8. BPI Employees Union-Davao City-FUBU v. BPI, G.R.

No. 174912, July 24, 2013

Facts:
 Bank of the Philippine Islands (BPI) entered into a service agreement with BPI
Operations Management Corporation (BOMC), a subsidiary of BPI.
 The agreement involved the outsourcing of various functions, such as check clearing,
delivery of bank statements, fund transfers, and cash servicing.
 A service agreement between BPI and BPI Operations Management Corporation
(BOMC) was initially implemented in BPI’s Metro Manila branches. In this agreement,
BOMC undertook to provide services
 BPI Employees Union-Metro Manila-FUBU (BPIEU-Metro Manila-FUBU) filed a
complaint for unfair labor practice, but the National Labor Relations Commission (NLRC)
ruled in favor of BPI, stating that the outsourcing was a valid exercise of
management prerogative.
 The service agreement was later implemented in Davao City, and a merger between
BPI and Far East Bank and Trust Company (FEBTC) took place.
 Twelve former FEBTC employees were transferred to BOMC as a result of the merger.
 BPI Employees Union-Davao City-FUBU (Union) objected to the transfer, claiming
that it violated the collective bargaining agreement and deprived the Union of
membership.
 The Union filed a formal protest and requested that the matter be submitted to the
grievance procedure under the collective bargaining agreement.
 BPI did not consider it grievable and instead proposed a Labor Management Conference
(LMC).
 During the LMC, BPI argued that the creation of BOMC was to preserve more jobs
and place employees where they were most needed.
 The Union claimed that BOMC undermined the existence of the union and deprived
employees of their right to join the union.
 The Union filed a notice of strike, and BPI filed a petition for assumption of jurisdiction
with the Department of Labor and Employment (DOLE).
 The DOLE certified the labor dispute to the NLRC for compulsory arbitration.
 The NLRC upheld the validity of the service agreement and dismissed the charge
of unfair labor practice.
 The Union appealed to the Court of Appeals (CA), but the CA affirmed the NLRC's
decision.

Issue:
WON outsourcing of jobs included in the existing bargaining unit to BOMC is a breach of the
union-shop agreement in the CBA thus tantamount to unfair labor practice.
Ruling: No.
ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. ...Accordingly,
violations of a Collective Bargaining Agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and shall be resolved as grievances under
the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.

Clearly, 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 bank's 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.