LABOR STANDARDS

Preliminary Title
[G.R. No. 133215. July 15, 1999]

PAGPALAIN HAULERS, INC., petitioner, vs. The HONORABLE CRESENCIANO B. TRAJANO, in his official capacity as Secretary of Labor and Employment, the
HONORABLE RENATO D. PARUNGO, in his official capacity as the Med-Arbiter in DOLE Case No. NCR-OD-M-9705-006, and the INTEGRATED LABOR
ORGANIZATION (ILO-PHILS) PAGPALAIN WORKERS UNION-ILO-PHILS. respondents.

DECISION

ROMERO, J.:

On May 14, 1997, respondent Integrated Labor Organization-Pagpalain Haulers Workers Union (hereafter referred to as ILO-PHILS), in a bid to represent the
rank-and-file drivers and helpers of petitioner Pagpalain Haulers, Inc. (hereafter referred to as Pagpalain), filed a petition for certification election with the
Department of Labor and Employment. ILO-PHILS attached to the petition copies of its charter certificate, its constitution and by-laws, its books of account, and
a list of its officers and their addresses.

On July 10, 1997, Pagpalain filed a motion to dismiss the petition, alleging that ILO-PHILS was not a legitimate labor organization due to its failure to comply with
the requirements for registration under the Labor Code. Specifically, it claimed that the books of account submitted by ILO-PHILS were not verified under oath
by its treasurer and attested to by its president, a required by Rule II, Book V of the Omnibus Rules Implementing the Labor Code.

In a reply dated August 4, 1997, ILO-PHILS dismissed Pagpalains claims, saying that Department Order No. 9, Series of 1997 had dispensed with the requirement
that a local or chapter of a national union submit books of account in order to be registered with the Department of Labor and Employment.

Finding in favor of ILO-PHILS, the Med-Arbiter, on August 27, 1997, ordered the holding of certification elections among the rank-and-file of Pagpalain Haulers.
Pagpalain promptly appealed the decision to the Secretary of Labor and Employment. It claimed that the Med-Arbiter had gravely abused his discretion in
allowing Department Order No. 9 to take precedence over a ruling of the Supreme Court. Pagpalain cited Protection Technology v. Secretary, Department of
Labor and Employment[1] and Progressive Development Corporation v. Secretary of Labor[2] in support of its contention.

Declaring Protection and Progressive to be inapplicable to the case before him, the Secretary, on February 27, 1998, issued a resolution dismissing Pagpalains
appeal. In his own words, [I]n these aforementioned cases, the Supreme Court premised its ruling on the previous rules implementing the Labor Code, particularly
Book V, that provides the requirements for the registration of a local or chapter of a federation or national union. With the issuance of Department Order No.
09 amending the rules implementing Book V of the Code, the requirement on books of account no longer exists.[3]

Aggrieved by said resolution, Pagpalain now comes to this Court for relief claiming that the Secretary of Labor acted without jurisdiction in issuing the questioned
resolution. In support of its proposition, it claims that:
1. DEPARTMENT ORDER NO. 9, SERIES OF 1997, ISSUED BY PUBLIC RESPONDENT SECRETARY OF LABOR IS NULL AND VOID FOR BEING CONTRARY TO PUBLIC
POLICY LAID DOWN BY THE SUPREME COURT IN PROTECTION TECHNOLOGY, INC. V. SECRETARY OF LABOR (G.R. NO. 117211, 1 MARCH 1995) AND PROGRESSIVE
DEVELOPMENT CORP. V. SECRETARY OF LABOR (G.R. NO. 96425, 4 FEBRUARY 1992);

2. DEPARTMENT ORDER NO. 9, SERIES OF 1997, OF PUBLIC RESPONDENT SECRETARY OF LABOR CANNOT ALTER THE REQUIREMENTS OF ARTICLES 241(H) AND
(J) OF THE LABOR CODE OF THE PHILIPPINES, NOR CAN IT PREVAIL OVER THE RULINGS OF THE SUPREME COURT, WHICH FORM PART OF THE LAW OF THE LAND.

Pagpalains contentions are without merit.

Under Article 234 of the Labor Code, the requirements for registration of a labor organization is as follows:

Art. 234. Requirements of registration. Any applicant labor organization, association or group of unions or workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following
requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in
it.

As can be gleaned from the above, the Labor Code does not require the submission of books of account in order for a labor organization to be registered as a
legitimate labor organization. The requirement that books of account be submitted as a requisite for a registration can be found only in Book V of the Omnibus
Rules Implementing the Labor Code, prior to its amendment by Department Order No. 9, Series of 1997. Specifically, the old Section 3(e), Rule II, of Book V
provided that [t]he local or chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of officers and books of
accounts. For reporting purposes, the procedure governing the reporting of independently registered unions, federations or national unions shall be observed.

In Progressive Development Corporation, cited by Pagpalain, this Court held that the above-mentioned procedure governing the reporting of independently
registered unions refers to the certification and attestation requirements contained in Article 235, paragraph 2. Article 235, paragraph 2 provides that [a]ll
requisite documents and papers shall be certified under oath by the secretary or the treasurer of the organization, as the case may be, and attested to by its
president; hence, in the above-mentioned case, we ruled that in applications for registration by a local or chapter of a federation or national union, the
constitution and by-laws, set of officers and books of account submitted by said local or chapter must be certified under oath by the secretary or treasurer and
attested to by its president.
Three years later, in Protection Technology v. Secretary of Labor, we amplified our ruling in Progressive, saying that the non-submission of books of account
certified by and attested to by the appropriate officer is a ground for an employer to legitimately oppose a petition for certification election filed by a local or
chapter of a national union.

By virtue of Department Order No. 9, Series of 1997, however, the documents needed to be submitted by a local or chapter have been reduced to the following:

(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter;

(b) The names of the local/chapters officers, their addresses, and the principal office of the local/chapter;

(c) The local/chapters constitution and by-laws; provided that where the local/chapters constitution and by-laws is the same as that of the federation or national
union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or Treasurer of the local/chapter and attested by its President.[4]

Since the Department Order No. 9 has done away with the submission of books of account as a requisite for registration, Pagpalains only recourse now is to
have said order declared null and void. It premises its case on the principles laid down in Progressive and Protection Technology. First, Pagpalain maintains that
Department Order No. 9 is illegal, allegedly because it contravenes the above-mentioned rulings of this Court. Citing Article 8 of the Civil Code, which provides
that [j]udicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines, Pagpalain declares the two
cases part of the law of the land which, under the third paragraph of Article 7 of the Civil Code,[5] may not be supplanted by mere regulation.

Second, it claims that dispensing with books of account contravenes public policy, citing Protection Technology, as follows:

It is immaterial that the Union, having been organized for less than a year before the application for registration with the BLR, would have had no real opportunity
to levy and collect dues and fees from its members which need to be recorded in the books of account. Such accounting books can and must be submitted to
the BLR, even if they contain no detailed or extensive entries as yet. The point to be stressed is that the applicant local or chapter must demonstrate to the BLR
that it is entitled to registered status because it has in place a system for accounting for members contributions to its fund even before it actually receives dues
and fees from its members. The controlling intention is to minimize the risk of fraud and diversion in the course of the subsequent formation and growth of the
Union fund. [Underscoring petitioners]

To buttress its argument, Pagpalain also cites Progressive, thus:

The employer naturally needs assurance that the union it is dealing with is a bona fide organization, one which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the certification and attestation requirements will in a marked degree allay these apprehensions of
management. Not only is the issuance of any false statement and misrepresentation a ground for cancellation of registration (See Article 239(a), (c) and (d)); it
is also a ground for a criminal charge of perjury.

The certification and attestation requirements are preventive measures against the commission of fraud. They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the union for
dubious ends. [Underscoring petitioners]
Finally, Pagpalain cites as indicative of public policy, the following sections of Article 241 of the Labor Code:

The following are the rights and conditions of membership in a labor organization:

xxx xxx xxx

(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and
entered into the record of the organization to be kept and maintained for that purpose;

xxx xxx xxx

(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a
receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of
the financial records of the organization. [Underscoring petitioners]

Under Article 8 of the Civil Code, [j]udicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.
This does not mean, however, that courts can create law. The courts exist for interpreting the law, not for enacting it. To allow otherwise would be violative of
the principle of separation of powers, inasmuch as the sole function of our courts is to apply or interpret the laws, particularly where gaps or lacunae exist or
where ambiguities becloud issues, but it will not arrogate unto itself the task of legislating.

