Bpi Employees Union-Davao City-Fubu v. Bank of the Philippine Islands
REITERATIONFacts
The Antecedents: The underlying dispute arose when the Bank of the Philippine Islands (BPI) implemented a service agreement with its subsidiary, BPI Operations Management Corporation (BOMC), to handle various support services previously performed by BPI employees. This agreement was initially implemented in BPI's Metro Manila branches, and subsequently in Davao City following a merger between BPI and Far East Bank and Trust Company (FEBTC). The BPI Employees Union-Davao City-FUBU (Union) objected to the transfer of functions and twelve former FEBTC employees to BOMC, arguing that these functions rightfully belonged to BPI employees and that the Union was deprived of potential membership due to the transfer of FEBTC personnel. Procedural History: The Union filed a formal protest and subsequently a notice of strike, citing contracting out of services, violation of the duty to bargain, and union busting. The Department of Labor and Employment (DOLE) certified the labor dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration. The NLRC upheld the validity of the service agreement between BPI and BOMC, dismissing the charge of unfair labor practice and ruling that BPI's engagement of BOMC was a valid exercise of management prerogative. The Union's motion for reconsideration was denied, and it elevated the matter to the Court of Appeals (CA) via a petition for certiorari. The CA affirmed the NLRC's decision, finding that the NLRC's factual findings were supported by substantial evidence and that the NLRC did not act with grave abuse of discretion. The CA also noted that the Union's right to represent the merged employees was contingent on their choice to join the Union. The Petition: The Union filed a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, assailing the CA's decision. The Union argued that the CA erred in holding that Department Order No. 10 did not apply and that the petition before the CA involved questions of law, specifically whether BPI's act of outsourcing functions formerly performed by union members violated the Collective Bargaining Agreement (CBA). The Union contended that the outsourcing of jobs included in the bargaining unit to BOMC was a breach of the union shop agreement in the CBA, as it reduced the number of positions covered by the bargaining unit and thus diminished the Union's membership. BPI, in defense, argued that the service agreement was pursuant to prevailing law (CBP Circular No. 1388), that the creation of BOMC was within management prerogatives, and that the CBA recognized BPI's exclusive right to manage its business. BPI also argued that the case cited by the Union, Shell Oil Workers’ Union v. Shell Company of the Philippines, Ltd., was not applicable as there was no express stipulation in the CBA regarding the continued existence of specific positions.
Issue(s)
Whether the act of BPI to outsource cashiering, distribution, and bookkeeping functions to BOMC is in conformity with the law and the existing CBA. Whether the transfer of twelve (12) former FEBTC employees to BOMC, instead of being absorbed by BPI, violates the union shop agreement in the CBA and interferes with the employees' right to self-organization. Whether Department Order No. 10, Series of 1997, applies to the case.
Ruling
The petition is DENIED. The decision of the Court of Appeals affirming the National Labor Relations Commission's ruling that the service agreement between BPI and BOMC is valid and legal is sustained.
Ratio Decidendi
On the validity of outsourcing and violation of CBA: The Court reiterated that contracting out of services is a valid exercise of management prerogative, provided it is done in good faith and does not violate the law or the Collective Bargaining Agreement (CBA). The Union's reliance on the Shell Oil Workers’ Union v. Shell Company of the Philippines, Ltd. case was deemed misplaced because, unlike in Shell, there was no express stipulation in the CBA guaranteeing the continued existence of specific positions within the bargaining unit. The Court emphasized that violations of a CBA, except those that are gross in character, are to be treated as grievances and not as unfair labor practices (ULP) under Article 261 of the Labor Code. The alleged violation of the union shop agreement, even if considered flagrant, was not a violation of an economic provision of the CBA, and thus not an ULP. Furthermore, the CBA itself recognized BPI's exclusive rights and prerogatives, including hiring, promotion, transfers, and maintenance of order and efficiency. On interference with the right to self-organization: The Court found no evidence that the outsourcing interfered with the employees' right to self-organization. The NLRC correctly noted that no union members were terminated; instead, functions were transferred to BOMC without affecting union membership. BPI exerted efforts to ensure no union member was terminated, and there was no diminution of salaries or benefits. The transfer of the twelve (12) former FEBTC employees to BOMC was not proven to be motivated by ill will, anti-unionism, or bad faith. The Court clarified that the representation of prospective members by a union is contingent on the employees' choice to join the union, making the Union's claim of restraint premature. On the applicability of Department Order No. 10 (D.O. No. 10) and BSP Circular No. 1388: The Court held that there was no conflict between D.O. No. 10 and Central Bank of the Philippines (CBP) Circular No. 1388, Series of 1993, and that they complement each other. While D.O. No. 10 provides general guidelines on permissible contracting, the Bangko Sentral ng Pilipinas (BSP), as the regulatory agency for banks, has the competence to issue specific rules like CBP Circular No. 1388. The Court found that the functions outsourced by BPI, such as cashiering, distribution, and bookkeeping, were ancillary to the core banking functions of deposit and loan, and were specifically enumerated as permissible services to be contracted out under CBP Circular No. 1388. Even if D.O. No. 10 were considered alone, the outsourced functions were not directly related or integral to the main business of banking, thus falling within the permissible scope of contracting out under Section 6(d) of D.O. No. 10. The Court emphasized that the outsourcing must not violate the employee's right to security of tenure and benefits, nor constitute labor-only contracting.
Main Doctrine
Contracting out of services is a valid exercise of management prerogative, provided it is done in good faith, does not violate the law or the Collective Bargaining Agreement, and does not result in the termination of employment or diminution of benefits. Ancillary banking functions, as distinguished from core banking functions, may be outsourced.