GR 164301; (August, 2010) (Digest)
G.R. No. 164301; August 10, 2010
BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, Respondent.
FACTS
Petitioner Bank of the Philippine Islands (BPI) merged with Far East Bank and Trust Company (FEBTC), with BPI as the surviving corporation. The former FEBTC rank-and-file employees in Davao City were absorbed by BPI. At the time of the merger, these absorbed employees were not members of any labor union. Respondent BPI Employees Union-Davao Chapter is the exclusive bargaining agent for BPI’s rank-and-file employees in Davao City under an existing Collective Bargaining Agreement (CBA). The CBA contains a union shop clause requiring all new regular employees within the bargaining unit to join the union within thirty days as a condition for continued employment.
The union demanded that the absorbed FEBTC employees comply with this union shop clause. When some refused, the union requested BPI to terminate their employment. BPI refused, contending that the absorbed employees, being involuntary transferees by operation of the merger, were not “new employees” contemplated by the union shop clause and were thus exempt. The dispute was elevated to voluntary arbitration, which ruled in favor of BPI. The Court of Appeals reversed the voluntary arbitrator’s decision.
ISSUE
May a corporation validly exempt employees absorbed as a result of a corporate merger from the coverage of a union shop clause in an existing CBA?
RULING
No. The Supreme Court affirmed the Court of Appeals and ruled against BPI. The legal logic is anchored on the primacy of labor laws and the specific CBA terms over general corporate law principles on mergers. The Court emphasized that the Corporation Code, which governs mergers, is silent on employment terms; thus, the disposition of labor rights is governed by the Labor Code and the CBA.
The union shop clause under Article II, Section 2 of the CBA explicitly applies to “new employees… who may hereafter be regularly employed.” The absorbed FEBTC employees, upon their automatic employment by BPI due to the merger, became regular employees of BPI within the bargaining unit. They are therefore “new employees” relative to BPI and are clearly covered by the plain language of the union shop clause. The Court rejected BPI’s argument that the merger created a privileged class of employees exempt from union membership. Such an interpretation would undermine the CBA and the principle of collective bargaining. Furthermore, the Court noted that the absorbed employees themselves did not appeal the Court of Appeals decision against them, implying acquiescence. The union shop clause is a valid union security measure expressly authorized under Article 248(e) of the Labor Code, and BPI, as a party to the CBA, is bound to enforce it.