1. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. Nos.

L-16292-94, L-16309 and

L-16317-18 October 31, 1960 KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD
COMPANYp, etitioner, vs. YARD CREW UNION, STATION EMPLOYEES UNION, RAILROAD
ENGINEERING DEPARTMENT UNION, MANILA RAILROAD COMPANY, and COURT OF INDUSTRIAL
RELATIONS, respondents. MANILA RAILROAD COMPANY,petitioner, vs. COURT OF INDUSTRIAL
RELATIONS, MANILA RAILROAD CREW UNION, STATION EMPLOYEES UNION and KAPISANAN NG
MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, respondents.
Facts of the Case:
On March 7, 1955, the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company,
hereinafter called Kapisanan, filed a petition (Case No. 237-MC), praying that it be certified as
the exclusive bargaining agent in the Manila Railroad Company, A decision was promulgated by
the respondent Court finding three unions appropriate for purposes of collective bargaining, to
wit: (1) The unit of locomotive drivers, firemen, assistant firemen and motormen-otherwise
known as the engine crew unit: (2) the unit of conductors, assistant conductors, unit agents,
assistant route agents and train posters, otherwise known as the train crew unit, and (3) the unit
of all the rest of the company personnel, except the supervisors, temporary employees, the
members of the Auditing Department, the members of the security guard and professional and
technical employees, referred to by the respondent court as the unit of the rest of the
employees. To these 3 units, the following unions were respectively certified as the exclusive
bargaining agents: (1) The Union de Maquinistas, Fogoneros, Ayudantes y Motormen; (2) Union
de Empleados de Trenes (conductors); and (3) the Kapisanan Ng Mga Manggagawa Sa Manila
Railroad Company. After the decision had become final, Manila Railroad Yard Crew Union,
prayed that it be defined as a separate unit; The Kapisanan and the Company opposed the
separation of the said three units arguing that the Kapisanan had been duly certified as the
collective bargaining agent in the unit of all of the rest of the employees and it had entered into
a collective bargaining agreement. Appellate Court Decision: The Court ordered a plebiscite to
be conducted among the employees in the three proposed groups, namely: the Engineering
Department, the Station Employees and the Yard Crew Personnel. The employee in the
proposed groups minus the supervisors, temporary employees, members of the Auditing
Department, members of the security group, professionals and technical employees, shall vote,
in a secret ballot to be conducted by this Court, on the question of whetheror not they desire to
be separated from the unit of the rest of the employeesbeing represented by the Kapisanan. .
The respondent Court also declared that the collective bargaining agreement could not be a bar
to another certification election because one of its signatories, the Kapisanan President, Vicente
K. Olazo, was a supervisor:

Issues:
1. Is the order of the respondent court, granting groups of employees to choose whether or not
they desire to be separated from the certified unit to which they belong, during the existence of
a valid bargaining contract entered into by a union close to the heels of its certification, contrary
to law?
2. Is it legal error for the respondent court to hold that the bargaining agreement in question
does not bar certification proceedings, only because one of the signatories for the union was
adjudged by the majority of such court to be supervisor, in a previous case?
 Decision:

What the court ordered was only the holding of a plebiscite for the purpose of verification of the
evidence that the workers signed manifestations and resolutions of their desire to be separated
from Kapisanan and not certification. The respondent Court only exercised its full right of
investigation of the facts in order that it may arrive at a conclusive findings. As the respondent
court has yet to resolved the issue on whether or not the collective bargaining agreement is not
a bar to petitions for certification as separate units because its signatory, Vicente K. Olazo, is a
supervisor, the case is deemed premature and hence dismissed.

2.

BENGUET CONSOLIDATED, INC. vs. BCI EMPLOYEES & WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION
OF FREE LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA

OCTOBER 23, 2012 ~ VBDIAZ

BENGUET CONSOLIDATED, INC. vs. BCI EMPLOYEES & WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION
OF FREE LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA

G.R. No. L-24711,; Apr 30, 1968

FACTS:

On June 23, 1959, the Benguet-Balatoc Workers Union (“BBWU”), for and in behalf of all Benguet
Consolidated, Inc (BENGUET) employees in its mines and milling establishment located at Balatoc,
Antamok and Acupan, Mt. Province, entered into a Collective Bargaining Contract (CONTRACT) with
BENGUET. The CONTRACT was stipulated to be effective for a period of 4-1/2 years, or from June 23,
1959 to December 23, 1963. It likewise embodied a No-Strike, No-Lockout clause.

