SHELL OIL WORKERS' UNION, petitioner, vs.

 SHELL COURT REPORTS

COMPANY OF THE PHILIPPINES, LTD., and THE COURT
ANNOTATED
OF INDUSTRIAL RELATIONS, respondents.
Shell Oil Workers' Union vs.
Indrustrial Peace Act; Scope of management
prerogative; Effect of collective bargaining agreement.—It is to be
Shell Company of the Philippines,
admitted that the stand of ShelI Company as to the scope of Ltd.
management prerogative is not devoid of plausibility if it were not in the very concept of a legal order is the maintenance of
bound by what was stipulated. The growth of industrial democracy peacef ul ways. A strike otherwise valid, if violent in character, may
fostered by the institution of collective bargaining with the workers be placed beyond the pale. Care is to be taken, however, especially
entitled to be represented by a union of their choice, has no doubt where an unf air labor practice is involved, to avoid stamping it with
contracted the sphere of what appertains solely to the employer. What illegality just because it is tainted by such acts. To avoid rendering
was stipulated in an existing collective bargaining contract certainly illusory the recognition of the right to strike, responsibility in such a
precluded Shell Company from carrying out what otherwise would case should be individual and not collective. A different conclusion
have been within its prerogative if to do so would be violative would be called for, of course, if the existence of force while the
thereof. strike lasts is pervasive and widespread, consistently and deliberately
Same; Collective bargaining agreement must be respected.— resorted to as a matter of policy. It could be reasonably concluded
The crucial question is whether the then existing collective then that even if justified as to ends, it becomes illegal because of the
bargaining contract running for three years from August 1, 1966 to means employed.
December 31, 1069 constituted a bar to such a decision reached by Same; State protection to labor.—The plain and unqualified
management? The answer must be in the affirmative. As correct constitutional command of protection to labor should not be lost sight
stressed in the brief for the petitioner, there was specific coverage of. The State is thus under obligation to lend its aid and its succor to
concerning the security guard section in the collective bargaining the efforts of its labor elements to improve their economic condition.
contract, It is found not only in the body thereof but in the two It is now generally accepted that unionization is a means to such an
appendices concerning the age schedules as well as the premium pay end. It should be encouraged. Thereby, labor's strength, what there is
and the night compensation to which the personnel in such section of it, becomes solidified. It can bargain as a collectivity. Management
were entitled. It was thus an assurance of security of tenure, at least, then will not always have the upper hand nor be in a position to
during the lifetime of the agreement. For what is involved is the ignore its just demands. That, at any rate, is the policy behind the
integrity of the agreement reached, terms of which should be Industrial Peace Act. The judiciary and administrative agencies in
277 construing it must ever be conscious of Its implications. Only thus
may there be f idelity to what is ordained by the f undamental law.
VOL. 39, MAY 277 For if it were otherwise, Instead of protection, there would be neglect
31, 1971 or disregard. That is to negate the fundamental principle that the
Constitution is the supreme law.
Shell Oil Workers' Union vs.
Shell Company of the Philippines, APPEAL from a decision of the Court of Industrial Relations.
The facts are stated in the opinion of the Court.
Ltd.      J. C. Espinas, B. C. Pineda, J. J. de la Rosa &
binding on both parties. One of them may be released, but only
Associates for petitioner.
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      Siguion Reyna, Montecillo, Belo & Ongsiako for
continue during the existence of the contract. Only thus may there be respondent Company.
compliance with and fulfillment of the covenants in a valid subsisting
agreement. FERNANDO, J.:
Same; Failure to comply constitutes an unfair labor practice.
—The Shell Company, in failing to manifest fealty to what was The insistence on the part of respondent Shell Company of the
stipulated in an existing collective bargaining contract, was thus Philippines to dissolve its security guard section,
guilty of an unfair labor practice. Such a doctrine first found 279
expression in Republic Savings Bank vs. Court of Industrial
Relations, L-20303, Sept. 27, 1967, 21 SCRA 226. VOL. 39, MAY 31, 1971 279
Same; Right of labor to strike.—The unfair labor practice Shell Oil Workers' Union vs. Shell
strike called by the Union did have the impress of validity. Rightly,
labor is justified in making use of such a weapon in its arsenal to Company of the Philippines, Ltd.
counteract what is clearly outlawed by the Industrial Peace Act. That stationed at its Pandacan Installation, notwithstanding its being
would be one way to assure that the objectives of unionization and embraced in, and its continuance as such thus assured by an
collective bargaining would not be thwarted. It would, of course, file existing collective bargaining contract, resulted in a strike
an unfair labor practice case before the Court of Industrial Relations. called by petitioner Shell Oil Workers' Union, hereinafter to be
It is not precluded, however, from relying on its own resources to designated as the Union, certified a month later on June 27,
frustrate such an effort on the part of an employer. 1967 by the President to respondent Court of Industrial
Same; When to strike.—Necessarily so, the choice as to when
Relations. Against its decision declaring the strike illegal
such an objective may be attained by striking likewise belongs to it.
There is the rejection of the concept that an outside authority, even if primarily on the ground that such dissolution was a valid
governmental, should make the decisions for it as to ends which are exercise of a management prerogative, this appeal is taken.
desirable and how they may be achieved. The assumption is that With due recognition that the system of industrial democracy
labor can be trusted to determine for itself when the right to strike fostered in the regime of unionization and collective
may be availed of in order to attain a successful fruition in their bargaining leaves room for the free exercise of management
disputes with management. It is true that there is a requirement in the rights, but unable to close our eyes to the violation of a
Act that before the employees may do so, they must file with the contract still in force implicit in such dissolution thus giving
Conciliation Service of the Department of Labor a notice of their rise to an unf air labor practice, we cannot sustain respondent
intention to strike. Such a requisite however, as has been repeatedly
Court of Industrial Relations. Consequently, the harsh and
declared by this Court, does not have to be complied with in case of
unf air labor practice strike, which certainly is entitled to greater unwarranted sanction imposed, the dismissal of the security
judicial protection if the Industrial Peace Act is to be rendered guards and the officers of the Union, cannot stand. Insofar,
meaningful. how-ever, as individual liability is deemed incurred for serious
Same; How strike to be conducted.—What is clearly within the acts of violence, whether committed by a leader or member of
law is the concerted activity of cessation of work in order that a the Union, we leave things as adjudged.
union's economic demands may be granted or that an employer cease The deep-rooted differences between the parties that led to
and desist from an unfair labor practice. That the law recognizes as a the subsequent strike were made clear in the presidential
right. There is though a disapproval of the utilization of force to attain
certification. As set forth in the opening paragraph of the
such as objective. For implicit
278 decision now on appeal: "Before this Court for resolution is
the labor dispute between the petitioner Shell Oil Workers'
278 SUPREME Union, Union for brevity, and the respondent Shell Company
of the Philippines Limited, Company for short, which was consultation with the Union. There was even an offer of
certified to this Court on June 27, 1967 by the Office of the cooperation as long as a scheme for retirement of the security
President of the Republic of the Philippines pursuant nt to the guards affected or their redeployment would be followed. 5

