Manila Oriental Sawmill Co. vs. National Labor Union

A valid and subsisting collective bargaining agreement may not be repudiated by the simple expedient of employees changing their bargaining representative; a strike undertaken as a subterfuge to circumvent such an agreement is illegal and undeserving of judicial sanction.

On 4 May 1950, Manila Oriental Sawmill Co. concluded a one-year agreement on working conditions with the United Employees Welfare Association, a duly registered labor union composed of the company’s employees. The agreement was entered into pursuant to a settlement in a pending case before the Court of Industrial Relations.

• On 4 May 1950, the United Employees Welfare Association, a registered labor union whose members were employees of petitioner Manila Oriental Sawmill Co., entered into a one-year agreement on working conditions with petitioner. The agreement was concluded pursuant to a settlement in Case No. 173-V of the Court of Industrial Relations.
• On 14 August 1950, thirty-six of the thirty-seven members of the United Employees Welfare Association tendered their resignations from that union and joined the local chapter of respondent National Labor Union. No evidence showed petitioner approved these resignations.
• On 15 August 1950, the president of respondent union wrote petitioner presenting seven demands on behalf of the employees who had just joined the union.
• Petitioner’s counsel replied, noting that the laborers on whose behalf the letter was written were still affiliated with the United Employees Welfare Association.
• On 22 August 1950, respondent union reiterated its demands. Petitioner’s counsel responded that petitioner could not recognize the union’s local chapter unless and until the 4 May 1950 agreement was declared null and void by the Court of Industrial Relations.
• On 28 August 1950, the members of respondent union struck.
• Petitioner promptly sought a declaration of illegality from the Court of Industrial Relations, which the court denied, ruling the strike legal and setting the union’s demands for hearing.

• Freedom of Contract: Petitioner argued that the order of the Court of Industrial Relations was null and void because, by refusing to declare the strike illegal despite the existence of a valid and subsisting collective bargaining agreement between petitioner and the union to which the striking employees formerly belonged, the lower court violated the constitutional precept underlying freedom of contract.

• Legality of Strike and Right to Present New Demands: Respondent National Labor Union maintained that the strike was a lawful exercise of the right to strike, as its local chapter comprised the near-total majority of the employees concerned, who had properly exercised their freedom of association by transferring unions and were entitled to press new demands on their behalf.

• Illegality of Strike: Whether the strike of 28 August 1950 was illegal, given that the employees who struck were bound by a valid and subsisting one-year collective bargaining agreement with petitioner, and their mass resignation and immediate affiliation with respondent union was a stratagem to circumvent that contract.

• Illegality of Strike: The strike was illegal. The near-unanimous resignation of the members of the United Employees Welfare Association and their immediate entry into respondent union, followed by the presentation of seven new demands that conflicted with the subsisting agreement, was a transparent subterfuge to circumvent and repudiate a valid contract entered into freely and with the sanction of the Court of Industrial Relations. Such a move subverted the freedom of contract and the good faith that must govern contractual relations. A labor organization, while wholesome when serving its legitimate purpose, outlives that purpose when used as a means to subvert valid commitments. Following the principle expounded in Triburo Coach Corp., employees may not repudiate their contractual obligations simply by changing their bargaining representative. Consequently, the strike lacked legal justification, and the order declaring it legal was reversed.

• Repudiation of collective agreements by change of representative: A valid and subsisting collective bargaining agreement cannot be repudiated by the simple process of employees resigning en masse from the contracting union and joining another labor organization to press new demands. To allow such a maneuver would undermine the freedom of contract and the stability of industrial peace protected by collective agreements. The Court adopted the ruling in Triburo Coach Corp. that the mere change of a bargaining representative does not, in itself, affect or impair an existing contract; the employees’ obligations continue until the contract expires or is lawfully terminated.

• “The manifest object of the act is to prevent industrial strife, confusion and unrest. Industrial peace is promoted by collective agreements obtained for employees through the medium of their bona fide labor organizations or other proper representatives . . . .”
• “If employees are to enjoy actual liberty of contract through their labor organizations or other bona fide representatives, and their contracts are to be effective, their obligations may not be repudiated simply by the process of changing the representatives, and in their own interest they should not seek to do so.”
• “A labor organization is wholesome if it serves its legitimate purpose of settling labor disputes. That is why it is given personality and recognition in concluding collective bargaining agreements. But if it is made use of as a subterfuge, or as a means to subvert valid commitments, it outlives its purpose for far from being an aid, it tends to undermine the harmonious relations between management and labor.”

• Triburo Coach Corp., 3 Labor Cases, 60,076 — Quoted with approval to support the rule that a valid existing collective contract is not impaired or terminated merely by the certification of a new bargaining representative, and that employees may not repudiate their obligations by the expedient of changing that representative.

• Constitutional guarantee of freedom of contract — Invoked as the fundamental precept violated by a strike undertaken to circumvent a valid and subsisting collective bargaining agreement.

Paras, C.J., Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, and Jugo, JJ., concurred.