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For consideration is a Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning the Decision^[1] and Resolution of the Court of Appeals (CA), dated October 23, 2014 and May 21, 2015, respectively, in CA-G.R. SP No. 130798. The challenged rulings sustained the validity of the external credit check as a condition before respondent could grant the application for salary loans of petitioner's members. This is notwithstanding the non-mention of the said condition in the parties' Collective Bargaining Agreement (CBA).



In 2001, the Bangko Sentral ng Pilipinas (BSP) issued the Manual of Regulations for Banks (MoRB). Relevant to the instant case is Section X338 thereof which reads:

Banks may provide financial assistance to their officers and employees, as part of their fringe benefits program, to meet housing, transportation, household and personal needs of their officers and employees. Financing plans and amendments thereto shall be with prior approval of the BSP. (emphasis added)

Pursuant to the above-cited provision, respondent Hongkong and Shanghai Banking Corporation Limited (HSBC), on March 12, 2003, submitted its Financial Assistance Plan (Plan) to the BSP for approval. The Plan allegedly contained a credit checking proviso stating that "[r]epayment defaults on existing loans and adverse information on outside loans will be considered in the evaluation of loan applications." The BSP approved the Plan on May 5, 2003.^[2] Said Plan was later amended thrice,^[3] all of which amendments were approved by the BSP.^[4]

Meanwhile, petitioner Hongkong Bank Independent Labor Union (HBILU), the incumbent bargaining agent of HSBC's rank-and-file employees, entered into a CBA with the bank covering the period from April 1, 2010 to March 31, 2012. Pertinent to the instant petition is Article XI thereof, which reads:

Article XI
Salary Loans

Section 1. Housing/house Improvement Loan. The BANK, or other financial institution when appropriate, shall extend housing loan to qualified employees with at least three (3) YEARS OF SERVICE, UP TO One Million Five Hundred Thousand Pesos (P1,500,000.00) payable in twenty-five (25) years or up to the retirement date of the employee, whichever comes first. Subject to BSP approval, an additional Five Hundred Thousand Pesos (P500,000.00) can be availed subject to the terms above with interest rate at the BLR less 3% but not less than six percent (6%) per annum.

Section 2. Personal Loans. The BANK, or the Retirement Trust Fund Inc. or other financial institutions, when appropriate, shall extend personal loan to qualified employees, with at least 1 year service, up to six months basic pay of the employees at six percent (6%) interest per annum, payable in three years.

Section 3. Car Loans. The BANK, or the Retirement Trust Fund Inc. or other financial institutions when appropriate, shall extend a car loan to qualified employees with at least 3 years service up to Five Hundred Fifty Thousand Pesos (PHP550,000.00) payable in seven (7) years. Interest rate shall be six percent (6%) per annum.

Section 4. Credit Ratio. The availment of any of the foregoing loans shall be subject to the BANK's credit ratio policy.

When the CBA was about to expire, the parties started negotiations for a new one to cover the period from April 1, 2012 to March 31, 2017. During the said negotiations, HSBC proposed amendments to the above­ quoted Article XI allegedly to align the wordings of the CBA with its BSP­ approved Plan. Particularly, HSBC proposed the deletion of Article XI, Section 4 (Credit Ratio) of the CBA, and the amendment of Sections 1 to 3 of the same Article to read as follows:

Article XI
Salary Loans

Section 1. Housing/house Improvement Loan. Based on the Financial Assistance Plan duly approved by Bangko Sentral ng Pilipinas (BSP), the BANK, or other financial institution when appropriate, shall extend housing loan to qualified employees with at least three (3) YEARS OF SERVICE UP TO One Million Five Hundred Thousand Pesos (P1,500,000.00) payable in twenty-five (25) years or up to the retirement date of the employee, whichever comes first, subject to employee's credit ratio. An additional Five hundred thousand Pesos (P500,000.00) can be availed subject to the terms above with interest rates at the BLR less 3% but not less than six percent (6%) per annum.

Section 2. Personal Loans. Based on the financial Assistance Plan duly approved by Bangko Sentral ng Pilipinas (BSP), the BANK, or other financial institutions when appropriate, shall extend personal loan to qualified employees, with at least 1 year service, up to six months basic pay of the employees at six percent (6%) interest per annum, payable in three (3) years, subject to employee's credit ratio.

Section 3. Car loans. Based on the Financial Assistance Plan duly approved by Bangko Sentral ng Pilipinas (BSP), the BANK, or other financial institutions when appropriate, shall extend a car loan to qualified employees with at least three years service, up to Five Hundred Fifty Thousand Pesos (PHP550,000.00) payable in seven (7) years. Interest rate shall be six percent (6%) per annum. (emphasis added)

HBILU vigorously objected to the proposed amendments, claiming that their insertions would curtail its members' availment of salary loans. This, according to the Union, violates the existing exceptions set forth in  BSP Circular 423, Series of 2004,^[5] and Section X338.3^[6] of the MoRB. In view of HBILU's objection, HSBC withdrew its proposed amendments and, consequently, Article XI remained unchanged.

Despite the withdrawal of the proposal, HSBC sent an e-mail to its employees on April 20, 2012 concerning the enforcement of the Plan, including the Credit Checking provisions thereof. The e-mail reads:

Dear All

We wish to reiterate the following provisions included in the Financial Assistance Plan (FAP) as approved by Bangko Sentral ng Pilipinas (BSP). Note that the FAP is the official guideline and policy governing Staff Loans and Credit Cards.

>>>>CREDIT CHECKING

Below are the specific provisions included in the FAP regarding credit checking.

Housing Loan, Car Loan, Personal Loan & Computer/Club Membership/Medical Equipment Loan	Repayment defaults on existing loans and adverse information considered in the evaluation of loan applications.
Credit Card	Repayment defaults on existing loans and adverse information considered in the evaluation of loan applications.

With the strict implementation of these provisions, adverse credit findings may result to disapproval of loan or credit card applications. These findings will include the following:

(1)	Frequency of confirmed ADA failure on staff/commercial loans and credit cards (3 consecutive incidents within the past 6 months or 6 incidents within the past 12 months). Note that applications with pending ADA for investigation will only be processed upon confirmation of status (Confirmed or Reprieved);
(2)	Adverse findings on HSBC cards; or
(3)	Adverse findings from external credit checks.[7]

Thereafter, in September 2012, HBILU member Vince Mananghaya (Mananghaya) applied for a loan under the provisions of Article XI of the CBA. His first loan application in March 2012 was approved, but adverse findings from the external checks on his credit background resulted in the denial of his September application.^[8] HBILU 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 prior to approval of any loan application under Article XI of the CBA—is not sanctioned under the CBA. The Union emphasized that under the terms of Article XI, there is no such requirement and that it cannot, therefore, be unilaterally imposed by HSBC.

Justifying its denial of the loan application, HSBC countered that the external credit check conducted in line with Mananghaya's loan application was merely an implementation of the BSP-approved Plan. The adoption of the Plan, HSBC stressed, is a condition sine qua non for any loan grant under Section X338 of the MoRB. Moreover, the Credit Check policy has been in place since 2003, and is a sound practice in the banking industry to protect the interests of the public and preserve confidence in banks.

The issue was then submitted for resolution by the NCMB Panel of Accredited Voluntary Arbitrators (the Panel).^[9] In the interim, the parties, on September 29, 2012, inked a new CBA for the period covering April 1, 2012 up to March 31, 2017.^[10]



On May 17, 2013, the Panel rendered a Decision finding for HSBC. It held that herein respondent, as an employer, has the right to issue and implement guidelines for the availment of loan accommodations under the CBA as part of its management prerogative. The repeated use of the term "qualified employees" in Article XI of the CBA was deemed indicative of room for the adoption of further guidelines in the availment of the benefits thereunder. The Panel also agreed that HSBC's Plan is not a new policy as it has already been approved by the BSP as early as 2003. Thus, the Panel ruled that the salary loan provisions under Article XI of the CBA must be read in conjunction with the provisions of the Plan.