Consequently, Progressive and Protection Technology are not to be deemed as laws on the registration of unions. They merely interpret and apply the
implementing rules of the Labor Code as to registration of unions. It is this interpretation that forms part of the legal system of the Philippines, for the
interpretation placed upon the written law by a competent court has the force of law.[6] Progressive and Protection Technology, however, applied and
interpreted the then existing Book V of the Omnibus Rules Implementing the Labor Code. Since Book V of the Omnibus Rules, as amended by Department Order
No. 9, no longer requires a local or chapter to submit books of accounts as a prerequisite for registration, the doctrines enunciated in the above-mentioned
cases, with respect to books of account, are already passe and therefore, no longer applicable. Hence, Pagpalain cannot insist that ILO-PHILS comply with the
requirements prescribed in said rulings, for the current implementing rules have deleted the same.

Neither can Pagpalain contend that Department Order No. 9 is an invalid exercise of rule-making power by the Secretary of Labor. For an administrative order
to be valid, it must (i) be issued on the authority of law and (ii) it must not be contrary to the law and Constitution.[7]

Department Order No. 9 has been issued on authority of law. Under the law, the Secretary is authorized to promulgate rules and regulations to implement the
Labor Code. Specifically, Article 5 of the Labor Code provides that [t]he Department of Labor and other government agencies charged with the administration
and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Consonant with this article, the Secretary
of Labor and Employment promulgated the Omnibus Rules Implementing the Labor Code. By virtue of this self-same authority, the Secretary amended the
above-mentioned omnibus rules by issuing Department Order No. 9, Series of 1997.
Moreover, Pagpalain has failed to show that Department Order No. 9 is contrary to the law or the Constitution. At the risk of being repetitious, the Labor Code
does not require a local or chapter to submit books of account in order for it to be registered as a legitimate labor organization. There is, thus, no inconsistency
between the Labor Code and Department Order No. 9. Neither has Pagpalain shown that said order contravenes any provision of the Constitution.

Pagpalain cannot also allege that Department Order No. 9 is violative of public policy. As adverted to earlier, the sole function of our courts is to apply or interpret
the laws.[8] It does not formulate public policy, which is the province of the legislative and executive branches of government. It cannot, thus, be said that the
principles laid down by the court in Progressive and Protection Technology constitute public policy on the matter. They do, however, constitute the Courts
interpretation of public policy, as formulated by the executive department through its promulgation of rules implementing the Labor Code. However, this public
policy has itself been changed by the executive department, through the amendments introduced in Book V of the Omnibus Rules by Department Order No. 9.
It is not for us to question this change in policy, it being a well-established principle beyond question that it is not within the province of the courts to pass
judgment upon the policy of legislative or executive action.[9] Notwithstanding the expanded judicial power under Section 1, Article VIII of the Constitution, an
inquiry on the above-stated policy would delve into matters of wisdom not within the powers of this Court.

Furthermore, the controlling intention in requiring the submission of books of account is the protection of labor through the minimization of the risk of fraud
and diversion in the handling of union funds. As correctly pointed out by the Solicitor General, this intention can still be realized through other provisions of the
Labor Code. Article 241 of the Labor Code, for instance:

Art. 241. Rights and conditions of membership in a labor organization The following are the rights and conditions of membership in a labor organization:

xxx xxx xxx

(b) The members shall be entitled to full and detailed reports from their officers and representatives of all financial transactions as provided for in the constitution
and by-laws of the organization;

xxx xxx xxx

(g) No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions in its behalf or make any disbursement of its funds
unless he is duly authorized pursuant to its constitution and by-laws;

(h) Every payment of fees, dues, or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and
entered into the record of the organization to be kept and maintained for the that purpose;

(i) The funds of the organization shall not be applied for any purpose or object other than those expressly provided by its constitution or by-laws or those
expressly authorized by written resolution adopted by the majority of the members at a general meeting duly called for the purpose;

(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a
receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of
the financial records of the organization.

xxx xxx xxx

(l) The treasurer of any labor organization and every officer thereof who is responsible for the account of such organization or for the collection, management,
disbursement, custody or control of the fund, moneys and other properties of the organization, shall render to the organization and to its members a true and
correct account of all the moneys received and paid by him since he assumed office or since the last day on which he rendered such account, and of all bonds,
securities and other properties of the organization entrusted to his custody or under his control. The rendering of such account shall be made:

(1) At least once a year within 30 days after the close of its fiscal year;

(2) At such other times as may be required by a resolution of the majority of the members of the organization;

(3) Upon vacating his office.

The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished the Secretary of Labor.

(m) The books of account and other records of the financial activities of any labor organization shall be open to inspection by any officer or member thereof
during office hours;

xxx xxx xxx

Furthermore, Article 274 of the Labor Code empowers the Secretary of Labor or his duly authorized representative to inquire into the financial activities of
legitimate labor organizations upon the filing of a complaint under oath duly supported by the written consent of 20% of the total membership of the labor
organization concerned, as well as to examine their books of accounts and other records to determine compliance or non-compliance with the law. All of these
provisions are designed to safeguard the funds of a labor organization that they may not be squandered or frittered away by its officers or by third persons to
the detriment of its members.

Lastly, Department Order No. 9 only dispenses with books of account as a requirement for registration of a local or chapter of a national union or federation. As
provided by Article 241 (h) and (j), a labor organization must still maintain books of account, but it need not submit the same as a requirement for registration.
Given the foregoing disquisition, we find no cogent reason to declare Department Order No. 9 null and void, as well as to reverse the assailed resolution of the
Secretary of Labor.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit and the resolution of the Secretary of Labor dated February 27,
1998 AFFIRMED. Costs against petitioner.

SO ORDERED.

Vitug, Panganiban, Purisima, and Gonzaga_Reyes, JJ., concur.

[1] 242 SCRA 99 (1995).

[2] 205 SCRA 802 (1992).

[3] Rollo, pp. 23-24.

[4] Section 1, Rule VI, Book V, Omnibus Rules Implementing the Labor Code.

[5] Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution.

[6] People v. Jabinal, 55 SCRA 607 (1974).

[7] De Leon, Administrative Law: Text and Cases, p. 90.

[8] Tolentino, Civil Code of the Philippines: Vol. 1, citing 1 Camus 38.

[9] Taada v. Cuenco, 103 Phil. 1031 (1957).

Rule-Making Power
Scope / Application
EN BANC

G.R. No. 81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,

vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas Employment
Administration, respondents.

Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the recruitment of Filipino workers, male and
female, for overseas placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment,
in the character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this
petition for certiorari and prohibition. Specifically, the measure is assailed for "discrimination against males or females;" 2 that it "does not apply to all Filipino
workers but only to domestic helpers and females with similar skills;" 3 and that it is violative of the right to travel. It is held likewise to be an invalid exercise of
the lawmaking power, police power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker participation "in policy and decision-making
processes affecting their rights and benefits as may be provided by law." 4 Department Order No. 1, it is contended, was passed in the absence of prior
consultations. It is claimed, finally, to be in violation of the Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI members
face should the Order be further enforced.

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the Philippine Overseas Employment
Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of Iraq,
Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor
General invokes the police power of the Philippine State.

It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question is whether or not it is valid under the Constitution.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact legislation that may interfere with personal
liberty or property in order to promote the general welfare." 5 As defined, it consists of (1) an imposition of restraint upon liberty or property, (2) in order to
foster the common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and
flexible response to conditions and circumstances thus assuring the greatest benefits." 6

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter. Along with the taxing power and eminent domain, it is
inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital functions of
governance. Marshall, to whom the expression has been credited, 7 refers to it succinctly as the plenary power of the State "to govern its citizens." 8

"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly termed the "law of overwhelming necessity." It may be said
to be that inherent and plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society." 9

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the conception that men in organizing the state and imposing
upon its government limitations to safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of citizens to obstruct
unreasonably the enactment of such salutary measures calculated to ensure communal peace, safety, good order, and welfare." 10 Significantly, the Bill of Rights
itself does not purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the greatest of all rights, is not unrestricted license to act
according to one's will." 11 It is subject to the far more overriding demands and requirements of the greater number.

Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it may not be exercised arbitrarily or
unreasonably. Otherwise, and in that event, it defeats the purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used to
further private interests at the expense of the citizenry, there is a clear misuse of the power. 12

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear and convincing evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that Department Order No. 1 applies only
to "female contract workers," 14 but it does not thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law" under
the Constitution 15 does not import a perfect Identity of rights among all men and women. It admits of classifications, provided that (1) such classifications rest
on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply equally to all
members of the same class. 16

The Court is satisfied that the classification made-the preference for female workers — rests on substantial distinctions.

As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad, especially domestic servants, amid
exploitative working conditions marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers,
even rape and various forms of torture, confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely the
caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In fulfilling that duty, the Court sustains the Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for isolated instances, our men abroad have
been afflicted with an Identical predicament. The petitioner has proffered no argument that the Government should act similarly with respect to male workers.
The Court, of course, is not impressing some male chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter
of evidence (that women domestic workers are being ill-treated abroad in massive instances) and not upon some fanciful or arbitrary yardstick that the
Government acted in this case. It is evidence capable indeed of unquestionable demonstration and evidence this Court accepts. The Court cannot, however, say
the same thing as far as men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are
concerned, this Court is content that distinctions are borne by the evidence. Discrimination in this case is justified.