3 years later, or on April 6, 1962, a certification election was conducted by the Department of Labor
among all the rank and file employees of BENGUET in the same collective bargaining units. BCI
EMPLOYEES & WORKERS UNION (UNION) obtained more than 50% of the total number of votes,
defeating BBWU. The Court of Industrial Relations certified the UNION as the sole and exclusive collective
bargaining agent of all BENGUET employees as regards rates of pay, wages, hours of work and such other
terms and conditions of employment allowed them by law or contract.

Later on, the UNION filed a notice of strike against BENGUET. UNION members who were BENGUET
employees in the mining camps at Acupan, Antamok and Balatoc, went on strike. The strike was attended
by violence, some of the workers and executives of the BENGUET were prevented from entering the
premises and some of the properties of the BENGUET were damaged as a result of the strike. Eventually,
the parties agreed to end the dispute. BENGUET and UNION executed the AGREEMENT. PAFLU placed its
conformity thereto. About a year later or on January 29, 1964, a collective bargaining contract was finally
executed between UNION-PAFLU and BENGUET.

Meanwhile, BENGUET sued UNION, PAFLU and their Presidents to recover the amount the former
incurred for the repair of the damaged properties resulting from the strike. BENGUET also argued that the
UNION violated the CONTRACT which has a stipulation not to strike during the effectivity thereof.

Defendants unions and their presidents defended that: (1) they were not bound by the CONTRACT which
BBWU, the defeated union, had executed with BENGUET; (2) the strike was due, among others, to unfair
labor practices of BENGUET; and (3) the strike was lawful and in the exercise of the legitimate rights of
UNION-PAFLU under Republic Act 875.

The trial court dismissed the complaint on the ground that the CONTRACT, particularly the No-Strike
clause, did not bind defendants. BENGUET interposed the present appeal.

ISSUE:

Did the Collective Bargaining Contract executed between Benguet and BBWU on June 23, 1959 and
effective until December 23, 1963 automatically bind UNION-PAFLU upon its certification, on August 18,
1962, as sole bargaining representative of all BENGUET employees
RULING:

NO. BENGUET erroneously invokes the so-called “Doctrine of Substitution” referred to in General
Maritime Stevedore’s Union v. South Sea Shipping Lines where it was ruled that:

“We also hold that where the bargaining contract is to run for more than two years, the principle of
substitution may well be adopted and enforced by the CIR to the effect that after two years of the life of a
bargaining agreement, a certification election may be allowed by the CIR, that if a bargaining agent other
than the union or organization that executed the contract, is elected, said new agent would have to
respect said contract, but that it may bargain with the management for the shortening of the life of the
contract if it considers it too long, or refuse to renew the contract pursuant to an automatic renewal
clause.”

BENGUET’s reliance upon the Principle of Substitution is totally misplaced. This principle, formulated by
the NLRB as its initial compromise solution to the problem facing it when there occurs a shift in
employees’ union allegiance after the execution of a bargaining contract with their employer, merely
states that even during the effectivity of a collective bargaining agreement executed between employer
and employees thru their agent, the employees can change said agent but the contract continues to bind
them up to its expiration date. They may bargain however for the shortening of said expiration date.

In formulating the “substitutionary” doctrine, the only consideration involved was the employees‘
(principal) interest in the existing bargaining agreement. The agent’s (union) interest never entered the
picture. The majority of the employees, as an entity under the statute, is the true party in interest to the
contract, holding rights through the agency of the union representative. Thus, any exclusive interest
claimed by the agent is defeasible at the will of the principal. The “substitutionary” doctrine only provides
that the employees cannot revoke the validly executed collective bargaining contract with their employer
by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase
“said new agent would have to respect said contract” must be understood. It only means that the
employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except
of course to negotiate with management for the shortening thereof.