The Panel further discussed that HSBC's adoption of the Plan was not done for any whimsical or arbitrary reason, but because the bank was constrained to comply with Section X338 of the MoRB. As a banking institution, HSBC cannot divorce itself from the regulatory powers of the BSP. Observance of Section X338 of the MoRB was then necessary before the bank could have been allowed to extend loan accommodations to its officers and employees.

On the basis thereof, the Panel held that they are not ready to rule that HSBC's Plan violates Article XI of the CBA.

Aggrieved, HBILU elevated the case to the CA.



The CA sustained the findings and conclusions of the NCMB-PVA in toto on the ratiocination that HSBC was merely complying with Section X338 of the MoRB when it submitted the Plan to BSP. When BSP, in turn, approved the said Plan, HSBC became legally bound to enforce its provisions, including the conduct of external credit checks on its loan applicants.^[11] The appellate court further ruled that the Plan should be deemed incorporated in the CBA because it is a regulatory requirement of BSP without which the salary loan provisions of the CBA are rendered inoperative.

Petitioner's motion for reconsideration having been denied by the CA thru its May 21, 2015 Resolution, HBILU now seeks recourse from this Court.


HBILU presents the following grounds to warrant the reversal of the assailed Decision, viz:

The decisions and resolutions of the Hon. Panel of Voluntary Arbitrators and the Hon. Court of Appeals are tainted with grave abuse of discretion and it showed patent errors in the appreciation of facts which led to wrong conclusions of law; or stated otherwise;

The Hon. Panel of Voluntary Arbitrators and Court of Appeals committed serious, reversible and gross error in law in ruling that the Bank's Financial Assistance Plan as not in violation of Article XI of the Parties' CBA revision on Salary Loans (Article XII of the new and existing CBA)^[12]

Simply put, the issue for Oui resolution is whether or not HSBC could validly enforce the credit-checking requirement under its BSP-approved Plan in processing the salary loan applications of covered employees even when the said requirement is not recognized under the CBA.

Arguments of Petitioner

In support of its position, HBILU argues, among others, that HSBC failed to present in court the Plan that was supposedly submitted to the BSP for approval, and to show that the requirement of external credit checking had already been included therein.^[13]  Too, said Plan is not a set of policies for salary loans that came from the BSP, but was devised solely by HSBC.^[14]

Furthermore, HBILU claims that it is not privy to the Plan and has not been consulted, much less informed, of the impositions therein prior to its implementation. No proof was offered that the Plan had been disseminated to the employees prior to the April 20, 2012 e-mail blast.^[15]

Lastly, the implementation of the Plan, according to HBILU, is tantamount to diminution of benefits^[16] and a unilateral amendment of the existing CBA,^[17] which are both proscribed under the Labor Code. Had the parties to the CBA intended to include the external credit check as an additional condition to the availment of employee salary loans, then it should have been plainly provided in their agreement.^[18]

Arguments of Respondent

In its Comment, HSBC claims that the Plan is neither new nor was it issued on a mere whim or caprice. On the contrary, the Plan was established as early as 2003, way before Mananghaya's application was denied, to conform to Section X338 of the BSP MoRB. HSBC reminds the Court that the loan and credit accommodations could have only formed part of the employees' fringe benefit program if they were extended through a financing scheme (i.e., the Plan) approved by the BSP.

Moreover, HSBC argues that the dissemination of the Plan via e-mail blast on April 20, 2012 was but a reiteration, as opposed to a first publication. It contends that even prior to the establishment and approval of the Plan in 2003, the then-loan policy already included the requirement on external credit checking. According to the bank, there was already a provision that required the conduct of credit checking in the processing and evaluation of loan applications in their General Policies on Loans, cascaded through the Intranet system to HSBC employees on October 24, 2002, viz:
   

CREDIT CHECKING
	Repayment defaults on existing loans and adverse information on outside loans will be considered in the evaluation of loan applications.

The union members cannot then feign ignorance of the external credit checking requirement in staff loan applications, according to HSBC. Consequently, petitioner's bare denial of any knowledge about it cannot be given any credence. Considering too that the Plan reiterating the requirement has been approved by the BSP in 2003, HBILU slept on its rights when it questioned its strict imposition almost a decade after its issuance.

Finally, HSBC postulates that the non-mention of the Plan in the CBA is no justification for the bank to disregard the same in processing employee loan applications. Provisions of applicable laws, especially those relating to matters affected with public policy, are deemed written into the contract.^[19]



The petition is meritorious.

The constitutional right of employees
to participate in matters affecting
their benefits and the sanctity of the CBA

Preliminarily, it is crucial to stress that no less than the basic law of the land guarantees the rights of workers to collective bargaining and negotiations as well as to participate in policy and decision-making processes affecting their rights and benefits. Section 3, Article XIII of the 1987 Constitution provides:

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

Pursuant to said guarantee, Article 211 of the Labor Code, as amended, declares it a policy of the State:

(a) To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;

x x x x

(d) To promote the enlightenment of workers concerning their rights and obligations as union members and as employees;

x x x x

(g) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. (Emphasis ours)

Corollary thereto, Article 255 of the same Code provides:

ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS PARTICIPATION IN POLICY AND DECISION-MAKING.

x x x x

Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making process of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor management councils shall be elected by at least the majority of all employees in said establishment. (Emphasis and underscoring ours)

We deem it necessary to remind HSBC of the basic and well­ entrenched rule that although jurisprudence recognizes the validity of the exercise by an employer of its management prerogative and will ordinarily not interfere with such, this prerogative is not absolute and is subject to limitations imposed by law, collective bargaining agreement, and general principles of fair play and justice.^[20]

Indeed, being a product of said constitutionally-guaranteed right to participate, the CBA is, therefore, the law between the parties and they are obliged to comply with its provisions.

Unilateral amendments to the CBA
violate Article 253 of the Labor Code

A collective bargaining agreement or CBA is the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.^[21]

In Faculty Association of Mapua Institute of Technology (FAMJT) v. Court of Appeals,^[22] this Court was emphatic in its pronouncement that the CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its terms and conditions constitute the law between the parties. And until a new CBA is executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement.^[23]  This finds basis under Article 253 of the Labor Code, which states:

ARTICLE 253. Duty to bargain collectively when there exists a collective bargaining agreement. – When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. x x x It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. (emphasis added)

In the present controversy, it is clear from the arguments and evidence submitted that the Plan was never made part of the CBA. As a matter of fact, HBILU vehemently rejected the Plan's incorporation into the agreement. Due to this lack of consensus, the bank withdrew its proposal and agreed to the retention of the original provisions of the CBA. The subsequent implementation of the Plan's external credit check provisions in relation to employee loan applications under Article XI of the CBA was then an imposition solely by HSBC.

In this respect, this Court is of the view that tolerating HSBC's conduct would be tantamount to allowing a blatant circumvention of Article 253 of the Labor Code. It would contravene the express prohibition against the unilateral modification of a CBA during its subsistence and even thereafter until a new agreement is reached. It would unduly license HSBC to add, modify, and ultimately further restrict the grant of Salary Loans beyond the terms of the CBA by simply adding stringent requirements in its Plan, and having the said Plan approved by BSP in the guise of compliance with the MoRB.

HSBC's defense, that there was no modification of the CBA since the external credit check has been a long-standing policy of the Bank applied to all of its employees, is inconvincing. Noteworthy is that the bank failed to submit in evidence the very Plan that was supposedly approved by the BSP in 2003. Nevertheless, even if We were to rely on the later versions of the Plan approved by the BSP, Our ruling will not change.

