128.
TRADE UNIONS OF THE PHILS/FEBRUARY SIX MOVEMENT
(TUPAS/FSM) v Laguesma
G.R. No. 95013. September 21, 1994
COLLECTIVE BARGAINING AND ADMINISTRATION OF
AGREEMENTS; TERMS OF COLLECTIVE BARGAINING
AGREEMENT
(ARTICLE 253-A, LABOR CODE) APPLIED IN CASE AT BAR. —
It is crystal clear from the records that the rank-and-file employees of private
respondent's Glassware Division are, at present, represented by ILO-PHILS.
Hence, petitioner's reliance on the March 22, 1990 Certification issued by
Director Bautista, Jr., is misplaced. The existence and filing of their CBA
was confirmed in a Certification, dated April 24, 1990. The certification of
ILO-PHILS. "as the sole and exclusive bargaining agent of the rank-and-file
workers of Transunion-Glassware Division," means it shall remain as such
during the existence of the CBA, to the exclusion of other labor
organizations, including petitioner, and no petition questioning the majority
status of the incumbent bargaining agent shall be entertained, nor shall
certification election be conducted, outside of the sixty-day freedom period
immediately before the expiry date of the five-year term of the CBA.
REGISTRY OF UNIONS AND FILE OF COLLECTIVE AGREEMENTS;
OFFICIAL FUNCTIONS PRESUMED REGULARLY PERFORMED.—
Petitioner points out that the subject CBA was filed beyond the 30-day
period prescribed under Article 231 of the Labor Code. It appears that the
procedural requirement of filing the CBA within 30 days from date of
execution under Article 231 was not met. The subject CBA was executed on
November 28, 1989. It was ratified on December 8, 1989, and then 􀀼led with
DOLE for registration purposes on March 14, 1990. Be that as it may, the
delay in the filing of the CBA was sufficiently explained, i.e., there was an
inter-union conflict on who would succeed to the presidency of ILO-PHILS.
The CBA was registered by the DOLE only on May 4, 1990. It would be
injudicious for us to assume, as what petitioner did, that the said CBA was
filed only on April 30, 1990, as 5 days before its registration, on the
unsupported surmise that it was done to suit the law that enjoins Regional
Offices of DOLE to act upon an application for registration of a CBA within
5 days from its receipt thereof. In the absence of any substantial evidence
that DOLE officials or personnel, in collusion with private respondent, had
antedated the filing date of the CBA, the presumption on regularity in the
performance of official functions holds.
COLLECTIVE BARGAINING AGREEMENT; IMPORTANCE. —
Noncompliance with the procedural requirement of Article 231 should not
adversely affect the substantive validity of the CBA between ILO-PHILS and
the Transunion Corporation- Glassware Division covering the company's
rank and file employees. A CBA is more than a contract. It is highly
impressed with public interest for it is an essential instrument to promote
industrial peace. Hence, it bears the blessings not only of the employer and
employees concerned but even the DOLE. To set it aside on technical
grounds is not conducive to the public good.
FACTS: On March 23, 1990, TUPAS-FSM filed a petition for certification
election with the DOLE, for the purpose of choosing a bargaining
representative for the rank-and-file employees of Transunion
CorporationGlassware Division. Petitioner had then secured a Certification,
dated March 22, 1990, that “Transunion Corporation” has no existing
collective bargaining agreement with any labor organization.
It appears, however, that before the filing of said petition, or on November
15, 1989, Integrated Labor Organization (ILO-Phils.) was duly certified by
DOLE as the sole and exclusive bargaining agent of the rank-and-file
employees of Transunion Corporation-Glassware Division. On November
28, 1989, a collective bargaining agreement (CBA) was then forged between
Transunion-Glassware Division and ILO-Phils covering the company’s
rankand-file employees. The CBA, with a five-year term from December 1,
1989 to December 1, 1994, was ratified by a great majority of the rank-and-
filers on December 8, 1989. In the meantime, the President of ILO-PHILS.
died. An inter-union conflict followed and the subject CBA was filed with
DOLE, for registration purposes, only on March 14, 1990, more or less, three
(3) months from its execution. Finally, on May 4, 1990, the Certification of
Registration was issued by DOLE.
ILO-Phils., intervened in the certification election proceedings initiated by
TUPAS-FSM. It opposed the petition in view of the existing CBA between
ILO and the Transunion Corporation-Glassware Division contending that the
subject CBA was filed beyond the 30-day period prescribed under Article
231 of the Labor Code. It also insists that under Article 232 of the Labor
Code, the prohibition on the filing of a petition for certification election
applies when the CBA had been duly registered and, in this case, since the
CBA was not registered in accordance with the Art. 231, the prohibition will
