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by Atty. Gabriel Ablola 🇵🇭

Tag: GOCC Governance Act

  • Legislative Prerogative vs. Security of Tenure: The Constitutionality of GOCC Governance Reform

    TL;DR

    The Supreme Court affirmed the constitutionality of the GOCC Governance Act of 2011 (Republic Act No. 10149), settling a challenge against its provisions modifying the terms of office for officials in government-owned and controlled corporations (GOCCs). The Court declared that Congress possesses the legislative authority to alter public offices it has created, including shortening terms and reorganizing GOCCs, without infringing upon the constitutional right to security of tenure. This power, however, must be exercised in good faith and for legitimate public policy objectives, such as improving efficiency and accountability within the government corporate sector. The ruling underscores the balance between legislative authority to reform public institutions and the protection of public officers’ rights, ultimately favoring the state’s capacity to ensure good governance and fiscal discipline in GOCC operations.

    Restructuring the State: Can Congress Redesign GOCCs Without Violating Tenure?

    The consolidated cases of Lagman v. Ochoa and Pichay v. Governance Commission challenged the constitutionality of Republic Act No. 10149, also known as the GOCC Governance Act of 2011. Petitioners, a legislator and a former GOCC chairperson, argued that the Act unconstitutionally infringed upon the security of tenure of GOCC officials, unduly delegated legislative powers to the Governance Commission for GOCCs (GCG), encroached upon the jurisdiction of the Civil Service Commission (CSC), and violated the equal protection clause. These challenges arose from the law’s sweeping reforms aimed at addressing inefficiencies and abuses within GOCCs, including provisions that shortened the terms of incumbent officials and empowered the GCG to reorganize, streamline, and set compensation standards for these entities.

    The petitioners contended that Section 17 of the Act, which effectively shortened the fixed terms of GOCC directors and CEOs, was a violation of their security of tenure, particularly for those appointed under special GOCC charters. They argued this amounted to removal without cause and due process. Further, they asserted that Section 5 of the law, granting the GCG broad powers to reorganize and abolish GOCCs, represented an undue delegation of legislative power, lacking sufficient standards to guide the GCG’s actions. These powers, they claimed, encroached upon the exclusive domain of legislative authority and undermined the constitutional mandate of the CSC.

    In its decision, the Supreme Court meticulously addressed each constitutional challenge, ultimately dismissing the petitions and upholding the validity of Republic Act No. 10149. The Court first tackled the issue of justiciability, acknowledging the transcendental importance of the issues raised, which warranted the Court’s exercise of jurisdiction despite procedural questions regarding locus standi and hierarchy of courts. This demonstrated the Court’s willingness to address critical constitutional questions with broad public impact, even when procedural technicalities might otherwise impede judicial review.

    Regarding security of tenure, the Court clarified that while public officers in the civil service, including GOCCs, are constitutionally protected from removal without cause, this protection does not equate to an immutable right to a specific term of office. The Court emphasized the established principle that Congress, having the power to create public offices, also possesses the power to modify or even abolish them. This includes the authority to change the qualifications, duties, and terms of office, provided such changes are made in good faith and for public interest, not aimed at specific individuals. The shortening of terms under RA 10149 was deemed a valid exercise of legislative power to improve GOCC governance, not an unlawful removal.

    The Court then addressed the claim of undue delegation of legislative power. It applied the completeness test and the sufficient standard test, finding that Republic Act No. 10149 adequately met both. The law, in Section 2, clearly declared the policy of promoting fiscal discipline and efficiency in GOCCs. Section 5 provided sufficient standards to guide the GCG in evaluating GOCCs for reorganization, abolition, or privatization, such as relevance to state policy, duplication of functions, and financial inefficiency. The GCG’s role was construed as primarily fact-finding and recommendatory, with ultimate decisions on abolition or privatization resting with the President, thus not an unconstitutional delegation of legislative power.

    The Court also rejected the argument that the GCG supplanted the Civil Service Commission. It differentiated the mandates of the two bodies: the GCG focuses on GOCC governance and institutional performance, while the CSC is concerned with personnel administration across the civil service. The Court found no conflict or duplication in their functions, emphasizing that the GCG’s role in setting qualifications and compensation standards for GOCC officials was consistent with the President’s executive power and did not diminish the CSC’s constitutional authority over civil service matters.