provision of Section 10 of Republic Act No. 875. Said dispute The tentative character of such proposed dissolution was
x x x 'was a result of the transfer by the Company of the made evident by the fact however that on August 26, 1966, a
eighteen (18) security guards to its other department and the collective bargaining contract was executed between the
consequent hiring of a private security agency to undertake the Union and the Shell Company effective from the first of the
work of said security guards.' " 1
month of that year to December 31, 1969. It contained the
_______________ usual grievance procedure and no strike clauses.  More 6

relevant to the case before this Court, however, was the

1
 Decision, Annex F, Brief for the Petitioner, pp. 84-85. inclusion of the category of the security guards in such
280 collective bargaining contract. This was stressed in the brief
280 SUPREME COURT for the petitioner where specific mention is made of the
agreement covering rank and file personnel regularly
REPORTS ANNOTATED employed by the Company, included in
Shell Oil Workers' Union vs. Shell _______________
Company of the Philippines, Ltd. 3
 Ibid. pp. 85-86
The respective contentions of the parties were then taken up. 4
 Brief for the Respondent, pp. 4 and 5.
Petitioner "filed the petition on July 7, 1967 alleging, among 5
 Decision, Annex V. Brief for the Petitioner, p. 88.
others, that the eighteen (18) security guards affected are part 6
 Ibid.
of the bargaining unit and covered by the existing collective 282
bargaining contract, and as such, their transfers and eventual
282 SUPREME COURT
dismissals are illegal being done in violation of the existing
contract. It, therefore, prayed that said security guards be REPORTS ANNOTATED
reinstated with full back wages from the time of their Shell Oil Workers' Union vs. Shell
dismissal up to the time of their actual reinstatement."  Then 2

Company of the Philippines, Ltd.

came a summary of the stand of Shell Company: "For hours which is the work area covered by the Pandacan
hereafter, respondent Company filed its Answer [to] the Installation  There was likewise specific reference to such
7

material allegations in the Union's petition and adverted that positions in the wage schedule for hourly-rated categories
the issues in this case are: (1) whether or not the Company appearing- in an appendix thereof.  Mention was expressly
8

commits unfair labor practice in contracting out its security made in another appendix of the regular remuneration as well
service to an independent professional security agency and as premium pay and night compensation.  Nonetheless, Shell
9

reassigning the 18 guards to other sections of the Company; Company was bent on doing away with the security guard
(2) whether or not the dismissal of the 18 security guards are section, to be replaced by an outside security agency. That was
justified; and (3) whether or not the strike called by the Union communicated to the Union in a panel to panel meeting on
on May 25, 1967 is legal. As special and affirmative defenses, May 3, 1967. A counter-offer on the part of the Union to
the Company maintained that in contracting out the security reduce the working days per week of the guards from six to
service and redeploying the 18 security guards affected, it was five was rejected by Shell Company on the ground of its being
merely performing its legitimate prerogative to adopt the most unusual and impracticable, Two days later, there was a
efficient and economical method of operation; that said guards meeting of the Union where a majority of the members made
were transferred to other sections with increase, except for clear that should there be such a replacement of the company
four (4) guards, in rates of pay and with transfer bonus; that guards by a private security agency, there would be a strike. It
said action was motivated by business consideration in line was noted in the decision that when the strike vote was taken,
with past -established practice and made after notice to and out of 243 members, 226 were f or the approval of a motion to
discussion with the Union; that the 18 guards concerned were that effect.  On the afternoon of May 24, 1967, a notice of
10

dismissed for wilfully refusing to obey the transfer order; and reassignment effective at 8:00 o'clock the next morning was
that the strike staged by the Union on May 25, 1967 is illegal. handed to the guards affected. At 10:00 o'clock that evening,
Primarily, Company prayed, among others, for the dismissal there was a meeting by the Union attended by ten officers and
of the Union's petition and the said Union's strike be declared a majority of the members wherein it was agreed viva
illegal followed by the termination of the employee status voce that if there would be an implementation of the circular
_______________
dissolving- the security section to be replaced by guards from
2
 Ibid, p. 85. an outside agency, the Union would go on strike
immediately.  The strike was declared at half-past 7:00 o'clock
11

281 in the morning of May 25, 1967 when security guards from an
VOL. 39, MAY 31, 1971 281 outside agency were trying to pass the main gate of the Shell
Shell Oil Workers' Union vs. Shell Company to start their work, With the picket Iine established,
they were unable to enter. Efforts were made by the
Company of the Philippines, Ltd. Conciliation
of those responsible and who participated in said illegal _______________
strike." 3

The move for the dissolution of the security section by 7

 Brief for the Petitioner, pp. 20-21.
reassigning the guards to other positions and contracting out 8
 Ibid., p. 21.
 Ibid.
such service to an outside security agency had its origins as far
9

