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G.R. No.


April 30, 1968

BENGUET CONSOLIDATED, INC., plaintiff-appellant,

On June 23, 1959, the Benguet-Balatoc Workers Union ("BBWU"), for and in behalf of all
BENGUET employees in its mines and milling establishment entered into a CBA with
Benguet Consolidated, Inc. (BENGUET). Pursuant to its very terms, said CONTRACT
became effective for a period of four and a half (4-) years, or from June 23, 1959 to
December 23, 1963. It likewise embodied a No-Strike, No-Lockout clause. About three
years later, or on April 6, 1962, a certification election was conducted by the DOLE
among all the rank and file employees of BENGUET in the same collective bargaining
units. UNION obtained more than 50% of the total number of votes, defeating BBWU, and
accordingly, the Court of Industrial Relations certified BCI Employees & Workers Union
("UNION") as the SEBA 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
A resolution was approved by union members directing to file a notice of strike against
1. [Refusal] to grant any amount as monthly living allowance for the workers;
2. Violation of Agreements reached in conciliation meetings among which is the taking
down of investigation [sic] and statements of employees without the presence of union
3. Refusal to dismiss erring executive after affidavits had been presented, thereby
company showing [sic] bias and partiality to company personnel;
4. Discrimination against union members in the enforcement of disciplinary actions.
The Notice of Strike was filed. And UNION members went on strike. The parties agreed to
end the raging dispute. Accordingly, BENGUET and UNION executed the AGREEMENT,
PAFLU placed its conformity thereto and said agreement was attested to by the Director
of the BLR. About a year later or on January 29, 1964, a collective bargaining contract
was finally executed between UNION-PAFLU and BENGUET. Meanwhile, as a result,
allegedly, of the strike staged by UNION and its members, BENGUET had to incur
expenses for the rehabilitation of mine openings, repair of mechanical equipment, cost of
pumping water out of the mines, value of explosives, tools and supplies lost and/or
destroyed, and other miscellaneous expenses, all amounting to P1,911,363.83. So,

BENGUET sued UNION, PAFLU and their respective Presidents to recover said amount in
the CFI, on the sole premise that said defendants breached their undertaking in the
existing CONTRACT not to strike during the effectivity thereof.
In answer to BENGUET's complaint, defendants unions and their respective presidents
put up the following defenses: (1) they were not bound by the CONTRACT which BBWU,
the defeated union, had executed with BENGUET; (2) the strike was due, inter alia, 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 rendered
judgment dismissing the complaint on the ground that the CONTRACT, particularly the
No-Strike clause, did not bind defendants. The latters counterclaim was likewise denied.
Failing to get a reconsideration of said decision, BENGUET interposed the present appeal.
(1) 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
(2) Are defendants labor unions and their respective presidents liable for the illegal acts
committed during the course of the strike and picketing by some union members?
(3) Are defendants liable to pay the damages claimed by BENGUET?

1. No. In support of an affirmative answer to the first question, BENGUET first invokes the
so-called "Doctrine of Substitution" referred to in General Maritime Stevedores' Union v.
South Sea Shipping Lines, L-14689, July 26, 1960. It provides that the employees cannot
revoke the validly executed collective bargaining contract with their employer by the
simple expedient of changing their bargaining agent. New agent would have to respect
said contract. 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, therefore, 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. To consider
UNION contractually bound to the no-strike stipulation would therefore violate the legal
maxim that res inter alios nec prodest nec nocet.

Of course, 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 liability ties imposed by the same
upon BBWU. The stand taken by the trial court all the more becomes unassailable in the
light of Art. 1704 of the Civil Code providing that: In the collective bargaining, the labor
union or members of the board or committee signing the contract shall be liable for nonfulfillment thereof. There is no question, defendants were not signatories nor participants
in the CONTRACT. Also, in contract of agency, everything binding on a duly authorized
agent, acting as such, is binding on the principal; not vice-versa, unless there is a mutual
agency, or unless the agent expressly binds himself to the party with whom he contracts.
As the Civil Code decrees it: The agent who acts as such is not personally liable to the
party with whom he contracts, unless he expressly binds himself or exceeds the limits of
his authority without giving such party sufficient notice of his powers. 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.
2. No. The rule of vicarious liability has, since the passage of Republic Act 875, been
expressly legislated out. The standing rule now is that for a labor union and/or its officials
and members to be liable, there must be clear proof of actual participation in, or
authorization or ratification of the illegal acts. While the lower court found that some
strikers and picketers resorted to intimidation and actual violence, it also found that
defendants presented uncontradicted evidence that before and during the strike, the
strike leaders had time and again warned the strikers not to resort to violence but to
conduct peaceful picketing only. Assuming that the strikers did not heed these
admonitions coming from their leaders, the failure of the union officials to go against the
erring union members pursuant to the UNION and PAFLU constitutions and by-laws
exposes, at the most, only a flaw or weakness in the defense which, however, cannot be
the basis for plaintiff BENGUET to recover.
3. No. 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. The lower court therefore correctly absolved
them from liability.
Judgment of the lower court appealed from is affirmed.