The “substitutionary” doctrine cannot be invoked to support the contention that a newly certified
collective bargaining agent automatically assumes all the personal undertakings — like the no-strike
stipulation here — in the collective bargaining agreement made by the deposed union. When BBWU
bound itself and its officers not to strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the employees, not of the other
unions which possess distinct personalities.

UNION, as the newly certified bargaining agent, could always voluntarily assume all the personal
undertakings made by the displaced agent. But as the lower court found, there was no showing at all that,
prior to the strike, UNION formally adopted the existing CONTRACT as its own and assumed all the
liabilities imposed by the same upon BBWU. Defendants were neither signatories nor participants in the
CONTRACT.

Everything binding on a duly authorized agent, acting as such, is binding on the principal; not vice-versa,
unless there is mutual agency, or unless the agent expressly binds himself to the party with whom he
contracts. Here, it was the previous agent who expressly bound itself to the other party, BENGUET.
UNION, the new agent, did not assume this undertaking of BBWU.

Since defendants were not contractually bound by the no-strike clause in the CONTRACT, for the simple
reason that they were not parties thereto, they could not be liable for breach of contract to plaintiff.

WHEREFORE, the judgment of the lower court appealed from is hereby affirmed.

3. [ G.R. No. L-28223, August 30, 1968 ]

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL RAILWAYS, PETITIONER, VS. COURT OF
INDUSTRIAL RELATIONS AND SAMAHAN NG MGA MANGGAWA SA CALOOCAN SHOPS, RESPONDENTS.

DECISION
REYES, J. B. L., J.:
Petition by the "Mechanical Department Labor Union sa PNR" 'for a review of an order of the Court of
Industrial Relations, in its Case No. 1475-MC, directing the holding of a plebiscite election to determine
whether the employees at the Caloocan Shops desire the respondent union,
"Samahan ng Manggagawa sa Caloocan Shops", to be separated from the Mechanical Department Labor
Union, with a view to the former being recognized as a separate bargaining unit.
The case began on 13 February 1965 by a petition of the respondent "Samahan ng Manggagawa, etc."
calling attention to the fact that there were three unions in the Caloocan shops of the Philippine National
Railways: the "Samahan", the "Kapisanan ng Manggagawasa Manila Railroad Company", and the
Mechanical Department Labor Union; that no certification election had been held in the last 12 months in
the Caloocan shops; that both the"Samahan and the Mechanical Department Labor Union had submitted
different labordemands upon the management for which reason a certification election was needed to
determine the proper collective bargaining agency for the Caloocan shop workers.
The petition was opposed by the management as well as by the Mechanical Department Labor Union, the
latter averring that it had been previously certified in two cases as sole and exclusive bargaining agent of
the employees and laborers of the PNR's mechanical department, and had negotiated two bargaining
agreements with management in 1961 and 1963; that before the expiration of the latter, a renewal
thereof had been negotiated and the contract remained to be signed; that the "Samahan" had been
organized only in 21 January 1965; that the Caloocan shops unit was not established nor separate from
the Mechanical Department unit; that the "Samahan" is composed mainly of supervisors who had filed a
pending case to be declared non-supervisors; and that the purpose of the petition was to disturb the
present smooth working labor management relations.
By an order of 18 August 1967, Judge Arsenio Martinez, after receiving the evidence, made the following
findings:
"The Court, after a cursory examination of the evidence presented made the following
findings: That petitioner union is composed of workers exclusively at the Caloocan shops of the Philippine
National Railways charged with the maintenance of rolling stocks for repairs; major repairs of locomotive,
engines, etc. are done in the Caloocan shops while minor ones in the Manila sheds; workers in
the Caloocan shops do not leave their station unlike Manila shop workers who go out along the routesand
lines for repairs; workers both in the Caloocan shops and Manila sheds are exposed to hazards
occasioned by the nature of their work; that with respect to wages and salaries of employees, categories
under the Job Classification and Evaluation Plan of the company apply to all workers both in
the Caloocan shops and Manila sheds: administration over employees, members of
petitioner union as well as oppositor is under the Administrative Division of the company that from the
very nature of their work, members of petitioner union and other workers of the Mechanical Department
have been under the coverage of the current collective bargaining agreement which was a result of a cer-
tification by this Court of the Mechanical Department Labor union, first in 1960 and later in
1963. Subsequently, when the latter contract expired, negotiations for its renewal were had and at the
time of the filing of this petition was already consummated, the only act remaining to be done was
to affix the signatures of the parties thereto; that during the pendency of this petition, on June 14, 1965,
the aforesaid collective bargaining agreement was signed between the Philippine National Railways and
the Mechanical Department Labor Union sa Philippine National Railways (Manila Railroad Company).
The main issue involved herein is: Whether or not a new unit should be established,
the Caloocan shops, separate and distinct from the rest of the workers under the Mechanical Department
now represented by the Mechanical Department Labor Union.