As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican regime, it is the executive branch that enforces
policy. For their part, the courts decide, in the proper cases, whether that policy, or the manner by which it is implemented, agrees with the Constitution or the
laws, but it is not for them to question its wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief Executive or his subalterns,
especially when the legislature itself has specifically given them enough room on how the law should be effectively enforced. In the case at bar, there is no
gainsaying the fact, and the Court will deal with this at greater length shortly, that Department Order No. 1 implements the rule-making powers granted by the
Labor Code. But what should be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions indeed call
for a deployment ban.

There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is the avowed objective of Department
Order No. 1 to "enhance the protection for Filipino female overseas workers" 17 this Court has no quarrel that in the midst of the terrible mistreatment Filipina
workers have suffered abroad, a ban on deployment will be for their own good and welfare.

The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those conditions exist. This is clear from the Order
itself ("Pending review of the administrative and legal measures, in the Philippines and in the host countries . . ."18), meaning to say that should the authorities
arrive at a means impressed with a greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability,
depending on the circumstances of each case. Accordingly, it provides:

9. LIFTING OF SUSPENSION. — The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment
Administration (POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers. 19

The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it does not apply to "all Filipina workers" 20 is
not an argument for unconstitutionality. Had the ban been given universal applicability, then it would have been unreasonable and arbitrary. For obvious reasons,
not all of them are similarly circumstanced. What the Constitution prohibits is the singling out of a select person or group of persons within an existing class, to
the prejudice of such a person or group or resulting in an unfair advantage to another person or group of persons. To apply the ban, say exclusively to workers
deployed by A, but not to those recruited by B, would obviously clash with the equal protection clause of the Charter. It would be a classic case of what Chase
refers to as a law that "takes property from A and gives it to B." 21 It would be an unlawful invasion of property rights and freedom of contract and needless to
state, an invalid act. 22 (Fernando says: "Where the classification is based on such distinctions that make a real difference as infancy, sex, and stage of civilization
of minority groups, the better rule, it would seem, is to recognize its validity only if the young, the women, and the cultural minorities are singled out for favorable
treatment. There would be an element of unreasonableness if on the contrary their status that calls for the law ministering to their needs is made the basis of
discriminatory legislation against them. If such be the case, it would be difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the
assailed Order clearly accords protection to certain women workers, and not the contrary.)

It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered provisions of the Order, it is evident that such
a total ban has hot been contemplated. We quote:

5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar skills defined herein to the following [sic] are authorized under these
guidelines and are exempted from the suspension.

5.1 Hirings by immediate members of the family of Heads of State and Government;

5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and

5.3 Hirings by senior officials of the diplomatic corps and duly accredited international organizations.

5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor agreements or understanding.

xxx xxx xxx

7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--Vacationing domestic helpers and/or workers of similar skills shall be allowed to process
with the POEA and leave for worksite only if they are returning to the same employer to finish an existing or partially served employment contract. Those workers
returning to worksite to serve a new employer shall be covered by the suspension and the provision of these guidelines.

xxx xxx xxx

9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment
Administration (POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers. 24

xxx xxx xxx

The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is subject, among other things, to the requirements
of "public safety," "as may be provided by law." 25 Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford
protection to labor," 26 pursuant to the respondent Department of Labor's rule-making authority vested in it by the Labor Code. 27 The petitioner assumes that
it is unreasonable simply because of its impact on the right to travel, but as we have stated, the right itself is not absolute. The disputed Order is a valid
qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It is true that police power is the domain
of the legislature, but it does not mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department
of Labor and Employment with rulemaking powers in the enforcement whereof. 28

The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes affecting their rights and benefits" 29
is not well-taken. The right granted by this provision, again, must submit to the demands and necessities of the State's power of regulation.

The Constitution declares that:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment
opportunities for all. 30

"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more paramountly is that such an employment be
above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their
employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack
or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on deployment.

The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition
with respect to certain countries as manifested by the Solicitor General.

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by the Government. 31 Freedom of
contract and enterprise, like all other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a
controlling economic way of life.

This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of the Government, however, is not
necessarily to maintain profits of business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government regulation. The interest of
the State is to provide a decent living to its citizens. The Government has convinced the Court in this case that this is its intent. We do not find the impugned
Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.

WHEREFORE, the petition is DISMISSED. No costs.

SO ORDERED.

Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes and Griño-Aquino, JJ., concur.

Gutierrez, Jr. and Medialdea, JJ., are on leave.

Footnotes

1 Rollo, 3.

2 Id., 12.

3 Id., 13.

4 CONST., Art XIII, Sec. 3.

* Per reports, on June 14, 1988, the Government is said to have lifted the ban on five more countries: New Zealand Australia, Sweden, Spain, and West
Germany. ("Maid export ban lifted in 5 states," The Manila Chronicle, June 14, 1988, p. 17, col. 2.)

5 Edu v. Ericta, No. L-32096, October 24, 1970, 35 SCRA 481, 487.

6 Supra, 488.

7 TRIBE, AMERICAN CONSTITUTIONAL LAW, 323 (1978).

8 Id.

9 Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708 (1919).

10 Edu v. Ericta, supra.

11 Rubi v. Provincial Board of Mindoro, supra, 704.

12 It is generally presumed, notwithstanding the plenary character of the lawmaking power, that the legislature must act for public purposes. In Pascual v.
Secretary of Public Works [110 Phil. 331 (1960)], the Court nullified an act of Congress appropriating funds for a private purpose. The prohibition was not
embodied in the Constitution then in force, however, it was presumed that Congress could not do it.

13 Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, No. L-24693, July 31, 1967, 20 SCRA 849.

14 Dept. Order No. 1 (DOLE), February 10, 1988.

15 CONST., supra, Art. III, Sec. 1.

16 People v. Cayat, 68 Phil. 12 (1939).

17 Dept. Order No. 1, supra.

18 Supra.

19 Supra.

20 Rollo, Id., 13.

21 See TRIBE, Id., citing Calder v. Bull, 3 U.S. 386 (1798).

22 Id.

23 FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 549-550 (1977).

24 Dept. Order No. 1, supra.

25 CONST., supra, Art. Ill, Sec. 6.

26 Pres. Decree No. 442, Art. 3.

27 Supra, Art. 5.

28 Supra.

29 CONST., supra, Art. XIII, Sec. 3.

30 Supra.

31 Heirs of Juancho Ardona v. Reyes, Nos. L-60549, 60553-60555, October 26, 1983, 125 SCRA 220.
Recruitment and Placement
SECOND DIVISION

G.R. No. 86773 February 14, 1992

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT (SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD,
ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.

NOCON, J.:

This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the National Labor Relations Commission sustaining the labor arbiter, in holding
herein petitioners Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes
liable to pay private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon computed from May 16, 1986 until full payment thereof is
made, as separation pay and other post-employment benefits, and the resolution denying the petitioners' motion for reconsideration of said decision dated
January 9, 1989.

The antecedent facts of the case are as follows:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement entered
into in Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the
sponsoring country (Article 1, Agreement Establishing the SEAFDEC).

On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a probationary basis by the SEAFDEC-AQD and was appointed
Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed
to the position of Professional III and designated as Head of External Affairs Office with the same pay and benefits.

On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private respondent informing him that due to the
financial constraints being experienced by the department, his services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled
to separation benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits (Rollo, p. 153).
Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on March 18, 1987 a complaint against petitioners for non-
payment of separation benefits plus moral damages and attorney's fees with the Arbitration Branch of the NLRC (Annex "C" of Petition for Certiorari).

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as the SEAFDEC-AQD is an international
organization and that private respondent must first secure clearances from the proper departments for property or money accountability before any claim for
separation pay will be paid, and which clearances had not yet been obtained by the private respondent.

A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by the petitioners was politically motivated and in
bad faith. On the other hand, petitioners alleged that private respondent has property accountability and an outstanding obligation to SEAFDEC-AQD in the
amount of P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave benefits amounting to P44,000.00 due to his failure to avail of the
same during his employment with the SEAFDEC-AQD (Annex "D", Id.).

On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16, 1986 until full payment thereof is made, as separation pay and
other post-employment benefits;

2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's fees.

All other claims are hereby dismissed.

SO ORDERED. (Rollo, p. 51, Annex "E")

On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the award of P50,000.00 as actual damages and attorney's fees for
being baseless. (Annex "A", p. 28, id.)

