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In 1972, the US Naval Base authoritiesin Subic conducted a public

bidding for a 5-year contract for the right to operate and/or manage
the transportation services inside the naval base. This bidding was
won by Santiago Guerrero, owner-operator of Guerrero’s Transport
Services, Inc. (Guerrero), over Concepcion Blayblock, the then
incumbent concessionaire doing business under the name of
Blayblock Transport Services Blayblock. Blayblock’s
395 employees are members of the union BTEA-KILUSAN (the Union).

When Guererro commenced its operations, it refused to employ the

members of the Union. Thus, the Union filed a complaint w/ the NLRC
against Guerrero to compel it to employ its members, pursuant to Art.
1, Sec. 2 of the RP-US Base Agreement. The case was dismissed by
the NLRC upon Guerrero’s MTD on jurisdictional grounds, there being
no employer-employee relationship between theparties. Upon appeal,
the Sec. of Labor remanded the case to the NLRC. The NLRC issued a
Resolution ordering Guererro to “absorb all complainants who filed
their applications on or before the deadline” set by Guerrero, except
those who may have derogatory records w/ the US
Naval Authorities in Subic. The Sec. of Labor affirmed.

Guerrero claims that it substantially complied w/ the decision of the

Sec. of Labor affirming the NLRC Resolution, & that any non-
compliance was attributable to the individual complainants who failed
to submit themselves for processing & examination. The
LaborArbiter ordered the reinstatement of 129 individuals. The Union
filed a Motion for Issuance of Writ of Execution. The order wasn’t
appealed so it was declared final & executory

Subsequently, the parties arrived at a Compromise Agreement

wherein they agreed to submit to the Sec. of Labor the determination
of members of the Union who shall be reinstated by Guerrero, w/c
determination shall be final. The agreement is deemed to have
superseded the Resolution of the NLRC. The Sec. of Labor ordered
theabsorption of 175 members of the Union subject to 2 conditions.

Whether or not the said members of the Union were entitled to be
reinstated by Guerrero.


YES. Pursuant to Sec. 6 of Art. I of the RP-US Labor Agreement, the

US Armed Forces undertook, consistent w/ military requirements, "to
provide security for employment, and, in the event certain services
are contracted out, the US Armed Forces shall require the contractor
or concessioner to give priority consideration to
affected employees for employment.

A treaty has 2 aspects — as an international agreement between

states, and as municipal law for the people of each state to observe.
As part of the municipal law, the aforesaid provision of the treaty
enters into and forms part of the contract between Guerrero and the
US Naval Base authorities. In view of said stipulation, the new
contractor (Guerrero) is, therefore, bound to give "priority" to the
employment of the qualified employees of the previous contractor
(Blaylock). It is obviously in recognition of such obligation that
Guerrero entered into the aforementioned Compromise Agreement.

Under the Compromise Agreement, theparties agreed to submit to the

Sec. of Labor the determination as to who of the members of the Union
shall beabsorbed or employed by Guerrero, and that such
determination shall be considered as final. The Sec. of Labor issued
an Order directing the NLRC, through Labor Arbiter Francisco de los
Reyes, to implement the absorption of the 175 members into
Guerrero's Transport Services, subject to the following conditions:

a) that they were bona fide employees of the Blaylock Transport

Service at the time its concession expired; and
b) that they should pass final screening and approval by the
appropriate authorities of the U.S. Naval Base concerned.

For this purpose, Guerrero is ordered to submit to and secure from the
appropriate authorities of the U.S. naval Base at Subic, Zambales the
requisite screening and approval, the names of the members of the

Considering that the Compromise Agreement of theparties is more

than a mere contract and has the force and effect of any other
judgment, it is, therefore, conclusive upon the parties and their
privies. For it is settled that a compromise has, upon the parties, the
effect and authority of res judicata and is enforceable by execution
upon approval by the court.