not apply.
Articles 231 and 232 of the Labor Code read: Art. 231.—Registry of unions
and file of collective agreements.—xxx. “Within thirty (30) days from the
execution of a Collective Bargaining Agreement, the parties shall submit
copies of the same directly to the Bureau or the Regional Office of the
Department of Labor and Employment for registration accompanied with
verified proofs of its posting in two conspicuous places in the place of work
and ratification by the majority of all the workers in the bargaining unit. The
Bureau or Regional Office shall act upon the application for registration of
such Collective Bargaining Agreement within five (5) days from receipt
thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.
Art. 232.—Prohibition on Certification Election.—The Bureau shall not
entertain any petition for certification election or any other action which may
disturb the administration of duly registered existing collective bargaining
agreements affecting the parties except under Articles 253, 253-A and 256 of
this Code
ISSUE: Whether or not non-compliance with the cited procedural
requirement should adversely affect the substantive validity of the CBA.
RULING: NO. It appears that the procedural requirement of filing the CBA
within 30 days from date of execution under Article 231 was not met. The
subject CBA was executed on November 28, 1989. It was ratified on
December 8, 1989, and then filed with DOLE for registration purposes on
March 14, 1990. Be that as it may, the delay in the filing of the CBA was
sufficiently explained, i.e., there was an inter-union conflict on who would
succeed to the presidency of ILO-PHILS. The CBA was registered by the
DOLE only on May 4, 1990. It would be injudicious for us to assume, as
what petitioner did, that the said CBA was filed only on April 30, 1990, or
five (5) days before its registration, on the unsupported surmise that it was
done to suit the law that enjoins Regional Offices of DOLE to act upon an
application for registration of a CBA within five (5) days from its receipt
thereof. In the absence of any substantial evidence that DOLE officials or
personnel, in collusion with private respondent, had antedated the filing date
of the CBA, the presumption on regularity in the performance of official
functions holds. More importantly, non-compliance with the cited procedural
requirement should not adversely affect the substantive validity of the CBA
between ILOPHILS and the Transunion Corporation-Glassware Division
covering the company’s rank and file employees. A collective bargaining
agreement is more than a contract. It is highly impressed with public interest
for it is an essential instrument to promote industrial peace. Hence, it bears
the blessings not only of the employer and employees concerned but even the
Department of Labor and Employment. To set it aside on technical grounds
is not conducive to the public good.
129. SUNDOWNER Dev Corp v Drilon
G.R. No. 82341. December 6, 1989
EMPLOYMENT CONTRACTS AND COLLECTIVE BARGAINING
AGREEMENTS; NOT ENFORCEABLE AGAINST A TRANSFEREE OF
AN ENTERPRISE. —
The rule is that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not
enforceable against a transferee of an enterprise, labor contracts being in
personam, thus binding only between the parties. A labor contract merely
creates an action in personam and does not create any real right which should
be respected by third parties. This conclusion draws its force from the right
of an employer to select his employees and to decide when to engage them as
protected under our Constitution, and the same can only be restricted by law
through the exercise of the police power.
GENERAL RULE THAT BONA FIDE PURCHASER OF ASSETS OF AN
ONGOING CONCERN NOT REQUIRED TO ABSORB EMPLOYEES OF
THE LATTER; EXCEPTION. —
As a general rule, there is no law requiring a bona fide purchaser of
assets of an on-going concern to absorb in its employ the employees of the
latter. However, although the purchaser of the assets or enterprise is not
legally bound to absorb in its employ the employers of the seller of such
assets or enterprise, the parties are liable to the employees if the transaction
between the parties is colored or clothed with bad faith. In the case at bar,
contrary to the claim of the public respondent that the transaction between
petitioner and Mabuhay was attended with bad faith, the court finds no
cogent basis for such contention. Thus, the absorption of the employees of
Mabuhay may not be imposed on petitioner.
FACTS: Hotel Mabuhay leased the premises belonging to Syjuco. However,
due to non-payment of rentals, a case for ejectment was filed and Hotel
Mabuhay offered to amicably settle by surrendering the premises and to sell
its assets and property to any interested party, to which Syjuco acceded.
ISSUE: Whether or not the purchaser of the assets of an employer
corporation can be considered a successor employer of the latter’s employees