10
 Decision, Annex F, Brief for the Petitioner, pp. 95-96.
back as 1964. A study made by the Shell Company for the 11
 Ibid., p. 96.
purpose of improving the productivity, organization and
efficiency of its Pandacan Installation recommended its 283
dissolution. If an outside agency to perform such service were VOL. 39, MAY 31, 1971 283
to be hired, there would be a savings of P96,000.00 annually Shell Oil Workers' Union vs. Shell
in addition to further economy consequent on the elimination
Company of the Philippines, Ltd.
to overtime an administration expenses. Its implementation
was scheduled for 1965.  There was then, in July 1966, a joint
4
Service of the Department of Labor to settle the matter, but
consultation by the Union and management on the matter. At they were unsuccessful.  It was not until June 27, 1967,
12

that stage, it would appear that there was no serious opposition however, that the Presidential certification came.  There was a 13

to such a move provided it be done gradually and in close return to work order on July 6, 1967 by respondent Court, by
virtue of which pending the resolution of the case, the Shell VOL. 89, MAY 31, 1971 285
Company was not to lockout the employees involved and the
employees in turn were not to strike.
Shell Oil Workers' Union vs. Shell
The decision of respondent Court was rendered on August Company of the Philippines, Ltd.
5, 1967. It declared that no unfair labor practice was what units are essential for its operation. To it belongs the
committed by Shell Company in dissolving its security guards ultimate determination of whether services should be
from an outside agency, as such a step was well within performed by its personnel or contracted to outside agencies. It
management prerogative. Hence for it, the strike was illegal, is the opinion of the Court, that while management has the
there being no compliance with the statutory requisites before final say on such matter, the labor union is not to be
an economic strike could be staged. Respondent Court sought completely lef t out. What was done by Shell Company in
to reinforce such a conclusion by a finding that its purpose informing the Union as to the step it was intending to take on
was not justifiable and that it was moreover carried out with the proposed dissolution of the security guard section to be
violence. There was thus a failure on its part to accord due replaced by an outside agency is praise-worthy. There should
weight to the terms of an existing collective bargaining be mutual consultation eventually deference is to be paid to
agreement. Accordingly, as was made clear in the opening what management decides. Thereby, in the words of Chief
paragraph of this opinion, we view matters differently. The Justice Warren, there is likely to be achieved "peaceful
strike cannot be declared illegal, there being a violation of the accommodation of conflicting interest."  In this particular case
14

collective bargaining agreement by Shell Company. Even if it though, what was stipulated in an existing collective
were otherwise, however, this Court cannot lend sanction of bargaining contract certainly precluded Shell Company from
its approval to the outright dismissal of all union officers, a carrying out what otherwise would have been within its
move that certainly would have the effect of considerably prerogative if to do so would be violative 'thereof.
_______________ _______________

 Ibid., pp. 96-97.

12  Fibreboard Corp. v. National Labor Relations Board, 379 US
14

 Ibid., p. 77. The decision under review speaks of the efforts exerted by
13 203 (1964). The relevant portion of Chief Justice Warren's opinion is well-
the Union leaders who were also prominent personalities in the Shell Terminal worth quoting: "The Company was concerned with the high cost of its
Employees Savings and Loans Association to avoid the contemplated strike if maintenance operation. It was induced to contract out the work by assurances
further financial concessions were to be extended to them. Since, however, it from independent contractors that economies could be derived by reducing the
is obvious from the decision itself that the strike was approved not once but work force, decreasing fringe benefits, and eliminating overtime payments.
twice by the Union membership, its cause being due to the dissolution of the These have long been regarded as matters peculiarly suitable for resolution
security guard section as noted in the Presidential certification and the within the collective bargaining framework, and industrial experience
pleadings of the parties, no legal relevance is to be attributed to such activities demonstrates that collective negotiation has been highly successful in
on the part of the Union leaders in the consideration of the crucial issues achieving peaceful accommodation of the conflicting interests. Yet, it is
posed by this litigation. contended that when an employer can effect cost savings in these respects by
contracting the -work out. there is no need to attempt to achieve similar
284 economies through negotiation with existing employees or to provide them
with an opportunity to negotiate a mutually acceptable alternative The short
284 SUPREME COURT answer is that, although it is not possible to say whether a satisfactory solution
REPORTS ANNOTATED could be reached. national labor policy is founded upon the congressional
determination that the chances are good enough to warrant subjecting such
Shell Oil Workers' Union vs. Shell issues to the process of collective negotiation" Al pp 212-213.
Company of the Philippines, Ltd. 286
weakening a labor organization, and thus in effect frustrate the
policy of the Industrial Peace Act to encourage unionization.
286 SUPREME COURT
To the extent, however, that the serious acts of violence REPORTS ANNOTATED
occurring in the course of the strike could be made the basis Shell Oil Workers' Union vs. Shell
for holding responsible a leader or a member of the Union Company of the Philippines, Ltd.
guilty of their commission, what was decided by respondent
2. The crucial question thus is whether the then existing collec
Court should not be disturbed.
tive ve bargaining contract running f for three years f rom
1. It is the contention of Shell Company, sustained by
August 1, 1966 to December 31, 1969 constituted a bar to
respondent Court, that the dissolution of the security guard
such a decision reached by management? The answer must be
section to be replaced by an outside agency is a management
in the affirmative. As correctly stressed in the brief for the
prerogative. The Union argues otherwise, relying on the
petitioner, there was specific coverage concerning the security
.assurance of the continued existence of a security guard
guard section in the collective bargaining contract. lt is found
section at least, during the lifetime of the collective bargaining
not only in the body thereof but in the two appendices
agreement. The second, third and fourth assignment of errors,
concerning the wage schedules as well as the premium pay
while they could have been more felicitously worded, did
and the night compensation to which the personnel in such
attack the conclusion reached by respondent Court as contrary
section were entitled.  It was thus an assurance of security of
15