The Caloocan Shops, all located at Caloocan City have 360 workers more or less. It is part and parcel of
the whole Mechanical Department of the Philippine National Railways. The department is composed of
four main divisions or units, namely: Operations, Manila Area and Lines; Locomotive Crew; Motor Car
Crew; and the Shops Rolling Stocks Maintenance. (Exhibits "D" and "D-1").

The Locomotive crew and Motor Car Crew, though part of the Mechanical Department, is a separate unit,
and is represented by the Union de Maquinistas, Fogoneros Y Motormen. The workers under the other
two main units of the departments are represented by the Mechanical Department Labor Union. The
workers of the Shops Rolling Stocks Maintenance Division or the Caloocan Shops now seek to be
separated from the rest of the workers of the department and to be represented by the
"SamahanNg Manggagawa sa Caloocan Shops."

There is certainly a community of interest among the workers of the Caloocan Shops. They are grouped
in one place. They work under one or same working condition, same working time or schedule and are
exposed to same occupational risk.

Though evidence on record shows that workers at the Caloocan Shops perform the same nature of
work as their counterparts in the Manila Shed, the difference lies in the fact that workers at
the Caloocan Shops perform major repairs of locomotives, rolling stocks, engines, etc., while those in the
Manila Shed, works on minor repairs. Heavy equipment and machineries are found in the Caloo-
can Shops."

The trial judge then reviewed the collective bargaining history of the Philippine National Railways, as
follows:
"On several similar instances, this Court allowed the establishment of new and separate bargaining units
in one company, even in one department of the same company, despite the existence of the same facts
and circumstances as obtaining in the case at bar.

The history of the collective bargaining in the Manila Railroad Company, now the Philippine National
Railways shows that originally, there was only one bargaining unit in the company, represented by
the Kapisanan Ng Manggagawa sa MRR. Under Case No. 237-MC, this Court ordered the establishment
of two additional units, the engine crew and the train crew to be represented by the Union
de Maquinistas, Fogoneros, Ayudante Y Motormen and Union
de Empleados de Trenes respectively. Then in 1961, under Cases Nos. 491-MC, 494-MC and 507-MC
three new separate units were established, namely, the yard crew unit, station employees unit and
engineering department employees unit, respectively, after the employees concerned voted in a
plebiscite conducted by the court for the separation from existing bargaining units in the company. Then
again, under Case No. 763-MC, a new unit, composed of the Mechanical Department employees, was
established to be represented by the Mechanical Department Labor Union. Incidentally, the first attempt
of the employees of the Mechanical Department to be separated as aunit was dismissed by this Court in
Case No. 488-MC.
In the case of the yard crew, station employees and the Engineering Department employees, the
Supreme Court sustained the order of this Court in giving the employees concerned the right to vote and
decide whether or not they desire to be separate units (See G. R. No. L-16292-94, L-16309 and L-16317-
18, November, 1965)."

