GSIS Family Bank Employees Union vs. Villanueva

Non-chartered government-owned or controlled corporations incorporated under the Corporation Code are covered by Republic Act No. 10149 (GOCC Governance Act of 2011) and are therefore prohibited from negotiating the economic terms of collective bargaining agreements with their employees; instead, compensation and benefits are governed by the Compensation and Position Classification System established under the law and subject to the President's approval.

Royal Savings Bank was organized on July 22, 1969 as a private thrift bank under the Corporation Code. After financial distress and receivership in 1984, the Government Service Insurance System (GSIS) acquired majority ownership through rehabilitation agreements, eventually owning 99.55% of the bank's outstanding capital stock. The bank was renamed Comsavings Bank and later GSIS Family Bank in 2001. Despite government acquisition, it continued operating as a private corporation without an original charter until its closure in 2016.

• Royal Savings Bank was organized on July 22, 1969 under the Corporation Code as a private stock savings and loan association.
• In 1984, after the Central Bank placed it under receivership, GSIS acquired control through a rehabilitation agreement, eventually owning 99.55% of outstanding shares.
• The bank was renamed GSIS Family Bank in 2001 but remained incorporated under the Corporation Code without a special charter.
• In 2004, the BSP General Counsel opined that the bank was not a government bank because it was organized under the general corporation law for private needs, unlike banks created by special law for public needs.
• On September 8, 2010, President Aquino issued Executive Order No. 7 imposing a moratorium on salary increases for GOCC employees.
• On June 6, 2011, Republic Act No. 10149 (GOCC Governance Act) was enacted, creating the Governance Commission for GOCCs (GCG) and mandating a Compensation and Position Classification System (CPCS).
• In January and March 2013, the GCG advised GSIS Family Bank that as a government financial institution, it was unauthorized to enter into negotiations for the economic terms of CBAs because compensation was provided by law, not subject to private bargaining.
• The Union demanded payment of Christmas bonuses under the existing CBA and sought to negotiate a new CBA covering 2012-2015.
• GSIS Family Bank refused to negotiate, citing the GCG advisory and the CPCS under RA 10149.
• On May 13, 2016, the BSP Monetary Board prohibited GSIS Family Bank from doing business and designated the Philippine Deposit Insurance Corporation as receiver.

• GSIS Family Bank is a private bank incorporated under the Corporation Code, not a GOCC with an original charter, and therefore outside the coverage of RA 10149.
• Mere acquisition by GSIS (government) did not automatically convert the bank into a GOCC subject to RA 10149.
• As a private corporation, the bank and its employees are covered by the Labor Code, not the Civil Service Law, and retain the right to collectively bargain economic terms.
• The Governance Commission committed grave abuse of discretion by preventing the bank from negotiating the CBA.
• Cited Philippine National Oil Company-Energy Development Corp. v. Leogardo to support that non-chartered GOCCs are subject to the Labor Code.

• The Governance Commission exercises administrative functions, not judicial or quasi-judicial functions, making certiorari under Rule 65 improper.
• Petitioner failed to implead indispensable parties (other members of the GCG and the bank's full Board of Directors) and violated the rule on judicial hierarchy.
• GSIS Family Bank is a GOCC (specifically a government financial institution) covered by RA 10149 regardless of being non-chartered, as the law makes no distinction between chartered and non-chartered GOCCs.
• Under RA 10149 and Executive Order No. 203, all GOCCs are covered by the CPCS, and governing boards may not negotiate economic terms of CBAs with employees.
• The bank merely followed the GCG directive; it lacked authority to negotiate economic terms as these require presidential approval under the CPCS.

• Procedural Issues:
  • Whether certiorari under Rule 65 is the proper remedy against the Governance Commission's advisory opinions.
  • Whether the closure of GSIS Family Bank rendered the petition moot.
  • Whether petitioner failed to implead indispensable parties (all members of the Governance Commission).
• Substantive Issues:
  • Whether GSIS Family Bank, as a non-chartered GOCC, is covered by Republic Act No. 10149.
  • Whether non-chartered GOCCs may enter into collective bargaining agreements with their employees regarding economic terms of employment.

• Procedural:
  • Certiorari is not the proper remedy because the Governance Commission exercises administrative, not judicial or quasi-judicial functions; its letters were merely advisory opinions, not binding directives.
  • The petition is moot because GSIS Family Bank was closed by the BSP on May 13, 2016, making it impossible to grant the prayer to compel negotiation of a new CBA.
  • However, the Court resolved the substantive issues as they present an opportunity to guide the bench, bar, and public on similar issues.
  • The failure to implead all five members of the Governance Commission (a collegial body) constitutes a fatal defect as these are indispensable parties.
• Substantive:
  • GSIS Family Bank is a GOCC under RA 10149 because it is a stock corporation owned by the government (GSIS) to the extent of at least a majority of its outstanding capital stock (99.55%), regardless of being organized under the Corporation Code rather than by special charter.
  • RA 10149 applies to all GOCCs, whether chartered or non-chartered, and does not distinguish between the two.
  • Under Section 9 of RA 10149 and Executive Order No. 203, all GOCCs are covered by the Compensation and Position Classification System (CPCS); governing boards are prohibited from negotiating economic terms of CBAs with employees.
  • While employees of non-chartered GOCCs are covered by the Labor Code (not Civil Service Law) for purposes of termination and discipline, their compensation is limited by the CPCS under RA 10149.
  • The right to collective bargaining of government employees is subject to limitations; economic terms fixed by law (such as the CPCS) are not subject to negotiation.

