HONGKONG BANK INDEPENDENT LABOR UNION, VS.

HONKONG AND
SHANGHAI BANKING CORPORATION LIMITED
G.R. No. 218390 FEBRUARY 28, 2018, THIRD DIVISION, VELASCO, J.
Digested by: Jordz Ivan C. Ramos

DOCTRINE:

“We (Supreme Court) cannot subscribe to HSBC’s position that its imposition of
the credit checking requirement on salary loans granted under the CBA is valid. The
evidence presented convinces this Court to hold that credit checking requirement
imposed by HSBC under the questioned Financial Assistance Plan modified the CBA
provisions on salary loans was a unilateral imposition violative of HSBC’s duty to bargain
collectively and therefore, invalid.”

FACTS:

Section X338 of the Manual of Regulations of Banks (MORB) issued by the

Bangko Sentral ng Pilipinas (BSP) substantially states that: Banks may provide financial
assistance to their officers and employees, as part of their fringe benefits program and
that such financing plans and amendments shall be with prior approval of the BSP.

Pursuant to Section X338, the respondent, Hongkong Shanghai Banking

Corporation Limited (HSBC), submitted its Financial Assistance Plan (plan) to the BSP
for approval. The plan allegedly contained a credit checking proviso stating that
“repayment defaults on existing loans and adverse information on outside loans will be
considered in the evaluation of loan applications.”

Meanwhile, petitioner, Hongkong Bank Independent Labor Union, the bargaining

agent of HSBC’s rank-and-file employees, entered into a CBA with the bank. A provision
of the CBA provides for housing, personal and car loan assistance to HSBC employees.
When the CBA was about to expire, the parties started negotiations for a new CBA.
During the said negotiations, HSBC proposed amendments to align the wordings of the
CBA with its BSP approved Financial Assistance Plan, specifically to include the Credit
Checking Proviso stating that repayment defaults and information on outside loan will be
considered in the evaluation of loan applications.

The proposed amendments were vigorously objected by the petitioner Labor

Union in which the respondent HSBC withdrew its proposed amendments but
nevertheless sent an e-mail to its employees for the enforcement of the Credit Checking
Provision of the Financial Assistance Plan on any loan applications of its employees.

Thereafter, Vince Mananghaya, a member of the petitioner Hongkong Bank

Labor Union, applied for a loan under the CBA. His first loan application was approved,
but adverse findings from the external checks on his credit background resulted in the
denial of his second loan application.

The petitioner labor union then raised the denial as a grievance issue with the
National Conciliation Mediation Board (NCMB). It argued that the imposition of an
additional requirement – the external credit checking is not sanctioned under the CBA.
The respondent HSBC countered that the external credit checking was merely an
implementation of the BSP Financial Assistance Plan.

The NCMB rendered a decision finding for respondent HSBC. It held that the
respondent HSBC, as an employer, has the right to issue and implement guidelines for
the availment of loan applications as part of its management prerogative.

The Court of Appeals sustained the findings and conclusions of the NCMB in
toto.

ISSUE:

Can HSBC validly enforce the credit checking requirement under the BSP
approved financial assistance plan in processing the salary loan applications of covered
employees even when the said requirement is not recognized under the CBA?

RULING:

No, the Credit Checking Requirement cannot be enforced in processing salary

loan applications of employees if said requirement is not recognized under the CBA
because of the following reasons:

1. The Constitutional right of employees to participate in matters affecting their

benefits and the sanctity of the CBA.

The Constitution guarantees the rights of all workers to self-organization,

collective bargaining and negotiations. The court ruled that even though
jurisprudence recognizes the validity of the exercise by an employer of its
management prerogative, such prerogative is not absolute and is subject to
limitations imposed by law, collective bargaining agreement, and general
principles of fair play and justice.

In this case, there is the presence of a Collective Bargaining Agreement between

the petitioner and the respondent. And being a product of said constitutionally
guaranteed right to participate, the CBA between the petitioner and respondent is
obligatory.

2. Unilateral Amendments to the CBA violate Article 253 of the Labor Code

In the present controversy, it is clear from the arguments and evidence submitted
that the Financial Assistance Plan on Credit Checking was never made part of
the CBA. The petitioner labor union even vehemently rejected the incorporation
of the credit checking proviso into the CBA.

In this respect, the respondent HSBC cannot add, modify, and restrict the grant
of salary loans beyond the terms of the CBA because to do so would lead to
unilateral amendments to the CBA without the concurrence of the labor union.

3. Salary loans subject of this case are not covered by the credit checking
requirement under the MORB
Section X304.1 of MORB substantially states that: “A bank shall grant loans or
other credit accommodations only in amounts and for the periods of time
essential for the effective completion of the operation to be financed. Before
granting loans, a bank must ascertain that the borrower, co-maker, endorser,
surety is/are financially capable of fulfilling his/their commitments to the bank. A
bank shall obtain adequate information on his/their credit standing and financial
capacities x x x.”

However, this must be read together with X338.3 which states: All loans or other
credit accommodations to bank officers and employees, EXCEPT those granted
under the fringe benefit program of the bank, shall be subject to the same terms
and conditions imposed on the regular lending operations of the bank.

In other words, Section X338.3 clearly excluded loans and credit

accommodations under the bank’s fringe benefits programs from the operation of
Section X304.1

Furthermore, it is inaccurate to state that credit checking is necessary, or even

indispensable, in the grant of salary loans to the bank's employees, since the
business of banking is imbued with public interest and there is a fiduciary
relationship between the depositor and the bank. It is also incorrect to state that
allowing bank employees to borrow funds from their employer via salary loans
without the prior conduct of a credit check is inconsistent with this fiduciary
obligation. This is so because there are other ways of securing payment of said
salary loans other than ascertaining whether the borrowing employee has the
capacity to pay the loan.