SHELL OIL WORKERS' UNION vs. SHELL COMPANY OF THE PHILIPPINES

SHELL OIL WORKERS’ UNION vs. SHELL COMPANY OF THE PHILIPPINES, LTD.
, and THE
COURT OF INDUSTRIAL RELATIONS
G.R. No. L-28607, May 31, 1971.
FACTS:
Respondent Shell Company of the Philippines (COMPANY) dissolved its security guard section stationed at its
Pandacan Installation, notwithstanding its (guard section) continuance and that such is assured by an existing
collective bargaining contract. The respondent company transferred 18 security guards to its other department and
consequently hired a private security agency to undertake the work of said security guards. This resulted in a strike
called by petitioner Shell Oil Workers’ Union (UNION), The President certified it to respondent Court of Industrial
Relations (CIR). CIR declared the strike illegal on the ground that such dissolution was a valid exercise of a
management prerogative. Thus this appeal is taken.
Petitioner argued that the 18 security guards affected are part of the bargaining unit and covered by the existing
collective bargaining contract, as such, their transfers and eventual dismissals are illegal being done in violation of
the existing contract. The 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, that said action was motivated by business consideration in line with past
established practice and made after notice to and discussion with the Union, that the 18 guards concerned were
dismissed for wilfully refusing to obey the transfer order, and that the strike staged by the Union is illegal.
ISSUE:
Whether the existing collective bargaining contract on maintaining security guard section, among others, constitute a
bar to the decision of the management to contract out security guards.
RULING:
YES. The strike was legal because there was a violation of the collective bargaining agreement by Company. It was
part of the CBA that the Security Guard Section will remain. Yet, the Company did not comply with the stipulation
in CBA. It was thus an assurance of security of tenure, at least, during the lifetime of the agreement. For what is
involved is the integrity of the agreement reached, the terms of which should be binding on both parties
The stand of Shell Company as to the scope of management prerogative is not devoid of plausibility, management
prerogative of the Company would have been valid if it were not bound by what was stipulated in CBA. The
freedom to manage the business remains with management. It cannot be denied the faculty of promoting efficiency
and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate
determination of whether services should be performed by its personnel or contracted to outside agencies. However,
while management has the final say on such matter, the labor union is not to be completely left out.
An unfair labor practice is committed by a labor union or its agent by its refusal ‘to bargain collectively with the
employer’. 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.
The right to self-organization guarded by the Industrial Peace Act explicitly includes the right “to engage in
concerted activities for the purpose of collective bargaining and to the mutual aid or protection.” The employee,
tenant or laborer is inhibited from striking or walking out of his employment only when so enjoined by the CIR and
after a dispute has been submitted thereto and pending award or decision by the court of such dispute.
In the present case, the employees or laborers may strike before being ordered not to do so and before an industrial
dispute is submitted to the CIR, subject to the power of the latter, after hearing when public interest so requires or
when the dispute cannot, in its opinion, be promptly decided or settled, to order them to return to work, with the
consequence that if the strikers fail to return to work, when so ordered, the court may authorize the employer to
accept other employees or laborers.” Thus a strike may not be staged only when, during the pendency of an
industrial dispute, the CIR has issued the proper injunction against the laborers (section 19, Commonwealth Act No.
103, as amended).
WHEREFORE, the decision of respondent Court of Industrial Relations of August 5, 1967 is reversed.
————-
**NOTE:
BELIEF IN GOOD FAITH THAT EMPLOYER COMMITTED UNFAIR LABOR PRACTICE RENDERS
STRIKE LEGAL:
It is not even required that there be in fact an unfair labor practice committed by the employer. It suffices, if such a
belief in good faith is entertained by labor, as the inducing factor for staging a strike. So it was declared: “As a
consequence, we hold that the strike in question had been called to offset what petitioners were wanted in believing
in good faith to be unfair labor practices on the part of Management, that petitioners were not bound, therefore, to
wait for the expiration of thirty (30) days from notice of strike before staging the same, that said strike was not,
accordingly, illegal and that the strikers had not thereby lost their status as employees of respondents herein.”

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SHELL OIL WORKERS’ UNION vs. SHELL COMPANY OF THE PHILIPPINES, LTD.

G.R. No. L-28607, May 31, 1971.

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