RULING: The absorption of the employees of Hotel Mabuhay may not be
imposed on Sundowner, who has no liability whatsoever to the employees of
Hotel Mabuhay and its responsibility if at all, is only to consider them for re-
employment in the operation of the business in the same premises. There can
be no implied acceptance of the employees of Hotel Mabuhay by petitioner
as it is expressly provided in the agreement that petitioner has no
commitment or duty to absorb them.
The rule is that unless expressly assumed. labor contracts such as
employment contracts and CBAs are not enforceable against a transferee of
an enterprise, labor contracts being IN PERSONAM, thus, binding only
between the parties. A labor contract merely creates an action in personam
and does not create an real right which should be respected by third parties.
This conclusion draws its force from the right of an employer to select his
employees and to decide when to engage them as protected under our
Constitution and the same can only be restricted by law through the exercise
of police power.
As a general rule, there is no law requiring a bona fide purchaser of assets of
an on-going concern to absorb in its employ the employees of the latter.
However, although the purchaser is not legally bound to absorb in its employ
the employees of the seller, the parties are liable to the employees if the
transaction between is clothed with bad faith.
130. BENGUET CONSOLIDATED v BCI EMPLOYEES &
WORKERS UNION-PAFLU
G.R. No. L-24711. April 30, 1968
"PRINCIPLE OF SUBSTITUTION", MEANING OF. —
The principle of substitution, formulated by the National Labor Relations
Board, counterpart of our CIR, means that where there occurs a shift in
employees' union allegiance after the execution of a collective bargaining
contract with their employer, the employees can change their agent - the
labor union, but the collective bargaining contract which is still subsisting,
continues to bind the employees up to its expiration date. They may,
however, bargain for the shortening of said expiration date. And the only
consideration for the "substitutionary" doctrine is the employees' interest in
the existing bargaining agreement; the agent's (Union's) interest never enters
into the picture.
UNDER "SUBSTITUTIONARY DOCTRINE", EMPLOYEES CANNOT
RENEGE ON THEIR COLLECTIVE BARGAINING CONTRACT;
EXCEPTION. —
The "Substitutionary doctrine" provides that the employees cannot revoke the
validly executed collective bargaining contract with their employer by the
simple expedient of changing their bargaining agent. The new agent must
respect the contract. The employees, thru their new bargaining agent, cannot
renege on the collective bargaining contract, except to negotiate with
management for the shortening thereof.
NEW COLLECTIVE BARGAINING AGENT DOES NOT
AUTOMATICALLY ASSUME ALL PERSONAL UNDERTAKINGS OF
DEPOSED UNION; SUBSTITUTIONARY DOCTRINE, HELD
INAPPLICABLE. —
The "Substitutionary doctrine" cannot be invoked to support the claim that a
newly certified collective bargaining agent automatically assumes all
personal undertakings, such as the no-strike stipulation in this case, assumed
by the deposed union. When the BBWU bound itself and its officers not to
strike, it could not bind all the rival unions because the BBWU was the agent
only of the employees, not of the other unions which possess distinct
personalities.
FACTS: The Benguet-Balatoc Workers Union (BBWU) entered into a
Collective Bargaining Contract with Benguet Consolidated, Inc(BENGUET).
It became effective for a period of 4-½ years, and itembodied a No-Strike,
No-Lockout clause. 3 years later, a certification election was conducted
among all the rank and file employees of BENGUET. BCI Employees &
Workers Union (UNION) defeated BBWU. CIR certified UNION as the sole
and exclusive collective bargaining agent of all BENGUET employees.
A Notice of Strike was filed, and the UNION members who were
BENGUET employees went on strike. Picket lines were formed, and the
picketers, resorted to threats and intimidation, and use of force and violence.
Some of the properties of BENGUET were also damaged. Eventually, the
parties agreed to end the dispute. BENGUET and UNION executed an
agreement. PAFLU placed its conformity thereto and said agreement was
attested to by the Director of the BLR. A collective bargaining contract was
executed between UNION-PAFLU and BENGUET.
As a result of the strike staged by UNION and its members,
BENGUET had to incur expenses for the repair of the damaged properties.
BENGUET sued UNION, PAFLU and their Presidents before the CFI on the
sole premise that said defendants breached their undertaking in the existing
contract not to strike. The unions and their 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 to unfair labor
practices of BENGUET; and (3) the strike was lawful and in the exercise of
the legitimate rights of UNION-PAFLU. CFI dismissed the complaint on the
ground that the contract did not bind defendants.
contract, except of course to negotiate with management for the shortening
thereof. The doctrine cannot be invoked to support the contention that a
newly certified collective bargaining agent automatically assumes all the
personal undertakings 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. The UNION 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.
Everything binding on a duly authorized agent 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. In the case at bar, it was
BBWU who expressly bound itself to BENGUET.
UNION, the new agent, did not assume this undertaking of BBWU.
Since defendants were not contractually bound by the no-strike clause, for
the simple reason that they were not parties thereto, they could not be liable
for breach of contract to plaintiff.
The judgment of the lower court appealed from is hereby affirmed.