In view of its findings and the history of union representation in the railway company, indicating
that bargaining units had been formed through separation of new units from existing ones whenever
plebiscites had shown the workers' desire to have their own representatives, and relying on the "Globe
doctrine" (Globe Machine & Stamping Co., 3 NLRB 294) applied in Democratic Labor Union
vs. Cebu Stevedoring Co., G.R. No. L-10321, 28 February 1958, Judge Martinez held that the employees in
the Caloocan Shopsbe given a chance to vote on whether their group should be separated from that
represented by the Mechanical Department Labor Union, and ordered plebiscite held for the
purpose. The ruling was sustained by the Court en banc; wherefore, the Mechanical Department Labor
Union appealed to this Court, questioning the applicability under the circumstances of the "Globe
doctrine" of considering the will of the employees in determining what should represent them.
Technically, this appeal is premature, since the result of the ordered plebiscite among the workers of
the Caloocan shops may be adverse to the formation of a separate unit, in which event, as stated in the
appealed order all questions raised in this case would be rendered moot and academic. Apparently,
however, the appellant Mechanical Department Labor Union take it for granted that the plebiscite would
favor separation.
We find no grave abuse of discretion in the issuance of the ruling under appeal as would justify our
interfering with it. Republic Act No. 875 has primarily entrusted the prosecution of its policies to the
Court of Industrial Relations, and, in view of its intimate knowledge concerning the facts
and circumstances surrounding the cases brought before it, this Court has repeatedly upheld the
exercise of discretion of the Court of Industrial Relations in matters concerning the representation of
employee groups (Manila Paper Mills Employees & Workers' Association vs. C. I. R., 104
Phil. 10; Benguet Consolidated vs. Bobok Lumber Jack Association, 103 Phil. 1150).
Appellant contends that the application of the "Globe doctrine" is not warranted because the workers of
the Caloocan shops do not require different skills from the rest of the workers in the Mechanical
Department of the Railway Company. This question is primarily one of fact. The Industrial Court has
found that there is a basic difference, in that those in the Caloocan shops not only have acommunity of
interest and working conditions but perform major repairs of railway rolling stock, using heavy equipment
and machineries found in said shops, while the others only perform minor repairs. It is easy to
understand, therefore, that the workers in the Caloocan shops require special skill in the use of heavy
equipment and machinery sufficient to set them apart from the rest of the workers. In addition, the
record shows that the collective bargaining agreements negotiated by the appellant union have been in
existence for more than two (2) years; hence, such agreements can not constitute a bar to the
determination by proper elections, of a new bargaining representative (PLDT Employees' Union vs.
Philippine Long Distance Telephone Co., 51 Off. Gaz., 4519).
As to the charge that some of the members of the appellee, "Samahan Ng Manggagawa", are actually
supervisors, it appears that the question of the status of such members is still pending final decision;
hence, it would not constitute a legal obstacle to the holding of the plebiscite. At any rate the appellant
may later question whether the votes of those ultimately declared to be supervisors should be
counted.
Whether or not the agreement negotiated by the appellant union with the employer, during
the pendency of the original petition in the Court of Industrial Relations, should be considered valid and
binding on the workers of the Caloocan shops is a question that should be first passed
upon by the Industrial Court.
IN VIEW OF THE FOREGOING, the order appealed from is affirmed, with costs against appellant
Mechanical Department Labor Union sa Philippine National Railways.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

4.
G.R. No. 77395 Belyca Corporation v. Dir. Calleja, et. al. November 29, 1988
Facts:

On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor organization,
filed a petition for direct certification as the sole and exclusive bargaining agent of all the rank and file
employees/workers of Belyca Corporation, a duly organized, registered and existing corporation,
employing approximately 205 rank and file employees/workers.

Respondent employer, on the other hand, alleged in its position paper, among others, (1) that of the total
138 rank-and-file employees who authorized, signed and supported the filing of the petition (a) 14 were
no longer working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their membership
from petitioner union (d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed due to malicious
insubordination and destruction of property and (f) 100 simply abandoned their work or stopped
working; and (2) that the statutory requirement for holding a certification election has not been complied
with by the union.

The Labor Arbiter granted the certification election sought for by petitioner union in his order dated
August 18, 1986.

Issue:

Whether or not the statutory requirement of 30% (now 20%) of the employees in the proposed
bargaining unit, asking for a certification election had been strictly complied with.

