Nos.
2006-001(2005) to 2006-014(2005), in the total amount of P27,293,621.40 are
hereby AFFIRMED.[12
IN AFFIRMING NOTICE OF DISALLOWANCE (ND) NOS. 2006- 001(2005) TO 2006-03(2005),
ALL DATED 09 JANUARY 2007 CONCERNING THE SALARIES AND BENEFITS OF THE
FORMER GENERAL MANAGER OF PETITIONER ZCWD, BY HOLDING THAT ITS BOARD
OF DIRECTORS DID NOT HAVE THE POWER TO FIX THE GENERAL MANAGER'S SALARY
AND BENEFITS DESPITE THE CLEAR MANDATE OF SECTION 23 OF P.D. NO. 198, AS
AMENDED BY R.A. NO. 9286;
Limited power of the BOD to
fix the salary of the GM
ZCWD's contention that, pursuant to Section 23 of P.D. No. 198, as amended by R.A. No. 9286,
the BOD has the discretion to fix the compensation of the GM is misplaced. As held in Mendoza
v. COAX (Mendoza),[16] unless specifically exempted by its charter, GOCCs are covered by the
provisions of the SSL. The Court in Mendoza recognized the power of the BOD to fix the
compensation of the GM but limited the same to the extent that the rates approved must be in
accordance with the position classification system under the SSL. Here in this case, the salary
increase of GM Bucoy, including the corresponding increase in her monetized leave credits,
was properly disallowed for being in excess of the amounts allowed under the SS