National Housing Corp. vs.

Juco
134 SCRA 172
January 17, 1985

Facts:

Juco was an employee of the NHA. He filed a complaint for illegal dismissal w/ MOLE but his case was
dismissed by the labor arbiter on the ground that the NHA is a government-owned corporation and
jurisdiction over its employees is vested in the CSC. On appeal, the NLRC reversed the decision and
remanded the case to the labor arbiter for further proceedings. NHA in turn appealed to the SC.

Issue:

Whether employees of the National Housing Corporation, a GOCC without original charter, covered by
the Labor Code or by laws and regulations governing the civil service.

Held:

Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil Service embraces every branch,
agency, subdivision and instrumentality of the Government, including every government owned and
controlled corporation. The inclusion of GOCC within the embrace of the civil service shows a deliberate
effort at the framers to plug an earlier loophole which allowed GOCC to avoid the full consequences of
the civil service system. All offices and firms of the government are covered.

This constitutional provision has been implemented by statute PD 807 is unequivocal that personnel of
GOCC belong to the civil service and subject to civil service requirements. "Every" means each one of a
group, without exception. This case refers to a GOCC. It does not cover cases involving private firms
taken over by the government in foreclosure or similar proceedings.

For purposes of coverage in the Civil Service, employees of government owned or controlled corps.
whether created by special law or formed as subsidiaries are covered by the Civil Service Law, not the
Labor Code, and the fact that private corporation owned or controlled by the government may be
created by special charter does not mean that such corporation not created by special law are not
covered by the Civil Service.

The infirmity of the resp's position lies in its permitting the circumvention or emasculation of Sec. 1, Art.
XII-B [now Art IX, B, Sec. 2 (1)] of the Constitutional. It would be possible for a regular ministry of
government to create a host of subsidiary corporation under the Corp. Code funded by a willing
legislature. A government-owned corp. could create several subsidiary corps. These subsidiary
corporation would enjoy the better of two worlds. Their officials and employees would be privileged
individuals, free from the strict accountability required by the Civil Service Dec. and the regulations of
the COA. Their incomes would not be subject to the competitive restraint in the open market nor to the
terms and conditions of civil service employment.

Conceivably, all government owned or controlled corporation could be created, no longer by special
charters, but through incorporation under the general law. The Constitutional amendment including
such corporation in the embrace of the civil service would cease to have application. Certainly, such a
situation cannot be allowed.