BPI v. BPI EES others refused.
Later, however, some of those
who initially joined retracted their membership.
FACTS:
Respondent Union sent notices to the members
BPI and Far East Bank, with the approval of who recanted their membership as well as those
Bangko Sentral and SEC, excuted their article and to who refused to join; they were called to a
plan of Merger. hearing regarding the said matter.
Pursuant to this, all the employees of Far East in When these former employees of FarEastBank
its different branches were hired by BPI as its refused to attend the hearing, the president of
own employees, with their status and tenure the Union requested BPI to implement the Union
recognized and salaries and benefits maintained. Shop Clause of the CBA and to terminate their
employment pursuant thereto.
The respondent (BPI Employees Union) is the Respondent Union informed BPI that they
exclusive bargaining agent of BPI’s rank and file elevated the matter of implementing the Union
employees in Davao City. At that time, the Far Shop clause of the CBA to the GRIEVANCE
East Bank Employees rank and file employees did COMMITTEE. (the matter remain unresolved)
not belong to any labor union at the time of the
merger. This matter was later elevated and submitted to
voluntary arbitration by parties. (Voluntary
Prior to the effectivity of the merger, the Arbitrator ruled in favor of petitioner BPI.)
respondent union invited said Far East Bank According to VA, the former employees of
Employees to a meeting regarding the Union FarEastBank were not covered by the Union
Shop Clause under the existing CBA between BPI Security Clause of the CBA between BPI and the
and respondent union. Union on the ground that the said employees
were not new employees of who were hired and
Under the said clauses, Article II section 1 subsequently regularized, but were absorbed
provides for the maintenance of membership of employees “by operation of law” because the
all employees within the bargaining unit of BPI “former employees” of FarEast can be
who are members on the date of effectivity of considered assets and liabilities of the absorbed
the CBA. The same includes all employees who corporation.
subsequently joined or became members during
the lifetime of this agreement. (being a condition CA: Reversed the VA’s decision: There is no
to their employment) question that there exits a union-shop clause in
the CBA between the Union and BPI.
Section 2 provides for a Union Shop clause New
employees falling within the bargaining unit as - At the onset, CA agreed with the decision of
defined in Article I of this Agreement, who may the VA that the ABSORBED employees are
hereafter be regularly employed by the Bank distinct and different from NEW employees
shall, within thirty (30) days after they become BUT only in so far as their employment
regular employees, join the Union as a condition service is concerned. The distinction ends
of their continued employment. It is understood there. In the case at bar, the absorbed
that membership in good standing in the Union employees length of service from its former
is a condition of their continued employment employer is tacked with their employment
with the Bank. (Emphases supplied.) with BPI. Otherwise stated, the absorbed
employees service is continuous and there
So subsequently, some of the former is no gap in their service record.
FarEastBank Employees joined the Union while
ISSUE: WON the former FarEastBank Employees that The court held that the purpose of a union shop
were absorbed by BPI upon merger should be covered or other union security arrangement is to guarantee the
by the Union Shop Clause found in the existing CBA continued existence of the union through enforced
between petitioner and respondent Union. (yes) membership for the benefit of the workers.
or All employees in the bargaining unit covered by
a Union Shop Clause in their CBA with management are
May a corporation invoke its merger with another
subject to its terms. However, under law and
corporation as a valid ground to exempt it “absorbed
jurisprudence, the following kinds of employees are
employees” from the coverage of union shop clause
exempted from its coverage:
contained in its existing CBA with its own certified labor
union? (no) 1. Employees who at the time the union shop
agreement takes effect are bona fide
HELD:
members of a religious organization which
The SC held that Section 2, Article II of the CBA is prohibits its members from joining labor
silent as to how one becomes a regular employee of the unions on religious grounds;
BPI for the first time. There is nothing in the said
provision which requires that a new regular employee 2. employees already in the service and
first undergo a temporary or probationary status before already members of a union other than the
being deemed as such under the union shop clause of majority at the time the union shop
the CBA. agreement took effect;
Union security is a generic term which is applied 3. confidential employees who are excluded
to and comprehends closed shop, union shop, from the rank and file bargaining unit; and
maintenance of membership or any other form of
agreement which imposes upon employees the 4. employees excluded from the union shop
obligation to acquire or retain union membership as a by express terms of the agreement.
condition affecting employment.