to and in violation of the existing contract. It is to be admitted

tenure, at least, during the lifetime of the agreement. Nor is it a
that the stand of Shell Company as to the scope of
sufficient answer, as set forth in the decision of respondent
management prerogative is not devoid of plausibility if it were
Court, that while such a section would be abolished, the
not bound by what was stipulated. The growth of industrial
guards would not be unemployed as they would be transferred
democracy fostered by the lnstitution of collective bargaining
to another position with an increase in pay and with a trans fer
with the workers entitled to be represented by a union of their
bonus. For what is involved is the integrity of the agreement
choice, has no doubt contracted the sphere of what appertains
reached, the terms of which should be binding on both parties.
solely to the employer. It would be going too far to assert,
One of them may be released, but only with the consent of the
however, that a decision on each and every aspect of the
other. The right to object belongs to the latter, and if exercised,
productive process must be reached jointly by an agreement
must be respected. Such a state of affairs should continue
between labor and management. Essentially, the freedom to
during the existence of the contract. Only thus may there be
manage the business remains with management. It still has
compliance with and fulfillment of the covenants in a valid
plenty of elbow room for making its wishes prevail. In much
subsisting agreement.
the same way that labor unions may be expected to resist to
What renders the stand of Shell Company even more
the utmost what they consider to be an unwelcome intrusion
vulnerable is the f act that as set f orth in its brief and as found
into their exclusive domain, they cannot justly object to
by respondent Court as far back as 1964, it had already been
management equally being jealous of its prerogatives.
studying the matter of dissolving the security guard section
More specifically, it cannot be denied the faculty of
and contracting- out such service to an outside agency.
promoting efficiency and attaining economy by a study of
Apparently, it had reached a decision to that effect for
285
implementation the next year. In July 1966, there was a joint collectively in good faith."  As a matter of fact, this Court has
20

consultation between it and the Union gone even further. It is not even required that there be in fact
_______________ an unfair
_______________
15
 Brief for the Petitioner, pp. 20-21.
19
 Cf. Phil. Marine Radio Officers' Assn. v. Court of Industrial
287 Relations, 102 Phil. 373 (1957); San Carlos Milling Co., Inc. v. Court of
VOL. 39, MAY 31, 1971 287 Industrial Relations, L-15453, March 17, 1961, 1 SCRA 734; Consolidated
Labor Assn. of the Phil. v. Marsman and Co., Inc., L-17038, July 31, 1964, 11
Shell Oil Workers' Union vs. Shell SCRA 589; Phil. Steam Navigation Co. v. Phil. Marine Officers Guild, L-
Company of the Philippines, Ltd. 20667, Oct. 29, 1965, 15 SCRA 174; Ferrer v. Court of Industrial
Relations, L-24267, May 31, 1966, 17 SCRA 352; Cromwell Commercial
on the matter. Nonetheless on August 26,1966, a collective Co., Inc. v. Cromwell Commercial Employees and Laborers Union, L-19777,
bargaining contract was entered into which, as indicated Feb. 20. 1967, 19 SCRA 398; Cebu Portland Cement Co. v. Cement Workers'
above, did assure the continued existence of the security guard Union, L-25032, Oct. 14, 1968, 25 SCRA 504.
 Cromwell Commercial Co., Inc. v. Cromwell Commercial Employees
section. The Shell Company did not have to agree to such a
20

and Laborers Union, L-19777, Feb. 20, 1967, 19 SCRA 398, 400-401

stipulation. Or it could have reserved the right to effect a
dissolution and reassign the guards. It did not do so. Instead, 289
when it decided to take such a step resulting in the strike, it VOL. 39, MAY 31, 1971 289
would rely primarily on provisions in the collective Shell Oil Workers' Union vs. Shell
bargaining' contract coached in general terms, merely
declaratory of certain management prerogatives. Considering Company of the Philippines; Ltd.
the circumstances of record, there can be no justification then labor practice committed by the employer. It suffices, if such a
for Shell Company's insistence on pushing through its project belief in good faith is entertained by labor, as the inducing
of such dissolution without thereby incurring a violation of the factor for staging a strike. So it was clearly stated by the
collective bargaining agreement. present Chief Justice while still an Associate Justice of this
3. The Shell Company, in failing: to manifest fealty to Court: "As a consequence, we hold that the strike in question
what was stipulated in an existing collective bargaining had been called to offset what petitioners were warranted in
contract, was thus guilty of an unf air labor practice. Such a believing in good faith to be unfair labor practices on the part
doctrine first found expression in Republic Savings Bank v. of Management, that petitioners were not bound, therefore, to
Court of Industrial Relations,  the opinion of the Court being
16 wait for the expiration of thirty (30) days from notice of strike
penned by Justice Castro. There was a reiteration of such a before staging the same, that said strike was not, accordingly,
view in Security Bank Employees Union v. Security Bank and illegal and that the strikers had not thereby lost their status as
Trust Company.  Thus: “It being expressly provided in the
17 employees of respondents herein." 21

Industrial Peace Act that [an] unfair labor practice is 5. It would thus appear that the decision now on appeal did
committed by a labor union or its agent by its refusal 'to not reflect sufficient awareness of authoritative
bargain collectively with the employer' and this Court having pronouncements coming from this Court. What is worse,
decided in the Republic Savings Bank case that collective certain portions thereof yield the impression that an attitude
bargaining does not end with the execution of an agreement, decidedly unsympathetic to labor's resort to strike is evident.
being a continuous process, the duty to bargain necessarily Such should not be the case. The right to self-organization so
imposing on the parties the obligation to live up to the terms of sedulously guarded by the Industrial Peace Act explicitly
such a collective bargaining agreement if entered into, it is includes the right "to engage in concerted activities for the
undeniable that non-compliance therewith constitutes an unfair purpose of collective bargaining and to the mutual aid or
labor practice." 18 protection."  From and after June 17, 1953 then, there cannot
22