The only provision relative to the credit checking requirement under the 2006 and 2011 Plans is this and nothing else:

CREDIT CHECKING
	Repayment defaults on existing loans and adverse information on outside loans will be considered m the evaluation of loan applications.[24]

As for the manner in which said credit checking will be done, as well as any additional requirements that will be imposed for the purpose, the 2006 Plan and even its later 2011 version are silent thereon.^[25]  Nowhere in these Plans can We find the requirement for the submission of an "Authority to Conduct Checks Form," as well as the details on adverse credit finding, specifically:

With the strict implementation of these provisions, adverse credit findings may result to disapproval of loan or credit card applications. These findings will include the following:

(1)	Frequency of confirmed ADA failure on staff/commercial loans and credit cards (3 consecutive incidents within the past 6 months or 6 incidents within the past 12 months). Note that applications with pending ADA for investigation will only be processed upon confirmation of status (Confirmed or Reprieved);
(2)	Adverse findings on HSBC cards; or
(3)	Adverse findings from external credit checks.[26]

In fact, regrettably, HSBC's only documentary basis for proving that the credit checking requirement and the manner of its enforcement have been set in place much earlier is the use of the term "reiterate" in its April 20, 2012 e-mail. Thus, we quote:

Dear All

We wish to reiterate the following provisions included in the Financial Assistance Plan (FAP) as approved by Bangko Sentral ng Pilipinas (BSP).
x x x

20. Accordingly, the above email dated 20 April 2012 clearly indicates that the dissemination therein of the FAP and its provisions is merely a reiteration, and not a first publication as the Union now conveniently claims.^[27] x x x (emphasis supplied)

What further convinces Us that the external credit check as well as the manner of its enforcement is a new imposition by HSBC is the fact that the bank made no attempt to rebut HBILU's evidence that the former's requirements for the grant of salary loans changed only after the April 20, 2012 email blast. HBILU sufficiently proved that prior to the April 20, 2012 email, members of the bargaining unit were using only four (4) documents in applying for a loan, to wit: 1) Application for Personal Loan Form; 2) Authority to Deduct Form; 3) Set-Off of Retirement Fund Form; and 4) Promissory Note Form.^[28] Thereafter, management imposed a new set of requirements, which includes the "Authority to Conduct Checks Form."^[29] As testified to by Mananghaya, he only signed the first four (4) requirements for his March 2012 loan. However, for the September 2012 loan, he was asked to complete a new set of documents which included the Authority to Conduct Checks Form.^[30] Too, even the email itself states that said credit checking requirement, among others, is to be strictly enforced effective May 2012.^[31] Though HSBC claims that credit checking has been the bank's long-standing policy, it failed to show that it indeed required such before its covered employees could avail of a salary loan under the CBA prior to April 20, 2012—the date of the email blast.

Thus, no other conclusion can be had in this factual milieu other than the fact that HSBC's enforcement of credit checking on salary loans under the CBA invalidly modified the latter's provisions thereon through the imposition of additional requirements which cannot be found anywhere in the CBA.

If it were true that said credit checking under the Plan covers salary loans under the CBA, then the bank should have negotiated for its inclusion thereon as early as the April 1, 2010 to March 31, 2012 CBA which it entered into with HBILU. However, the express provisions of said CBA inked by the parties clearly make no reference to the Plan. And even in the enforcement thereof, credit checking was not included as one of its requirements. This leads Us to conclude that HSBC originally never intended the credit checking requirement under the Plan to apply to salary loans under the CBA. At most, its application thereto is a mere afterthought, as evidenced by its sudden, belated, and hurried enforcement on said salary loans via the disputed email blast.

In other words, it appears that, based on its actuations, HSBC never intended to apply the credit checking item under the Plan to salary loans under the CBA. Otherwise, it would have enforced such requirement from the moment the salary loans provisions under the old CBA were implemented, which it did not. It may be that said requirement was being applied to other types of loans under the Plan, but based on the evidence presented, We cannot say the same for salary loans under the CBA.

The minority argues that primacy is being accorded to the CBA over the Plan approved by the BSP. Such, however, is not the case. We are not saying that the Plan should yield to the CBA. The point that we are driving at in this lengthy discussion is that on the basis of the evidence presented, We are convinced that the credit checking provision of the Plan was never intended to cover salary loans under the CBA. Otherwise, HSBC would have implemented such the moment said salary loans under the previous CBA were made available to its covered employees. Thus, HSBC cannot now insist on its imposition on loan applications under the disputed CBA provision without violating its duty to bargain collectively.

If We were to allow this practice of leaving to HSBC the determination, formulation, and implementation of the guidelines, procedures, and requirements for the availment of salary loans granted under the CBA, which guidelines, procedures, and requirements unduly restrict the provisions of the CBA, this Court would in effect be permitting HSBC to repeatedly violate its duty to bargain collectively under the guise of enforcing the general terms of the Plan.

Salary loans subject of this case are
not covered by the credit checking
requirement under the MORB

In maintaining that the credit checking requirement under the MoRB should be deemed written into the CBA, the minority makes reference to Sec. X304.1 of the 2011 MoRB in maintaining that financial institutions must look into the obligor's repayment history, among other things, before approving a loan application. Said provision reads:

§ X304.1 General guidelines. Consistent with safe and sound banking practices, 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 or other credit accommodations, a bank must ascertain that the borrower, co-maker, endorser, surety, and/or guarantor, if applicable, is/are financially capable of fulfilling his/their commitments to the bank. For this purpose, a bank shall obtain adequate information on his/their credit standing and financial capacities x x x.

At this point it is well to draw attention to the fact that said provision is a general one as specifically indicated thereat. It is also equally important to emphasize that Sec. X304.1 must be interpreted in conjunction with Section X338.3, the provision which specifically applies to salary loans under the fringe benefit program of the bank. Thus:

Subsection X338.3 Other conditions/limitations

The investment by a bank in equipment and other chattels under its fringe benefits program for officers and employees shall be included in determining the extent of the investment of the bank in real estate and equipment for purposes of Section 51 of R.A. No. 8791.

The investment by a bank in equipment and other chattels contemplated under these guidelines shall not be for the purpose of profits in the course of business for the bank.

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. Loans or other credit accommodations granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791 and Sections X326 to X336 but not to the individual ceilings where such loans or other credit accommodations are obtained under the bank's fringe benefits program. (emphasis ours)

In specifying that "[a]ll 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," Sec. X338.3 clearly excluded loans and credit accommodations under the bank's fringe benefits program from the operation of Sec. X304.1. This fact is even recognized in the dissent. To ignore this clear exception and insist on interpreting the general guidelines under Section X304.1 would be to renege from Our duty to apply a clear and unambiguous provision.^[32]

It may also be argued that HSBC, being a bank, is statutorily required to conduct a credit check on all of its borrowers, even though it be made under a loan accommodation scheme, applying Section 40^[33] of Republic Act No. (RA) 8791 (General Banking Law of 2000). A reading of RA 8791, however, reveals that loan accommodations to employees are not covered by said statute. Nowhere in the law does it state that its provisions shall apply to loans extended to bank employees which are granted under the latter's fringe benefits program. Had the law intended otherwise, it could have easily specified such, similar to what was done for directors, officers, stockholders and their related interests under Section 36 thereof. This conclusion is supported by the very wording of Subsection X338.3 of the MORB. To reiterate:

Subsection X338.3 Other conditions/limitations

The investment by a bank in equipment and other chattels under its fringe benefits program for officers and employees shall be included in determining the extent of the investment of the bank in real estate and equipment for purposes of Section 51 of R.A. No. 8791.

The investment by a bank in equipment and other chattels contemplated under these guidelines shall not be for the purpose of profits in the course of business for the bank.

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. Loans or other credit accommodations granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791 and Sections X326 to X336 but not to the individual ceilings where Such loans or other credit accommodations are obtained under the bank's fringe benefits program.