    Finally, the Court addressed the equal protection challenge, stemming from the law’s exclusion of certain entities like the Bangko Sentral ng Pilipinas, state universities and colleges, and local water districts from its full coverage. The Court applied the rational basis test, finding that these exclusions were based on substantial distinctions and served legitimate government interests. For instance, the BSP’s exclusion was justified by its constitutional independence, and state universities and colleges were appropriately regulated by the Commission on Higher Education. These classifications were deemed reasonable and germane to the law’s purpose of reforming GOCC governance.

    In conclusion, the Supreme Court’s decision in Lagman v. Ochoa and Pichay v. Governance Commission is a significant affirmation of legislative power to reform and regulate GOCCs for improved public service and fiscal responsibility. It clarifies the boundaries of security of tenure in public office and sets important precedents on the permissible scope of delegation of legislative authority to administrative bodies in the context of GOCC governance.

    FAQs

    What was the key issue in this case? The central issue was whether the GOCC Governance Act of 2011 unconstitutionally infringed upon security of tenure, unduly delegated legislative power, and violated equal protection.
    What is the GOCC Governance Act of 2011? Republic Act No. 10149, aimed at promoting financial viability, fiscal discipline, and improved governance in government-owned and controlled corporations (GOCCs).
    Did the Supreme Court find the GOCC Governance Act constitutional? Yes, the Supreme Court upheld the constitutionality of the GOCC Governance Act in its entirety.
    What did the Court say about security of tenure in GOCCs? The Court clarified that while GOCC officials have security of tenure, Congress can modify the terms of their office for valid public purposes without violating this right.
    Was the delegation of power to the Governance Commission considered undue? No, the Court ruled that the delegation of power to the GCG was valid, as the law provided sufficient standards and policies to guide its actions.
    Why were some GOCCs excluded from the law’s coverage? The exclusions, such as for BSP and state universities, were deemed reasonable classifications based on substantial distinctions and legitimate government interests.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Lagman v. Ochoa, G.R. No. 197422 & G.R. No. 197950, November 03, 2020

  • Collective Bargaining in GOCCs: Limits on Economic Terms After RA 10149

    TL;DR

    The Supreme Court ruled that GSIS Family Bank, as a government-owned or controlled corporation (GOCC), could not negotiate economic terms in a collective bargaining agreement (CBA) with its employees due to Republic Act No. 10149 and Executive Order No. 203. While employees have the right to self-organization, government employees’ rights to collective bargaining are limited to matters not fixed by law. RA 10149 mandated a Compensation and Position Classification System (CPCS) for all GOCCs, which preempts private bargaining on compensation. This decision clarifies the extent to which GOCCs can independently determine employee benefits and salaries, emphasizing that they are subject to the compensation standards set by the government.

    From Private Roots to Public Rules: GSIS Family Bank’s Labor Rights Crossroads

    This case involves the GSIS Family Bank Employees Union’s attempt to compel GSIS Family Bank to negotiate a new collective bargaining agreement (CBA). The central legal question is whether GSIS Family Bank, initially a private entity but later majority-owned by the Government Service Insurance System (GSIS), could independently negotiate economic terms with its employees, or if it was bound by the Compensation and Position Classification System (CPCS) mandated by Republic Act No. 10149, also known as the GOCC Governance Act of 2011.

    The factual history begins with Royal Savings Bank, a private thrift bank established in 1969. Facing financial difficulties in the 1980s, Royal Savings Bank underwent a series of transformations, eventually becoming Comsavings Bank and then GSIS Family Bank, with GSIS acquiring a controlling stake. In 2013, the GSIS Union sought to negotiate a new CBA, but GSIS Family Bank declined, citing the Governance Commission for Government-Owned or Controlled Corporations’ (GCG) opinion that it lacked the authority to negotiate economic terms due to RA 10149. This prompted the GSIS Union to file a Petition for Certiorari, Prohibition, and Mandamus, arguing that GSIS Family Bank remained a private entity not subject to RA 10149.