_______________ be the least doubt that a strike as form of concerted activity

has the stamp of legitimacy. As a matter of law, even under
16
 L-20303, Sept. 27, 1967, 21 SCRA 226. the regime
17
 L-28536, April 30, 1968, 23 SCRA 503. _______________
18
 Ibid., p. 512.
21
 Ferrer v. Court of Industrial Relations, L-24267, May 31, 1966, 17
288
SCRA 352, 360. The Ferrer doctrine was followed in Norton & Harrison Co.
288 SUPREME COURT & Jackbilt Concrete Blocks Co. Labor Union v. Norton Harrison Co. &
Jackbilt Concrete Blocks Co., Inc., L-18461, Feb. 10, 1967, 19 SCRA 310.
REPORTS ANNOTATED 22
 Section 3 01 the Industrial Peace Act reads in full: ''Employees shall
Shell Oil Workers' Union vs. Shell have the right to self-organization and to form, join or assist labor
organizations of their own choosing for the purpose of collective bargaining
Company of the Philippines, Ltd. through representatives of their own choosing and to engage in concerted
4. Accordingly, the unfair labor practice strike called by the activities for the purpose of collective bargaining and other mutual aid or
Union did have the impress of validity. Rightly, labor is protection. individuals employed as supervisors shall not be eligible for
membership in a labor organization of employees under their supervision but
justified in making use of such a weapon in its arsenal to may form separate organization? of their own."
counteract what is clearly outlawed by the Industrial Peace
Act. That would be one way to assure that the objectives of 290
unionization and collective bargaining would not be thwarted. 290 SUPREME COURT
It could, of course, file an unfair labor practice case before the REPORTS ANNOTATED
Court of Industrial Relations. It is not precluded, however,,
from relying on its own resources to frustrate such an effort on Shell Oil Workers' Union vs. Shell
the part of an employer. So we have consistently held—and Company of the Philippines, Ltd.
for the soundest of reasons. 19 of compulsory arbitration under the Court of Industrial
There is this categorial pronouncement from the present Relations Act,  a strike was by no means a forbidden weapon.
23

Chief Justice: "Again, the legality of the strike follows as a Such is the thought embodied in the opinion of Justice Laurel
corollary to the finding of fact, made in the decision appealed in Rex Taxicab Company v. Court of Industrial
from—which is supported by substantial evidence—to the Relations.  Thus: "In other words, the employee, tenant or
24

effect that the strike had been triggered by the Company's laborer is inhibited f rom striking or walking out of his
failure to abide by the terms ano conditions of its collective employment only when so enjoined by the Court of Industrial
bargaining- agreement with the Union, by the discrimination, Relations and after a dispute has been submitted thereto and
resorted to by the company, with regard to hire and tenure of pending award or decision by the court of such dispute. It
employment, and the dismissal of employees due to union follows that, as in the present case, the employees or laborers
activities, as well as the refusal of the company to bargain may strike before being ordered not to do so and before an
industrial dispute is submitted to the Court of Industrial 6. Respondent Court was likewise impelled to consider the
Relations, subject to the power of the latter, af ter hearing strike illegal because of the violence that attended it. What is
when public interest so requires or when the dispute cannot, in clearly within ,the law is the concerted activity of cessation of
its opinion, be promptly decided or settled, to order them to work in order that a union's economic demands may be
return, with the consequence that if the strikers f ail to return granted or that an employer cease and desist from an unfair
to work, when so ordered, the court may authorize the labor practice. That the law recognizes as a right, There is
employer to accept other employees or laborers."  Former 25
though a disapproval of the utilization of force to attain such
Chief Justice Paras, in a case not too long before enactment of an objective. For implicit in the very concept of a legal order
the Industrial Peace Act, had occasion to repeat such a view. is the maintenance of peaceful ways. A strike otherwise valid,
Thus: "As a matter of fact, a strike may not be staged only if violent in character, may be placed beyond the pale. Care is
when, during the pendency of an industrial dispute, the Court to be taken, however, especially where an unfair labor practice
of Industrial Relations has issued the proper injunction against is involved, to avoid stamping it with illegality just because it
the laborers (section 19, Commonwealth Act No. 103, as is tainted by such acts. To avoid rendering illusory the
amended). Capital need not, however, be apprehensive about recognition of the right to strike, responsibility in such a case
the recurrence of strikes in view of the system of compulsory should be individual and not collective. A different conclusion
arbitration by the Court of Industrial Relations." 26
would be called for, of course, if the existence of force while
A strike then, in the apt phrase of Justice J.B.L. Reyes, is the strike lasts is pervasive and widespread, consistently and
"an institutionalized factor of democratic growth." 27
deliberately resorted to as a matter of policy. It could be
_______________ reasonably concluded then that even if justified as to ends, it
becomes illegal because of the means employed.
 Commonwealth Act No. 103 as amended, October 29, 1936.
23

Respondent Court must have unduly impressed by the

 70 Phil. 621 (1940).
24

 Ibid., pp. 629-630.

25
evidence submitted by the Shell Company to the effect that the
 Dee C. Chuan & Sons v. Court of Industrial Relations, 85 Phil. 365, 368
26 strike was marred by acts of force, intimidation and violence
(1950). on the evening of June 14 and twice in the mornings of June
 San Carlos Milling Co., Inc. v. Court of Industrial Relations, L-15453, 15 and 16, 1967 in Manila. Attention was likewise called to
27

March 17, 1961, 1 SCRA 734, 740.