Notably, even though the provision covers loans extended to both bank officers and employees, paragraph 3 thereof singled out loans and credit accommodations granted to officers when it provided for the applicability of RA 8791.

What the law does not include, it excludes.

These convince Us to conclude that RA 8791 only intended to cover loans by third persons and those extended to directors, officers, stockholders and their related interests. Consequently, Section 40 thereof, which requires a bank to ascertain that the debtor is capable of fulfilling his commitments to it before granting a loan or other credit accommodation, does not automatically apply to the type of loan subject of the instant case.

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. BSP Circular 423, Series of 2004 itself provides for such, thus:

Subsection X338.1 Mechanics. The mechanics of such financing plan shall have the following minimum features:

Participation shall be limited to full-time and permanent officers and employees of the bank;

x x x x

The bank shall adopt measures to protect itself from losses such as by incorporating in the plan or contract provisions requiring co-makers or co-signor, chattel, or real estate mortgages, fire insurance, mortgage redemption insurance, assignment of money value of leave credits, pension or retirement benefits. (Emphasis ours)

Additionally, both the BSP Circular 423, Series of 2004 and Section X338.3 of the MoRB provide for a safeguard in order to protect the funds of the Bank's depositors while allowing the Bank to extend such benefits to its employees, in that both require that:

The aggregate outstanding loans and other credit accommodations granted under the bank's fringe benefits program, inclusive of those granted to officers in the nature of lease with option to purchase, shall not exceed five percent (5%) of the bank's total loan portfolio.^[34]

There are, therefore, sufficient safety nets consistent with the bank's fiduciary duty to its depositors even without requiring the conduct of an external credit check in the availment of salary loans under the subject CBA. As a matter of fact, there is no showing that the bank's finances suffered because it has been granting said salary loans under the CBA without the external credit check.

Withal, We 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 Us to hold that the credit checking requirement imposed by HSBC under the questioned Plan which effectively and undoubtedly modified the CBA provisions on salary loans was a unilateral imposition violative of HSBC's duty to bargain collectively and, therefore, invalid. HSBC miserably failed to present even an iota of concrete documentary evidence that the credit checking requirement has been imposed on salary loans even before the signing of the CBA subject of the instant dispute and that the Plan was sufficiently disseminated to all concerned. In contrast, HBILU sufficiently proved that HSBC violated its duty to bargain collectively under Article 253 of the Labor Code when it unilaterally restricted the availment of salary loans under Article XI of the CA on the excuse of enforcing the Plan approved by the BSP.

As this Court emphasized in Philippine Airlines, Inc. v. NLRC, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights,^[35] more so in the case at bar where the employees have been led to believe that they were given the chance to participate in HSBC's policy-formulation with respect to the subject benefit, only to find out later that they would be deprived of the fruits of said involvement.

On interpretation of CBAs

At this point, We deem it proper to recall the basics in resolving issues relating to the provisions and enforcement of CBAs. In United Kimberly-Clark Employees Union Philippine Transport General Workers Organization (UKCEU-PTGWO) v. Kimberly-Clark Philippines, Inc., this Court emphasized that:

As a general proposition, an arbitrator is confined to the interpretation and application of the collective bargaining agreement. He does not sit to dispense his own brand of industrial justice: his award is legitimate only in so far as it draws its essence from the CBA, i.e., when there is a rational nexus between the award and the CBA under consideration. It is said that an arbitral award does not draw its essence from the CBA; hence, there is an unauthorized amendment or alteration thereof, if:

1. It is so unfounded in reason and fact;
   
2. It is so unconnected with the working and purpose of the agreement;
   
3. It is without factual support in view of its language, its context, and any other indicia of the parties' intention;
   
4. It ignores or abandons the plain language of the contract;
   
5. It is mistakenly based on a crucial assumption which concededly is a nonfact;
   
6. It is unlawful, arbitrary or capricious; and
   
7. It is contrary to public policy.
   
   x x x x
   

If the terms of a CBA are clear and [leave] no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties. When a CBA may be expected to speak on a matter, but does not, its sentence imports ambiguity on that subject. The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the parties to anticipate or address all future problems, gaps may be left to be filled in by reference to the practices of the industry, and the step which is equally a part of the CBA although not expressed in it. In order to ascertain the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered The VA may also consider and rely upon negotiating and contractual history of the parties, evidence of past practices interpreting ambiguous provisions. The VA has to examine such practices to determine the scope of their agreement, as where the provision of the CBA has been loosely formulated. Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it.^[36] (emphasis ours)

Thus, in resolving issues concerning CBAs, We must not forget that the foremost consideration therein is upholding the intention of both parties as stated in the agreement itself, or based on their negotiations. Should it appear that a proposition or provision has clearly been rejected by one party, and said provision was ultimately not included in the signed CBA, then We should not simply disregard this fact. We are duty-bound to resolve the question presented, albeit on a different ground, so long as it is consistent with law and jurisprudence and, more importantly, does not ignore the intention of both parties. Otherwise, We would be substituting Our judgment in place of the will of the parties to the CBA.

With these, We find no need to resolve the other matters presented.

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated October 23, 2014 and Resolution dated May 21, 2015 of the Court of Appeals in CA-G.R. SP No. 130798 are hereby REVERSED and SET ASIDE.

Respondent Hongkong and Shanghai Banking Corporation's Financial Assistance Plan, insofar as it unilaterally imposed a credit checking proviso on the availment of Salary Loans by its employees under Article XI of the 2010-2012 CBA, is hereby declared legally ineffective and invalid for being in contravention of Article 253 of the Labor Code.

SO ORDERED.

Bersamin, Martires, and Gesmundo, JJ., concur.
Leonen, J., see separate opinion.

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^[1] Penned by Associate Justice Maria Elisa Sempio Diy and concurred in by Associate Justices Ramon M. Bato, Jr. and Rodil V. Zalameda.

^[2] Rollo, p. 283.

^[3] On July 27, 2006, February 11, 2008, and on July 4, 2011.

^[4] Rollo, p. 128.

^[5] SECTION X338. Financial Assistance to Officers and Employees. Banks may provide financial assistance to their officers and employees, as part of their fringe benefits program, to meet the housing, transportation, household and personal needs of their officers and employees. Financing plans and amendments thereto, shall be with prior approval of the Bangko Sentral.

Subsection X338.1 Mechanics. The mechanics of such financing plan shall have the following minimum features:

Participation shall be limited to full-time and permanent officers and employees of the bank; Financial assistance shall only be for the following purposes:

(1) The acquisition of a residential house and lot, or the construction, renovation or repair of a residential house on a lot owned and to be occupied by the officer or employee;

(2) The acquisition of vehicles, household equipment and appliances for the personal use of the officer or employee or his immediate family; or

(3) To meet expenses for the medical, maternity, education, emergency and other personal needs of the officer or employee or his immediate family;

Financial assistance for purposes mentioned in Items b(1) and b(2) of this Section shall be granted  in the form of a loan, advance or other credit accommodation, installment sale, lease with option to purchase or lease-purchase arrangement where the lessee is obliged to purchase the real estate or equipment;

The amount and maturity of financial assistance for each purpose shall be determined by the bank in consonance with the normal requirements thereof: Provided, That the maximum amount shall be stated as percentage or multiple of the total monthly compensation of the officer or employee and shall be within the paying capacity of the borrowing officer or employee.

Total monthly compensation shall include the basic salary and all fixed and regular monthly allowances of the officer or employee. Payments for sickness benefits and other special emoluments which are not fixed or regular in nature, or the commutation into cash of unused leave credits shall not be included in the computation of total monthly compensation;

The amortization payment shall include amounts necessary to cover mortgage redemption insurance and fire insurance premiums, taxes, special assessments, and other related fees and charges;

Availment of the financing plan to construct or acquire a residential house and lot shall be allowed only once during the officer's or employee's tenure with the bank, except where the right over the real estate previously acquired or constructed under the financing plan is absolutely transferred or assigned to another officer or employee of the bank or to a third party: Provided, That the bank must be fully paid or reimbursed for the outstanding availment on the financing plan before the officer/employee is allowed to re-avail himself of the same financing plan.

