SUNDOWNER DEVELOPMENT V. DRILON (LABOR)

FACTS: Hotel Mabuhay leased the premises belonging to Syjuco. However, due to non-payment of rentals, a case for ejectment was filed and Hotel Mabuhay offered to amicably settle by surrendering the premises and to sell its assets and property to any interested party, to which Syjuco acceded.

HELD: The absorption of the employees of Hotel Mabuhay may not be imposed on Sundowner, who has no liability whatsoever to the employees of Hotel Mabuhay and its responsibility if at all, is only to consider them for re-employment in the operation of the business in the same premises. There can be no implied acceptance of the employees of Hotel Mabuhay by petitioner as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them.

The rule is that unless expressly assumed. labor contracts such as employment contracts and CBAs are not enforceable against a 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 an 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 our Constitution and the same can only be restricted by law through the exercise of police power.

As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. However, although the purchaser is not legally bound to absorb in its employ the employees of the seller, the parties are liable to the employees if the transaction between is clothed with bad faith.