the fact that even on the following day, with police officials
291 stationed at the strike-bound area, molotov bombs did explode
VOL. 39, MAY 31, 1971 291 and the streets were obstructed with wooden planks containing
protruding nails. Moreover, in the branches of the Shell
Shell Oil Workers' Union vs. Shell
Company in Iloilo City as well as in Bacolod, on dates
Company of the Philippines, Ltd. unspecified, physical in-
This is to foster industrial democracy. Implicit in such a 293
concept is the recognization that concerning the ends which VOL. 39, MAY 31, 1971 293
labor considers worthwhile, its wishes are ordinarily entitled
to respect. Necessarily so, the choice as to when such an Shell Oil Workers' Union vs. Shell
objective may be attained by striking likewise belongs to it. Company of the Philippines, Ltd.
There is the rejection of the concept that an outside authority, juries appeared to have been inflicted on management
even if governmental, should make the decisions for it as to personnel. Respondent Court in the appealed decision did
ends which are desirable and how they may be achieved. The penalize with loss of employment the ten individuals
assumption is that labor can be trusted to determine for itself responsible for such acts. Nor is it to be lost sight of that
when the right to strike may be availed of in order to attain a before the certification on June 27, 1967, one month had
successful fruition in their disputes with management. It is true elapsed during which the Union was on strike. Except on those
that there is a requirement in the Act that bef ore the few days specified then, the Shell Company could not allege
employees may do so, they must file with the Conciliation that the strike was conducted in a manner other than peaceful.
Service of the Department of Labor a notice of their intention Under the circumstances, it would be going too far to consider
to strike.  Such a requisite however, as has been repeatedly
28 that it thereby became illegal This is not by any means to
declared by this Court, does not have to be complied with in condone the utilization of force by labor to attain its
case of unfair labor practice strike, which certainly is entitled objectives. It is only to show awareness that in labor conflicts,
to greater judicial protection if the Industrial Peace Act is to be the tension that fills the air as well as the feeling of frustration.
rendered meaningful. What has been said thus far would and bitterness could break out in sporadic acts of violence. If
demonstrate the unwarranted deviation of the there be in this case a weighing of interests in the balance, the
_______________ ban the law imposes on unfair labor practices by management
that could provoke a strike and its requirement that it be
 Section 14 of the Industrial Peace Act provides in full: "(a) Whenever a
28
conducted peaceably, it would be, to repeat, unjustified,
party desires to negotiate an agreement, it shall serve a written notice upon the
other party, with a statement of its proposals. The other party shall make a
considering all the facts disclosed, to stamp the strike with
reply thereto not later than ten days from receipt of such proposals. (b) In case illegality. It is enough that individual liability be incurred by
differences shall arise on the basis of such proposals and reply, either party those guilty of such acts of violence that call for loss of
may request a conference which shall begin not later than ten days from the employee status.
making of such request. Both parties shall endeavor in such conference to
settle the dispute amicably and expeditiously. (c) If the dispute is not settled
Such an approach is reflected in our recent decisions. As
by conference and the Conciliations Service of the Department of Labor was realistically observed by the present Chief Justice, it is
intervenes in the dispute, it shall be the duty of each party to participate fully usually attended by "the excitement, the heat and the passion
and promptly in such meetings and conferences as the Service may undertake. of the direct participants in the labor dispute, at the peak
(d) Before an employer may lockout his employees or the employees may
strike, either party as the case may be, must f ile with the Conciliation Service thereof x x x."29 x x."  Barely four months ago, in Insular Life
29

thirty days prior thereto a notice of their intention to strike or lockout the Assurance Co., Ltd. Employees' Association v. Insular Life
employees. Such notice shall be in a form to be prescribed by the Chief of the Assurance Co., Ltd.,  there is the recognition by this Court,
30

Conciliation Service. speaking through Justice Castro, of picket-

_______________
292
202 SUPREME COURT  Ferrer v. Court of Industrial Relations, L-24267, May 31, 1966, 17
29

REPORTS ANNOTATED SCRA 352, 360.

 L-25291, January 30, 1971, 37 SCRA 244.
30

Shell Oil Workers' Union vs. Shell

294
Company of the Philippines, Ltd.
decision now 00 appeal from what is indicated by the law and 294 SUPREME COURT
authoritative decisions. REPORTS ANNOTATED
 capital in industry and in agriculture. The State may provide f or compulsory
Shell Oil Workers' Union vs. Shell arbitration "
Company of the Philippines, Ltd. 34
 The eighteen security guards are: E. Crisostomo, P. Falculan, B.
Bicomong, F. Flores, L. Francisco, B. Velasco, D. Pascual, J. Suarez, J.
ing as such being "inherently explosive."  It is thus clear that
31

Tuazon, A, Jimenez, J. Linsangan, F. Solis, P. Carillo, V. Diaz, F. Bernardo,

not every form of violence suffices to affix the seal of E. Mendoza, C. Bonus. and G. de Jesus.
illegality on a strike or to cause the loss of employment by the
guilty party. 296
7. In the light of the foregoing, there being a valid unfair 206 SUPREME COURT
labor practice strike, the loss of employment decreed by REPORTS ANNOTATED
respondent Court on all the Union officers cannot stand. The
Shell Oil Workers' Union vs. Shell
premise on which such penalty was decreed was the illegality
of the strike. We rule differently. Hence, its imposition is Company of the Philippines, Ltd.
unwarranted. It is to be made clear, however, that because of the exception of Ernesto Crisostomo, who was found guilty of
the commission of specific serious acts of violence, the committing a serious act of violence is set aside and they are
Union's President, Gregorio Bacsa, as well as its Assistant declared reinstated. The continuance of their status as such is,
Auditor, Conrado Peña, did incur such a penalty. 32 however, dependent on whether or not a security guard section
On this point, it may be observed further that even if there is provided for in the collective bargaining contract entered
was a mistake in good faith by the Union that an unfair labor into after the expiration of the contract that expired on
practice was committed by the Shell Company when such was December 31, 1969. The loss of employee status of the
not the case. still the wholesale termination of employee status officers of the Union,  decreed by respondent Court in its
35

of all the officers of the Union, decreed by respondent Court, decision, is likewise set aside, except as to Gregorio Bacsa and
hardly commends itself for approval. Such a drastic blow to a Conrado Peña, both of whom did commit serious acts of
labor organization, leaving it leaderless, has serious violence. The termination of the employee status of Nestor
repercussions. The immediate effect is to weaken the Union. Samson, Jose Rey, Romeo Rosales, Antonio Labrador and
New leaders may of course emerge. It would not be unlikely, Sesinando Romero, who committed acts of violence not
under the circumstances, that they would be less than vigorous serious in character, is also set aside, but while allowed to be
in the prosecution of labor's claims. They may be prove to fall reinstated, they are not entitled to back pay. Ricardo
_______________ Pagsibigan and Daniel Barraquel, along with the aforesaid
Gregorio Bacsa, Conrado Peña and Ernesto Crisostomo, were
 Ibid., p. 273. Mathews on Labor Relations and the Law was cited to this
31
legally penalized with dismissal because of the serious acts of
effect: "For as pointed out by one author, 'The picket line is an explosive front, violence committed by them in the course of the strike. The
charged with the emotions and f ierce loyalties of the union-management
dispute. It may be marked by colorful name-calling, intimidating threats or rest of the employees laid off should be reinstated with back
sporadic fights between the pickets and those who pass the line.'" Teller was pay to be counted from the date they were separated by virtue
likewise cited to the effect that fist fighting between union and non-union of the appealed decision, from which should be deducted
employees in the midst of a strike is no bar to reinstatement. At p. 272.
whatever earnings may have been received by such employees
 It would likewise follow that no punitive sanction should be imposed on
32

the eighteen security guards except for Ernesto Crisostomo who was rightfully during such period. The case is hereby remanded to
held accountable for the act of violence attributed to him. respondent Court for the implementation of this decision. In
ascertaining the back wages to which the security guards are
295
entitled, it must likewise be ascertained whether or not the
VOL. 39, MAY 81, 1971 295 security guard section is continued after December 31, 1969.
Shell Oil Workers' Union vs. Shell Without costs.
Company of the Philippines, Ltd.      Concepcion,
victims to counsels of timidity and apprehension. At the C.J., Zaldivar, Teehankee, Villamor and Makasiar,
forefront of their consciousness must be an awareness that a JJ., concur.
_______________
mistaken move could well mean their discharge from
employment. That would be to render the right to self-  The thirteen officers of the Union are: G. Bacsa, E. Gaspar, E.
35

organization illusory. Ocampo. D. Sahagun, J. Pilande, R. Constantino, C. Peña, P. Calaunan, N.

