HSBC Employees Union vs. NLRC

THE HONGKONG AND SHANGHAI BANKING CORPORATION EMPLOYEES UNION, petitioner, vs.
NATIONAL LABOR RELATIONS

COMMISSION AND THE HONGKONG AND SHANGHAI BANKING CORPORATION, LTD., respondents.
[G.R. No. 125038. November 6, 1997]
REGALADO, J.:
Duty to Bargain Collectively; Meaning of Duty
FACTS:
The case at bar arose from the issuance of a non-executive job evaluation program (JEP) lowering the starting salaries
of future employees, resulting from the changes made in the job grades and structures, which was unilaterally implemented
by the Bank retroactive to January 1, 1993. The program in question was announced by the Bank on January 18, 1993.
UNION’S Answer: The Union, through its President, Peter Paul Gamelo, reiterated its previous verbal objections to the
Banks unilateral decision to devise and put into effect the said program because it allegedly was in violation of the existing
collective bargaining agreement (CBA) between the parties and thus constituted unfair labor practice. The Union demanded
the suspension of the implementation of the JEP and proposed that the same be instead taken up or included in their
upcoming CBA negotiations.
HSBC’s Reply: The Bank replied in a letter dated January 25, 1993 that the JEP was issued in compliance with its
obligation under the CBA, apparently referring to Article III, Section 18 thereof which provides that: Within the lifetime of this
Agreement the BANK shall conduct a job evaluation of employee positions. The implementation timetable of the said exercise
shall be furnished the UNION by the BANK within two (2) months from the signing of this Agreement.
This prompted the Union to undertake concerted activities to protest the implementation of the JEP, such as whistle
blowing during office hours starting on March 15, 1993 up to the 23rd day, and writing to clients of the Bank allegedly to
inform them of the real situation then obtaining and of an imminent disastrous showdown between the Bank and the Union.
The Union engaged in said activities despite the fact that as early as February 11, 1993, it had already initiated the
renegotiation of the non-representational provisions of the CBA by submitting their proposal to the Bank, to which the latter
submitted a reply. As a matter of fact, negotiations on the CBA commenced on March 5, 1993 and continued through March
24, 1993 when the Bank was forced to declare a recess to last for as long as the Union kept up with its concerted
activities. The Union refused to concede to the demand of the Bank unless the latter agreed to suspend the implementation
of the JEP.
The Bank filed with the Arbitration Branch of the NLRC a complaint for unfair labor practice against the Union allegedly
for engaging in the contrived activities against the ongoing CBA negotiations between the Bank and the Union in an attempt
to unduly coerce and pressure the Bank into agreeing to the Unions demand for the suspension of the implementation of the
JEP. It averred that such concerted activities, despite the ongoing CBA negotiations, constitute unfair labor practice (ULP)
and a violation of the Unions duty to bargain collectively under Articles 249 (c) and 252 of the Labor Code.
The Union filed a Motion to Dismiss on the ground that the complaint states no cause of action. It alleged that its united
activities were actually being waged to protest the Banks arbitrary imposition of a job evaluation program and its unjustifiable
refusal to suspend the implementation thereof. It further claimed that the unilateral implementation of the JEP was in
violation of Article I, Section 3 of the CBA which prohibits a diminution of existing rights, privileges and benefits already
granted and enjoyed by the employees. To be sure, so the Union contended, the object of the Bank in downgrading existing
CBA salary scales, despite its sanctimonious claim that the reduced rates will apply only to future employees, is to torpedo
the salary structure built by the Union through three long decades of periodic hard bargaining with the Bank and to thereafter
replace the relatively higher-paid unionized employees with cheap newly hired personnel. In light of these circumstances, the
Union insists that the right to engage in these concerted activities is protected under Article 246 of the Labor Code regarding
non-abridgment of the right to self-organization and, hence, is not actionable in law.
In its Opposition,[7] the Bank stated that the Union was actually challenging merely that portion of the JEP providing for
a lower rate of salaries for future employees. Contrary to the Unions allegations in its motion to dismiss that the JEP had
resulted in diminution of existing rights, privileges and benefits, the program has actually granted salary increases to, and in
fact is already being availed of by, the rank and file staff. The Unions objections are premised on the erroneous belief that
the salary rates for future employees is a matter which must be subject of collective bargaining negotiation. The Bank believes
that the implementation of the JEP and the resultant lowering of the starting salaries of future employees, as long as there
