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In 1953, the CIR issued an Order directing that an election be held among the unlicensed members and
crew of the respondent shipping line company. In said order, the USUP and GMSU were considered
eligible to be voted in the CE. After then, the CIR issued an Order certifying USUP as the exclusive
bargaining representative of the laborers and employees of the Shipping Lines. On June 28, 1957, a
collective bargaining agreement was entered into between the Shipping Line and the USUP. Art. 10 of
the agreement provided as follows:

This Agreement shall take effect on July 21, 1957, to continue in full force and effect for two (2) years
until July 20, 1959 and thereafter for another period of two (2) years, unless either party shall notify the
other in writing not less than sixty (60) days prior to the expiration date hereof of its intention or
election to terminate the agreement as of the end of the current term.

Thereafter, the petitioner questioned the bargaining agreement of July 28, 1957, stated that it was but a
renewal of the same or similar agreement of July 1955, so that the bargaining agreement has been in
existence for about five years, which is too long a period within which a certification election has not
been held.

Issue: (1) whether or not a Certification election must be held;

(2) whether or not a renewal of the CBA is proper.

Ruling: (1) the SC upheld “after reviewing the cases decided by the NLRB of the United States and our
own cases, we have arrived at the conclusion that it is reasonable and proper that when there is a
bargaining contract for more than a year, it is too early to hold a certification election within a year from
the effectivity of said bargaining agreement; also that a two-year bargaining agreement may run for
three, even four years, but in such a case, it is equally advisable that to decide whether or not within
those three or four years, a certification election should not be held, may well be left to the sound
discretion of the CIR, considering the conditions involved in the case, particularly, the terms and
conditions of the bargaining contract.”

(2) the court said that “we also uphold 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 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.”


A CBA was concluded on June 23, 1959 between petitioner company an Benguet-Balatoc Worker’s
Union (BBWU), effective for a period of 4 ½ years or from June 23, 1959 to December 23, 1963. It
likewise embodied a “No strike, No Lock-out clause”.
About three years later, or on April 6, 1962, before the expiration of the CBA, a CE was conducted by the
DOL among all RF employees of the petitioner in the same collective bargaining units. Another union,
herein respondent, obtained more than 50% of the total number of votes, defeating BBWU, and
accordingly, the CIR, on August 18, 1962, certified UNION-PAFLU as the SOLE of all the employees of
petitioner company. One of the issues raised in the instant case is whether the CBA executed between
the co. and BBWU on June 23, 1959 and effective until December 23, 1963 automatically binds UNION-
PAFLU upon its certification, on August 18, 1962, as SOLE of all employees of the petitioner.

Petitioner invoke the afore-quote ruling in General Maritime in support of its contention that the CBA
existing was binding on the new bargaining agent – UNION PAFLU.

Issue: Whether or not petitioner’s claim holds water.

Ruling: No, the SC held that such invocation is not persuasive because the afore-quoted pronouncement
in General Maritime was an obiter dictum. The only issue in said case was whether a CBA which had
practically run for five years constituted a bar to certification proceedings. It was held that it did not
accordingly directed the court a quo to order CE. With that, nothing more was necessary disposition of
the case. Moreover, pronouncement adverted to was rather premature. The possible certification of a
union different from that which signed the bargaining contract was a mere contingency then since the
elections were still held. Clearly, the Court was not called upon to rule on the possible effects of such
proceedings on the bargaining agreement. It further held:

“But worse, 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'
interest in the existing bargaining agreement. The agent's interest never entered the picture. In fact, the
justification for said doctrine was:

... that 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.... (Emphasis supplied)

Stated otherwise, 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, 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.