Indeed, the situation of the former FEBTC
There is union shop when all new regular employees in this case clearly does not fall within the first
employees are required to join the union within a certain three exceptions to the application of the Union Shop
period for their continued employment. Clause discussed earlier. No allegation or evidence of
There is maintenance of membership shop when religious exemption or prior membership in another
employees, who are union members as of the effective union or engagement as a confidential employee was
date of the agreement, or who thereafter become presented by both parties. The sole category therefore in
members, must maintain union membership as a which petitioner may prove its claim is the fourth
condition for continued employment until they are recognized exception or whether the former FEBTC
promoted or transferred out of the bargaining unit or the employees are excluded by the express terms of the
agreement is terminated. existing CBA between petitioner and respondent.
A closed-shop, on the other hand, may be The SC held that the word new employees
defined as an enterprise in which, by agreement include not only the employees hired by BPI as non-
between the employer and his employees or their regular employees who later qualify for regular
representatives, no person may be employed in any or employment and become regular employees but also
certain agreed departments of the enterprise unless he those, who as a legal consequence of a merger, are
or she is, becomes, and, for the duration of the automatically deemed regular employees of BPI.
agreement, remains a member in good standing of a The CBA does not make a distinction as to how a
union entirely comprised of or of which the employees in regular employee attains such a status. Moreover, there
interest are a part. is nothing in the Corporation Law and the merger
agreement mandating the automatic employment as a
regular employee by the surviving corporation in the right to choose not to be absorbed by BPI. Even though
merger. FEBTC employees had no choice or control over the
merger of their employer with BPI, they had a choice
THE EMPLOYEES ABSORED BY FAREASTBANK ARE
whether or not they would allow themselves to be
NEITHER ASSETS NOR LIABILITIES
absorbed by BPI.
In the same light, the employees absorbed by
Employment is a personal consensual contract
FarEastBank are neither assets nor liabilities. BPIs
and absorption by BPI of a former FEBTC employee
absorption of former FEBTC employees was neither by
without the consent of the employee is in violation of an
operation of law nor by legal consequence of
individuals freedom to contract. It would have been a
contract. There was no government regulation or law
different matter if there was an express provision in the
that compelled the merger of the two banks or the
articles of merger that as a condition for the merger, BPI
absorption of the employees of the dissolved
was being required to assume all the employment
corporation by the surviving corporation. Had there
contracts of all existing FEBTC employees with the
been such law or regulation, the absorption of
conformity of the employees. In the absence of such a
employees of the non-surviving entities of the merger
provision in the articles of merger, then BPI clearly had
would have been mandatory on the surviving
the business management decision as to whether or not
corporation.[27] In the present case, the merger was
employ FEBTCs employees. FEBTC employees likewise
voluntarily entered into by both banks presumably for
retained the prerogative to allow themselves to be
some mutually acceptable consideration. In fact, the
absorbed or not; otherwise, that would be tantamount to
Corporation Code does not also mandate the
involuntary servitude.
absorption of the employees of the non-surviving
corporation by the surviving corporation in the case of There appears to be no dispute that with respect
a merger. to FEBTC employees that BPI chose not to employ or
FEBTC employees who chose to retire or be separated
Significantly, too, the Articles of Merger and Plan
from employment instead of being absorbed, BPIs
of Merger did not contain any specific stipulation with
assumed liability to these employees pursuant to the
respect to the employment contracts of existing
merger is FEBTCs liability to them in terms of separation
personnel of the non-surviving entity which is
pay, retirement pay or other benefits that may be due
FEBTC. This Court cannot uphold the reasoning that the
them depending on the circumstances.
general stipulation regarding transfer of FEBTC assets
and liabilities to BPI as set forth in the Articles of Merger LEGAL CONSEQUENCES OF MERGER
necessarily includes the transfer of all FEBTC employees
into the employ of BPI and neither BPI nor the FEBTC
employees allegedly could do anything about it. Even if
it is so, it does not follow that the absorbed employees
should not be subject to the terms and conditions of
employment obtaining in the surviving corporation.
Furthermore, the Supreme Court held that it is
contrary to public policy to declare the former FEBTC
employees as forming part of the assets or liabilities of
FEBTC that were transferred and absorbed by BPI in the
Articles of Merger. Assets and liabilities, in this instance,
should be deemed to refer only to property rights and
obligations of FEBTC and do not include the
employment contracts of its personnel. A corporation
cannot unilaterally transfer its employees to another
employer like chattel. Certainly, if BPI as an employer
had the right to choose who to retain among FEBTCs
employees, FEBTC employees had the concomitant