Ruling:

Yes. It is undisputed that petitioner Belyca Corporation (Livestock and Agro Division) employs more or less
two hundred five (205) rank-and-file employees and workers. It is significant to note that 124 employees
out of such number have expressed their written consent to the certification election; much more than
the required 30% and over and above the present requirement of 20% by Executive Order No. 111.

More than that, any doubt cast on the authenticity of signatures to the petition for holding a certification
election cannot be a bar to its being granted. In fact, once the required percentage requirement has been
reached, even the employees’ withdrawal from union membership taking place after the filing of the
petition for certification election will not affect said petition. Also, until a decision, final in character, has
been issued declaring the strike illegal and the mass dismissal or retrenchment valid, the strikers cannot
be denied participation in the certification election.

5.

6. G.R. No. 97237 August 16, 1991

FILIPINAS PORT SERVICES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION

PARAS, J.:
This is a petition for clarification with prayer for preliminary injunction filed by Filipinas Port Services, Inc.
(hereinafter referred to as Filport) seeking to clarify two conflicting decisions rendered by this Court in
cases involving identical or similar parties, facts and issues.
The antecedent facts of the case are as follows:
In view of the government policy which ordained that cargo handling operations should be limited to only
one cargo handling operator-contractor for every port (under Customs Memorandum Order 28075, later
on superseded by General Ports Regulations of the Philippine Ports Authority) the different stevedoring
and arrastre corporations operating in the Port of Davao were integrated into a
single dockhandlers corporation, known as the Davao Dockhandlers, Inc., which was registered with the
Securities and Exchange Commission on July 13, 1976.
Due to the late receipt of its permit to operate at the Port of Davao from the Bureau of
Customs, Davao Dockhandlers, Inc., which was subsequently renamed Filport, actually started its
operation on February 16, 1977.
As a result of the merger, Section 118, Article X of the General Guidelines on The Integration of
Stevedoring/Arrastre Services (PPA Administrative Order No. 13-77) mandated Filport to draw its
personnel complements from the merging operators, as follows:
"Sec. 118. Absorption of labor - Subject to the provisions of the immediate preceding section,
and consistent with the actualoperational requirements of the new management, all labor force together
with its necessary personnel complement, of themerging operators shall be absorbed by the merged or in
tegrated organization to constitute its labor force." (Emphasis supplied)
Thus, Filport's labor force was mostly taken from the integrating corporations, among them the private
respondents.
On February 4, 1987, private respondent Paterno Liboon and 18 others filed a complaint with the
Department of Labor and Employment Regional Office in Davao City, alleging that they were employees
of Filport since 1955 through 1958 up to December 31, 1986 when they retired; that they were paid
retirement benefits computed from February 16, 1977 up to December 31, 1986 only; and that taking
into consideration their continuous length of service, they are entitled to be paid retirement benefits
differentials from the time they started working with the predecessors of Filport up to the time they were
absorbed by the latter in 1977 (p. 15, Rollo).
Finding Filport a mere alter ego of the different integrating corporations, the Labor Arbiter
held Filport liable for retirement benefits due private respondents for services rendered prior to February
16, 1977. Said decision was affirmed by the NLRC on appeal.
Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 85704, claiming that it is
an entirely new corporation with a separate juridical personality from the integrating corporations; and
that Filport is not a successor-employer, liable for the obligations of private respondents' previous
employers, as shown clearly in the memorandum dated November 21, 1978 of PPA Assistant General
Manager Maximo S. Dumlao, Jr., to wit:
"21 November 1978
"MEMORANDUM
"TO : The Officer-in-Charge
PMU Davao
"FROM : The ACM for Operations
"SUBJECT : Clarification of Sec. 116 of PPA Administrative Order No. 13-
77 of New Organization 's Liability
"In reply to your telegram dated November 16, 1978, Sec. 116 of PPA Administrative Order #13-77 is
hereby quoted for clarification:
"New Organization's Liability - The integrated cargo-handling organization shall be absolutely free from
any liability or obligation of the merging