    The Supreme Court addressed two preliminary issues before delving into the merits of the case. First, the Court determined that a Petition for Certiorari was not the appropriate remedy because the GCG’s opinion was merely advisory, not a judicial or quasi-judicial determination. Second, the Court acknowledged that GSIS Family Bank’s closure in 2016 rendered the petition moot. Despite this, the Court chose to address the substantive issues due to the case’s importance in guiding the bench and bar.

    The Court then turned to the central issue of whether GSIS Family Bank, as a government-owned or controlled corporation, could enter into a CBA with its employees. The Court referenced Presidential Decree No. 2029 and Executive Order No. 292, which define a government-owned or controlled corporation as one vested with functions relating to public needs and owned by the government to the extent of at least a majority of its outstanding capital stock. Since GSIS owned 99.55% of GSIS Family Bank’s stock, the bank clearly met this definition.

    The Court highlighted the constitutional right of workers to self-organization and collective bargaining. However, it distinguished between private and government employees. While private employers and employees can freely negotiate terms and conditions of employment within the bounds of law, government employees’ terms are largely fixed by legislation. Therefore, negotiable matters in the public sector are limited to those not already determined by law.

    SECTION 4. Coverage. — This Act shall be applicable to all GOCCs, GICPs/GCEs, and government financial institutions, including their subsidiaries, but excluding the Bangko Sentral ng Pilipinas, state universities and colleges, cooperatives, local water districts, economic zone authorities and research institutions: Provided, That in economic zone authorities and research institutions, the President shall appoint one-third (1/3) of the board members from the list submitted by the GCG.

    The Court emphasized that Republic Act No. 10149, the GOCC Governance Act of 2011, applies to all GOCCs, regardless of whether they were created by special charter or incorporated under the Corporation Code. Section 9 of RA 10149 explicitly states that no GOCC shall be exempt from the Compensation and Position Classification System (CPCS) developed by the Governance Commission. Furthermore, Executive Order No. 203, issued in 2016, approved the CPCS and unequivocally stated that GOCCs, whether chartered or non-chartered, may not negotiate the economic terms of their CBAs.

    Consequently, GSIS Family Bank was justified in refusing to enter into a new CBA with the GSIS Union, as it lacked the authority to negotiate economic terms. The Supreme Court ultimately denied the petition, holding that unless directly challenged in an appropriate case, the constitutionality and validity of Republic Act No. 10149, as applied to fully government-owned and controlled non-chartered corporations, would prevail. This decision affirms the limits on collective bargaining for economic terms in GOCCs, emphasizing adherence to government-set compensation standards.

    FAQs

    What was the key issue in this case? The central legal question was whether GSIS Family Bank, as a GOCC, could independently negotiate economic terms in a collective bargaining agreement with its employees, or if it was bound by the CPCS mandated by Republic Act No. 10149.
    What is the significance of Republic Act No. 10149? Republic Act No. 10149, also known as the GOCC Governance Act of 2011, created the Governance Commission for GOCCs and mandated a Compensation and Position Classification System applicable to all GOCCs, aiming to standardize compensation and prevent excessive benefits.
    What did the Court say about the employees’ right to self-organization? The Court affirmed the constitutional right of workers to self-organization and collective bargaining but distinguished between private and government employees, noting that government employees’ rights to collective bargaining are limited to matters not fixed by law.
    Why was GSIS Family Bank not allowed to negotiate economic terms in a CBA? GSIS Family Bank was not allowed to negotiate economic terms because Republic Act No. 10149 and Executive Order No. 203 established a CPCS for all GOCCs, which preempts private bargaining on compensation.
    What was the effect of GSIS Family Bank’s closure on the case? The closure of GSIS Family Bank in 2016 rendered the petition moot, but the Supreme Court still addressed the substantive issues due to the case’s importance in guiding the bench and bar on similar matters.
    Does this ruling apply to all government-owned corporations? Yes, the ruling applies to all government-owned and controlled corporations, whether they were created by special charter or incorporated under the Corporation Code, emphasizing adherence to government-set compensation standards.

    In conclusion, the GSIS Family Bank case clarifies the limitations on collective bargaining in government-owned or controlled corporations, particularly concerning economic terms. By aligning compensation standards with government regulations, the ruling seeks to promote fiscal responsibility and prevent disparities in benefits and salaries within the public sector.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: GSIS Family Bank Employees Union v. Villanueva, G.R. No. 210773, January 23, 2019