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108 BPI v. BPI EU (Fernandez)
108 BPI v. BPI EU (Fernandez)
164301
August 10, 2010 Leonardo-De Castro, J.
TOPIC IN SYLLABUS: ILO Convention No. 87
SUMMARY: BPI and FEBTC merged with the former as the surviving corp. FEBTC’s employees were absorbed by BPI.
BPI-EU of Davao Chapter invited the said employees to join the union pursuant to a union shop clause in the existing
CBA between the union and BPI. The employees refused membership; hence, the union requested that they be terminated.
BPI, however, did not act upon the request. VA ruled in BPI’s favor, stating that the absorbed employees are not covered
by the union shop clause since they were not “new” employees that needed to be regularized. Rather, they were part of
the assets and liabilities it assumed pursuant to the merger. CA reversed, stating that they are covered by the clause. SC
affirmed. The individual employee’s right to refrain from joining a union is not absolute and may be limited by a union
security clause.
FACTS:
BSP, as well as SEC, approved the Articles and Plan of Merger between BPI and FEBTC, with the former as the
surviving corporation absorbing all the assets and liabilities of the latter. FEBTC employees were hired by BPI as its
own employees, with their status and tenure recognized, and salaries and benefits maintained.
Prior to the effectivity of the Merger, respondent Union, SEBA of BPI’s RF employees in Davao, invited the absorbed
employees who did not belong to any union at the time, to a meeting re: Union Shop Clause 1 of the existing CBA
between BPI and BPI-EU. Some of the absorbed employees joined the Union, while some didn’t. Subsequently, those
who joined retracted their membership.
The Union then sent notices to these employees and called a hearing, but they refused to attend the same. Thus, the
Union President requested BPI to implement the Union Shop Clause and to terminate the employment of the said
employees.
After 2 months of mgmt. inaction, Union referred the issue to the Grievance Committee, and thereafter, to voluntary
arbitration. The VA ruled in favor of BPI’s interpretation that the former FEBTC employees were not covered by the
Union Security Clause in the CBA since these employees were not new employees who were hired and subsequently
regularized; rather, they were absorbed employees “by operation of law” because these employees can be considered
assets and liabilities of the absorbed corporation. Hence, these employees cannot be compelled to join the Union since
they had a constitutional right to join or not to join any organization. MR denied.
CA reversed. “Absorbed” and “new” employees’ distinction extends only as regards their employment service (service
is continuous). Their similarities far outweigh their differences (new employer, working conditions, terms of
employment and company policy to follow), and as such, these absorbed employees should be considered “new”
employees for the purpose of applying the Union Shop Clause.
ISSUES: WoN absorbed employees should be covered by the Union Shop Clause.
PETITIONER’S ARGUMENT/S: Absorbed employees are not “new employees” for purposes of applying the Clause,
since the said term is qualified by phrases “who may hereafter be regularly employed” and “after they become regular
employees”. Such only applies to employees hired initially on a temporary or probationary status for possible regular
employment at some future date.
HELD:
1. Yes.
Sec. 2, Art. II of the CBA is silent as to how one becomes a “regular employee” of BPI for the first time. Nothing
therein requires that “new” regular employees must first undergo a temporary/probationary status before being
deemed as such under the Union Shop Clause.
1
Section 2. Union Shop. New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by
the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that
membership in good standing in the Union is a condition of their continued employment with the Bank.
Dissent, Carpio, J.
“Self-organization” means voluntary association without compulsion, threat of punishment, or threat of loss of
livelihood. Compulsory membership is anathema to “self-organization”. The right to self-organize includes the right not
to exercise such right. Freedom to associate necessarily includes the freedom not to associate. Thus, freedom to join
unions necessarily includes the freedom not to join unions.
The merger of two corporations does not authorize the surviving corporation to terminate the employees of the absorbed
corporation in the absence of just or authorized causes as provided in Arts. 282 and 283, LC.
To compel the absorbed employees to join the Union at the risk of losing their jobs is violative of their constitutional
freedom to associate.
We cannot exalt union rights over and above the freedom and right of employees to join or not to join a union
Dissent, Brion, J.
In a complete merger situation where there is total takeover by one corp. over another and there is silence in the
agreement re: the fate of the human resource complement, the latter should not be left in legal limbo and should be
properly provided for, by compelling the surviving entity to absorb these employees.
Those who are immediately hired as regulars acquire their status through the voluntary act of hiring done within the
effective term or period of the CBA, while the absorbed employees merely continued the employment they started with
the absorbed corporation. Absorbed employees are neither “new” employees nor employees who became regular only
during the term of the CBA in the way that newly regularized employees become so. These absorbed employees are sui
generis.