On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.) which was denied on January 9, 1989. Thereafter, petitioners instituted
this petition for certiorari alleging that the NLRC has no jurisdiction to hear and decide respondent Lazaga's complaint since SEAFDEC-AQD is immune from suit
owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent.

The petition is impressed with merit.

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international agency beyond the jurisdiction of public
respondent NLRC.

It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom of Laos, Malaysia. Republic of the Philippines,
Republic of Singapore, Kingdom of Thailand and Republic of Vietnam (Annex "H", Petition).
The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16,1968. Its purpose is as follows:

The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member
governments of the Center, hereinafter called the "Members", and through collaboration with international organizations and governments external to the
Center. (Agreement Establishing the SEAFDEC, Art. 1; Annex "H" Petition) (p.310, Rollo)

SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur, Malaysia as one of the principal departments of
SEAFDEC (Annex "I", id.) to be established in Iloilo for the promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing SEAFDEC
mandates:

1. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in
whose territory its office is located.

As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law (p. 83, 1956 ed.):

Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of
international purposes, economic or social and mainly non-political. Among the notable instances are the International Labor Organization, the International
Institute of Agriculture, the International Danube Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct
juridical personality independent of the municipal law of the State where they are situated. As such, according to one leading authority "they must be deemed
to possess a species of international personality of their own." (Salonga and Yap, Public International Law, 83 [1956 ed.])

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one Director in the governing SEAFDEC Council
(Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.) and that its national laws and regulations shall apply only insofar as its contribution to SEAFDEC
of "an agreed amount of money, movable and immovable property and services necessary for the establishment and operation of the Center" are concerned
(Art. 11, ibid.). It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in Opinion No. 139, Series of 1984 —

4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes
issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44) The obvious reason for this is that the subjection of such an organization to
the authority of the local courts would afford a convenient medium thru which the host government may interfere in there operations or even influence or
control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states. In the case at bar, for instance, the entertainment by the National Labor Relations Commission of Mr.
Madamba's reinstatement cases would amount to interference by the Philippine Government in the management decisions of the SEARCA governing board;
even worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the requirements of Philippine law, which
may not necessarily coincide with the interests of the other member-states. It is precisely to forestall these possibilities that in cases where the extent of the
immunity is specified in the enabling instruments of international organizations, jurisdictional immunity from the host country is invariably among the first
accorded. (See Jenks, Id.; See also Bowett, The Law of International Institutions, pp. 284-1285).
Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction to a
tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the
rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, this Court held:

A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter
of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage
of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which it stemmed principally from the ruling in the cited case
of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The
exceptional circumstances involved in Sibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has
been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather
the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel. (Calimlim vs.
Ramirez, G.R. No. L-34362, 118 SCRA 399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286 [1987]) to justify its assumption of jurisdiction over SEAFDEC is
misplaced. On the contrary, the Court in said case explained why it took cognizance of the case. Said the Court:

We would note, finally, that the present petition relates to a controversy between two claimants to the same position; this is not a controversy between the
SEAFDEC on the one hand, and an officer or employee, or a person claiming to be an officer or employee, of the SEAFDEC, on the other hand. There is before us
no question involving immunity from the jurisdiction of the Court, there being no plea for such immunity whether by or on behalf of SEAFDEC, or by an official
of SEAFDEC with the consent of SEAFDEC (Id., at 300; emphasis supplied).

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local agency of the Philippine government, the
questioned decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989, respectively, are hereby REVERSED and SET ASIDE for having been
rendered without jurisdiction. No costs.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

THIRD DIVISION

DR. PERLA A. POSTIGO, FRANCISCO F. ALMACEN, NARCISO M. ALMENDRAL, NENA E. BASTO, JUANITO M. BERNARDINO, ADELFA B. CRESCINI, MARCIAL R. DE
JESUS, DR. PEDRO LOPEZ DE LEON, PREMIA M. DUMLAO, DAVID F. ESTACIO, LINA G. ESTRELLA, GENOVEVA V. HERNANDEZ, PEDRO A. PARIL, PEDRO H.
SINGSON, ALBERTO A. TUDIO, MARIETTA B. ULIT, LOURDES C. LEGASPI, PEDRO PEROCHO, LANI CORTEZ, GUADALUPE B. MACATANGAY, DOLORES C.
FERNANDEZ, LUMINOSA G. REYNO, ESTRELLA P. SURATOS, LYDIA E. DE BOSCH, ZENAIDA C. CARRIEDO, DR. FINAFLOR C. TAN,

Petitioners,

G.R. No. 155146

- versus -

PHILIPPINE TUBERCULOSIS SOCIETY, INC.,

Respondent.

Promulgated:

January 24, 2006_

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
QUISUMBING, J.:

This petition assails the Decision[1] dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No. 59597, which set aside the Resolution[2] dated January 31,
2000 of the National Labor Relations Commission (NLRC) in NLRC NCR CN 00-02-02148-99. The NLRC had dismissed the respondents appeal from the Decision
of the Labor Arbiter, who ordered the payment of retirement benefits under Republic Act No. 7641 to petitioners. This petition likewise assails the Resolution[3]
dated September 3, 2002 of the Court of Appeals denying petitioners motion for reconsideration.

The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:
Petitioners Dr. Perla A. Postigo, et al., were regular employees of the respondent Philippine Tuberculosis Society, Inc. (PTSI). They retired on various dates from
1996 to 1998. Upon retirement from service, some of the petitioners who were compulsory members of the Government Service Insurance System (GSIS)
obtained retirement benefits from the GSIS.

At the time the petitioners retired, Article 287 of the Labor Code had been amended by Republic Act No. 7641.[4] Rep. Act No. 7641 granted retirement pay to
qualified employees in the private sector, in the absence of any retirement plan or agreement with the company. As the respondent did not have a retirement
plan for its employees, aside from its contribution to the GSIS, petitioners claimed from the respondent their retirement benefits under Rep. Act No. 7641. The
respondent denied their claims on the ground that the accommodation extended by the GSIS to the petitioners removed them from the coverage of the law.

The petitioners then sought the opinion of the Bureau of Working Conditions (BWC) of the Department of Labor and Employment regarding their entitlement
to the retirement benefits provided in Rep. Act No. 7641.[5] The BWC confirmed their entitlement.[6] The same opinion was rendered and submitted by the
respondents legal counsel, Atty. Rene V. Sarmiento, to its Board of Directors.[7] Despite this, respondent PTSI refused to pay the petitioners their retirement
benefits.

The petitioners then filed a complaint before the Labor Arbiter.

In a Decision[8] dated June 30, 1999, the Labor Arbiter declared petitioners entitled to retirement benefits under Rep. Act No. 7641. However, one petitioner,
Dr. Finaflor C. Tan who was awarded her terminal leave pay, was not included in the award of retirement benefits.

Aggrieved, respondent PTSI appealed to the NLRC. Instead of posting the required cash or surety bond equivalent to the amount of the award, the respondent
filed a Motion to Reduce Bond on the ground that the amount awarded by the Labor Arbiter was erroneous. On January 31, 2000, the NLRC dismissed the appeal
for failure to post the required cash or surety bond.

Undaunted, the respondent elevated the matter to the Court of Appeals. On June 13, 2002, the CA reversed the NLRCs decision in this wise:

Indeed, in several occasions, the Supreme Court has cautioned the NLRC to give Article 223 of the Labor Code, as amended, particularly the provisions on
requiring a bond on appeals involving monetary awards, a liberal interpretation in line with the desired objective of resolving controversies on the merits.

Hence, considering the timeliness of the filing of the motion to reduce the appeal bond and the meritorious ground upon which it relies, We believe and so hold
that the legal requirement of posting an appeal bond has been substantially satisfied. Public respondent acted with grave abuse of discretion in dismissing the
appeal without passing upon the motion to reduce the appeal bond.

WHEREFORE, the petition is hereby GRANTED. Resolutions dated 31 January 2000 and 24 May 2000 in NLRC-NCR CN 00-02-02148-99 of public respondent
National Labor Relations Commission are hereby SET ASIDE. The NLRC is directed to act on the Motion to Reduce Bond and to give due course to the Appeal.

SO ORDERED.[9]

The petitioners now submit the following issues for our consideration:

I. Whether or not the remand of the case to the NLRC would only further delay the resolution of this case.
II. Whether or not the Honorable Court of Appeals decided the instant case in accordance with law and applicable jurisprudence and based on the
evidence on record for having failed to apply the jurisprudential precepts that:

a. errors in the computation of the monetary award are properly a subject of appeal and should be ventilated at the appropriate time, not in a mere motion to
reduce bond; and

b. the posting of a bond is an indispensable requirement to perfect an employers appeal.

III. Whether or not Petitioners are entitled to the benefits of the Retirement Pay Law.

IV. Whether or not Petitioners are entitled to interest on their retirement benefits for the unjustified withholding thereof.