The plain and unqualified constitutional command of Samson, J. Rey, P. Sawyer, A. Talastas and J. Belangoy.
protection to labor should not be lost sight of.  The State is 33

297
thus under obligation to lend its aid and its succor to the
efforts of its labor elements to improve their economic VOL. 39, MAY 297
condition. It is now generally accepted that unionization is a
means to such an end. It should be encouraged. Thereby,
31, 1971
labor's strength, what there is of it, becomes solidified. It can Shell Oil Workers' Union vs.
bargain as a collectivity. Management then will not always Shell Company of the Philippines,
have the upper hand nor be in a position to ignore its just Ltd.
demands. That, at any rate, is the policy behind the Industrial      Reyes, J.B.L., J., concurs with Justice Barredo.
Peace Act. The judiciary and administrative agencies in      Makalintal, J., concurs in the opinion of Justice
construing it must ever be conscious of its implications. Only Barredo.
thus may there be fidelity to what is ordained by the      Castro, J., took no part.
fundamental law. For if it were otherwise, instead of      Barredo, J., concurs in a separate opinion.
protection, there would be neglect or disregard. That is to
negate the fundamental principle that the Constitution is the
BARREDO, J., concurring—
supreme law,
WHEREFORE, the decision of respondent Court of
To be sure, a dissent from the opinion ably written by Our
Industrial Relations of August 5, 1967 is reversed, the finding
learned colleague, Justice Fernando, may not be entirely
of illegality of the strike declared by the Shell Oil Workers'
without some degree of plausibility. To begin with, the basic
Union on May 25, 1967 not being in accordance with law.
conclusion of fact of the Court of Industrial Relations in the
Accordingly, the dismissal by the Shell Company on May 27,
appealed decision, which by law and the previously unbroken
1967 of the eighteen security guards,  with 34