is no diminution of existing benefits and privileges being accorded to existing rank and file staff, is entirely a management
prerogative.
Labor Arbiter dismissed the complaint with prejudice and ordered the parties to continue with the collective bargaining
negotiations, there having been no showing that the Union acted with criminal intent in refusing to comply with its duty to
bargain but was motivated by the refusal of management to suspend the implementation of its job evaluation program, and
that it is not evident that the concerted activities caused damage to the Bank.
On appeal, respondent NLRC declared that based on the facts obtaining in this case, it becomes necessary to resolve
whether or not the Unions objections to the implementation of the JEP are valid and, if it is without basis, whether or not the
concerted activities conducted by the Union constitute unfair labor practice. It held that the labor arbiter exceeded his
authority when he ordered the parties to return to the bargaining table and continue with CBA negotiations, considering that
his jurisdiction is limited only to labor disputes arising from those cases provided for under Article 217 of the Labor Code,
and that the labor arbiters participation in this instance only begins when the appropriate complaint for unfair labor practice
due to a party’s refusal to bargain collectively is filed. Consequently, the case was ordered remanded to the arbitration branch
of origin for further proceedings in accordance with the guidelines provided for therein.
Hence, this petition.
ISSUE:
Whether the petitioner acted in bad faith in implementing the JE Program.
RULING:
NO. We find no merit in the petition. In the case at bar, private respondent union has miserably failed to convince this
Court that the petitioner acted in bad faith in implementing the JE Program. There is no showing that the JE Program was
intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive.
Accordingly, this Court, in a number of cases, has recognized and affirmed the prerogative of management to implement
a job evaluation program or a reorganization for as long as it is not contrary to law, morals or public policy. In upholding
managements prerogative to implement the JEP, the Court held therein that:
x x x It is the prerogative of management to regulate, according to its discretion and judgment, all aspects of
employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the
employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long
as it is exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh,
oppressive, vindictive or wanton manner or out of malice or spite.
It has been held that the crucial question whether or not a party has met his statutory duty to bargain in good faith
typically turns on the facts of the individual case. There is no per se test of good faith in bargaining. Good faith or bad faith
is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of credibility. The
effect of an employers or a unions actions individually is not the test of good-faith bargaining, but the impact of all such
occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the
finding of the NLRC. This, the court or the quasi-judicial agency concerned can do only after it has made a comprehensive
review of the allegations made in the pleadings filed and the evidence presented in support thereof by the parties, but
definitely not where, as in the present case, the accusation of unfair labor practice was negated and subsequently discharged
on a mere motion to dismiss.
It is a well-settled rule that labor laws do not authorize interference with the employer’s judgment in the conduct of his
business. The Labor Code and its implementing rules do not vest in the labor arbiters nor in the different divisions of the
NLRC nor in the courts managerial authority.[16] The hiring, firing, transfer, demotion, and promotion of employees has been
traditionally identified as a management prerogative subject to limitations found in the law, a collective bargaining
agreement, or in general principles of fair play and justice. This is a function associated with the employers inherent right to
control and manage effectively its enterprise. Even as the law is solicitous of the welfare of employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.[17]
Notwithstanding the relevance of the foregoing disquisition, considering however the factual antecedents in this case,
or the lack of a complete presentation thereof, we are constrained to refrain from ruling outright in favor of the Bank. While
it would appear that remanding the case would mean a further delay in its disposition, we are not inclined to sacrifice equity
and justice for procedural technicalities or expediency. The order dismissing the complaint for ULP with prejudice, to say the
least, leaves much to be desired.
WHEREFORE, subject to the foregoing observation, the challenged disposition of respondent National Labor Relations
Commission is hereby AFFIRMED.

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THE HONGKONG AND SHANGHAI BANKING CORPORATION EMPLOYEES UNION, petitioner, vs.

NATIONAL LABOR RELATIONS

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