An officer or employee (or his spouse) who already owns a residential house and lot shall not be qualified to avail himself of financial assistance for purposes of acquiring a residential house and/or lot.

These prohibitions notwithstanding, financial assistance for the repair or renovation of a residential house may be allowed subject to such limitation as may be prescribed by the bank pursuant to Item d of this Section;

Availment of the financing plan for the acquisition of a specific type of equipment or appliance shall be allowed not oftener than once every three (3) years: Provided, That re-availment shall be allowed only after previous obligations in connection with the acquisition of the same type of equipment or appliances have been fully liquidated; and

The bank shall adopt measures to protect itself from losses such as by incorporating in the plan or contract provisions requiring co-makers or co-signor, chattel, or real estate mortgages, fire insurance, mortgage redemption insurance, assignment of money value of leave credits, pension or retirement benefits.

Subsection 1338.2 Funding by Foreign Banks. In the case of local branches of foreign banks, financial assistance for their officers and employees may be funded, through any of the following means:

Through a local affiliate by special arrangement with the head office abroad in any of the following forms:

(1) Inward remittance from the head office of the affiliate;

(2) Assignment to the affiliate of equivalent amounts of profits otherwise remittable abroad under existing regulations; or

(3) Direct loans by the foreign bank to the affiliate; or

Through the local branch itself by:

(1) Segregation or transfer of undivided profits normally remitted to the head office abroad equivalent to the loans to officers and employees which shall be lodged under "Other Liabilities-Head Office Accounts". This account shall at all times have a balance equivalent to the outstanding loans to officers/employees financed under this scheme; or

(2) Inward remittance; or

Through the local branch from local sources without earmarking an equivalent amount of undivided profits: Provided, that the aggregate ceilings on such loans as provided under existing regulations shall apply.

Loans under Items b(1) and b(2) of this Section shall be treated in the branch books as loans granted by its head office. The documentation and collection of such loans shall be handled by the branch for the account of the head office.

Loans financed under Items a and b shall be subject to the reporting requirements of Section X335 but not to the ceilings provided under Sections X330 and X331. The same shall be excluded from the computation of the capital to risk assets ratio.

Subsection X338.3 Other conditions/limitations

The investment by a bank in equipment and other chattels under its fringe benefits program for officers and employees shall be included in determining the extent of the investment of the bank in real estate and equipment for purposes of Section 51 of R.A. No. 8791.

The investment by a bank in equipment and other chattels contemplated under these guidelines shall not be for the purpose of profits in the course of business for the bank.

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. Loans or other credit accommodations granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791 and Sections X326 to X336 but not to the individual ceilings where such loans or other credit accommodations are obtained under the bank's fringe benefits program.

The aggregate outstanding loans and other credit accommodations granted under the bank's fringe benefits program, inclusive of those granted to officers in the nature of lease with option to purchase, shall not exceed five percent (5%) of the bank's total loan portfolio. See < http://www.bsp.gov.ph/regulations/regulations.asp?type=1&id=165 > (last visited December 12, 2017).

^[6] All loans or 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. Loans of other credit accommodations granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791 and Sections X326 and X336 but not to the individual ceilings where such loans or other credit accommodations are obtained under the bank's fringe benefits program.

The aggregate outstanding loans and other credit accommodations granted under the bank's fringe benefits program, inclusive of those granted to officers in the nature of lease with option to purchase, shall not exceed five percent (5%) of the bank's total loan portfolio.

^[7] Rollo, p. 285.

^[8] Id.

^[9] Via a Notice to Arbitrate filed by HBILU on November 26, 2012.

^[10] Rollo, p. 95.

^[11] Id. at 168.

^[12] Id. at 90.

^[13] Id. at 92.

^[14] Id. at 101.

^[15] Id. at 93.

^[16] Id. at 98.

^[17] Id. at 102.

^[18] Id. at 98.

^[19] Citing Halagueña v. Philippine Airlines, Inc., G.R. No. 172013, October 2, 2009, 602 SCRA 297.

^[20] See Morales v. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012, 664 SCRA 110, 119-120.

^[21] Goya, Inc. v. Goya, Inc. Employees Union-FFW, G.R. No. 170054, January 21, 2013, 689 SCRA 1, 15-16.

^[22] G.R. No. 164060, June 15, 2007, 524 SCRA 709.

^[23] Id.

^[24] Rollo, pp. 475-476.

^[25] Id. at 475-488.

^[26] Id. at 285.

^[27] HSBC Comment, p. 8.

^[28] Rollo, p. 640.

^[29] Id. at 642.

^[30] Id. at 642-643.

^[31] Id. at 404.

^[32] A cardinal rule in statutory construction is that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. There is only room for application. Twin Ace Holdings Corporation v. Rufina and Company, G.R. No. 160191, June 8, 2006, 490 SCRA 368, 376.

^[33] SECTION 40. Requirement for Grant of Loans or Other Credit Accommodations. — Before granting a loan or other credit accommodation, a bank must ascertain that the debtor is capable of fulfilling his commitments to the bank. Toward this end, a bank may demand from its credit applicants a statement of their assets and liabilities and of their income and expenditures and such information as may be prescribed by law or by rules and regulations of Monetary Board to enable the bank to properly evaluate the credit  application which includes the corresponding financial statements submitted for taxation purposes to the Bureau of Internal Revenue. Should such statements prove to be false or incorrect in any material detail, the bank may terminate any loan or other credit accommodation granted on the basis of said statements and shall have the right to demand immediate repayment or liquidation of the obligation. In formulating rules and regulations under this Section, the Monetary Board shall recognize the peculiar characteristics of microfinancing, such as cash flow-based lending to the basic sectors that are not covered by traditional collateral. (76a)

^[34] Supra note 5.

^[35] G.R. No. 85985, August 13, 1993, 225 SCRA 301, 309.

^[36] G.R. No. 162957, March 6, 2006, 484 SCRA 187, 200-203.

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DISSENTING OPINION

LEONEN, J.:

I dissent from the ponencia insofar as it accords primacy to the Collective Bargaining Agreement over the Financial Assistance Plan approved by the Bangko Sentral ng Pilipinas. A collective bargaining agreement cannot amend laws, regulations, or policies, especially when it involves the banking industry, which is impressed with public interest.

This is a Petition for Review on Certiorari under Rule 45 questioning the Decision dated October 23, 2014 and Resolution dated May 21, 2015 of the Court of Appeals, which ruled as valid the requirement of an external credit check before the approval of an employee's salary loan, although this requirement was not stated in the parties' Collective Bargaining Agreement.

I submit that the Petition should be denied.

A collective bargaining agreement is a contract between an employer and his or her employees, establishing particular arrangements between them with respect to wages, hours of work, grievances, and other terms and conditions of employment.^[1]

A collective bargaining agreement is binding and is the law between its parties. Its terms and conditions must be respected and complied with until it expires. Article 253 of the Labor Code provides:

Article 264. [253] Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

In Faculty Association of Mapua Institute of Technology v. Court of Appeals,^[2]

Until a new CBA is executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Therefore, it must be understood as encompassing all the terms and conditions in the said agreement.

The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its terms and conditions "constitute the law between the parties." Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court and ask redress. The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the express policy of the law.^[3] (Citations omitted)

Nonetheless, a collective bargaining agreement is still subject to laws and public policy. It is still a contract limited by Article 1306 of the Civil Code, which states:

Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (Emphasis supplied)

Thus, although it is not explicitly provided for, as in all contracts, laws, morals, good customs, public order, or public policy is deemed written in collective bargaining agreements.

