Posted: May 1, 2015 in case digests, labor relations
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May 31, 1971 , FERNANDO, J.



  • Union called a strike due to the Company’s insistence on dissolving its security guard section stationed at its Pandacan Installation despite its continuance being included in the existing CBA. The strike was certified by the President to the CIR.

In President’s certification, it is said that the strike ‘was a result of the transfer by the Company of the eighteen (18) security guards to its other department and the consequent hiring of a private security agency to undertake the work of said security guards.’

Union: 18 security guards are part of the bargaining unit and covered by the existing CBA and as such, their transfers and eventual dismissals are illegal, being done in violation of the existing contract, prayed that said security guards be reinstated with full back wages from the time of their dismissal up to the time of their actual reinstatement.

Company: Company maintained that in contracting out the security service and redeploying the 18 security guards affected, it was merely performing its legitimate prerogative to adopt the most efficient and economical method of operation, said guards were transferred to other sections with increase, except for four (4) guards, in rates of pay and with transfer bonus, action was motivated by business consideration in line with past established practice and made after notice to and discussion with the Union, the 18 guards concerned were dismiss for wilfully refusing to obey the transfer order; and that the strike staged by the Union on May 25, 1967 is illegal. Company prayed, among others, for the dismissal of the Union’s petition and the said Union’s strike be declared illegal followed by the termination of the employee status of those responsible and who participated in said illegal strike

However, Company was bent on the dissolution,which was communicated to the Unions in a panel to panel meeting in1967. Counter-offer by the Union to reduce working days from 6 to 5 was rejected by the Company because it was highly unusual and impracticable.
When Union consulted with the members, the majority made clear that if the Company continued with their plan, there would be a strike.

Company released a notice of reassignment. Union decided to hold a strike immediately if the circular was implemented.

The next day, the Union went on strike when the guards from the new security agency were trying to pass the main gate.

Conciliation efforts of the Dept. of Labor were unsuccessful.

When President certified the strike, CIR released a return to work order.

CIR declared the strike illegal there being no compliance with the statutory requisites before an economic strike could be staged.


  • WON CIR erred in declaring the strike to be illegal (YES)


  • SC: Even if the regime of unionization and collective bargaining leaves room for the free exercise of management rights, we are unable to close our eyes to the violation of a contract still in force implicit in such dissolution thus giving rise to an unfair labor practice.
    • the harsh and unwarranted sanction imposed, the dismissal of the security guards and the officers of the Union, cannot stand.
    • strike cannot be declared illegal, there being a violation of the collective bargaining agreement by Shell Company. Even if it were otherwise, however, this Court cannot lend sanction of its approval to the outright dismissal of all union officers, a move that certainly would have the effect of considerably weakening a labor organization, and thus in effect frustrate the policy of the Industrial Peace Act to encourage unionization.
    • the serious acts of violence occurring in the course of the strike could be made the basis for holding responsible a leader or a member of the Union guilty of their commission, what was decided by respondent Court should not be disturbed
  • the stand of Shell Company as to the scope of management prerogative is not devoid of plausibility if it were not bound by what was stipulated. The growth of industrial democracy fostered by the institution of collective bargaining with the workers entitled to be represented by a union of their choice, has no doubt contracted the sphere of what appertains solely to the employer. It would be going too far to assert, however, that a decision on each and every aspect of the productive process must be reached jointly by an agreement between labor and management.
  • freedom to manage the business remains with management. It still has plenty of elbow room for making its wishes prevail. In much the same way that labor unions may be expected to resist to the utmost what they consider to be an unwelcome intrusion into their exclusive domain, they cannot justly object to management equally being jealous of its
  • Company cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. HOWEVER, while management has the final say on such matter, the labor union is not to be completely left out.
  • In this particular case though, what was stipulated in an existing collective bargaining contract certainly precluded Shell Company from carrying out what otherwise would have been within its prerogative if to do so would be violative thereof.
  • crucial question: whether the then existing collective bargaining contract running for three years from August 1, 1966 to December 31, 1969 constituted a bar to such a decision reached by management. (YES)
    • there was specific coverage concerning the security guard section in the collective bargaining contract. It is found not only in the body thereof but in the two appendices concerning the wage schedules as well as the premium pay and the night compensation to which the personnel in such section were entitled. It was thus an assurance of security of tenure, at least, during the lifetime of the agreement.
    • Not enough that the guards would not be unemployed as they would be transferred to another position with an increase in pay and with a transfer bonus. For what is involved is the integrity of the agreement reached, the terms of which should be binding of both parties. One of them may be released, but only with the consent of the other. The right to object belongs to the latter, and if exercised, must be respected. Such a state of affairs should continue during the existence of the contract.
    • Furthermore, the Company had already conducted studies and decided, as early as 1964 to dissolve the section but they still entered into the CBA with the Union. They did not need to agree to all the stipulations or reserved the right to dissolve and reassign the guards. There is no justification for the Company’s insistence on pushing through with the dissolution without violating the CBA.
    • The Company, in failing to manifest fealty to the stipulations of the CBA is guilty of unfair labor practice.
      • Republic Savings Bank v. Court of Industrial Relations: “It being expressly provided in the industrial Peace Act that [an] unfair labor practice is committed by a labor union or its agent by its refusal ‘to bargain collectively with the employer’ and this Court having decided in the Republic Savings Bank case that collective bargaining does not end with the execution of an agreement, being a continuous process, the duty to bargain necessarily imposing on the parties the obligation to live up to the terms of such a collective bargaining agreement if entered into, it is undeniable that non-compliance therewith constitutes an unfair labor practice.”


  • CIR reversed
  • Dismissal of 18 security guards set aside and they are declared reinstated. Except Ernesto Crisostomo who was found to have committed serious acts of violence
    • Continuance of their status is dependent on the existence of the security section after the expiration of the CBA on 1969.
  • Loss employment status of the Union officers is also set aside except as to Gregorio Bacsa and Conrado Pena, both of whom did commit serious acts of violence
  • termination of the employment status of Nestor Samson, Jose Rey, Romeo Rosales, Antonio Labrador and Sesinando Romero, who committed acts of violence not serious in character, is also set aside, but while allowed to be reinstated, they are not entitled to back pay.
  • rest of the employees laid off should be reinstated with back pay to be counted from the date they were separated by virtue of the appealed decision, from which should be deducted whatever earnings may have been received by such employees during such period
  • remanded to respondent Court for the implementation of this decision.



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