operators who shall continue to be individually liable for their respective liabilities or obligations, ifany." (
underscoring supplied) x x x
"The new organization's liability shall be the payment of salaries, benefits and all other money due the
employee as a result of his
employment, starting on the date of his service in the newly integrated organization.
"In answer to your query, therefore, the absorption of an employee into a newly integrated organization
does not include the carry over of his length of service.
s/t MAXIMO S. DUMLAO, JR.
Asst. General Manager"
While G.R. No. 85704 was still pending decision by this Court, Josefino Silva, another employee of Filport,
instituted a suit against Filport and Damasticor (one of the defunct stevedoring firms) claiming for
retirement benefits for services rendered prior to February 19, 1977. The labor arbiter found
for Josefino Silva and said decision was affirmed by the NLRC.
Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 86026. On August 31,
1989, this Court, through the First Division, rendered a decision, holding that:
"Petitioner (Filport) cannot be held liable for the payment of the retirement pay of private respondent
(Josefino Silva) while in the employ of DAMASTICOR x x x who is held responsible for the same as the
labor contract is in personam and cannot be passed on to the petitioner." (Rollo, p. 7)
In so ruling, the First Division relied heavily on the case of Fernando v. Angat Labor Union (5 SCRA 248)
where it was held that unless expressly assumed, labor contracts are not enforceable against a transferee
of an enterprise, labor contracts being in personam.
Per entry of judgment, the aforesaid decision became final and executory on November 24, 1989 (p.
87, Rollo).
On September 3, 1990, however, this Court, through the Second Division, dismissed the petition in G.R.
No. 85704 "for failure to sufficiently show that the questioned judgment is tainted with grave abuse of
discretion."
Per entry of judgment, said resolution became final and executory on December 4, 1990 (p. 108, Rollo).
Hence, the instant petition for clarification with prayer for preliminary injunction to enjoin the
respondents from enforcing the decision in G.R. No. 85704 until further orders of this Court.
We see no reason to disturb the findings of fact of the public respondent, supported as they are by
substantial evidence in the light of the well established principle that findings of administrative agencies
which have acquired expertise because their jurisdiction is confined to specific matters are generally
accorded not only respect but at times even finality, and that judicial review by this Court on labor cases
does not go so far as to evaluate the sufficiency of the evidence upon which the Labor Arbiter and the
NLRC based their determinations but are limited to issues of jurisdiction or grave abuse of
discretion. (National Federation of Labor Union v. Ople, 143 SCRA 129).
In the case filed by private respondent Paterno Liboon et al against Filport, the findings of the NLRC in its
November 27, 1987 decision are categorical:
"In resolving the issues, the Labor Arbiter concludes as follows:
"The eventual incorporation of the arrastre/stevedoring firms and their subsequent registration with the
Securities and Exchange Commission on July 13, 1975 brought to the fore the interlocking ownership of
the new corporation.
xxx xxx xxx
"Subsequent amendment of its Articles of Incorporation highlighted by the renaming of
the Davao Dockhandlers, Inc. to Filipinas Port Services, Inc. did not diminish the fact that the ownership
and constituency of the new corporation are basically identical with the previous owners.
"It is, therefore, the considered view of this Office that respondent Filport being a mere alter ego of the
different merging companies has at the very least, the obligation not only to absorb into its employ
workers of the dissolved companies, but also to absorb the length of service earned by the absorbed
employees from their former employers.
xxx xxx xxx
"We are in full accord with, and hereby sustain, the findings and conclusions of the Labor Arbiter. Under
the circumstances, respondent-appellant is a successor-employer. As a successor entity, it is answerable
to the lawful obligations of the predecessor employers, herein integrees. This Commission has so held
under the principle of 'substitution' that the successor firm is liable to (sic) the obligations of the
predecessor employer, notwithstanding the change in management or even personality, of the new
contracting employer."
(Lakas Ng Manggagawang Filipino [LAKAS] v. Tarlac Electrical Cooperative, Inc. et al., NLRC Case No. RB III-
157-75, January 28, 1978, En Banc). x x x The Supreme Court earlier upheld the "Substitutionary"
doctrine in the case of Benguet Consolidated, Inc. vs. BOI Employees & Workers Union, (G.R. L-24711,
