GSIS Family Bank Union vs.

Villanueva

G.R. 210773

Facts: Royal Savings Bank (RSB) was organized and incorporated as a thrift bank. As part of its amicable
settlement with Central Bank and rehabilitation, the RSB transferred all its shares to Commercial Bank of
Manila, a wholly owned subsidiary of the GSIS. It was renamed as Comsavings Bank.

Later on, GSIS divested its holdings in Commercial Bank of Manila, but not including Comsavings Bank.

GSIS infused additional capital to Comsavings Bank resulting in 99.55% holdings in the latter’s
outstanding capital stock. Comsavings Bank was renamed as GSIS Family Bank.

President Aquino III issued Executive Order No. 7, which placed an indefinite moratorium on increases
in salaries and benefits of employees in GOCCs and government financial institutions. President
Aquino also signed into law RA No. 10149, or the GOCC Governance Act of 2011. The law created the
Governance Commission for GOCCs.

Benitez, then President of GSIS Family Bank, wrote the Governance Commission to seek clarification on
several issues, including, among others, its authority to enter into a collective bargaining agreement
with the GSIS Union.

The Governance Commission clarified that GSIS Family Bank was classified as a government financial
institution. Moreover, as a government financial institution, GSIS Family Bank was unauthorized to enter
into a collective bargaining agreement with its employees “based on the principle that the
compensation and position classification system is provided for by law and not subject to private
bargaining.” 

GSIS Union sent GSIS Family Bank a demand letter for the payment of Christmas bonus to its members,
as stipulated in their CBA. GSIS Union accused GSIS Family Bank of evading its contractual obligation to
its employees by invoking the Governance Commission’s opinion that it was no longer authorized to
grant incentives and other benefits to its employees, unless authorized by the President of the
Philippines.

Petitioner filed a petition for certiorari before the Court, asserting that the GSIS Family Bank is a private
bank; thus it is not covered by RA 10149.

Issues: Is GSIS Family Bank a private bank outside the scope of RA 10149, hence it can enter into CBA
with its employees?

Ruling: NO. GSIS Family Bank is a GOCC subject to the provisions of RA 10149, hence it cannot enter into
new CBA with its employees for lack of authority therefor.

Section 2(13) of Executive Order No. 292 (Administrative Code of 1987) defined a government-owned or
controlled corporation:

(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-
stock corporation, vested with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to the extent of at least
 fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled
corporations may be further categorized by the Department of the Budget, the Civil Service
Commission, and the Commission on Audit for purposes of the exercise and discharge of their
respective powers, functions and responsibilities with respect to such corporations.
This definition was echoed in Section 3(o) of Republic Act No. 10149:

SECTION 3. Definition of Terms. —

....

(o) Government-Owned or -Controlled Corporation (GOCC) refers to any agency organized as a

stock or nonstock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government of the Republic of the
Philippines directly or through its instrumentalities either wholly or, where applicable as in the
case of stock corporations, to the extent of at least a majority of its outstanding capital stock:
Provided, however, That for purposes of this Act, the term "GOCC" shall include GICP/GCE and
GFI as defined herein.

Thus, a government-owned or controlled corporation is: (1) established by original charter or through
the general corporation law; (2) vested with functions relating to public need whether governmental
or proprietary in nature; and (3) directly owned by the government or by its instrumentality, or where
the government owns a majority of the outstanding capital stock. Possessing all three (3) attributes is
necessary to be classified as a government-owned or controlled corporation.

There is no doubt that GSIS Family Bank is a government-owned or controlled corporation since
99.55% of its outstanding capital stock is owned and controlled by the Government Service Insurance
System.