V. Whether or not Petitioner Dr. Tan should be made similarly entitled to her retirement pay, which was inadvertently excluded by the Labor Arbiter,
pursuant to the timely motion to render judgment nunc pro tunc she filed before the Labor Arbiter and which was consistently raised all the way up to this
Honorable Court, in order to effect a complete disposition of the instant case.[10]

In short, petitioners raise for our resolution these issues: (1) Did the Court of Appeals err in granting the petition and directing the NLRC to act on the Motion to
Reduce Bond and to give due course to the appeal? and (2) Are the petitioners entitled to benefits under Rep. Act No. 7641?

On the first issue, petitioners contend that (1) errors in the computation of the monetary award are properly a subject of appeal and should be ventilated at the
appropriate time, not in a mere motion to reduce bond; and (2) the posting of a bond is an indispensable requirement to perfect an employers appeal.

Respondent counters that in case the monetary award is being disputed, an appeal may still be filed without the appeal bond, provided that a motion to reduce
bond is filed within the reglementary period.

We think that the Court of Appeals did not err in granting the petition and holding that there was substantial compliance in the posting of a cash or surety bond.
We likewise find Nationwide Security and Allied Services, Inc. v. NLRC[11] and Rosewood Processing, Inc. v. NLRC[12] inapplicable to this case.

In Nationwide Security, the petitioners therein filed a motion to reduce bond instead of an appeal or surety bond. The NLRC denied the motion on the grounds
that petitioners alleged inability to post the bond was without basis, and to grant the motion on the grounds stated therein would be tantamount to ruling on
the merits. In affirming the decision of the NLRC, the Court noted that petitioners had funds from its other businesses to post the required bond. Further, the
errors raised in the motion dealt with matters that would go into the merits of the case and were thus more appropriate in an appeal.

In this case, respondent deferred the posting of the surety bond in view of the alleged erroneous computation by the Labor Arbiter of the monetary award.
While the Labor Arbiter awarded P5,480,484.25[13] as retirement benefits, only P5,072,277.73,[14] according to the respondents computation was due and
owing to the petitioners. Since the motion raised a pure mathematical error, the same may be resolved without going into the merits of the case.
In Rosewood, the petitioner therein filed a motion to reduce the bond with the appeal bond, albeit not in the amount equivalent to the monetary award in the
judgment appealed from. The Court held that the NLRC gravely abused its discretion in dismissing the appeal since a consideration of the merits appearing in
the appeal as well as the filing of the appeal bond show that there was substantial compliance with the rules governing appeal.

Here, aside from the fact that the filing of the motion was justified, the respondent immediately submitted a supersedeas bond[15] with its motion for
reconsideration of the NLRC resolution dismissing its appeal. In Ong v. Court of Appeals,[16] we ruled that the aggrieved party may file the appeal bond within
the ten-day reglementary period following the receipt of the resolution of the NLRC to forestall the finality of such resolution.[17] Hence, while the appeal of a
decision involving a monetary award in labor cases may be perfected only upon the posting of a cash or surety bond and the posting of the bond is an
indispensable requirement to perfect such an appeal, a relaxation of the appeal bond requirement could be justified by substantial compliance with the rule.

Article 223 of the Labor Code provides that an appeal from a decision of the Labor Arbiter must be made within ten calendar days from receipt of a copy of the
decision by the aggrieved party; and if the decision involves a monetary award, an appeal by the aggrieved party may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award. In addition, Section
6, Rule VI of the New Rules of Procedure of the NLRC provides that the Commission may, in justifiable cases and upon motion of the aggrieved party, reduce the
amount of the bond. Further, the filing of the motion to reduce bond does not stop the running of the period to perfect appeal.

Time and again, this Court has ruled that while the above-mentioned rule treats the filing of a cash or surety bond in the amount equivalent to the monetary
award in the judgment appealed from, as a jurisdictional requirement to perfect an appeal, the bond requirement on appeals involving awards is sometimes
given a liberal interpretation in line with the desired objective of resolving controversies on the merits.[18]

The special circumstances in this case, upon which the motion to reduce the bond was predicated, justify the relaxation of the appeal bond requirement.
However, considering that the claim for retirement benefits was made sometime in 1999 to support the petitioners during the twilight years of their lives, there
is no doubt that a remand of the case to the NLRC will only unduly delay the determination of their entitlement to such benefits. Moreover, since the case calls
for the resolution of a question of law, we consider it more appropriate to resolve the appeal at this juncture, rather than remand the case to the NLRC.

We come now to the second issue. The petitioners contend that despite their compulsory membership in the GSIS, they are still covered by Rep. Act No. 7641
for the following reasons: (1) the respondent is registered with the Securities and Exchange Commission as a non-stock and non-profit corporation; hence, it is
a private entity and its employees are employees in the private sector; and (2) the petitioners are not included in the exemptions from coverage of Rep. Act No.
7641.

Respondent PTSI counters that as an employer in the public sector, it is not covered by Rep. Act No. 7641 which applies only to employees in the private sector.
It relies on Section 3, Rule I of the Amended Rules Implementing Title II, Book IV of the Labor Code, to wit:

SEC. 3. Employer(a) The term shall mean any person natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry,
undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment.

(b) An employer shall belong to either:

(1) The public sector covered by the GSIS, comprising the National Government, including government-owned or controlled corporations, the Philippine
Tuberculosis Society, the Philippine National Red Cross, and the Philippine Veterans Bank; or
(2) The private sector covered by the SSS, comprising all employers other than those defined in the immediately preceding paragraph.

Respondents reliance on the afore-quoted rules is unfounded. The definition of a public sector employer as quoted above is relevant only for purposes of
coverage under the Employees Compensation and State Insurance Fund. Instead, it is the implementing rules of Title II, Book VI of the Labor Code, which provides
for the coverage and exemptions of retirement benefits. Thus:

SECTION 1. General Statement on Coverage. This Rule shall apply to all employees in the private sector, regardless of their position, designation or status and
irrespective of the method by which their wages are paid, except to those specifically exempted under Section 2 hereof. As used herein, the term Act shall refer
to Republic Act No. 7641 which took effect on January 7, 1993.

SEC. 2. Exemption. This Rule shall not apply to the following employees:

2.1 Employees of the National Government and its political subdivisions, including Government-owned and/or controlled corporations, if they are covered by
the Civil Service Law and its regulations.

...

Having determined the applicable implementing rules, we now proceed to resolve whether the respondent is a private corporation or a public corporation; and
consequently, whether the petitioners are employees in the private sector or in the public sector.

On this score, the case of Feliciano v. Commission on Audit,[19] finds strong relevance. Although with different factual circumstances, the Court discussed therein
the two classes of corporations recognized by the 1987 Constitution. The first refers to private corporations created under a general law; the second refers to
government-owned or controlled corporations created by special charters. We also reiterated that under Section 14 of the Corporation Code, [a]ll corporations
organized under this Code shall file with the Securities and Exchange Commission articles of incorporation

The respondent was incorporated on March 11, 1960 as a non-profit, benevolent and non-stock corporation under the Corporation Code.[20] Having been
created under the general corporation law instead of a special charter, we hold that the respondent is a private and not a governmental corporation. More so,
Section 2(1), Article IX(B) of the 1987 Constitution provides:

SECTION 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or
controlled corporations with original charters.

Extant on the records is the respondents admission that although its employees are compulsory members of the GSIS, said employees are not governed by the
Civil Service Law. If the respondent is truly a government-owned or controlled corporation, and petitioners are employees in the public sector, then, they should
have been covered by said law. The truth, however, is that, the respondent is a non-profit but private corporation organized under the Corporation Code, and
the petitioners are covered by the Labor Code and not by the Civil Service Law.

From the foregoing, it is clear to us that the petitioners are employees in the private sector, hence entitled to the benefits of Rep. Act No. 7641.
Even assuming that by virtue of their compulsory inclusion in the GSIS, the petitioners became employees in the public sector, they are still entitled to the
benefits of Rep. Act No. 7641 since they are not covered by the Civil Service Law and its regulations. This much is certain upon reading the implementing rules
of Title II, Book VI of the Labor Code as afore-cited as well as the Labor Advisory on Retirement Pay Law.[21] Under the said advisory, the coverage of, as well as
the exclusion from, Rep. Act No. 7641 has been delineated as follows:

RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of their position, designation or status and irrespective of the
method by which their wages are paid. They shall include part-time employees, employees of service and other job contractors and domestic helpers or persons
in the personal service of another.

The law does not cover employees of retail, service and agricultural establishments or operations employing not more than (10) employees or workers and
employees of the National Government and its political subdivisions, including Government-owned and/or controlled corporations, if they are covered by the
Civil Service Law and its regulations. (Underscoring ours.)

