Case Digest: BPIEU v. BPI

G.R. No. 174912: July 24, 2013




BPI Operations Management Corporation (BOMC), which was created pursuant to Central Bank Circular No. 1388, Series of 1993 (CBP Circular No. 1388, 1993), and primarily engaged in providing and/or handling support services for banks and other financial institutions, is a subsidiary of the Bank of Philippine Islands (BPI) operating and functioning as an entirely separate and distinct entity.

A service agreement between BPI and BOMC was initially implemented in BPIs Metro Manila branches. In this agreement, BOMC undertook to provide services such as check clearing, delivery of bank statements, fund transfers, card production, operations accounting and control, and cash servicing, conformably with BSP Circular No. 1388. Not a single BPI employee was displaced and those performing the functions, which were transferred to BOMC, were given other assignments.

The Manila chapter of BPI Employees Union (BPIEU-Metro ManilaFUBU) then filed a complaint for unfair labor practice (ULP). The Labor Arbiter (LA) decided the case in favor of the union. The decision was, however, reversed on appeal by the NLRC. BPIEU-Metro Manila-FUBU filed a petition for certiorari before the CA which denied it, holding that BPI transferred the employees in the affected departments in the pursuit of its legitimate business.

The service agreement was likewise implemented in Davao City. Later, a merger between BPI and Far East Bank and Trust Company (FEBTC) took effect on April 10, 2000 with BPI as the surviving corporation. Thereafter, BPIs cashiering function and FEBTCs cashiering, distribution and bookkeeping functions were handled by BOMC. Consequently, twelve (12) former FEBTC employees were transferred to BOMC to complete the latters service complement.

BPI Davaos rank and file collective bargaining agent, BPI Employees Union-Davao City-FUBU (Union), objected to the transfer of the functions and the twelve (12) personnel to BOMC contending that the functions rightfully belonged to the BPI employees and that the Union was deprived of membership of former FEBTC personnel who, by virtue of the merger, would have formed part of the bargaining unit represented by the Union pursuant to its union shop provision in the CBA.

ISSUE: Whether or not the act of BPI to outsource the cashiering, distribution and bookkeeping functions to BOMC is in conformity with the law and the existing CBA.

HELD: Yes.

Labor Law- only gross violations of the economic provisions of the CBA are treated as ULP. Otherwise, they are mere grievances.

In the present case, the alleged violation of the union shop agreement in the CBA, even assuming it was malicious and flagrant, is not a violation of an economic provision in the agreement. The provisions relied upon by the Union were those articles referring to the recognition of the union as the sole and exclusive bargaining representative of all rank-and-file employees, as well as the articles on union security, specifically, the maintenance of membership in good standing as a condition for continued employment and the union shop clause. It failed to take into consideration its recognition of the banks exclusive rights and prerogatives, likewise provided in the CBA, which included the hiring of employees, promotion, transfers, and dismissals for just cause and the maintenance of order, discipline and efficiency in its operations.

The Union, however, insists that jobs being outsourced to BOMC were included in the existing bargaining unit, thus, resulting in a reduction of a number of positions in such unit. The reduction interfered with the employees right to self-organization because the power of a union primarily depends on its strength in number.

It is incomprehensible how the "reduction of positions in the collective bargaining unit" interferes with the employees right to self-organization because the employees themselves were neither transferred nor dismissed from the service. In the case at hand, the union has not presented even an iota of evidence that petitioner bank has started to terminate certain employees, members of the union. In fact, what appears is that the Bank has exerted utmost diligence, care and effort to see to it that no union member has been terminated. In the process of the consolidation or merger of the two banks which resulted in increased diversification of functions, some of these non-banking functions were merely transferred to the BOMC without affecting the union membership.

It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business judgment or management prerogative. Absent proof that the management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. In this case, bad faith cannot be attributed to BPI because its actions were authorized by CBP Circular No. 1388, Series of 1993 issued by the Monetary Board of the then Central Bank of the Philippines (now Bangko Sentral ng Pilipinas).