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FIRST DIVISION

G.R. No. 86026 August 31, 1989

FILIPINAS PORT SERVICES, INC. DAMASTICOR, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND JOSEFINO SILVA, Respondents.

GANCAYCO, J.:

The lone issue in this case is whether or not the successor-in-interest of an employer is liable for the differential retirement pay of an employee earned by him when he was still under the employment of the predecessor-in-interest.chanroblesvirtualawlibrary chanrobles virtual law library

The uncontroverted factual and legal antecedents are as follows:

1. Prior to February l6, 1977,stevedoring and arrastre services for coastwise or domestic cargoes loaded at the Sta. Ana Pier and Sasa Wharf of the Port of Davao were handled by several cargo handling operators, among whom were the following:

A. Allied Stevedoring Corporation chanrobles virtual law library

B. Davao Maritime Stevedoring Corporation (DAMASTICOR) chanrobles virtual law library

C. Davao Southern Stevedoring Corporation chanrobles virtual law library

D. Mt. Apo Stevedoring Corporation chanrobles virtual law library

E. United Stevedoring Corporation chanrobles virtual law library

F. Mindanao Terminal Brokerage Services, Inc.chanroblesvirtualawlibrary chanrobles virtual law library

G. Bay United Stevedoring Corporation

During the existence of DAMASTICOR, private respondent Josefino Silva was employed by said company . . . .

2. Subsequently, the government adopted a policy that there should be only one cargo handling operator in every port. This policy was approved in Customs Memorandum Order 28075 which was later superseded by the General Port Regulations of the Philippine Ports Authority (PPA) which fully implemented the policy. Accordingly all the existing arrastre and stevedoring firms which were then operating individually in the Port of Davao were integrated into a single and unified service which resulted in the formation of a new corporation known as the Davao Dockhandlers, Inc. The name was later changed to Filipinas Port Services, Inc. (FILPORT), petitioner herein . . . .chanroblesvirtualawlibrary chanrobles virtual law library

3. Petitioner started its operation on February 16, 1977. By mandate, however, of the PPA's Administrative Order No. 13-77, petitioner drew its necessary labor force, together with its personnel complement, from the merging operators. Of the employees absorbed, private respondent was among them. He continued to work until his retirement on June 29, 1987. . . .chanroblesvirtualawlibrary chanrobles virtual law library

4. Upon his retirement, private respondent was paid his retirement pay corresponding only to the period that he actually worked with petitioner. His length of service with DAMASTICOR was not included in the computation of his retirement pay . . .chanroblesvirtualawlibrary chanrobles virtual law library

5. On July 8, 1987, private respondent lodged a complain against petitioner and/or DAMASTICOR with the Department of Labor and Employment (DOLE) demanding payment of separation pay covering the period of his employ with DAMASTICOR. After the submission by the parties of their respective position papers, the case was submitted for decision . . . .chanroblesvirtualawlibrary chanrobles virtual law library

6. In its Position Paper, petitioner denied owing any monetary liability to private respondent, claiming that it could not be held liable for the payment of private respondent's separation pay corresponding to the period of the latter's employment with DAMASTICOR since it is not the successor-employer of the latter.chanroblesvirtualawlibrary chanrobles virtual law library

On the other hand, private respondent's Position Paper will show that while his complaint prayed for the payment of his separation pay, he was actually demanding payment of his differential retirement pay . . . .chanroblesvirtualawlibrary chanrobles virtual law library

7. On January l9, 1988, the Labor Arbiter rendered a Decision, the dispositive part of which reads as follows:chanrobles virtual law library

WHEREFORE, premises considered, judgment is hereby rendered ordering respondent FILPORT as the survivor- employer to pay retirement pay to complainant computed from 1960 until his retirement on June 29, 1987 at the rate of one-half month pay for every year of service a fraction of at least six months being considered as one year; less payment made.chanroblesvirtualawlibrary chanrobles virtual law library