April 30, 1968, 23 SCRA 465). (pp. 35 & 37, Rollo)
Said findings were reiterated in the case filed by Josefino Silva against Filport where the NLRC, in its
decision dated January 19, 1988, further ruled that:
"x x x As We have ruled in the similar case involving herein appellant, the latter is deemed a survivor
entity because it continued in an essentially unchanged manner the business operators of the
predecessor arrastre and port service operators, hiring substantially the same workers, including
herein appellee, of the integree predecessors, using substantially the same facilities, with similar working
conditions and line of business, and employing the same corporate control, although under a new
management and corporate personality." (G.R. No. 86026, p. 35, Rollo)
Thus, granting that Filport had no contract whatsoever with the private respondents regarding the
services rendered by them prior to February 16, 1977, by the fact of the merger, a succession of
employment rights and obligations had occurred between Filport and the private respondents. The law
enforced at the time of the merger was Section 3 of Act No. 2772 which took effect on March 6,
1918. Said law provides:
"Sec. 3. Upon the perfecting, as aforesaid, of a consolidation made in the manner herein provided, the
several corporations parties thereto shall be deemed and taken as one corporation, upon the terms and
conditions set forth in said agreement; or, upon the perfecting of a merger, the corporation merged shall
be deemed and taken as absorbed by the other corporation and incorporated in it; and all and singular
rights, privileges, and franchises of each of said corporations, and all property, real and personal, and all
debts due on whatever account, belonging to each of such corporations, shall be taken and deemed as
transferred to and vested in the new corporation formed by the consolidation, or in the surviving
corporation in case of merger, without further act or deed; and the title to real estate, either by deed or
otherwise, under the laws of the Philippine Islands vested in either corporation, shall not be deemed in
any way impaired by reason of this Act: Provided, however, That the rights of creditors and all liens upon
the property of either of said corporations shall be preserved unimpaired; and all debts, liabilities, and
duties of said corporations shall thenceforth attach to the new corporation in case of a consolidation, or
to the surviving corporation in case of a merger, and be enforced against said new corporation or
surviving corporation as if said debts, liabilities, and duties had been incurred or contracted by it."
As earlier stated, it was mandated that Filport shall absorb all labor force and necessary personnel
complement of the merging operators, thus, clearly indicating the intention to continue the employer-
employee relationships of the individual companies with its employees through Filport.
The alleged memorandum of the PPA Assistant General exonerating Filport from any liability arising from
and as a result of the merger is contrary to public policy and is violative of the workers' right to security of
tenure. Said memorandum was issued in response to a query of the PMU Officer-in-Charge and was not
even published nor made known to the workers who came to know of its existence only at the hearing
before the NLRC. (G.R. No. 86026, pp. 93-94, Rollo)
The principle involved in the case cited by the First Division (Fernando v. Angat Labor Union [supra])
applies only when the transferee is an entirely new corporation with a distinct personality from the
integrating firms and NOT where the transferee was found to be merely an alter ego of the different
merging firms, as in this case. Thus, Filport has the obligation not only to absorb the workers of the
dissolved companies but also to include the length of service earned by the absorbed employees with
their former employers as well. To rule otherwise would be manifestly less than fair, certainly, less than
just and equitable.
Finally, to deny the private respondents the fruits of their labor corresponding to the time they worked
with their previous employers would render at naught the constitutional provisions on labor
protection. In interpreting the protection to labor and social justice provisions of the Constitution and
the labor laws, and rules and regulations implementing the constitutional mandate, the Supreme Court
has always adopted the liberal approach which favors the exercise of labor rights. (Euro-Linea, Phils., Inc.
v. NLRC, 156 SCRA 83).
WHEREFORE, the Resolution of the Second Division of this Court in G.R. No. 85704 dated September 3,
1990 is hereby REITERATED.
SO ORDERED.

8. https://www.academia.edu/18669748/Labor_Rev_Case_Digests
9. https://docslide.net/documents/final-labor-case-digestsdocx.html