10. Benguet Consolidated, Inc. vs.

BCI Employees and Workers Union-PAFLU (1968)

Facts: The Benguet-Balatoc Workers Union (BBWU), for and in behalf of all Benguet
Consolidated, Inc. employees in its mines and milling establishment entered into a Collective
Bargaining Contract (CBC) 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.

Three years later, 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 (BEWU) obtained more than 50% of the total number of votes, defeating
BBWU; on August 18, 1962, the CIR then certified BEWU as the sole and exclusive collective
bargaining agent of all Benguet employees.

Later on, BEWU filed a notice of strike against Benguet. Its members then went on a violent
strike. Eventually, the parties agreed to end the dispute; Benguet and BEWU executed an
agreement. The Philippine Association of Free Labor Unions (PAFLU) placed its conformity
thereto. About a year later or on January 29, 1964, a CBC was finally executed between BEWU-
PAFLU and Benguet.

However, as a result of the strike, 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.

Benguet then sued BEWU, PAFLU, and their Presidents to recover the amount the former
incurred for the repair of the damaged properties. Benguet contends, among others, that since all
the employees, as principals, continue being bound by the no-strike stipulation until the
contract's expiration, BEWU, as their agent, must necessarily be bound also pursuant to the Law
on Agency.

Issues: (1) Whether the CBC executed between Benguet and BBWU on June 23, 1959 and
effective until December 23, 1963 automatically bound BEWU-PAFLU upon its certification, on
August 18, 1962, as sole bargaining representative of all Benguet employees; and (2) Whether
BEWU is also bound by the no-strike clause pursuant to the Law of Agency?

Ruling: (1) No. Benguet erroneously invoked the so-called “Doctrine of Substitution” referred to
in General Maritime Stevedore’s Union vs. South Sea Shipping Lines where it was ruled that:

Where the bargaining contract is to run for more than 2 years, the principle of substitution may well be
adopted and enforced by the CIR to the effect that after 2 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. The “substitutionary”
doctrine only provides that the employees cannot revoke the validly executed CBC 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 CBC, except
to negotiate with management for the shortening thereof.

(2) No. 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 provides:

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. BEWU,
the new agent, did not assume this undertaking of BBWU (No-Strike, No-Lockout clause).

Maint point: Since BEWU-PAFLU were not contractually bound by the no-strike clause in the
CBC, for the simple reason that they were not parties thereto, they could not be liable for breach
of contract to plaintiff.