On December 20, 2013, employees of GSIS Family Bank, a non-chartered Government-Owned or Controlled Corporation, demanded for the payment of their Christmas bonus which had been annually given them pursuant to their Collective Bargaining Agreement with said bank.
GSIS Family Bank refused to grant the said bonus. This was because it was advised by the Governance Commission for Government-Owned or Controlled Corporations (or the Governance Commission) that it could not grant incentives and other benefits to its employees, without authority from the President of the Philippines. According to the Governance Commission, as a government financial institution, GSIS Family Bank was not authorized to enter into a collective bargaining agreement with its employees based on the principle that compensation and position classification system of its employees is provided for by law and not subject to private bargaining.
Was the refusal valid?
The Supreme Court ruled that it was valid. The Court found that GSIS Family Bank could not be faulted for refusing to enter into a new collective bargaining agreement with petitioner as it lacked the authority to negotiate economic terms with its employees.
In denying the claims of the employees of GSIS Family Bank, the Supreme Court illustrated the interplay between the provisions of the Labor Code of the Philippines and the provisions of the GOCC Governance Act of 2011 (or Republic Act Number 10149) on the life of a non-chartered government-owned or controlled corporation.
The Court ruled that the power of a government-owned or controlled corporation to fix salaries or allowances of its employees is subject to and must conform to the compensation and classification standards laid down by applicable law, specifically the GOCC Governance Act of 2011. According to the Court, the said law does not differentiate between chartered and non-chartered government-owned or controlled corporations; hence, the provisions of this law equally apply to all GOCCs.
Furthermore, the Court ruled that while government-owned or controlled corporations without original charters are covered by the Labor Code of the Philippines, employees of said government-owned or controlled corporations are bereft of any right to negotiate the economic terms of their employment, i.e., salaries, emoluments, incentives and other benefits, with their employers since these matters are covered by compensation and position standards issued by applicable law.
According to the Court, the law1Section 9 of Republic Act No. 10149 categorically states, “Any law to the contrary notwithstanding, no [government-owned or controlled corporation] shall be exempt from the coverage of the Compensation and Position Classification System developed by the [Governance Commission] under this Act.” The law also directed the Governance Commission to develop a Compensation and Position Classification System, to be submitted for the approval of the President of the Philippines, which shall apply to all officers and employees of government-owned or controlled corporations, whether chartered or non-chartered. When it comes to collective bargaining agreements and collective negotiation agreements in government-owned or controlled corporations, the President of the Philippines, through Executive Order No. 2032Section 2 issued on March 22, 2016, stated that while it recognized the right of workers to organize, bargain, and negotiate with their employers, “the Governing Boards of all covered [government-owned or controlled corporations], whether Chartered or Non-chartered, may not negotiate with their officers and employees the economic terms of their [collective bargaining agreements].”
Further reading:
- GSIS Family Bank Employees Union v. Villanueva, G.R. No. 210773, January 23, 2019.
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