Bankard, Inc. vs. National Labor Relations Commission

An employer's contracting out of services or functions being performed by union members does not constitute unfair labor practice under Article 248(c) of the Labor Code absent substantial evidence proving that the employer acted with intent to interfere with, restrain, or coerce employees in the exercise of their right to self-organization. The burden of proving such intent rests on the party alleging unfair labor practice.

Bankard, Inc., a corporation engaged in the credit card business, implemented a Manpower Rationalization Program (MRP) in December 1999 as a cost-cutting measure to enhance operational efficiency and competitiveness. The program invited employees to tender voluntary resignations in exchange for separation pay equivalent to at least two months' salary per year of service, with eligible employees receiving additional retirement benefits. Following the implementation of the MRP, wherein majority of employees in the Phone Center and Service Fulfillment Division availed of the program, Bankard contracted an independent agency to handle its call center operations. The Bankard Employees Union-AWATU viewed these actions as designed to reduce regular employees and replace them with contractual workers ineligible for union membership, prompting the filing of notices of strike alleging unfair labor practices.

• The Manpower Rationalization Program (MRP): In December 1999, Bankard implemented the MRP as a valid cost-cutting and efficiency measure to remain competitive in the credit card industry. The program offered voluntary resignation packages to employees, providing separation pay of at least two months' salary for every year of service, with eligible employees receiving additional retirement benefits. Majority of the employees in the Phone Center and Service Fulfillment Division availed of the program.
• Contracting Out of Services: Following the reduction in regular employees through the MRP, Bankard contracted an independent agency to handle its call center needs. The Union alleged that other departments, including Marketing, Voice Authorization, Computer Services, and Records Retention, also utilized contractual messengers to perform workloads previously assigned to regular employees.
• Union Allegations and Strike Activities: The Union claimed that Bankard's "freeze-hiring" policy on positions vacated by regular employees, coupled with the MRP, was calculated to reduce union membership and increase the number of contractual employees who could not qualify for union membership. On June 26, 2000, the Union filed a Notice of Strike alleging unfair labor practices. On July 25, 2000, the Union declared a Collective Bargaining Agreement (CBA) bargaining deadlock and filed a second Notice of Strike on July 26, 2000, alleging bad faith bargaining. Despite two certification orders from the Labor Secretary dated July 12, 2000, and August 9, 2000, certifying the disputes to the NLRC and enjoining strikes or lockouts, the Union proceeded with a strike on August 11, 2000.
• CBA Negotiations: During conciliatory conferences, the parties failed to settle amicably and submitted position papers. The parties eventually executed a Memorandum of Agreement (MOA) renegotiating the provisions of the 1997-2002 CBA, which was overwhelmingly ratified by the Union members.

• Validity of Management Prerogative: Bankard maintained that job contractualization and outsourcing constituted legitimate exercises of management prerogative intended to achieve cost-efficient operations and enhance competitiveness, not to undermine the Union.
• Absence of Intent to Interfere: Petitioner argued that the MRP was implemented in good faith as a valid cost-cutting measure, and there was no evidence that it was designed to encourage employees to disassociate from the Union or restrain them from joining any labor organization.
• Mootness of Bad Faith Bargaining: The issue of alleged bad faith in bargaining was rendered moot and academic by the execution and ratification of the CBA between the parties.

• Violation of Article 248(c): The Union countered that the MRP and subsequent contracting out of services to contractual employees constituted unfair labor practice under Article 248(c) of the Labor Code, as these acts were calculated to reduce union membership and prevent union growth by replacing regular employees with contractual workers ineligible for union membership.
• Bad Faith Bargaining: Respondent argued that Bankard's proposals during CBA negotiations were unreasonably low, demonstrating lack of intent to reach an agreement and constituting a scheme to force the Union to declare a bargaining deadlock.

• Unfair Labor Practice under Article 248(c): Whether Bankard committed unfair labor practice by implementing the MRP and contracting out services previously performed by union members.
• Burden of Proof: Whether the Union discharged its burden of proving by substantial evidence that Bankard acted with intent to interfere with, restrain, or coerce employees in the exercise of their right to self-organization.

• Unfair Labor Practice under Article 248(c): Bankard did not commit unfair labor practice. While the MRP resulted in a reduction of union membership, the Union failed to prove by substantial evidence that Bankard intended the program as a tool to deliberately and drastically reduce union membership or to interfere with the employees' right to self-organize. Absent proof of ill will, bad faith, or malice, the contracting out of services constituted a valid exercise of management prerogative.
• Burden of Proof: The Union failed to discharge its burden of proof. In unfair labor practice cases, the alleging party must prove the charge by substantial evidence—defined as more than a mere scintilla of evidence, but such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The Union presented only bare allegations without sufficient proof that Bankard was motivated by anti-union animus.

• Concept of Unfair Labor Practice — Unfair labor practices are acts that violate the workers' constitutional right to self-organization and are inimical to legitimate labor-management relations. Without the element of interference with the right to organize, acts of an employer, even if unfair, do not constitute unfair labor practice.
• Burden of Proof in ULP Cases — The party alleging unfair labor practice bears the burden of proving the charge by substantial evidence because unfair labor practice is punishable with both civil and criminal sanctions. Substantial evidence requires more than a mere scintilla; it must be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
• Management Prerogative — Employers possess the fundamental right to prescribe and enforce rules necessary for the proper, productive, and profitable operation of their business, including the right to contract out services, provided such actions are not motivated by malicious or arbitrary intent to interfere with union rights.

• "Unfair labor practices violate the constitutional right of workers and employees to self-organization... Without that element, the acts, even if unfair, are not ULP." — Articulates the essential element of ULP as interference with the right to organize.
• "The general principle is that the one who makes an allegation has the burden of proving it... in ULP cases, the alleging party has the burden of proving the ULP... and in order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim." — Establishes the burden and quantum of proof in ULP cases.
• "Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise." — Defines the standard of substantial evidence.
• "Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer." — Affirms the scope of management prerogative subject to absence of anti-union animus.

• Prince Transport, Inc. v. Garcia, G.R. No. 167291 (2011) — Cited for the principle that factual findings of labor officials are accorded respect and finality when supported by substantial evidence.
• Culili v. Eastern Telecommunications Philippines, Inc., G.R. No. 165381 (2011) — Cited for the definition that unfair labor practices are acts violating the workers' right to organize.
• General Santos Coca-Cola Plant Free Workers Union-Tupas v. Coca-Cola Bottlers Phils., Inc., G.R. No. 178647 (2009) — Cited for the principle that without the element of interference with the right to organize, employer acts are not ULP.
• UST Faculty Union v. UST, G.R. No. 180892 (2009) — Cited for the rule that the burden of proving ULP rests on the alleging party and requires substantial evidence.

• Article 247, Labor Code — Defines unfair labor practices as violations of the constitutional right of workers and employees to self-organization and establishes that such acts disrupt industrial peace.
• Article 248(c), Labor Code — Prohibits contracting out services or functions being performed by union members when such will interfere with, restrain, or coerce employees in the exercise of their rights to self-organization.

Presbitero J. Velasco, Jr. (Chairperson), Diosdado M. Peralta, Roberto A. Abad, Marvic Mario Victor F. Leonen.