ISSUE: Whether or not the contract executed between BENGUET and

BBWU automatically bind UNION-PAFLU upon its certification as sole
bargaining representative of all BENGUET employees.

RULING: BENGUET invoked the "Doctrine of Substitution" referred to in

General Maritime Stevedores' Union v. South Sea
Shipping Lines where it stated that, if bargaining agent other than the union
or organization that executed the contract, is elected, said the agent should
respect the said contract. The statement was obiter dictum. BENGUET's
reliance upon the Principle of Substitution is totally misplaced.
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
131. LIBERTY FLOUR MILLS EMPLOYEES v LIBERTY FLOUR
MILLS
G.R. Nos. 58768-70. December 29, 1989.
PRESIDENTIAL DECREE NO. 525; EMERGE ON ALLOWANCE;
DEEMED ABSORBED BY THE WAGE INCREASE UNDER THE
COLLECTIVE BARGAINING AGREEMENT; CASE AT BAR. —
The Court holds that the emergency allowances are indeed absorbed by the
wage increases required by P.D. 525 are indeed absorbed by the wage
increases required under the Section 2 of the CBA. This is because Section 6
of the Interpretative Bulletin on LOI No. 174 specifically provides: Sec. 6.
Allowances under LOI . — All allowances, bonuses, wage adjustments and
other benefits given by employers to their employees shall be treated by the
DOLE as in substantial compliance with the minimum standards set forth in
LOI No. 174 if: (a) they conform with at least the minimum allowances
scales specified in the immediately preceding Section ; and (b) they are given
in response to the appeal of the President in his speech on 4 January 1974, or
to countervail the quantum jump in the cost of living as a result of the energy
crisis starting in November 1973, or pursuant to Presidential Decree No. 390;
Provided, That the payment is retroactive to 18 February 1974 or earlier. The
allowances and other benefits may be granted unilaterally by the employer or
through collective bargaining, and may be paid at the same time as the
regular wages of the employees. Allowances and other benefits which are not
given in substantial compliance with the LOI as interpreted herein shall not
be treated by the DOLE as emergency allowances in the contemplation of the
LOI unless otherwise shown by sufficient proof. Thus, without such proof,
escalation clauses in collective bargaining agreements concluded before the
appeal of the President providing for automatic or periodic wage increases
shall not be considered allowances for purposes of the LOI.
SECTION 5 OF ITS IMPLEMENTING RULES INTERPRETED. —
The petitioners contend that the wage increases were the result of negotiation
undertaken long before the promulgation of P.D. No. 525 and so should not
be considered part of the emergency allowance decreed. In support of this
contention, they cite Section 15 of the Rules implementing P.D. No. 525,
providing as follows: Nothing herein shall prevent the employer and his
employees, from entering into any agreement with terms more favorable to
the employees than those provided herein, or be construed to sanction the
diminution of any benefits granted to the employees under existing laws,
agreements, and voluntary practice. Obviously, this section should not be
read in isolation but must be related to the other sectionsabove-quoted, to
give effect to the intent and spirit of the decree. The meaning of the section
simply is that any benefit over and above the prescribed allowances may still
be agreed upon by the employees and the employer or, if already granted,
may no longer be withdrawn or diminished.
COLLECTIVE BARGAINING AGREEMENTS; ENFORCES
REGARDLESS OF ABSENCE OF CERTIFICATION BY THE BUREAU
OF LABOR RELATIONS. —
In its challenged decision, the public respondent held that in demanding the
dismissal of Evaristo and Biascan, PLAC had acted prematurely because the
1974 CBA providing for union shop and pursuant to which the two
petitioners were dismissed had not yet been certi􀀼ed. The implication is that
it was not yet in effect and so could not be the basis of the action taken
against the two petitioners. This conclusion is erroneous. It disregards the
ruling of this Court in Tanduay Distillery Labor Union v. NLRC, were we
held: The fact, therefore, that the BLR failed to certify or act on TDLU's
request for certification of the CBA in question is of no moment to the
resolution of the issues presented in this case. The BLR itself found in its
order of July 8, 1982, that the "uncertified CBA was duly 􀀼led and
submitted on October 29, 1980, to last until June 30, 1982 is certifiable for
having complied with all the requirements for certification." The CBA
concluded in 1974 was certifiable and was in fact certified on April 11, 1975.
It bears stressing that Evaristo and Biascan were dismissed only on May 20,
1975, more than a month after the said certification. The correct view is that
expressed by Commissioner Cecilio P. Seno in his concurring and dissenting
opinion, viz.: . . . Evidence on record show that after the cancellation of the
registration certificate of the Federation of Democratic Labor Unions, no
other union contested the exclusive representation of the Philippine Labor
Alliance Council (PLAC), consequently, there was no more legal
impediment that stood on the way as to the validity and enforceability of the
provisions of the CBA entered into by and between respondent corporation
and respondent union. The certification of the collective bargaining
agreement by the BLR is not required to put a stamp of validity to such
contract. Once it is duly entered into and signed by the parties, a collective
bargaining agreement becomes effective as between the parties regardless of
whether or not the same has been certified by the BLR.
POLICY OF THE STATE TO PROMOTE UNIONISM EXPLAINED. —
It is the policy of the State to promote unionism to enable the workers to
negotiate with management on the same level and with more persuasiveness
than if they were to individually and independently bargain for the
improvement of their respective conditions. To this end, the Constitution
guarantees to them the rights "to self-organization, collective bargaining and
negotiations and peaceful concerted actions including the right to strike in collective bargaining agreement becomes effective as between the parties
accordance with law." There is no question that these purposes could be regardless of won the same has been certified by the BLR.
thwarted if every worker were to choose to go his own separate way instead
of joining his co-employees in planning collective action and presenting a
united front when they sit down to bargain with their employers. It is for this
reason that the law has sanctioned stipulations for the union shop and the
closed shop as a means of encouraging the workers to join and support the
labor union of their own choice as their representative in the negotiation of
their demands and the protection of their interest vis-a-vis the employer.