Neither do we find merit in the respondents argument that the rationale behind the enactment of Rep. Act No. 7641 justifies the exclusion of employees in the
public sector, who are already enjoying retirement benefits under the GSIS law, from the New Retirement Law.

We direct the respondents attention to Section 2 of Rep. Act No. 7641, to wit:

SEC. 2. Nothing in this Act shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices.

In addition, Rule II of the Rules Implementing Book VI of the Labor Code provides as follows:

SEC. 8. Relation to agreements and regulations. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits, supplements or
payments as provided in existing laws, individual or collective agreements or employment practices or policies.

...

In Juco v. NLRC,[22] we clarified that employees of government-owned and controlled corporations with special charters are covered under the Civil Service. On
the other hand, employees of government-owned and controlled corporations under the Corporation Code are governed by the provisions of the Labor Code.

The Philippine Tuberculosis Society, Inc. (PTSI) belongs to the latter category and, therefore, covered by Rep. Act No. 7641 which is an amendment to the Labor
Code. The accommodation under Rep. Act No. 1820 extending GSIS coverage to PTSI employees did not take away from petitioners the beneficial coverage
afforded by Rep. Act No. 7641. Hence, the retirement pay payable under Article 287 of the Labor Code as amended by Rep. Act No. 7641 should be considered
apart from the retirement benefit claimable by the petitioners under the social security law or, as in this case, the GSIS law.

As to the alleged prolonged refusal by the respondent to pay the petitioners their retirement benefits, we do not think that the respondents stance was entirely
in bad faith. The respondent harbored the honest belief that their compulsory coverage in the GSIS converted it into a public corporation excluded from the
coverage of Rep. Act No. 7641. As noted by this Court, the respondent even filed a supersedeas bond, albeit belatedly, with its motion for reconsideration of the
NLRC resolution dismissing its appeal. Such act only demonstrates that the respondent filed the appeal in good faith. We could not speculate and say that
respondent did not intend to pay the petitioners their retirement benefits in case the appeal is dismissed.
On the matter of petitioner Dr. Finaflor C. Tan, records show she has two causes of action: (1) non-payment of terminal leave pay; and (2) non-payment of
retirement benefits.[23] While the Labor Arbiter ruled that she is entitled to the commutation into cash of her unused leave credits which is the equivalent of
her terminal leave pay, the former did not include her in the award of retirement benefits. This was properly raised in the Motion to Render Judgment Nunc Pro
Tunc[24] filed by the petitioners on October 29, 1999 before the NLRC. We see no cogent reason why she should be excluded from the over-all award of
retirement benefits considering that she has participated in the proceedings before the Labor Arbiter.

WHEREFORE, this petition is PARTIALLY GRANTED. The Decision dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No. 59597, directing the NLRC to act
on the Motion to Reduce Bond and to give due course to the Appeal, as well as its Resolution denying the petitioners motion for reconsideration, are MODIFIED.

Consequently, it is DECLARED that the petitioners are entitled to retirement benefits under Rep. Act No. 7641. In addition to retirement benefits, petitioner Dr.
Finaflor C. Tan is entitled to the commutation into cash of her unused leave credits which is the equivalent of her terminal leave pay. Likewise, the petitioners
are entitled to attorneys fees, equivalent to 10% of the total monetary award.

Let this case be remanded to the Labor Arbiter for the computation of the retirement benefits and terminal leave pay above-mentioned. No pronouncement as
to costs.

SO ORDERED.

[1] Rollo, pp. 37-46. Penned by Associate Justice Romeo A. Brawner, with Associate Justices Jose L. Sabio, Jr., and Mario L. Guaria III concurring.

[2] Records, pp. 236-238.

[3] Rollo, p. 27.

[4] An Act Amending Article 287 of Presidential Decree No. 442, As Amended, Otherwise Known As the Labor Code of the Philippines, By Providing for Retirement
Pay to Qualified Private Sector Employees in the Absence of any Retirement Plan in the Establishment, effective on 07 January 1993.

[5] Records, pp. 24-25.

[6] Id. at 26-31.

[7] Id. at 33-34.

[8] Id. at 93-109.

[9] Rollo, p. 45.

[10] Id. at 750-751.

[11] G.R. No. 123204, 11 July 1997, 275 SCRA 394.

[12] G.R. Nos. 116476-84, 21 May 1998, 290 SCRA 408.

[13] Records, p. 109.

[14] Id. at 125.

[15] Id. at 247-252.

[16] G.R. No. 152494, 22 September 2004, 438 SCRA 668.

[17] Id. at 673.

[18] See Cosico, Jr. v. NLRC, G.R. No. 118432, 23 May 1997, 272 SCRA 583, 593; Star Angel Handicraft v. National Labor Relations Commission, G.R. No. 108914,
20 September 1994, 236 SCRA 580, 585; Blancaflor v. NLRC, G.R. No. 101013, 2 February 1993, 218 SCRA 366, 370-371; YBL (Your Bus Line) v. NLRC, G.R. No.
93381, 28 September 1990, 190 SCRA 160, 164.

[19] G.R. No. 147402, 14 January 2004, 419 SCRA 363.

[20] Records, pp. 35-37.

[21] Dated 24 October 1996.

[22] G.R. No. 98107, 18 August 1997, 277 SCRA 528, 533.

[23] Records, pp. 6-7.

[24] Id. at 214-215.

THIRD DIVISION

MAGDALENA HIDALGO, EDITHA GONZALES, EUNICE P. MALIMBAN, CHRISTINE VIDAL, CHRISTIAN CALLEJO, CONSOLACION P. MORENO, SHERINA F. DOREZA,
LUZ T. SUCGANG, PRISCILLA F. ESTOYE, REYNOSO V. GALLANO, ROSITA L. SENEDRIN, JULITA P. DE CASTRO, JULIETA F. PALAFOX, ERLINDO V. GALANO, JR.,
ROSALINDA R. SALUD, EVANGELINE D. EVANGELISTA, BABYLINDA N. NOHAY, BELINDA D. CARDONA, WILMA D. BARCENA, ANABELLE P. MOJADAS, LEONORA
GRANADO, RICARDO R. BARANGCO, ROMEO O. MAICON, DANILO B. ENRICO, MARIANILA SITO, MERLINA A. CATAAN, NEMIA E. PIANO, SOLEDAD P. RAMOS,
DANTE L. PESIGAN, EDA A. JUNIO, MERCEDES R. NAFARRETE, MARILYN S. GONO, LUZ SAMSON,

ERNESTO C. DESEAR, TERESITA G. GONZAGA, TERESITA E. EUSTAQUIO, VIRGINIA S. MONTEMAYOR, CRISTINA ABANTO, HENRY C. AMORTIZADO, FRANKIE
VALERA, NELIA G. CAMORO, JOYSIE LABRADOR, GERTRUDES FALALES, OPHELIA G. MUSAMAREN, PETRA M. IRINGAN, FRANCISCO C. CAPIZ, JR., RICKY
ECHIEVERA, MA. ELGIN O. ABAIS, JOHN CARANAN, ROMEO LAGUNA, REBECCA C. BUGUA, NELSON FERRER, HELEN MANRESA, CONSORCIA FAJANEL, MA.
JUANA A. GOLFO, RUBYLYN D. DUMANDAL, FLORECERFINA S. BANDOLIN, FLORENCIO A. QUILATON, JR., GLORIA J. DOMINGO, MAY MACUGAY, MARY ANN
CLAUDIO, ELVIRA KALALO, DOROTEA MARTINEZ, LIGAYA PANEDA, and RENATO AGUILAR,

Petitioners,

- versus -

G.R. No. 179793

Promulgated:

july 5, 2010

REPUBLIC OF THE PHILIPPINES, for and in behalf of the ARMED FORCES OF THE PHILIPPINES COMMISSARY AND EXCHANGE SERVICES (AFPCES),

Respondent.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
VILLARAMA, JR., J.:

Which quasi-judicial agency has jurisdiction to hear and decide complaints for illegal dismissal against an adjunct government agency engaged in proprietary
function? Should the complaint be lodged before the National Labor Relations Commission (NLRC) or to the Civil Service Commission (CSC)? This is the focal issue
that needs to be resolved in this petition for review on certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. SP No. 84801
nullifying the Labor Arbiters and the NLRCs rulings.

