Case Summary (G.R. No. 206486)
Petitioner and Respondents
The petitioner, PNCC, is a government-owned and controlled corporation (GOCC) established as the Construction Development Corporation of the Philippines in 1966. The respondents are former employees of PNCC who were retrenched in 2011 but subsequently rehired in executive positions. Their dispute centers around the alleged unjust withdrawal of the subject allowance, which they claim has become a vested benefit.
Key Dates
The significant dates in this case include the implementation of the retrenchment program in 2011, the issuance of audit observation memoranda by the Commission on Audit (COA) in 2012 and 2014 regarding the subject allowance, and the various rulings leading to the final decision of the Supreme Court on July 22, 2024.
Applicable Law
This case operates under the provisions of the 1987 Philippine Constitution and the Labor Code, particularly Article 100 concerning the prohibition against the elimination or diminution of benefits enjoyed by employees at the time of the promulgation of the Labor Code.
Antecedents
PNCC, having transformed from a private corporation to a GOCC due to conversion of debt to equity by government financial institutions, implemented a retrenchment program which led to the respondents' dismissal and later reemployment in executive positions. They were granted a subject allowance for personal drivers or fuel which was subsequently discontinued following an audit that deemed it disadvantageous given the company's financial status.
Labor Arbiter's Ruling
The Labor Arbiter ruled in favor of the respondents, asserting that the subject allowance had become ingrained in company policy, thus invoking Article 100 of the Labor Code which protects employee benefits from unilateral diminishment.
NLRC's Ruling
In contrast, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision, asserting that PNCC's status as a GOCC means that jurisdiction over the respondents' claims lies with the COA, not the Labor Arbiter. They determined that the withdrawal of the allowance was justified due to the audit's findings.
Court of Appeals' Ruling
The Court of Appeals reinstated the Labor Arbiter's ruling, emphasizing that Labor Code provisions applied as PNCC was governed by the Corporation Code without an original charter. The CA ordered the case to be remanded to the NLRC for resolution of the appeals concerning the allowance.
Supreme Court's Ruling
Upon reviewing the case, the Supreme Court affirmed the CA’s ruling regarding jurisdiction, stating that the Labor Arbiter has exclusive jurisdiction over money claims involving employees of a GOCC without an original charter, like PNCC. However, it clarified that the respondents did not have vested rights to the subject allowance as its grant was found in error and contrary to COA regulations which prohibit double allowances for those already receiving government vehicle benefits.
Nature of the Subject Allowance
The Court classified the subject allowance as a transportation allowance, confirming that it is not categorized as a driver's allowance in the traditional sense but rather
...continue readingCase Syllabus (G.R. No. 206486)
Nature of the Case and Procedural Posture
- Petition for Review on Certiorari under Rule 45 assailing the Court of Appeals decision and resolution.
- The Court of Appeals granted petition for certiorari and set aside the National Labor Relations Commission (NLRC) decision which had reversed the Labor Arbiter's decision dismissing respondents' complaint for lack of jurisdiction.
- Respondents (Felix M. Erece, Jr. et al.) filed claims against PNCC for payment of driver’s allowance, damages, and attorney’s fees.
Background and Antecedents of PNCC
- PNCC was originally incorporated as Construction Development Corporation of the Philippines (CDCP) in 1966 under the Corporation Code declared as a private corporation.
- Due to non-payment of loans, GFIs converted loans to equity shares making them majority shareholders; by 1988, PNCC became a government-owned corporation, renamed to reflect government acquisition.
- In 2011, PNCC implemented retrenchment, laid off respondents who executed quitclaims but were rehired for executive/managerial roles due to experience.
- Respondents held executive/managerial positions such as Assistant Vice-President and Vice-President in PNCC.
The Subject Allowance
- Beginning in 2011, respondents were granted a monthly allowance for personal driver or fuel consumption.
- The allowance was authorized by a 1996 PNCC Board of Directors Resolution.
- Commission on Audit (COA) issued Audit Observation Memoranda in 2012 and 2013 finding:
- The allowance composed of fixed monthly gasoline allowance and reimbursable transportation allowance.
- The allowance was disadvantageous to PNCC given its losses and lack of stable revenues.
- COA recommended reviewing and stopping the allowance grants to comply with regulations.
- PNCC ceased granting the allowance in 2014 without a Notice of Disallowance issued by COA.
Claims of Respondents and PNCC’s Position
- Respondents claimed PNCC is a private corporation, thus subject to Article 100 of the Labor Code which prohibits diminution of benefits once established.
- Argued that the allowance was a driver’s allowance, mistakenly labeled as gasoline allowance by COA.
- Claimed PNCC unilaterally withdrew the allowance without COA's official disallowance.
- PNCC claimed to be a GOCC subject to COA audit and jurisdiction,
- PNCC justified cessation based on COA audit findings and contested jurisdiction, asserting COA had jurisdic