In case a collective bargaining agreement runs contrary to these limitations, this Court has the power to strike down the violative provision.

In PNCC Skyway Traffic Management and Security Division Workers Organization v. PNCC Skyway Corp.:^[4]

Although it is a rule that a contract freely entered into between the parties should be respected, since a contract is the law between the parties, there are, however, certain exceptions to the rule, specifically Article 1306 of the Civil Code, which provides:

The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Moreover, the relations between capital and labor are not merely contractual. "They are so impressed with public interest that labor contracts must yield to the common good . . . ." The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts; they are imbued with public interest and therefore are subject to the police power of the state. However, it should not be taken to mean that provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification.  If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided.^[5] (Citations omitted, emphasis supplied)

Thus, a collective bargaining agreement cannot reign supreme where it is inconsistent with laws and public policy. This is especially so when the laws and public policy pertain to industries impressed with public interests and which necessarily warrant the protection of the State, such as the banking industry.

It is of vital importance that the general public trusts and has confidence in the banking industry. It is impressed with public interest and is so tied together with national economy and development. Its fiduciary nature likewise requires it to be stable, consistent, and reliable, thus, calling for high standards of integrity and performance. Under Section 2 of Republic Act No. 8791 (General Banking Law),

Section 2. Declaration of Policy. — The State recognizes the vital role of banks in providing an environment conducive to the sustained development of the national economy and the fiduciary nature of banking that requires high standards of integrity and performance. In furtherance thereof, the State shall promote and maintain a stable and efficient banking and financial system that is globally competitive, dynamic and responsive to the demands of a developing economy.

In Banco de Oro-EPCI Inc. v. JAPRL Development Corporation:^[6]

Banks are entities engaged in the lending of funds obtained through deposits from the public. They borrow the public's excess money  (i.e., deposits) and lend out the same. Banks therefore redistribute wealth in the economy by channeling idle savings to profitable investments.

Banks operate (and earn income) by extending credit facilities financed primarily by deposits from the public. They plough back the bulk of said deposits into the economy in the form of loans. Since banks deal with the public's money, their viability depends largely on their ability to return those deposits on demand. For this reason, banking is undeniably imbued with public interest. Consequently, much importance is given to sound lending practices and good corporate governance.

Protecting the integrity of the banking system has become, by large, the responsibility of banks. The role of the public, particularly individual borrowers, has not been emphasized. Nevertheless, we are not unaware of the rampant and unscrupulous practice of obtaining loans without intending to pay the same.^[7]  (Citations omitted)

As such, compared to other industries and businesses, the diligence required of banks is at its highest standard in all aspects-from granting loan applications to the hiring and supervision of its employees. In Far East Bank and Trust Co. v. Tentmakers Group, Inc.,^[8]

It cannot be over emphasized that the banking business is impressed with public interest. Of paramount importance is the trust and confidence of the public in general in the banking industry. Consequently, the diligence required of banks is more than that of a Roman pater familias or a good father of a family. The highest degree of diligence is expected. In handling loan transactions, banks are under obligation to ensure compliance by the clients with all the documentary requirements pertaining to the approval and release of the loan applications. For failure of its branch manager to exercise the requisite diligence in abiding by the [Manual of Regulations for Banks] and the banking rules and practices, [Far East Bank and Trust Co.] was negligent in the selection and supervision of its employees. In Equitable PCI Bank v. Tan, the Court ruled:

. . . Banks handle daily transactions involving millions of pesos. By the very nature of their works the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. Banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees.^[9] (Emphasis supplied, citations omitted)

Bangko Sentral ng Pilipinas (Bangko Sentral) is the central authority that provides policies on money, banking, and credit, and supervises and regulates bank operations. Republic Act No. 7653 (New Central Bank Act) states:

Section 1. Declaration of Policy. — The State shall maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money, banking and credit....

Section 2. Creation of the Bangko Sentral. — There is hereby established an independent central monetary authority, which shall be a body corporate known as the Bangko Sentral ng Pilipinas, hereafter referred to as the Bangko Sentral.
. . . .

Section 3. Responsibility and Primary Objective. — The Bangko Sentral shall provide policy directions in the areas of money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as provided in this Act and other pertinent laws over the operations of finance companies and non-bank financial institutions performing quasi-banking functions, hereafter referred to as quasi-banks, and institutions performing similar functions.

The primary objective of the Bangko Sentral is to maintain price ability conducive to a balanced and sustainable growth of the economy. It shall also promote and maintain monetary stability and the convertibility of the peso.^[10]

The Bangko Sentral's supervisory powers under the General Banking Law include issuing rules, establishing standards for the operation of financial institutions based on sound business practice, and examining the institutions for compliance and irregularities:

Section 4. Supervisory Powers. — The operations and activities of banks shall be subject to supervision of the Bangko Sentral. "Supervision" shall include the following:

4.1.	The issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered, taking into consideration the distinctive character of the operations of institutions and the substantive similarities of specific functions to which such rules, modes or standards are to be applied;
4.2.	The conduct of examination to determine compliance with laws and regulations if the circumstances so warrant as determined by the Monetary Board;
4.3.	Overseeing to ascertain that laws and regulations are complied with;
4.4.	Regular investigation which shall not be oftener than once a year from the last date of examination to determine whether an institution is conducting its business on a safe or sound basis: Provided, That the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed;
4.5.	Inquiring into the solvency and liquidity of the institution (2-D); or
4.6.	Enforcing prompt corrective action.

In line with its supervisory powers, the Bangko Sentral codified the rules, regulations, and policies in 1996 to implement the General Banking Law and other banking laws. The codification resulted in the Manual of Regulations of Banks (MORB).^[11] This was prepared by a multi-departmental Ad Hoc Review Committee created under the Bangko Sentral Monetary Board Resolution No. 1203 dated December 7, 1994. The MORB serves "as the principal source of banking regulations issued by the Monetary Board and the Governor of the Bangko Sentral and shall be cited as the authority for enjoining compliance with the rules and regulations embodied therein."^[12]

Pertinent to the case at bar is the following provision under the MORB:

Sec. X338 Financial Assistance to Officers and Employees. Banks may provide financial assistance to their officers and employees, as part of their fringe benefits program, to meet the housing, transportation, household and personal needs of their officers and employees.

Financing plans and amendments thereto, shall be with prior approval of the Bangko Sentral.

This provision states that banks may financially assist their employees for their housing, transportation, household, and personal needs, provided that a financing plan is approved first by the Bangko Sentral.^[13]

In the case at bar, petitioner Hong Kong Bank Independent Labor Union (HBILU) insists that respondent Hong Kong and Shanghai Banking Corporation (HSBC) is violating their Collective Bargaining Agreement in imposing an additional credit-checking requirement before granting a financial assistance loan to its members.

On the other hand, HSBC claims that the credit-checking requirement was provided for in its financing plan, which was duly approved by the Bangko Sentral, even before the execution of the parties' Collective Bargaining Agreement.

I find for HSBC.

Given the nature of the MORB, I opine that all its provisions are deemed incorporated in all pertinent Collective Bargaining Agreements. Necessarily, the financing plans required under the MORB and approved by the Bangko Sentral are also included in the Collective Bargaining Agreements. A financing plan is not a mere contract of a bank with any other entity. It is an arrangement that becomes part of the regulations of the Bangko Sentral by which the bank is bound. This is bolstered by X339.4, which requires banks to submit regular reports on their transactions under their financing plans:

§ X339.4 Reportorial requirements. Financing plans and amendments thereto shall be submitted to Bangko Sentral within thirty (30) calendar days from approval thereof by the bank's board of directors. The appropriate department of the [Supervision and Examination Sector] may require the banks concerned to submit a regular report monitoring the various transactions under the bank's financing plans for officers/employees.

