Light Rail Transit Authority vs. Venus, Jr.

March 24, 2006

485 SCRA 361
Puno, J.

Facts: LRTA (Light Rail Transit Authority) entered into
a 10-year agreement with METRO which states that
METRO shall manage and operate the rail way transit
system in Metro Manila. Pursuant to this agreement,
METRO hired employees which included the private
respondents. Metro, then, entered into a collective
bargaining agreement with PIGLAS-METRO. METRO
also executed a Deed of Sale for the shares of stocks in
favor of LRTA. However, despite the execution of such
Deed of Sale, METRO and LRTA still proceeded with
their original agreement- METRO acting as a manager
and operator of LRTA.

The Union, due to a deadlock, then filed a Notice of
Strike where the employees picketed in various
substations which caused the operations of the rail way
transit to be paralyzed. Despite the assumption of
jurisdiction of the Secretary of the Department of Labor
and the various notices posted and published, the
employees still failed to report and return to their work.
Hence, they were considered dismissed from
employment.

The respondents then filed a complaint for illegal
dismissal against petitioner LRTA and METRO. The
Labor Arbiter rendered a decision in favor of the
respondent adjudging that the said respondents are
entitled to money claims against both LRTA and METRO
and was also illegally dismissed. The NLRC reversed and
set aside the decision of the labor arbiter. The Court of
Appeals, however, reinstated the decision of the Labor
Arbiter. Hence the current petition.

The petitioner LRTA contends that there exists no
employer-employee relationship between it and the
respondents for it is METRO that hired them pursuant
to the 10-year agreement METRO and LRTA entered
into. It also argues that since it is a government-owned
and controlled corporation with an original charter, the
provisions of the Labor Code is not applicable upon them
and that by being a GOCC, it is the Civil Service
Commission that has jurisdiction over them not DOLE.

On the other hand, respondents contend that although
METRO is not fully-owned by LRTA, the fact that
METRO is a mere conduit of LRTA is sufficient enough
to warrant the piercing of the veil of corporate
personality of LRTA.

Issue: Whether or not LRTA is subject to the
jurisdiction of the Department of Labor and the
provisions of the Labor Code thereby allowing the
respondents to collect money claims from the petitioner.

Ruling: The Supreme Court ruled that LRTA is a
government-owned and controlled corporation which
means that it is not to be subjected under the jurisdiction
of the DOLE and the provisions of the Labor Code. It is
the Civil Service Commission that has jurisdiction over
LRTA. As expressly stated in Section 2 (1) of Article 9-B
of the 1987 Constitution, civil service embraces all
branches, subdivisions, instrumentalities and agencies of
the government, including government-owned and
controlled corporations with original charters. It is
submitted that a GOCC with an original charter is a
GOCC that is created by a special law and not by the
general corporation law. And, as a rule, GOCCs with an
original charter (created by a special law) is under the
jurisdiction of the Civil Service Commission and GOCCs
created under the general corporation law is under the
jurisdiction of the Department of Labor. Since LRTA is a
government-owned and controlled corporation created
by a special law, EO 603, jurisdiction falls with the Civil
Service Commission.

However, in the case of METRO, it is a government-
owned and controlled corporation without an original
charter and which is created under the general
corporation law and is therefore, subject to the
jurisdiction of the Department of Labor and the
provisions of the Labor Code.

The Supreme Court deemed the respondents as
employees of METRO and therefore they are subject to
the rights and privileges granted by the Labor Code. This
is because despite the acquisition of the shares of stock
of METRO by LRTA, the respondents remained to be
employees of METRO for there was never an intention to
make them employees of LRTA.