Republic of the Philippines has represented respondent Armed Forces of the Philippines Commissary and Exchange Services (AFPCES) in this recourse. AFPCES is
a unit/facility of the Armed Forces of the Philippines (AFP) organized pursuant to Letter of Instruction (LOI) No. 31, which was issued on November 20, 1972 by
then President Ferdinand Marcos. Under LOI No. 31-A, which amended LOI No. 31, an amount of P5 million was set aside from the Philippine Veterans Claims
Settlement Fund as seed capital for the AFPCES to be utilized and administered for the operations and management of all commissary facilities in the military
establishments all over the country. AFPCES was intended to benefit the veterans, their widows and orphans, and the members of the AFP and their dependents.
In December 1972, the AFP General Headquarters (AFP GHQ) issued Staff Memorandum No. 5 formally organizing the AFPCES.[3]

In order to socialize the services of AFPCES, General Order No. 920 was issued by the AFP GHQ on July 13, 1976 reorganizing the AFPCES as an AFP-Wide Service
Support Unit. General Order No. 920 also provided that all installation Commissary Exchange Service including their equipment, records and assets shall be
assigned and absorbed by the AFPCES.[4] This, in effect, centralized the management of the commissary exchange services to the AFPCES. On February 26, 1987,
General Order No. 138 was issued activating the AFPCES as a regular unit under the direct control of the AFP Chief of Staff.[5]

Petitioners, on the other hand, numbering 65 in all,[6] were hired as regular employees of AFPCES. Some worked as food handlers in AFPCES catering business
and served during social functions held within its premises. Others occupied positions as computer technicians, auditors, record clerks, cashiers, canvassers,
bookkeepers, and warehousemen.[7] Several of them had worked with AFPCES for a number of years, ranging from 4 to 31 years. Since the start of their
employment, petitioners were enrolled in the Social Security System (SSS), with respondent AFPCES paying its corresponding employers share in their monthly
SSS contribution.[8]

Between 1999 and 2001, however, AFPCES advised petitioners to undergo an indefinite leave of absence without pay, allegedly upon a conditional promise that
they would be allowed to return to work as soon as AFPCES tax subsidy is released and upon resumption of its store operations.[9]

When AFPCES failed to recall petitioners to their work as allegedly promised, petitioners filed a complaint for illegal (constructive) dismissal with damages against
AFPCES before the NLRC.[10] On July 4, 2002, after efforts to forge an amicable settlement had failed, Labor Arbiter Salimathar V. Nambi rendered a decision[11]
in favor of petitioners by ordering AFPCES to pay a total of P16,007,996.00 as back wages, 13th month pay and separation pay to petitioners.

AFPCES filed an appeal[12] praying, among others, that it be exempted from posting the required appeal bond. The NLRC, however, denied the plea and gave
AFPCES ten (10) days to post an appeal bond. The NLRC likewise denied AFPCES motion for reconsideration. Meanwhile, petitioners sought the immediate
execution of the Labor Arbiters decision.
AFPCES filed a petition before the appellate court docketed as CA-G.R. SP. No. 84801, and prayed among others, for the issuance of a temporary restraining
order to enjoin the NLRC from dismissing the appeal and granting execution of the Labor Arbiters decision.

On October 22, 2004, the Court of Appeals issued a Resolution denying AFPCES prayer for the issuance of a temporary restraining order for lack of merit.[13]

Subsequently, on October 29, 2004, the NLRC dismissed AFPCES appeal following its failure to post the required appeal bond.[14] On December 7, 2004,
petitioners moved for the execution of the Labor Arbiters decision.

On March 17, 2005, the enforcing sheriffs of the NLRC issued a Progress Report[15] indicating that writs of execution and garnishment have been issued against
AFPCES funds deposited with the Land Bank of the Philippines to satisfy the Labor Arbiters award. The said report noted that AFPCES has reinstated petitioners
to their former positions although Capt. Preciliano M. Ruiz, AFPCES commander and general manager, gave no assurance regarding the payment of petitioners
salaries.[16]

On April 7, 2005, the Court of Appeals granted AFPCES motion to lift the writ of garnishment and to stay the execution of the Labor Arbiters monetary award.
Undaunted, petitioners were able to secure an alias writ of execution after due hearing before the Labor Arbiter. The issue was again brought before the Court
of Appeals.

On August 31, 2006, the appellate court promulgated the assailed Decision in CA-G.R. SP No. 84801 granting AFPCES petition. The Court of Appeals, after applying
the Supreme Courts pronouncement in Duty Free Philippines v. Mojica,[17] explained that since AFPCES is a governmental agency that has no personality
separate and distinct from the AFP, petitioners are considered civil service employees, and that complaints for illegal dismissal should therefore be lodged not
with the Labor Arbiter but with the CSC.[18]

Aggrieved, petitioners moved for a reconsideration of the said decision, but the appellate court denied the same for lack of merit.[19]

Hence, this petition.

Pivotal to the resolution of this petition is a determination of the classification of petitioners employment status with respondent AFPCES. AFPCES asserts that
since petitioners are government employees, jurisdiction over their complaints lies not with the NLRC, but with the CSC. Petitioners, on the other hand, contend
that since they do not belong to the approved plantilla of government personnel, their complaints for illegal dismissal was properly made before the NLRC.

Let us clarify the matter.

Presidential Decree (PD) No. 807 or the Civil Service Decree of the Philippines[20] declares that the Civil Service Commission shall be the central personnel agency
to set standards and to enforce the laws governing the discipline of civil servants.[21] PD No. 807 categorically described the scope of the civil service as
embracing every branch, agency, subdivision, and instrumentality of the government, including every government-owned or controlled corporations whether
performing governmental or proprietary function;[22] and construed an agency to mean any bureau, office, commission, administration, board, committee,
institute, corporation, whether performing governmental or proprietary function, or any other unit of the National Government, as well as provincial, city or
municipal government, except as otherwise provided.[23]
Subsequently, Executive Order (EO) No. 180[24] defined government employees as all employees of all branches, subdivisions, instrumentalities, and agencies
of the Government, including government-owned or controlled corporations with original charters.[25] It provided that the Civil Service and labor laws shall be
followed in the resolution of complaints, grievances and cases involving government employees.[26]

In Philippine Refining Company v. Court of Appeals,[27] we declared that AFPCES is a government agency that is not immune from suit since it is engaged in
proprietary activities. We find no compelling reason to deviate from such pronouncement. The historical background of its creation and establishment indicates
that AFPCES is an agency under the direct control and supervision of the AFP as it was established to take charge of the operations and management of all
commissary facilities in military establishments all over the country. By clear implication of law, all AFPCES personnel should therefore be classified as
government employees and any appointment, promotion, discipline and termination of its civilian staff should be governed by appropriate civil service laws and
procedures.

Interestingly, in the course of the proceedings, petitioners did not question or refute such classification of the AFPCES. They, in fact, averred that AFPCES is not
created by a special law to classify it as a government-owned or controlled corporation with original charter, but a mere entity of the AFP. They also admit that
AFPCES is without any corporate features as it is merely an agency performing proprietary functions not only for the benefit of veterans, their widows and
orphans, and the members of the AFP, but for the public in general.[28]

Petitioners, however, assert that the pronouncement in Duty Free Philippines should not be applied in the instant case since the factual milieu of the said case
is different from the case at bar.

We partly agree with petitioners.

Like AFPCES, Duty Free Philippines is also a government agency engaged in proprietary activities without separate corporate existence. Unlike Duty Free
Philippines, however, AFPCES committed acts which created an impression upon petitioners that they fall within the coverage of pertinent labor laws and not
the civil service law. First, since the start of their employment and until their unceremonious indefinite suspension from work, AFPCES have enrolled petitioners
to the SSS, the primary governmental agency engaged in providing social security benefits to employees of the private sector, instead of the Government Service
Insurance System (GSIS) as mandated by Commonwealth Act No. 186.[29] AFPCES even remitted its corresponding employers share to petitioners SSS
contributions. Such practice has been continuously observed by the AFPCES in the span of more than three (3) decades.

Second, the hiring, appointment and discipline of AFPCES employees never went through the proper procedure as required by pertinent civil service laws and
regulations. In a formal request made by Feliciano M. Gacis, Jr., Officer-in-Charge of the Office of the Assistant Secretary for Personnel of the Department of
National Defense, inquiring from the CSC whether petitioners are indeed government employees covered by the Civil Service Law and CSC regulations, the said
Commission issued a Resolution containing the following findings:

It is explicit that the aforequoted LOI merely set aside a fund in the amount of five (5) [m]illion [p]esos for the operation of a commissary in all military
establishments in the country for the benefit of veterans, their widows and orphans, and the members of the Armed Forces of the Philippines. And the fund and
commissary shall be managed by an entity called AFPCES. It can, thus, be said that the AFPCES is a mere entity in the Armed Forces of the Philippines that is
tasked to manage a commissary in different military establishments for the benefit of those mentioned in the said LOI. Hence, it does not necessarily follow that
all its civilian employees are considered government employees covered by and subject to the Civil Service Law and rules.

Section 2 (1), Article IX B of the 1987 Constitution defines the scope of the civil service, as follows:
Sec. 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled
corporations with original charters.