FACTS: On February 6, 1974, respondent Philippine Labor Alliance Council

(PLAC) and Liberty Flour entered into a 3-year CBA effective January 1,
1974 providing for a daily wage increase of PhP2.00 for 1974, PhP1.00 for
1975 and PhP1.00 for 1976. The parties also agreed to establish a union shop
by imposing “membership in good standing for the duration of CBA” as a
condition for continued employment of workers. PLAC complained against
the company for non-payment of E-COLA under P.D. 525. A similar
complaint was filed on March 4, 1975, this time by petitioners who
apparently were veering away from PLAC. Evaristo and Biascan, after
organizing a union, filed for a certification election among rank-and-file
employees. PLAC then expelled the two for disloyalty and demanded their
dismissal by the respondent company, who complied on May 20, 1975. The
claims for E-COLA was dismissed as it was already absorbed by the wage
increase. The termination case in relation to back wages was also dismissed.

ISSUE: Whether or not E_COLA was also absorbed in the wage increases
and won dismissal of Evaristo and Biascan was illegal.

RULING: The company agreed to grant the emergency allowance even

before the obligation was imposed by government (P.D. 525). What the
petitioners claim they are being made to waive is the additional allowance
but the truth is they are not entitled to because they are already enjoying the
stipulated increases.
As with the case of illegal dismissal, the CBA concluded in 1974 was
certifiable and in fact certified in April 11, 1975 while the two were
dismissed on may 20, 1975. Evidence show that after the cancellation of the
registration certificate of the Federation of Democratic Labor Unions, no
other union contested the exclusive representation of the PLAC,
consequently there was no more legal impediment that stood on the way of
its validity and enforceability of the provisions of the collective bargaining
agreement entered into by and between respondent corporation and
respondent union. Once it was duly entered into and signed by the parties, a