All banks providing financial assistance to bank officers/employees shall submit a report on "Availments of Financial Assistance to Officers and Employees" to the Bangko Sentral within fifteen (15) banking days after end of reference semester.

Thus, the financing plan is not only a one-sided exercise of the bank's management prerogative. It is a requirement under the MORB by the Bangko Sentral. Thus, it takes on the form of a regulation by which HSBC is bound and must comply with.

The same can be said of credit checks in general. Consistent with sound banking practice and the public's interest in the banking system, banks are governed by guidelines before granting a loan to any obligor. Included in these guidelines is the requirement that a bank should first assess credit risks and ascertain the obligor's capacity to pay the loan. The General Banking Law provides:

Section 40. Requirement for Grant of Loans or Other Credit Accommodations. — Before granting a loan or other credit accommodation, a bank must ascertain that the debtor is capable of fulfilling his commitments to the bank.

Toward this end, a bank may demand from its credit applicants a statement of their assets and liabilities and of their income and expenditures and such information as may be prescribed by law or by rules and regulations of Monetary Board to enable the bank to properly evaluate the credit application which includes the corresponding financial statements submitted for taxation purposes to the Bureau of Internal Revenue. Should such statements prove to be false or incorrect in any material detail, the bank may terminate any loan or other credit accommodation granted on the basis of said statements and shall have the right to demand immediate repayment or liquidation of the obligation.

In formulating rules and regulations under this Section, the Monetary Board shall recognize the peculiar characteristics of microfinancing, such as cash flow-based lending to the basic sectors that are not covered by traditional collateral. (Emphasis supplied)

Currently, the MORB provides:

§ X178.5 Credit policies, processes and procedures. [Financial institutions] (FIs) shall have in place a sound, comprehensive and clearly defined credit policies, processes and procedures consistent with prudent standards, practices, and relevant regulatory requirements adequate for the size, complexity and scope of an FI's operations. The board-approved policies, processes and procedures shall cover all phases of the credit risk management system.

a. FIs shall establish appropriate processes and procedures to implement the credit policy and strategy. These processes and procedures, as well as the credit policy, shall be documented in sufficient detail, effectively communicated throughout the organization to provide guidance to staff, and periodically reviewed and updated to take into account new activities and products, as well as new lending approaches. Subsequent major changes must be approved by the board.

b. The credit policy shall likewise provide for the maintenance of an audit trail documenting that the credit risk management process was properly observed and identifying the unit, individual(s) and/or committee(s) providing input into the process.

c. The credit culture, which reflects the FI's credit values, beliefs and behaviors, shall likewise be articulated in the credit policy and communicated to credit officers and staff at all levels through the strategic plan. The credit practices shall be assessed periodically to ensure that the officers and staff conform to the desired standard and value.^[14]

B. Operating Under a Sound Credit Granting Process

§ X178.6 Credit approval process. The approval process for new credits as well as the amendment, renewal and refinancing of existing credit exposures shall be aligned with the credit risk management structure and clearly articulated in an FI's written credit policy. The process shall include the different levels of appropriate approving authority and the corresponding approving authority limits, which shall be commensurate with the risks of the credit exposures, as well as expertise of the approving individuals involved. It shall also include an escalation process where approval for restructuring of credits, policy exceptions or excesses in internal limits is escalated to units/officer with higher authorities. Further, there shall be proper coordination of relevant units and individuals and sufficient controls to ensure acceptable credit quality at origination.^[15]

§ X178.7 Credit granting and loan evaluation/analysis process and underwriting standards. Consistent with safe and sound banking practice, an FI shall grant credits only in amounts and for the periods of time essential for the effective completion of the activity to be financed and after ascertaining that the obligor is capable of fulfilling his commitments to the Fl. Towards this end, an FI shall establish well-defined credit­ granting criteria and underwriting standards, which shall include a clear indication of the FI's target market and a thorough understanding of the obligor or counterparty, as well as the purpose and structure of the credit and its source of repayment.

a. Fls shall conduct comprehensive assessments of the creditworthiness of their obligors, and shall not put undue reliance on external credit assessments. Credit shall be granted on the basis of the primary source of loan repayment or cash flow, integrity and reputation of the obligor or counterparty as well as their legal capacity to assume the liability.

b. Depending on the type of credit exposure and the nature of the credit relationship, the factors to be considered and documented m approving credits shall include, but are not limited to, the following:

(1) The purpose of the credit which shall be clearly stated in the credit application and in the contract between the FI and the obligor;

(2) The current risk profile (including the nature and aggregate amounts of risks, risk rating or credit score, pricing information) of the borrower, collateral, other credit enhancements and its sensitivity to economic and market developments;

(3) The sources of repayment, repayment history and current capacity to repay based on financial analysis from historical financial trends and indicators such as equity, profitability, turnover, leverage, and debt servicing ability via cash flow projections, under various scenarios;

(4) For commercial credits, the borrower's business expertise, its credit relationships including its shareholders and company directors, as applicable, and the status of the borrower's economic sector and its track record vis-a-vis industry peers;

(5) The proposed terms and conditions of the credit (i.e., type of financing, tenor, repayment structure, acceptable collateral) including covenants designed to limit changes in the future risk profile of the obligor;
. . . .

f. When granting consumer credits, an FI shall conduct its credit assessment in a holistic and prudent manner, taking into account all relevant factors that could influence the prospect for the loan to be repaid according to its terms and conditions. This shall include an appropriate consideration of the potential obligor's other debt obligations and repayment history and an assessment of whether the loan can be expected to be repaid from the potential obligor's own resources without causing undue hardship and over-indebtedness. Adequate checkings, including with relevant credit bureaus, shall he made to verify the obligor's credit applications and repayment records.^[16] (Emphasis supplied, citation omitted)

At the time the subject financing plan became an issue (i.e., when HBILU Member Vince Mananghaya applied for a loan in September 2012), the then 2011 MORB provided:

§ X304.1 General guidelines. Consistent with safe and sound banking practices, 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 or other credit accommodations, a bank must ascertain that the borrower, co-maker, endorser, surety and/or guarantor, if applicable, is/are financially capable of fulfilling his/their commitments to the bank For this purpose, a bank shall obtain adequate information on his/their credit standing and financial capacities.

These provisions, thus, show that in approving a loan in favor of an obligor, financial institutions must look into, among other things, the obligor's repayment history, creditworthiness, integrity, reputation, and capacity to assume the liability.

Thus, credit checks are a necessary component in loan approvals. They are required by all financial institutions that grant loans, taking into consideration credit risks and bearing in mind safe and sound banking practice.

Given that loans granted under a bank's fringe benefits program is not necessarily subject to the same terms and conditions imposed on the regular lending operations of the bank,^[17] the Bangko Sentral still requires that it first approve a financial plan for such a case, thus, showing that these types of loans are still regulated.

In this case, the Bangko Sentral approved a financing plan that provides for credit checking of covered employees.

No malice was proved to have been committed by HSBC in requiring the credit checking. There is no showing that it was motivated by bad faith in imposing the requirements, and it is presumed to have been done so in good faith. In implementing the credit-checking requirement, the bank is simply guided by the financing plan required under the MORB and approved by the Bangko Sentral.

Thus, although the credit-checking requirement is not explicitly provided for in the parties' Collective Bargaining Agreement, it is deemed incorporated in it. Their Collective Bargaining Agreement cannot prevail over a Bangko Sentral-approved financing plan.

To reiterate, the signing of a collective bargaining agreement does not result in the amendment of laws and policies, especially where the policy pertains to an industry imbued with public interest. It cannot likewise undermine safe and sound banking practice. To reiterate, banks play a vital role in our economy and society as they deal with the public's money.

