Case Summary (G.R. No. L-24711)
Material Facts and Chronology
On June 23, 1959, Benguet and the Benguet-Balatoc Workers Union (BBWU) executed a collective bargaining contract effective until December 23, 1963, which included a No‑Strike, No‑Lockout clause. A certification election was held April 6, 1962; on August 18, 1962 the CIR certified UNION as the sole and exclusive bargaining agent for the relevant Benguet employees. UNION members later approved a resolution directing a notice of strike, which was filed December 28, 1962; the strike commenced March 2, 1963 and involved picketing at strategic points on company premises, instances of intimidation, some acts of violence, arrests, and prosecutions for coercion. Parties executed a return‑to‑work agreement on May 2, 1963 and a new collective bargaining agreement on January 29, 1964. Benguet claimed P1,911,363.83 in damages allegedly caused by the strike and sued UNION, PAFLU and their presidents for breach of the 1959 CONTRACT.
Procedural Posture
The Court of First Instance dismissed Benguet’s complaint, holding the CONTRACT’s no‑strike clause did not bind the defendants. Defendants’ counterclaim was denied. Benguet appealed that judgment to the Supreme Court, raising three principal issues: (1) whether the CONTRACT automatically bound UNION‑PAFLU upon certification; (2) whether the unions and their presidents are liable for illegal acts committed by some strikers and picketers during the strike; and (3) whether defendants are liable for the damages claimed by Benguet.
Issue 1 — Whether the successor certified union is automatically bound by the prior collective bargaining contract
Benguet argued that upon certification as bargaining agent, UNION‑PAFLU stood substituted into the 1959 CONTRACT, including its No‑Strike clause. The Supreme Court rejected this argument. The Court characterized the “substitution” language in General Maritime Stevedore (quoted by Benguet) as obiter dictum in that case and therefore not a binding rule for automatic assumption of personal undertakings. The Court explained the substitutionary doctrine in NLRB jurisprudence as protecting the interests of employees as principals: a change in bargaining agent does not permit employees to repudiate a valid contract entered through their prior agent; the doctrine was crafted to preserve employees’ contractual rights, not to impose the former agent’s personal undertakings upon a new, distinct union organization.
Rationale for rejecting automatic assumption of personal covenants
The Court reasoned that BBWU, as the signatory agent, could bind the employees but could not validly bind other distinct unions which have their own legal personality. Applying the maxim res inter alios acta alios nec prodest nec nocet, the Court held that UNION could not be held contractually accountable for personal undertakings made by BBWU unless UNION had expressly assumed those obligations prior to the strike. The record, the Court noted, contained no showing that UNION formally adopted the CONTRACT as its own before the strike. Civil Code Art. 1704 was cited to support the proposition that only the union or representatives who signed the contract are liable for non‑fulfillment thereof.
Estoppel and prior statements considered and rejected
Benguet invoked a motion filed by UNION in a separate civil action (Bobok Lumber Jack Ass’n v. Benguet) containing language that the CIR had “transferred” the contractual rights of BBWU to the defendant union and that the collective bargaining contract would be respected. The Supreme Court rejected an estoppel argument based on that motion: the motion was made in the context of co‑defendants seeking to defeat a plaintiff’s claim in that separate action and was not a representation by UNION to Benguet that it accepted personal contractual liability; Benguet did not rely on that motion to its detriment; and inclusion of the motion in an appellate record was a procedural matter that did not rebut UNION’s explanation. Consequently there was no estoppel to bind UNION to BBWU’s no‑strike covenant.
Agency law and the limits of imputed obligations
The Court emphasized fundamental agency principles: what binds the principal is the agent’s authorized acts; the reverse is not true—an agent is not automatically bound by the principal’s prior acts or by acts of a different agent—unless there is mutual agency or the agent expressly binds himself. Citing Civil Code Art. 1897, the Court explained that an agent acting as such is not personally liable to the contracting party unless he expressly binds himself or exceeds authority without proper notice. Applying this to the labor context, the Court concluded the displaced union’s personal contractual promise not to strike did not create a like personal undertaking by UNION absent express assumption.
Issue 2 — Liability for illegal acts committed during the strike and scope of vicarious liability
Benguet sought to hold UNION, PAFLU and their officers liable for the intimidation and violence that occurred during the strike. The Supreme Court treated vicarious liability against unions and officials as expressly curtailed by statute: Section 9(c) of Republic Act No. 875 removed automatic vicarious liability and required clear proof of actual participation in, authorization or ratification of illegal acts before holding a union or its officials liable. The Court found that while some strikers had resorted to coercion and violence, the unions produced uncontradicted evidence that union leaders repeatedly warned members to conduct peaceful picketing. Given the statutory standard, a failure of union officials t
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Citation and Court
- Reported at 131 Phil. 994; G.R. No. L-24711; Decision dated April 30, 1968.
- Opinion authored by Chief Justice Bengzon; Justices Dizon, Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando concurred.
- Appeal from the judgment of the Court of First Instance (trial court) dismissing plaintiff-appellant Benguet Consolidated, Inc.’s complaint.
Parties
- Plaintiff-Appellant: Benguet Consolidated, Inc. (BENGUET).
- Defendants-Appellees: BCI Employees & Workers Union (UNION), Philippine Association of Free Labor Unions (PAFLU), and their respective presidents (named in the record as Cipriano Cid and Juanito Garcia in the caption).
