G.R. No. 129069 - People vs. Recto y Robea

Petitioners: Sixty-five individuals employed by the Armed Forces of the Philippines Commissary and Exchange Service (AFPCES) in various capacities—including food handlers, computer technicians, auditors, clerks, cashiers, and warehousemen—some with 4 to 31 years of service.
Respondent: Republic of the Philippines, for and in behalf of the AFPCES, which is a unit under the Armed Forces of the Philippines (AFP) organized pursuant to Letter of Instruction (LOI) No. 31, later amended by LOI No. 31-A.
AFPCES is tasked with managing and operating commissary facilities in military establishments nationwide, benefiting veterans, their dependents, AFP personnel, and the public.

Established in December 1972 through LOI No. 31, with P5 million earmarked from the Philippine Veterans’ Claims Settlement Fund to serve as seed capital.
Reorganized by General Orders:

In July 1976, General Order No. 920 centralized commissary exchange services under AFPCES.
In February 1987, General Order No. 138 activated AFPCES as a regular unit under the direct control of the AFP Chief of Staff.

The historical evidences underscore AFPCES’s integration with the AFP, lacking a separate corporate personality.

Petitioners were hired as regular employees; however, their appointments did not follow proper civil service procedures.
They were enrolled in the Social Security System (SSS) rather than the Government Service Insurance System (GSIS), raising questions about their employment classification.

Between 1999 and 2001, AFPCES placed petitioners on an indefinite leave of absence without pay, allegedly promising reinstatement upon release of its tax subsidy.
When AFPCES failed to recall them, petitioners filed a complaint for illegal dismissal with damages before the NLRC.

July 4, 2002: A Labor Arbiter ruled in favor of the petitioners, ordering AFPCES to pay back wages, 13th-month pay, and separation pay.
AFPCES’s appeal was dismissed by the NLRC for failure to post the required appeal bond.
The Court of Appeals, in its August 31, 2006 decision, held that since AFPCES is a governmental agency without a separate corporate personality, petitioners should be considered civil service employees and thus their illegal dismissal complaint should be heard by the Civil Service Commission (CSC).

Central Issue: Whether the complaint for illegal dismissal against AFPCES should be engaged by the National Labor Relations Commission (NLRC) or the Civil Service Commission (CSC).
Arguments of the Parties:

AFPCES contends that, as a governmental agency, its employees are under CSC jurisdiction.
Petitioners contend that, since they are not within the approved plantilla of government personnel, their complaint was properly filed before the NLRC.

Relevant laws and issuances include the Civil Service Decree (PD No. 807) and Executive Order No. 180, which define the scope of the civil service.
The pivotal question arises whether LOI 31-A constitutes the corporate charter necessary to classify AFPCES as a government-owned or controlled corporation, thereby falling under the Civil Service Law.

Petitioners sought execution of the Labor Arbiter’s decision while AFPCES attempted procedural moves including seeking a temporary restraining order and filing various motions.
Despite procedural complications—such as the lifting of the writ of garnishment and issues in executing the monetary award—the central contention remains the proper forum for adjudicating the petitioners’ claims.
Ultimately, the Supreme Court’s intervention reaffirms that any decision lacking proper jurisdiction is null and directs the case towards resolution by the CSC.

Should complaints for illegal (constructive) dismissal against an adjunct government agency like AFPCES be heard by the National Labor Relations Commission (NLRC) or by the Civil Service Commission (CSC)?

Are the petitioners, as employees of AFPCES, considered government employees under the Civil Service Law despite inconsistencies such as their SSS enrollment and non-compliance with proper civil service appointment procedures?
Does the absence of corporate features in LOI 31-A preclude AFPCES from being considered a government-owned or controlled corporation with an original charter, thus affecting the employment status of its civilian personnel?

Can the Labor Arbiter’s decision on illegal dismissal, rendered without proper jurisdiction, stand as a valid final judgment?
What is the appropriate remedy in light of the administrative irregularities and the anomalous situation created by AFPCES’s conflicting practices?