200. American President Lines v.

Clave (Millena)
(Clave is the presidential executive assistant who affirmed the labor minister ruling)
FACTS
1. 1960 - ALP entered into a contract with Maritime Security Agency (MSA) for
the latter to guar and protect MSU's vessels while they were moored at the
port of Manila. Contract was for one year but may be terminated by either
party upon 30-day notice.
2. The arrangement was that MSA was to hire and assign the guards. The
guards were not know to the petitioner. Lump sum payment was being paid
to MSA who in turn paid the individual guards.
3. Upon prior notice to MSA, the contract was terminated in 1961, or upon
expiation.
4. Petitioner executed a new contract with Philippine Scouts Veterans Security
and Investigation Agency.
5. The union protested the cancellation on December 24, 1960. They sent a
telegram to APL's office in the US to the effect that the relationship had been
in existence already for 10 years and that the cause of the termination was
the ship captain's personal grudge against the owner of MSU.)
6. On Feb. 1961, MSU passed a resolution abolishing itself.
7. December1961, the union passed another resolution reviving itself. (hello.
dissolved na kayo paano pa kayo makakapasa ng bagong resolution.)
8. 1963 - Maritime Security Union (MSU) filed a complaint for unfair labor
practice against American President Lines (APL) at the Court of Industrial
Relations.
9. Basis of complaint: failure of APL to negotiate an agreement with them and
had discriminated against them when they were dismissed in 1961 for no
other reason than their membership in the union.
10.Before the case could be resolved, the Labor Code was enacted so case was
transferred to NLRC.
11.The arbiter found for MSU. NLRC affirmed. Minister of Labor affirmed the
NLRC. Office of the President affirmed the Minister of Labor.
ISSUE:
1. WON there was an EE-ER relationship between APL and the individual
watchmen of MSA who are alleged to be members of the union.
2. WON petitioner refused to negotiate a CBA with the individual watchmen and
discriminated against them by terminating their contract because of their
union activities.
HELD:
1. NO. It is the agency that recruits, hires, and assigns the work of its
watchmen. The watchmen cannot perform any security service for
petitioner's vessels unless the agency first accepts him as its watchman. With
respect to the wages, the amount to be paid to the security guard is beyond
the power of APL to determine since lump sum amount is being given to MSA

who in turn determines how much is to be paid to the watchmen. Neither was
there power to dismiss the watchmen. APL can only request from MSA to
change a particular guard and it is proof that the power lies in MSA.
MSA cannot be an agent of APL because to so hold would be absurd
considering that MSA represents the watchmen in its contract with APL. An
agent can not represent two conflicting interests that are diametrically
opposed. Oh diba.
Since there was no EE-ER relationship, it follows that here is no ULP. But the
Court discussed the second issue as such:
2. NO. Apart from their oral declarations, there is no written proof that that there
was requests made to APL to negotiate a CBA. Under Ra 875, their desire to
negotiate an agreement should be expressed through a written notice.
There was nothing unfair in the termination of the contract. The hard fact is
that the contract had a lifetime of one year.

237. Sundowner Development Corporation v. Drilon, National Union of

Workers in Hotel, Restaurant, and Allied Industries (NUWHRAIN), Hotel
Mabuhay Chapter
Facts:
1. Hotel Mabuhay Inc., leased the premises belonging to Santiago Syjuco, Inc.
Due to non-payment of rentals, Syjuco filed a complaint against Mabuhay in
the MTC. Mabuhay offered to amicably settle the case surrendering the
premises to Syjuco and to sell its assets and personal property to any
interested party.
2. Syjuco offered the said premises to Sundowner. The negotiation resulted in a
contract to commence in 1987 until 1992.
3. Mabuhay offered to sell its assets and personal properties to petitioner to
which petitioner agreed. A deed of assignment was executed by Mabuhay in
favor of Sundowner.
4. On May 1987, NUWHRAIN picketed the leased premises, barricaded the
entrance to the leased premises and denied petitioners officers, employees
and guests free access to and egress from said premises. Thus, Sundowner
complained to Syjuco.
5. A complaint for damages and preliminary injunction and/or TRO was filed by
Sundowner. The judge issued a TRO but NUHWRAIN maintained their strike.
6. On May 14, 1987, Drilon issued an order assuming jurisdiction over the labor
dispute pursuant to Article 263g of the labor code and required to employees
to return to work and for Mabuhay to accept the employees pending final
determination of the issue on absorption of the former employees of
Mabuhay.
7. Mabuhay, in its answer alleged that it sold all its assets and personal
properties to Sundowner and there was no sale or transfer of its shares and
that Mabuhay completely ceased operation effective April 28, 1987.

8. June 26, 1987 Sundowner signed a tri-partite agreement with Mabuhan and
NUHWRAIN whereby Mabuhay paid to NUHWRAIN the sum of P638,000.00 in
addition to the first payment of P386,447 for which reason NUWHRAIN agreed
to lift the picket.
9. NUWHRAIN alleges that connivance between Mabuhay and petitioner in
selling the assets and closing the hotel to escape its obligations to the
employees of Mabuhay.
10.Drilon issued an order requiring Sundowner to absorb the members of the
union and to pay backwages.
ISSUE:
WON the purchaser of the assets of an employer corporation can be considered a
successor-employer of the latters employees.
HELD:
NO.
General rule: Labor contracts and collective bargaining agreements are not
enforceable against third party 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 the Constitution.
Exceptions:
1. Unless expressly assumed.
2. If the transfer of enterprise is colored or clothed with bad faith.
In this case, Sundowner did not assume the obligation to absorb the employees.
Neither was ther bad faith. Mabuhay surrendered the leased premises to Syjuco who
found petitioner and persuaded petitioner to lease the said premises. It was only
when Mabuhay offered to sell its assets and personal properties in the premises to
petitioner that they came to deal with each other. Petitioner agreed to purchase said
assets to enable Mabuhay to pay its obligations to Syjuco and its striking
employees.