The ponencia cites the case of Faculty Association of Mapua Institute of Technology  v. Court of Appeals^[18] to support its claim that the Collective Bargaining Agreement must be respected. That case involves an employer trying to amend a collective bargaining agreement through the issuance of new rules and by adopting a new formula to determine the pay of its employees. However, this case does not involve the implementation of any law, or any conflict with any public policy.

Likewise, the ponencia cites United Kimberly-Clark Employees Union v. Kimberly-Clark Phil., Inc.^[19] to support its contention on how a collective bargaining agreement must be interpreted. However, this case does not involve a business affected with public interest.

The cited cases do not involve the banking industry, which as stated, plays a vital role in the State's economy as it deals with the public's money. The highest standards are imposed on the banking industry because of its fiduciary nature and the necessity of its integrity, reliability, and high performance. These standards do not apply in the same manner as to other businesses. As such, the banking business is governed by more rules that must be strictly complied with. A bank's management prerogative is further limited by the Bangko Sentral's policies and regulations, which are issued to protect public interests and to maintain trust and confidence in banks. As such, banks may not simply choose to ignore these on a whim.

Thus, while the State emphasizes the primacy of free collective bargaining and negotiations, collective bargaining agreements must still be consistent with the banking industry's laws, standards, and policies.

Accordingly, I vote to DENY the Petition for Review on Certiorari.

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^[1] LABOR CODE, art. 263. [252] Meaning of Duty to Bargain Collectively. — The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession.

^[2] 552 Phil. 77 (2007) [Per J. Quisumbing, Second Division].

^[3] Id. at 84.

^[4] 626 Phil. 700 (2010) [Per J. Peralta, Third Division].

^[5] Id. at 715-716.

^[6] 574 Phil. 495 (2008) [Per J. Corona, First Division].

^[7] Id. at 506-507.

^[8] 690 Phil. 134 (2012) [Per J. Mendoza, Third Division].

^[9] Id. at 145-146.

^[10] See also Rep. Act No. 8791, sec. 5. Policy Direction; Ratios, Ceilings and Limitations. — The Bangko Sentral shall provide policy direction in the areas of money, banking and credit.

For this purpose, the Monetary Board may prescribe ratios, ceilings, limitations, or other forms of regulation on the different types of accounts and practices of banks and quasi-banks which shall, to the extent feasible, conform to internationally accepted standards, including those of the Bank for International Settlements (BIS). The Monetary Board may exempt particular categories of transactions from such ratios, ceilings and limitations, but not limited to exceptional cases or to enable a bank or quasi-bank under rehabilitation or during a merger or consolidation to continue in business with safety to its creditors, depositors and the general public.

^[11] Manual of Regulations for Banks (2017).

^[12] The Committee has been reconstituted several times to update the MORB and to keep it consistent with banking legislative reforms, and its implementing rules and regulations, and amendments to existing policies.

^[13] The minimum features of the financing plan is provided for in X338.1 and X338.3 of the Manual of Regulations for Banks:

§ X338.l Mechanics. The mechanics of such financing plan shall have the following minimum features:

a. Participation shall be limited to fulltime and permanent officers and employees of the bank;

b. Financial assistance shall only be for the following purposes:

(1) The acquisition of a residential house and lot, or the construction, renovation or repair of a residential house on a lot owned and to be occupied by the officer or employee;

(2) The acquisition of vehicles, household equipment and appliances for the personal use of the officer or employee or his immediate family; or

(3) To meet expenses for the medical, maternity, education, emergency and other personal needs of the officer or employee or his immediate family;

c. Financial assistance for purposes mentioned in Items "b(1)" and "b(2)" of this Subsection shall be granted in the form of a loan, advance or other credit accommodation, installment sale, lease with option to purchase or lease-purchase arrangement where the lessee is obliged to purchase the real estate or equipment;

d. The amount and maturity of financial assistance for each purpose shall be detennined by the bank in consonance with the normal requirements thereof: Provided, That the maximum amount shall be stated as percentage or multiple of the total monthly compensation of the officer or employee and shall be within the paying capacity of the borrowing officer or employee.

Total monthly compensation shall include the basic salary and all fixed and regular monthly allowances of the officer or employee. Payments' for sickness benefits and other special emoluments which are not fixed or regular in nature, or the commutation into cash of unused leave credits shall not be included in the computation of total monthly compensation;

e. The amortization payment shall include amounts necessary to cover mortgage redemption insurance and fire insurance premiums, taxes, special assessments, and other related fees and charges;

f. Availment of the financing plan to construct or acquire a residential house and lot shall be allowed only once during the officer's or employee's tenure with the bank, except where the right over the real estate previously acquired or constructed under the financing plan is absolutely transferred or assigned to another officer or employee of the bank or to a third party: Provided, That the bank must be fully paid or reimbursed for the outstanding availment on the fmancing plan before the officer/employee is allowed to re-avail himself of the same financing plan.

An officer or employee (or his spouse) who already owns a residential house and lot shall not be qualified to avail himself of financial assistance for purposes of acquiring a residential house and/or lot.

These prohibitions notwithstanding, financial assistance for the repair or renovation of a residential house may be allowed subject to such limitation as may be prescribed by the bank pursuant to Item "d" of this Subsection;

g. Availment of the fmancing plan for the acquisition of a specific type of equipment or appliance shall be allowed not oftener than once every three (3) years: Provided, That re-availment shall be allowed only after previous obligations in connection with the acquisition of the same type of equipment or appliances have been fully liquidated; and

h. The bank shall adopt measures to protect itself from losses such as by incorporating in the plan or contract provisions requiring co-makers or co-signor, chattel, or real estate mortgages, fire insurance, mortgage redemption insurance, assignment of money value of leave credits, pension or retirement benefits.

§ X338.3 Other conditions/limitations

a. The investment by a bank in equipment and other chattels under its fringe benefits program for officers and employees shall be included in detennining the extent of the investment of the bank in real estate and equipment for purposes of Section 51 of R.A. No. 8791.

b. The investment by a bank in equipment and other chattels contemplated under these guidelines shall not be for the purpose of profits in the course of business for the bank.

c. The aggregate outstanding loans and other credit accommodations granted under the bank's fringe benefits program, inclusive of those granted to officers in the nature of lease with option to purchase, shall not exceed five percent (5%) of the bank's total loan portfolio.

Banks providing financial assistance to their officers/employees shall submit a regular report on "availments offinancial assistance to officers and employees" to the BSP within fifteen (15) banking days after end of reference semester.

The appropriate department of the [Supervision and Examination Sector] may further require banks to submit such data or infonnation as may be necessary to facilitate verification of such transactions by BSP examiners. (Emphasis supplied)

^[14] Manual of Regulations for Banks citing Circ. No. 855 (2014).

^[15] Manual of Regulations for Banks citing Circ. No. 855 (2014).

^[16] 2017 Manual of Regulations for Banks citing Circ. No. 855 (2014).

^[17] BSP Circ. No. 423, series of 2004, subsec. X338.3 Other conditions/limitations

The investment by a bank in equipment and other chattels under its fringe benefits program for officers and employees shall be included in determining the extent of the investment ofthe bank in real estate and equipment for purposes of Section 51 of R.A. No. 8791.

The investment by a bank in equipment and other chattels contemplated under these guidelines shall not be for the purpose of profits in the course of business for the bank.

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. Loans or other credit accommodations granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791 and Sections X326 to X336 but not to the individual ceilings where such loans or other credit accommodations are obtained under the bank's fringe benefits program.

The aggregate outstanding loans and other credit accommodations granted under the bank's fringe benefits program, inclusive of those granted to officers in the nature of lease with option to purchase, shall not exceed five percent (5%) of the bank's total loan portfolio.

^[18] 552 Phil. 77 (2007) [Per J. Quisumbing, Second Division].

^[19] 519 Phil. 176 (2006) [Per J. Callejo, Sr., First Division].