Material Facts — Collective Bargaining Contract (CONTRACT)
- On June 23, 1959, Benguet-Balatoc Workers Union (BBWU), for and on behalf of all BENGUET employees in the mines and milling establishments at Balatoc, Antamok and Acupan, Municipality of Itogon, Mt. Province, executed a Collective Bargaining Contract (Exh. Z, hereinafter “CONTRACT”) with BENGUET.
- The CONTRACT expressly provided an effective term of four and one-half (4-1/2) years: June 23, 1959 to December 23, 1963.
- The CONTRACT contained a No-Strike, No-Lockout clause (Clause XVIII, INDUSTRIAL PEACE, pars. B and C).
Certification Election and Change of Bargaining Agent
- On April 6, 1962, the Department of Labor conducted a certification election among all rank-and-file employees of BENGUET in the same bargaining units.
- UNION obtained a majority (more than 50% of total votes), defeating BBWU.
- On August 18, 1962, the Court of Industrial Relations certified UNION as the sole and exclusive collective bargaining agent for rates of pay, wages, hours of work and other terms and conditions of employment allowed by law or contract.
Union Deliberations and Notice of Strike
- UNION conducted meetings on November 22, 23 and 24, 1962 at Antamok, Balatoc and Acupan Mines, respectively.
- UNION members approved a resolution directing the president to file a notice of strike for several grievances, enumerated as reasons for the strike:
- (1) Refusal to grant any amount as monthly living allowance for the workers;
- (2) Violation of agreements reached in conciliation meetings, including taking down investigation statements without presence of union representative;
- (3) Refusal to dismiss erring executive despite affidavits, showing company bias and partiality;
- (4) Discrimination against union members in enforcement of disciplinary actions.
- A Notice of Strike was filed on December 28, 1962 (neither party introduced the Notice into evidence).
Commencement and Conduct of the Strike (March–May 1963)
- On the evening of March 2, 1963, UNION members employed by BENGUET in the mining camps at Acupan, Antamok and Balatoc went on strike.
- Trial court findings on strike conduct (Record on Appeal pp. 40–41):
- Picket lines formed at strategic points within plaintiff’s premises; picketers used threats, intimidation and, in some instances, force and violence to prevent passage through picket lines by company personnel reporting for work.
- Human blocks were formed at entrances to working areas preventing vehicles from passing; company officers were for some time prevented from leaving staff areas.
- Picketers bore placards with “BBWU-PAFLU”; picketers were described as unruly, aggressive, and uttering threatening remarks toward staff and non-strikers.
- On some occasions, picketers pushed back cars attempting to enter working areas and attempted to overturn a vehicle; PC soldiers intervened and threw tear gas to disperse the crowd.
- Many picketers were apprehended by PC soldiers; criminal charges for grave coercion were filed before the Court of First Instance of Baguio.
- Two strike leaders and twenty-two picketers were found guilty of light coercion; nineteen other accused were acquitted.
- There was a complete stoppage of work in all the mines during the strike.
- After two weeks, the strikers allowed repair and maintenance of a water pump and some staff members, accompanied by PC soldiers, inspected premises for damages and losses.
Efforts to End Dispute; Agreements Following the Strike
- On May 2, 1963, parties agreed to end the dispute and executed a return-to-work Agreement (Exh. 1); PAFLU placed its conformity and the Agreement was attested by the Director of the Bureau of Labor Relations.
- After the strike, UNION agreed in the return-to-work Agreement executed on May 2, 1963, to respect the CONTRACT for the remaining period of its effectivity.
- On January 29, 1964, a collective bargaining contract was finally executed between UNION-PAFLU and BENGUET (see Exh. 3).
Plaintiff’s Claim for Damages
- BENGUET alleged that, as a result of the strike by UNION and its members, it incurred expenses amounting to P1,911,363.83 for:
- 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;
- Other miscellaneous expenses.
- BENGUET sued UNION, PAFLU and their respective presidents in the Court of First Instance of Manila seeking recovery of said amount on the sole premise that defendants breached the CONTRACT’s No-Strike clause during its effectivity.
Defendants’ Pleadings and Defenses
- Main defenses asserted by UNION, PAFLU and their presidents:
- (1) They were not bound by the CONTRACT executed between BENGUET and BBWU because they were not parties or signatories thereto.
- (2) The strike was due, inter alia, to unfair labor practices of BENGUET.
- (3) The strike was lawful and an exercise of legitimate rights under Republic Act No. 875.
- In their Answer, defendants denied material allegations, and paragraph VI of the Answer traversed plaintiff’s allegations (asserting peaceful, proper picketing and counter-allegations that plaintiff caused harm and unlawfully broke up the strike).
Trial Court Disposition and Findings
- On February 23, 1965, the trial court rendered judgment dismissing BENGUET’s complaint on the ground that the CONTRACT, particularly the No-Strike clause, did not bind the defendants (who were not signatories).
- The trial court also denied defendants’ counterclaim.
- Findings relevant to liability:
- Some strikers and picketers resorted to intimidation and actual violence.
- Defendants presented uncontradicted evidence that strike leaders warned strikers repeatedly to avoid violence and conduct peaceful picketing.
- The mere failure of union officials to go against erring members under union constitutions and by-laws was considered, at most, a weakness in defense, not a basis for plaintiff’s recovery.
- The rule of vicarious liability had been legislatively modified by Republic Act No. 875; union liability requires proof of actual participation, authorization or ratification of illegal acts.
Issues Presented on Appeal
- The appeal cha