United Kimberly-Clark Employees Union Philippine Transport General Workers

Organization (UKCEU-PTGWO) v. Kimberly-Clark Philippines, Inc. (KCPI)

Facts:
This is a petition for review on certiorari on the decision of the Court of Appeals
on settling the ambiguity in one of the provisions in the CBA between the
petitioner and respondent and the guidelines on the same provision set by the
latter.
The assailed provision was entered into in the 80s by both parties stating, among
others, that the respondent shall employ the immediate member of the family of
an employee, provided qualified, upon the employees resignation, retirement,
disability or death. The respondent, however, did not set any other employment
qualification standards regarding the matter. In fact, through the years, several
UKCEU members who availed of the benefit, recommended their successors, and
despite the recommendees being merely high school graduates, the respondent
nonetheless employed them.
In 1991, one Danilo Guerrero retired and recommended his nephew to succeed
him. KCPI rejected Guerreros recommendation since his nephew was not a
member of his immediate family. The matter was then brought to a voluntary
arbitrator who ruled that the nephew should be employed in accordance with the
CBA. On appeal, the Court affirmed the VAs ruling. However, the Court also ruled
that KCPI was not obliged to unconditionally accept the recommendee since the
latter must still meet the required employment standard theretofore set by it.
Due to this, KCPI issued Guidelines on the Hiring of Replacements of
Retired/Resigned Employees in connection with the assailed provision of the CBA.
The guidelines require, among others, that the recommendees must have
completed at least a two-year technical/vocational course or third year level of
college education and where both husband and wife are employees of the
company, they shall be treated as one family; thus, only one of the spouses shall
be allowed to avail of the benefit.
In the second half of 1998, KCPI started to suspend the implementation of the
CBA partly because of the depressed economic conditions then prevailing in the
country and in compliance with the freeze hiring policy of its Asia-Pacific
headquarters. The company refused to hire 80 recommendees as regular
employees.
After failing to settle the matter through grievance machineries, the parties filed
before the NCMB a submission agreement regarding the issue of whether KCPI
violated the assailed provision of the CBA.
UKCEU contended that the qualifications in terms of education (i.e. admitting
recommendees who were at least high school graduates) had been an
established practice of KCPI since 1980 and that refusing to hire the 80
recommendees as regular employees, KCPI violated its CBA with the union
equivalent to breach of contract and unfair labor practice. The Union also averred
that either the husband or the wife had the right to avail of the benefit and to
deny them such would be clear discrimination and violation of the CBA.
KCPI, however, maintained that pursuant to its management prerogative, it had
the right to determine hiring standards under the assailed provision of the CBA
without the consent or approval of the union. With respect to spouses both
employed in the company, it was maintained that the policy regarding the
availment of their benefits had always been consistent since 1980.
On a resolution issued by the VA, it ruled in favour of UKCEU stating that since
the CBA is the law between the parties, KCPI could not just unilaterally change or
suspend the implementation of the provision in the CBA even in the light of the
prevailing business situation in the Philippines. Moreover, the VA stated that
since KCPI failed to explain why it continued to hire casual workers doing the jobs
of regular employees (as was seen by the VA in his visit), it failed to substantiate
that the economic crisis did not warrant the hiring of regular employees.
On appeal to the CA, the Court agreed with the VAs decision that the company
may not suspend the implementation of the assailed provision of the CBA.
However, it overturned the VAs ruling on other aspects and stated that KCPI may
raise the educational qualification requirement of the recommendees under the
same provision in the exercise of its management prerogative and that each of
the spouse may avail of the benefit under the provision.

Issue:
Whether or not raising the educational qualification of the recommendees is
included in the companys exercise of its management prerogative.

Held:
Yes.
The Court held that if the parties stipulate that the hirees must be presumed of
employment qualification standards but fail to state such qualification standards
in the CBA, the VA may resort to evidence extrinsic of the CBA to determine the
full agreement intended by the parties.
The Court found that KCPI acted in accord with the CBA and the Guidelines it set
relative to the assailed provision. Management prerogative must be exercised in
good faith for the advancement of the employers interest and not for the
purpose of defeating or circumventing the rights of the employees under valid
agreements such as the CBA.
Benguet Consolidated, Inc. (BENGUET) v. BCI Employees and Workers Union-
PAFLU (UNION), Philippine Association of Free Labor Unions (PAFLU), Cipriano Cid,
and Juanito Garcia

Facts:
On June 23, 1959, the Benguet-Balatoc Workers Union (BBWU), for and in behalf
of all Benguet Consolidated, Inc (BENGUET) employees in its mines and milling
establishment located at Balatoc, Antamok and Acupan, Mt. Province, entered
into a Collective Bargaining Contract (CONTRACT) with BENGUET. The CONTRACT
was stipulated to be effective for a period of 4 and 1/2 years, or from June 23,
1959 to December 23, 1963. It likewise embodied a No-Strike, No-Lockout clause.
Three years later, or on April 6, 1962, 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
(UNION) obtained more than 50% of the total number of votes, defeating BBWU.
The Court of Industrial Relations certified the UNION as the sole and exclusive
collective bargaining agent 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 contract.
Later on, the UNION filed a notice of strike against BENGUET. UNION members
who were BENGUET employees in the mining camps at Acupan, Antamok and
Balatoc, went on strike. The strike was attended by violence, some of the
workers and executives of the BENGUET were prevented from entering the
premises and some of the properties of the BENGUET were damaged as a result
of the strike. Eventually, the parties agreed to end the dispute. BENGUET and
UNION executed the AGREEMENT. PAFLU placed its conformity thereto. About a
year later or on January 29, 1964, a collective bargaining contract was finally
executed between UNION-PAFLU and BENGUET.
Meanwhile, BENGUET sued UNION, PAFLU and their Presidents to recover the
amount the former incurred for the repair of the damaged properties resulting
from the strike. BENGUET also argued that the UNION violated the CONTRACT
which has a stipulation not to strike during the effectivity thereof.
Defendants unions and their presidents defended that: (1) they were not bound
by the CONTRACT which BBWU, the defeated union, had executed with
BENGUET; (2) the strike was due, among others, 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 dismissed the complaint on the ground that the CONTRACT,
particularly the No-Strike clause, did not bind defendants. BENGUET interposed
the present appeal.

Issue:
Whether or not 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 employees.

Held:
No.
BENGUET erroneously invokes the so-called Doctrine of Substitution referred to
in General Maritime Stevedores Union v. South Sea Shipping Lines where it was
ruled that:
We also hold 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 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.
BENGUETs 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 (principal) interest in the existing bargaining agreement. The
agents (union) interest never entered the picture. 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. 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 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.
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 liabilities
imposed by the same upon BBWU. Defendants were neither signatories nor
participants in the CONTRACT.
Everything binding on a duly authorized agent, acting as such, is binding on the
principal; not vice-versa, unless there is mutual agency, or unless the agent
expressly binds himself to the party with whom he contracts. 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.
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.