_______________ line of decisions of this Court on the point, We cannot lightly

set aside, seem to be logical and supported by evidence not
 Art. XIV, Sec. 6 of the Constitution reads as follows: "The State shall
33 seriously disputed. Withal, when it is considered that there is
afford protection to labor, especially to working women and minors, and shall nothing in the record to show that in acting as it did in this
regulate the relations between landowner and tenant, and between labor and case, respondent Shell Company, Ltd. was not actuated by any
anti-union, much less anti-labor motive but by purely weapon is the strike, and it is but natural that when things
economic reasons of sound management, and, in fact, appear to be dimming on the negotiation tables, labor should
petitioner does not even suggest any such purpose, one must almost instinctively take a striking posture. In other words, the
have to hesitate and deliberate long and hard before giving determination of the legality or illegality of a strike,
assent to a pronouncement that this respondent is guilty of particularly in this enlightened era of progressive thinking on
unfair labor practice, such as to legalize the strike declared by labor-management relations is something that cannot be
petitioner against it. I take it, however, that in a larger sense achieved by mere straight-jacketed legalistic argumentation
this is a policy decision, and all things considered, particularly and rationalization; the process is broader and deeper than
the constitutional injunctions on social justice and protection that, for to do justice in deciding such an issue, it is imperative
to labor, I prefer to err, since the juridical considerations and that utmost consideration should be given to the particular
equities in this case appear to my mind and conscience to be in circumstances of each case, with a view to having the most
equipoise, on the side of labor, who, as I see it, acted in the comprehensive understanding of the motivations of the parties,
same good faith that management did. I must hasten to add in the light of human needs, on the part of labor, and in the
though, that in thus referring to labor, I do not have in mind perspective of the orderly and economical conduct of business
the union leaders involved in this case to whom the Court of and industry, on the part of management. In this particular
Industrial Relations has attributed personal reasons for their case, for instance, I cannot agree that respondent has violated
attitude, but I am thinking more of those security guards who its collective bargaining agreement with petitioner, but, on the
felt other hand, I am not ready to conclude that for this reason, the
298 strike here in question was consequently illegal. I hold that the
298 SUPREME COURT two strike votes taken by the members of the petitioning union
REPORTS ANNOTATED were both premised on the sincere and honest belief that there
was a legal breach of the said agreement. That now I find, as
Shell Oil Workers' Union vs. Shell the lndustrial Court did, that technically and in truth, there was
Company of the Philippines, Ltd. no such infringement did not of necessity stamp the said strike
uncertain about the ultimate consequences of their transfer with the stigma of illegality.
ordered by respondent and naturally found nothing to hold on 300
was the protection of the collective bargaining agreement 300 SUPREME COURT
which they had a right to assume insured the substantial REPORTS ANNOTATED
continuance of the terms and conditions of their employment
contemplated in said agreement at the time it was entered into. Shell Oil Workers' Union vs. Shell
Contrary to the conclusion of the distinguished writer of Company of the Philippines, Ltd.
the main opinion, I regret to say that the record amply supports It may not be amiss to add at this juncture, to allay and
the finding of the Industrial Court that the transfer of the disabuse possible apprehension that the main opinion may
eighteen security guards concerned was not a violation of the conceivably produce in some quarters, that I do not discern in
collective bargaining agreement between petitioner and said it any prejudice on the part of Justice Fernando, strictly pro-
respondent. The more I go over the considerations of the labor and anti-management. Precisely, I am giving my
appealed decision, the more I am convinced not only that the concurrence to the judgment in this case because I am
move was never tinged by any anti-labor hue but also that convinced that, fundamentally, he has also viewed the
respondent had from the very beginning taken petitioner and situation at hand in the light of the above considerations, even
its duly authorized representatives in its long study and if Our respective approaches and articulation of views have to
deliberation of the problem, which took years, and had, in fact, differ, since I do not own all the perspectives whence he gives
consulted them on various aspects thereof. It is not denied that support to his conclusions, because I personally do not find
the maintenance of security is not the only aspect of its any necessity to resort to other authorities, when I feel that
multifarious departments it has decided to contract out; plain reasoning, predicated on commonly accepted principles
petitioner did not object to the previous ones. Indeed, it is safe and reliance on one's proper sense of justice can suffice for the
to conjecture that petitioner has always seen the point of occasion,
respondent, principally the economy it would achieve and the I also concur in the sanctions ordered in the main opinion.
consequent benefits labor might gain thereby. In this The Court has individualized the respective responsibilities of
connection, I particularly note that there is nothing in the the strikers herein involved because such exactly is what the
record indicating that there is factual basis for petitioner's justice of the situation demands. The reinstatement of those
claim that the security guards herein involved would surely relatively innocent cannot be but only fair and equitable and
suffer economic loss as a result of their questioned transfer; the approval of the lay-off of those found to have acted
respondent made it plain that overtime and other benefits beyond the requirements of the circumstances is founded on
accruing to them as security guards would likewise be given to sound policy. In simple terms, I hold that the mere fact that a
them in their new positions And in answer to petitioner's strike is not illegal and I want to emphasize here that there is,
almost rhetorical question, why were said guards being given in my opinion, a large shade of difference between a strike that
additional hourly pay and lump sum bonuses, if respondent did is really justified and legal and one that is merely held not to
not feel 'that their rights were being violated, it is perhaps not be illegal, cannot be an excuse for resort to violence. Even
unreasonable to suppose that management simply felt that as picketing which is the sister remedy of strikes is not supposed
the company to be completely unrestrained and unrestricted, and
299 unprovoked violence, threats and duress of more or less grave
VOL. 39, MAY 31, 1971 299 nature employed by strikers against person and property are
Shell Oil Workers' Union vs. Shell twice removed from what can be judicially tolerated.
Decision reversed.
Company of the Philippines, Ltd. 301
was to save money by contracting out its security VOL. 39, MAY 31, 1971 301
maintenance, it was but proper that the affected sector of labor
should share a part of its savings. Shell Oil Workers' Union vs. Shell
All these, however, do not mean, on the other hand, that Company of the Philippines, Ltd.
petitioner's strike should necessarily be held to be illegal. It is Notes.—A. Four different ways of entering into a
always a wholesome attitude in cases of this nature to give but collective bargaining agreement.—There are four different
secondary importance to strict technicalities, whether of ways under which. a collective bargaining agreement may be
substantive or remedial law, and to constantly bear in mind the entered into between the employer and his employees. These
human values involved which are beyond pecuniary are the ones specified in subsections (a), (b), (c) and (d) of
estimation. As a general rule, labor's most potent and effective section 12 of Republic Act 875. Under the first method, a
majority of the employees may designate the labor
organization it may choose to act as its representative for the
purpose of collective bargaining, which it can do without court
intervention, and the organization so designated may
immediately conclude a collective bargaining agreement with
its employer (subsection [a]). The second method, on the other
hand, requires judicial investigation to determine which labor
organization has been designated as the representative of the
employees whenever a question arises concerning such
representation. And if the court. should find reasonable -doubt
as to whom the employees have chosen after such
investigation, it shall order a certification election (subsection
[b]). The third method authorizes at least 10 per cent of the
employees in the appropriate unit to request an election, which
shall be mandatory on the court whenever a petition is filed
requesting such election to determine the representation of the
employees (subsection [ [c]). And the fourth method is the one
which permits an employer to petition the court for an election
if there has been no certification election held during the
twelve months prior to the date of the request of the
employees, and If the employer has reasonable doubt as to the
bargaining representative of the employees in the appropriate
unit (subsection [d]). (Bacolod-Murcia Milling Co., Inc. v.
National Employees-Workers Security Union, 100 Phil. 516,
521).
B. Exception to the rule that strikers may not collect their
wages during the days when they did not work.—in Macleod
& Company of the Philippines v. Progressive
302

302 SUPREME COURT

REPORTS ANNOTATED
Shell Oil Workers' Union vs. Shell
Company of the Philippines, Ltd.
Federation of Labor, 97 Phil. 205, 210-211, it was held that
"while there is a rule that strikers may not collect their wages
during- the days they did not go to work because of the age-
old rule governing the relation of labor and capital epitomized
in a "fair day's wage for a fair day's labor (Manila Trading &
Supply Co. v. Manila Trading Labor Association, 92 Phil.
997; J. P. Heilbrown Co. v. National Labor Union, 92 Phil.
575), this rule does not apply where the thirty-eight laborers
concerned did not voluntarily strike but were practically
locked out. They were notified that on a certain date they
would cease to work, and notwithstanding their efforts to
reach a compromise, the company adopted a stern attitude
which left no other alternative to them than to walk out.
Moreover, the company not only limited itself to dispensing-
with their services, but indirectly forced them to join another
labor union as a condition whereby they could be readmitted.
C. When a strike is illegal.—A strike declared without
giving to the general manager, or the board of directors of the
company, reasonable time within which to consider and act on
the demands submitted by the union is illegal Likewise, a
strike is illegal when it is declared in violation of a collective
bargaining agreement especially when it provides for
conclusive arbitration clauses. These agreements must be
strictly adhered to and respected if their ends have to be
achieved (Liberal Labor Union v. Philippine Can
Company, 91 Phil. 72). (Insurefco Paper Pulp & Project
Worker's Union v. Insular Sugar Refining Corp., 95 Phil. 761.)
See annotations on Basic Concepts on Collective
Bargaining in 9 SCRA 163-172; on Criteria of Employment
Relation as the Matrix of Industrial Court's Jurisdiction in 19
SCRA 280-288; on Employer's Duty to Bargain
Collectively in 25 SCRA 516-529.