• Test for Coverage of Civil Service Law vs. Labor Code — Under the 1987 Constitution, the test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law is the manner of its creation: corporations created by special charter are subject to the Civil Service Law, while those incorporated under the general Corporation Code are covered by the Labor Code. However, this distinction applies primarily to personnel actions (hiring, termination, discipline), not to compensation matters when specific legislation (like RA 10149) imposes a uniform compensation system.
• Compensation and Position Classification System (CPCS) — Under RA 10149, the Governance Commission is mandated to develop a CPCS that applies to all officers and employees of GOCCs, whether chartered or non-chartered, and whether covered by the Salary Standardization Law or exempt therefrom. This system standardizes compensation and removes the authority of GOCC governing boards to negotiate economic terms of employment through collective bargaining agreements.
• Right to Collective Bargaining of Government Employees — While the Constitution guarantees the right of government employees to self-organization, the right to collective bargaining and negotiation is subject to limitations. Unlike private sector employers, government entities cannot negotiate terms fixed by law; government employees must petition Congress for changes in terms fixed by legislation rather than bargain for them.

• "Officers and employees of government-owned or controlled corporations without original charters are covered by the Labor Code, not the Civil Service Law. However, non-chartered government-owned or controlled corporations are limited by law in negotiating economic terms with their employees."
• "The right to self-organization is absolute, the right of government employees to collective bargaining and negotiation is subject to limitations."
• "Collective bargaining is a series of negotiations between an employer and a representative of the employees to regulate the various aspects of the employer-employee relationship... In contrast with the private sector, the terms and conditions of employment of government workers are fixed by the legislature; thus, the negotiable matters in the public sector are limited to terms and conditions of employment that are not fixed by law."
• "All GOCCs, whether chartered or non-chartered, are government corporations brought about by the fact that they are owned and/or controlled by the government."

• Philippine National Oil Company-Energy Development Corp. v. Hon. Leogardo — Cited by petitioner to argue that non-chartered GOCCs are subject to the Labor Code. The Court distinguished this case, noting it involved jurisdiction over dismissal disputes, not the obligation to bargain collectively on economic terms.
• Galicto v. H.E. President Aquino III — Cited by respondents regarding the President's power to provide compensation systems for GOCCs. The Court noted this case dealt with a corporation with an original charter (Philhealth) and was dismissed on procedural grounds without ruling on the legality of RA 10149.
• Social Security System Employees Association v. Court of Appeals — Cited for the principle that government employees may petition Congress for changes in terms of employment fixed by law, rather than negotiate them.
• PCSO v. Chairperson Pulido-Tan — Cited to establish that GOCCs are covered by compensation and position standards issued by the Department of Budget and Management and applicable laws, and that GOCCs do not have complete liberty to set salaries and benefits.
• National Housing Corporation v. Juco — Referenced in PNOC-Energy Development Corp. regarding the old doctrine that all GOCC employees were governed by Civil Service Law.

• 1987 Constitution, Article IX-B, Section 2(1) — Defines the Civil Service as embracing all branches of government including GOCCs with original charters, distinguishing them from non-chartered GOCCs.
• 1987 Constitution, Article XIII, Section 3 — Guarantees workers' rights to self-organization, collective bargaining, and negotiations, subject to law.
• Presidential Decree No. 2029 (1986), Section 2 — Defines GOCCs as stock or non-stock corporations organized under general corporation law owned by government to the extent of at least majority of outstanding capital stock.
• Executive Order No. 292 (1987) [Administrative Code], Section 2(13) — Defines GOCCs as agencies organized as stock or non-stock corporations vested with functions relating to public needs and owned by government to at least 51% of capital stock.
• Republic Act No. 10149 (2011), Sections 3(o), 3(p), 4, 8, and 9 — The GOCC Governance Act defining GOCCs (including non-chartered), establishing the Governance Commission, creating the Compensation and Position Classification System (CPCS), and prohibiting exemption from said system.
• Executive Order No. 203 (2016) — Approves the CPCS and specifically prohibits governing boards of covered GOCCs from negotiating economic terms of CBAs.
• Rules of Court, Rule 65, Section 1 — Requirements for certiorari (judicial/quasi-judicial functions, grave abuse of discretion, no other adequate remedy).
• Rules of Court, Rule 3, Section 7 — Compulsory joinder of indispensable parties.