G.R. No. 46739 ; September 23, 1939
PAMPANGA BUS COMPANY, INC., petitioner, vs. PAMBUSCO EMPLOYEES’ UNION, INC., respondent.

FACTS

The Court of Industrial Relations issued an order directing Pampanga Bus Company, Inc. to recruit new employees from the Pambusco Employees’ Union, Inc. to replace dismissed union members, provided that if the union could not supply qualified persons, the company could hire others. The company challenged this order as compelling it, against its will, to preferentially hire union members.

ISSUE

Whether the Court of Industrial Relations has the authority to issue a compulsory order requiring an employer to preferentially hire members of a specific labor union.

RULING

No. The order is reversed. The right to make contracts concerning one’s business is an essential part of liberty protected by the constitutional due process clause. This includes an employer’s right to choose from whom to purchase labor, which is correlative to a laborer’s right to choose to whom to sell his labor. Compelling an employer to hire against its will constitutes oppression. While Commonwealth Act No. 213 grants labor unions the right to collective bargaining, it does not compel employers to enter into collective agreements. The freedom of contract may only be limited by a proper exercise of police power, as seen in specific statutory prohibitions against discriminatory discharge for union activity (e.g., Section 5 of Commonwealth Act No. 213 and Section 21 of Commonwealth Act No. 103 ). These provisions, patterned after the U.S. Wagner Act, do not compel agreements or prevent an employer from hiring individuals on terms it determines unilaterally, so long as the right to discharge is not exercised to intimidate or coerce employees regarding self-organization. The challenged order exceeded the court’s authority.

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