From the aforequoted constitutional provision, it is clear that only government-owned or controlled corporations with original charters are embraced by the
civil service. Hence, the question now that needs to be answered is: Can LOI 31-A be considered as the charter of the AFPCES such that it can be considered a
government-owned or controlled corporation embraced by the Civil Service Law and rules?

After a careful evaluation and scrutiny of LOI 31-A, the Commission is of the opinion and so holds that the said LOI could hardly be considered as the charter of
AFPCES. It should be noted that the said LOI does not specify the composition of AFPCES, its specific functions, its governing board, its powers and the limitation
of the exercise thereof. In short, the said LOI does not provide the AFPCES corporate features. This being the case, the AFPCES cannot be considered a
government-owned or controlled corporation with original charter. In fact, the AFPCES does not exercise corporate powers. Accordingly, its civilian employees
cannot be considered as government employees covered by the Civil Service Law and rules.

xxxx

Further, there is neither a showing that the positions of civilian employees of the AFPCES are included in the plantilla of personnel duly approved by the
Department of Budget and Management (DBM) nor said employees were issued appointments attested by the Commission.

WHEREFORE, the Commission hereby rules that all civilian employees of the Armed Forces of the Philippines Commissary and Exchange Service are not
government employees covered and embraced by the Civil Service Law and rules.[30]

Indeed, petitioners employment to the AFPCES should have been made in conformity with pertinent civil service regulations since AFPCES is a government
agency under the direct control and supervision of the AFP. However, since this did not happen, petitioners were placed under an anomalous situation with
AFPCES insisting that they are government employees under the jurisdiction of the CSC, but with the CSC itself disavowing any jurisdiction over them.

This notwithstanding, since it cannot be denied that petitioners are government employees, the proper body that has jurisdiction to hear the case is the CSC.
Such fact cannot be negated by the failure of respondents to follow appropriate civil service rules in the hiring, appointment, discipline and dismissal of
petitioners. Neither can it be denied by the fact that respondents chose to enroll petitioners in the SSS instead of the GSIS. Such considerations cannot be used
against the CSC to deprive it of its jurisdiction. It is not the absence or presence of the required appointment from the CSC, or the membership of an employee
in the SSS or in the GSIS that determine the status of the position of an employee. We agree with the opinion of the AFP Judge Advocate General that it is the
regulation or the law creating the Service that determines the position of the employee.[31]

Petitioners are government personnel since they are employed by an agency attached to the AFP. Consequently, as correctly observed by the Court of Appeals,
the Labor Arbiters decision on their complaint for illegal dismissal cannot be made to stand since the same was issued without jurisdiction. Any decision issued
without jurisdiction is a total nullity, and may be struck down at any time.[32]

However, given petitioners peculiar situation, the Court is constrained not to deny the petition entirely, but instead to refer it to the CSC pro hac vice. The Court
notes that this case has been pending for nearly a decade, but deciding it on the merits at this juncture, while ideal and more expeditious, is not possible. The
records of the case fail to adequately spell out the validity of the complaint for illegal dismissal as well as the actual amount of the claim. In fact, the records
even fail to disclose the amount of salary received by petitioners while they were engaged to work in AFPCES facilities. But rather than directing petitioners to
re-file and relitigate their claim before the CSC a step which will only duplicate much of the proceedings already accomplished the Court deems it best, pro hac
vice, to order the NLRC to forward the entire records of the case directly to the CSC which is directed to take cognizance of the case. The CSC is directed to
promptly resolve whether petitioners were illegally dismissed from the service, and whether they are entitled to their monetary claims. Further, taking into
consideration AFPCES failure to observe the proper procedure required by pertinent civil service rules and regulations regarding the hiring, appointment and
placement of petitioners, we likewise caution the CSC not to use the AFPCES inefficiency to prejudice the status of petitioners employment or to deny whatever
right they may have under pertinent civil service laws. To hold otherwise would only be giving premium to AFPCES delinquent attitude towards petitioners in
particular, and to the civil service in general. The AFPCES cannot be made to have its cake and eat it, too.

WHEREFORE, the petition is PARTLY GRANTED. The Court of Appeals Decision dated August 31, 2006 in CA-G.R. SP No. 84801 and its Resolution dated September
18, 2007 are hereby SET ASIDE.

The National Labor Relations Commission (NLRC) is DIRECTED to forward the records of the case (NLRC-NCR Case No. 03-01533-2001-NLRC NCR Case No. 032920-
02) to the Civil Service Commission (CSC), which is ordered to promptly proceed with the resolution of the case on the merits with deliberate dispatch.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice
Chairperson

ARTURO D. BRION

Associate Justice

LUCAS P. BERSAMIN

Associate Justice

ROBERTO A. ABAD

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts
Division.

CONCHITA CARPIO MORALES

Associate Justice

Chairperson, Third Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA

Chief Justice

* Additional member per Special Order No. 843.

[1] Rollo, pp. 11-23. Penned by Associate Justice Amelita G. Tolentino, with Associate Justices Portia Alio-Hormachuelos and Arcangelita Romilla-Lontok
concurring.

[2] Id. at 24-26.

[3] Id. at 101-102.

[4] Id. at 102.

[5] Id. at 13.

[6] Id. at 11-12. Magdalena Hidalgo, Eunice Malimban, Christian Callejo, Rosalinda R. Salud, Babylinda N. Nohay, Wilma D. Barcena, Leonora Granado, Romeo O.
Maicon, Marianila Sito, Nemia E. Piano, Editha Gonzales, Christine Vidal, Consolacion P. Moreno, Evangeline D. Evangelista, Belinda D. Cardona, Anabelle P.
Mojadas, Ricardo R. Barangco, Danilo B. Enrico, Merlina A. Cataan, Soledad P. Ramos, Dante L. Pesigan, Mercedes R. Nafarrete, Luz Samson, Teresita G. Gonzaga,
Virginia S. Montemayor, Henry C. Amortizado, Nelia G. Camoro, Gertrudes Falales, Petra M. Iringan, Ricky Echievera, John Caranan, Sherina F. Doreza, Priscilia
F. Estoye, Rosita L. Senedrin, Juliet F. Palafox, Rebecca C. Bugua, Helen Manresa, Ma. Juana A. Golfo, Eda A. Junio, Marilyn S. Gono, Ernesto C. Desear, Teresita
E. Eustaquio, Cristina Abanto, Frankie Valera, Joysie Labrador, Ophelia G. Musamarin, Francisco G. Capiz, Jr., Ma. Elgin O. Abais, Romeo Laguna, Luz T. Sucgang,
Reynoso V. Gallano, Julita P. De Castro, Erlindo V. Galano, Jr., Nelson Ferrer, Consorcia Fajanel, Rubylyn D. Dumandal, Florecerfina S. Bandolin, Gloria J. Domingo,
Mary Ann Claudio, Dorotea Martinez, Florencio A. Quilaton, Jr., May Macugay, Elvira Kalalo, Ligaya Paneda and Renato Aguilar.

[7] Id. at 32.

[8] Id. at 32-33.

[9] Id. at 14.

[10] Docketed as NLRC-NCR Case No. 00-03-01533-2001 (NLRC-NCR CA No. 032920-02).

[11] CA rollo, pp. 35-41.

[12] Id. at 42-54.

[13] Id. at 69-70.

[14] Id. at 121-123.

[15] Id. at 159.

[16] Id. at 159-160.

[17] G.R. No. 166365, September 30, 2005, 471 SCRA 776.

[18] Rollo, p. 19.

[19] Id. at 24-26.

[20] Took effect on October 6, 1975 and superceded Republic Act No. 2260, or the Civil Service Act of 1959.

[21] Section 2, Art. II, PD No. 807.

[22] Section 4, Art. IV, Id.

[23] Section 3, Art. III, Id.

[24] PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT EMPLOYEES, CREATING A PUBLIC SECTOR LABOR-MANAGEMENT
COUNCIL, AND FOR OTHER PURPOSES. It took effect on June 1, 1987.

[25] Section 1, EO No. 180.

[26] Section 16, Id.

[27] G.R. No. 118794, May 8, 1996, 256 SCRA 667, 675.
[28] Rollo, p. 40.

[29] AN ACT TO CREATE AND ESTABLISH A GOVERNMENT SERVICE INSURANCE SYSTEM, TO PROVIDE FOR ITS ADMINISTRATION, AND TO APPROPRIATE THE
NECESSARY FUNDS THEREFOR, otherwise known as the Government Service Insurance Act. The Act took effect on November 14, 1936.

[30] Rollo, pp. 104-106. Civil Service Commission Resolution No. 010051 dated January 5, 2001.

[31] CA rollo, p. 46.

[32] Solid Homes, Inc. v. Payawal, G.R. No. 84811, August 29, 1989, 177 SCRA 72, 80.