The complaint against DAMASTICOR is ordered Dismissed inasmuch as said corporation no longer exists.chanroblesvirtualawlibrarychanrobles virtual law library

8. Petitioner appealed the above Decision to the NLRC which was opposed by private respondent.chanroblesvirtualawlibrary chanrobles virtual law library

9. On August l6,1988, the NLRC promulgated its Decision affirming the labor arbiter's Decision. . . . ¹

Hence, the herein petition questioning said decision of the Fourth Division of respondent NLRC, in NLRC Case No. RABII-07-00354-87, dismissing the appeal and affirming the decision of the labor arbiter with costs against appellant. ² chanrobles virtual law library

In said decision, public respondent NLRC held in effect that a succession of employment rights and obligations took place between petitioner and DAMASTICOR. Petitioner now claims the NLRC committed a grave abuse of discretion.chanroblesvirtualawlibrary chanrobles virtual law library

The petition is impressed with merit.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner's main contention is that the period of private respondent's employment with DAMASTICOR should not be considered in the computation of his retirement pay because petitioner is not the successor-employer of private respondent after DAMASTICOR.chanroblesvirtualawlibrary chanrobles virtual law library

A close scrutiny of the record of this case inevitably and clearly shows that petitioner came into existence as a juridical person only as a direct result of the merger among different cargo handling operators. With that merger, Section 118, Article X of the General Guidelines on the Integration of Arrastre/ Stevedoring Services issued by the PPA mandated petitioner to draw its personnel complement from the merging operators to constitute its labor force, thus:

Sec. 118. Absorption of labor - Subject to the provisions of the immediate preceding section, and consistent with the actual operational requirements of the new management, all labor force together with its necessary personnel complement, of the merging operators shall be absorbed by the merged or integrated organization to constitute its labor force. ³

Petitioner claims that it cannot be considered a successor-in-interest of the merged operators because of the memorandum of the PPA Assistant General Manager dated November 21, 1978, which was supposed to be a clarification of Section 116 of PPA Administrative Order No. 13-77, to wit:

xxx xxx xxxchanrobles virtual law library

The new organization's liability shall be the payment of salaries, benefits and all other money due the employee as a result of his employment, starting on the date of his service in the newly integrated organization.chanroblesvirtualawlibrary chanrobles virtual law library

. . . , the absorption of an employee into a (the) newly integrated organization does not include the carry over of his length of service. ⁴chanrobles virtual law library

In Fernando vs. Angat Labor Union, ⁵ this Court held that, unless expressly assumed, labor contracts are not enforceable against a transferee of an enterprise, labor contracts being in personam. On the other hand, a transferor in bad faith may be held responsible to employees discharged in violation of the Industrial Peace Act. ⁶chanrobles virtual law library

Petitioner cannot be held hable for the payment of the retirement pay of private respondent while in the employ of DAMASTICOR. It is the latter who is responsible for the same as the labor contract of private respondent with DAMASTICOR is in personam and cannot be passed on to the petitioner. The adverted memorandum of the PPA Assistant General Manager to this effect is well taken.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, the petition is GRANTED and the decision of public respondent National Labor Relations Commission of August 16, 1988 is hereby REVERSED AND SET ASIDE and another judgment is hereby rendered DISMISSING the complaint against petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Endnotes:

1 Pages 2 to 4, and 5 Public Respondent's Comment.chanrobles virtual law library

2 Commissioner Musib M. Buat, ponente; concurred in by Commissioner Ernesto G. Ladrido, III and Braulio S. Dayday .chanrobles virtual law library

3 Page 6, Comment; italics supplied.chanrobles virtual law library

4 Pages 25 to 36, Rollo.chanrobles virtual law library

5 SCRA 248, 251 (1962) citing Visayan Transportation vs. Java, et al., 49 O.G. 4298.chanrobles virtual law library

6 Majestic Employees Association vs. Court of Industrial Relations, G.R. L-12607, February 22, 1962.chanrobles virtual law library