FILIPINAS PORT SERVICES, INC. DAMASTICOR, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND JOSEFINO SILVA, RESPONDENTS.

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.

The uncontroverted factual and legal
antecedents are as follows:

“1.  Prior to February
16, 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

B.  Davao
Maritime Stevedoring Corporation (DAMASTICOR)

C.  Davao
Southern Stevedoring Corporation

D.  Mt.
Apo
Stevedoring Corporation

E.  United Stevedoring
Corporation

F.  Mindanao Terminal
Brokerage Services, Inc.

G.  Bay United Stevedoring
Corporation

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

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approved in Customs Memorandum Order 28075 which was later superseded by the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 xxx.

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 xxx.

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 xxx.

5.  On July 8, 1987, private respondent lodged a
complaint 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 xxx.

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.

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 xxx.

7.  On January 19, 1988, the Labor Arbiter rendered a
Decision, the dispositive part of which reads as
follows:

‘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.

The complaint against DAMASTICOR is ordered Dismissed inasmuch as
said corporation no longer exists.’

8.  Petitioner appealed the
above Decision to the NLRC which was opposed by private respondent.

9.  On August 16, 1988, the NLRC promulgated its
Decision affirming the labor arbiter’s Decision. x x x“^[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]

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.

The petition is impressed with merit.

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.

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:

“x x x

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.

x x x, the
absorption of an employee into a (the) newly integrated organization does not
include the carry over of his length of service.”^[4]

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.^[6]

Petitioner cannot be held
liable 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.

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.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Pages 2 to 4, and 5 Public Respondent’s Comment.

^[2]
Commissioner Musib M. Buat,
ponente; concurred in by Commissioners Ernesto
G. Ladrido, III and Braulio
S. Dayday.

^[3]
Page 6, Comment; underscoring supplied.

^[4]
Pages 25 to 36, Rollo.

^[5]
5 SCRA 248, 251 (1962) citing Visayan
Transportation vs. Java, et al., 49 O.G. 4298.

^[6]
Majestic Employees Association vs. Court of Industrial Relations, G.R.
L-12607, February 22, 1962.