Master Iron Labor Union vs. NLRC

A no-strike clause in a Collective Bargaining Agreement is applicable only to economic strikes; a strike founded on an unfair labor practice of the employer cannot be considered a violation of the no-strike clause. Furthermore, a strike staged in good faith to offset perceived unfair labor practices is legal, and such presumption of legality prevails even if the allegations of unfair labor practice are subsequently found to be untrue.

Master Iron Works and Construction Corporation, engaged in steel fabrication, entered into a Collective Bargaining Agreement with the Master Iron Labor Union. The CBA contained a no-strike/no-lockout provision and established service allowances for workers assigned outside the company plant. Following the CBA's execution, the corporation subcontracted work traditionally performed by regular employees to casual workers, resulting in reduced workdays for regular employees. The union viewed this as a circumvention of the service allowance provision and a violation of the CBA, leading to a labor dispute that culminated in a work stoppage.

• The Master Iron Labor Union (MILU) and Master Iron Works and Construction Corporation entered into a Collective Bargaining Agreement (CBA) effective December 1, 1986, to November 30, 1989, which included a no-strike/no-lockout clause and provisions for service allowances for workers assigned outside the company plant.
• Immediately after signing the CBA, the Corporation subcontracted outside workers to perform jobs usually done by regular employees, including work outside the company plant, and scheduled regular workers on a rotation basis of only ten days per month.
• MILU requested implementation of the grievance procedure under the CBA, but the Corporation ignored the request.
• On April 8, 1987, MILU filed a notice of strike with the Department of Labor and Employment (DOLE), leading to an agreement mediated by DOLE wherein the Corporation acceded to return the usual work to regular employees.
• The Corporation continued hiring casual workers despite the agreement. When MILU President Wilfredo Abulencia insisted on performing his regular work, he was reprimanded, charged with insubordination, and suspended for three days.
• The Corporation ignored subsequent conciliation conferences requested by the union, insisting that hiring casual workers was a management prerogative.
• On July 9, 1987, MILU filed a second notice of strike citing violation of the CBA, discrimination, unreasonable suspension of union officials, and unreasonable refusal to entertain grievance.
• On July 24, 1987, MILU staged the strike and maintained picket lines.
• On July 28, 1987, CAPCOM soldiers summoned by the Corporation's counsel arrested the picketers, confiscated alleged weapons, and jailed them; criminal charges were later dismissed for failure of the arresting officers to appear.
• On September 7, 1987, MILU re-staged the strike with assistance from another labor alliance.
• On October 22, 1987, MILU sent a letter to the Corporation offering to return to work without conditions.
• The Corporation filed a petition to declare the strike illegal and a petition for injunction, the latter resulting in an NLRC order for the removal of barricades on September 24, 1987.

• The strike was legal because it was based on unfair labor practices (violation of the CBA, discrimination, unreasonable suspension, and refusal to entertain grievance), not economic demands, rendering the no-strike clause inapplicable.
• The grievance procedure was effectively exhausted because the Corporation refused to participate despite the union's requests.
• The offer to return to work was unconditional, and the NLRC erred in characterizing it as conditional.
• The CAPCOM dispersal was illegal as no violence had occurred to warrant police intervention.
• The NLRC exhibited bias and grave abuse of discretion in relying on the dismissed criminal charges against the strikers.

• The strike was economic in nature because it sought the implementation of service allowances under the CBA, which is an economic benefit.
• The hiring of casual workers was a valid exercise of management prerogative.
• The grievance procedure was not exhausted prior to the strike.
• The offer to return to work was conditional and therefore did not absolve the illegality of the strike.
• The strike was illegal due to alleged violence and coercion perpetrated by the strikers, justifying the termination of participants.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether the strike was illegal despite the no-strike clause in the CBA.
  • Whether the strike was founded on unfair labor practice or constituted an economic strike.
  • Whether the grievance procedure was properly exhausted prior to the strike.
  • Whether the union's offer to return to work was conditional.
  • Whether the termination of employment of the striking workers was valid.
  • Whether the dispersal of picket lines by CAPCOM soldiers was lawful.

• Procedural: N/A
• Substantive:
  • The strike was legal and not in violation of the CBA's no-strike clause because the clause applies only to economic strikes, not to strikes founded on unfair labor practices.
  • The strike was based on unfair labor practices, specifically the violation of the CBA through subcontracting to avoid service allowances, discrimination, and unreasonable suspension, rather than economic demands for new concessions.
  • The grievance procedure was deemed exhausted because the Corporation refused to participate despite the union's requests, demonstrating a lack of intent to abide by the CBA.
  • The offer to return to work was unconditional; the mention of continued dialogue for a peaceful relationship did not constitute a condition.
  • The termination of employment was illegal; the individual petitioners are entitled to reinstatement with three years of backwages and without loss of seniority rights.
  • The bringing of CAPCOM soldiers to the peaceful picket lines violated Article 264 of the Labor Code, which mandates that police keep out of picket lines unless actual violence occurs.
  • The Corporation was ordered to desist from subcontracting work normally performed by its regular workers.

• No-Strike Clause Limitation — A no-strike clause in a CBA is applicable only to economic strikes; it does not bar strikes founded on unfair labor practices.
• Economic Strike vs. Unfair Labor Practice Strike — An economic strike seeks concessions not required by law (e.g., higher wages), while a ULP strike protests violations of labor laws or the CBA; the latter is protected even if the no-strike clause exists.
• Good Faith Defense in Illegal Strike Cases — A strike staged in good faith to offset what strikers believe to be unfair labor practices is legal, and this presumption of legality prevails even if the allegations of unfair labor practice are subsequently found to be untrue.
• Management Prerogative Limitation — Management prerogatives, including hiring and contracting out, are not absolute and are subject to limitations found in law, the CBA, and general principles of fair play and justice.
• Individual vs. Collective Responsibility for Strike Violence — Responsibility for violent acts during a strike should be individual, not collective, unless the violence is pervasive, widespread, and deliberately resorted to as a matter of policy.
• Police Neutrality in Labor Disputes — Public officials and armed personnel shall keep out of picket lines unless actual violence or other criminal acts occur; bringing armed forces to a peaceful picket line is prohibited.

• "A no-strike clause in a CBA is applicable only to economic strikes."
• "All told, the strike staged by the petitioners was a legal one even though it may have been called to offset what the strikers believed in good faith to be unfair labor practices on the part of the employer... Verily, such presumption of legality prevails even if the allegations of unfair labor practices are subsequently found out to be untrue."
• "The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein."
• "What is clearly within the law is the concerted activity of cessation of work in order that... employer cease and desist from an unfair labor practice... To avoid rendering illusory the recognition of the right to strike, responsibility in such a case should be individual and not collective."

• Philippine Metal Foundries, Inc. vs. Court of Industrial Relations (90 SCRA 135 [1979]) — Controlling precedent establishing that no-strike clauses apply only to economic strikes.
• Consolidated Labor Association of the Philippines vs. Marsman & Co., Inc. (11 SCRA 589 [1964]) — Cited for the definition of an economic strike as one forcing wage or other concessions not required by law.
• National Federation of Labor Unions vs. NLRC (202 SCRA 346 [1991]) — Cited for the principle that management prerogative, if shown to be in grave abuse of discretion, may be looked into by courts.
• University of Sto. Tomas vs. NLRC (190 SCRA 758 [1990]) — Cited for the limitation of management prerogatives by law, CBA, and principles of fair play.
• Republic Savings Bank vs. Court of Industrial Relations (21 SCRA 226 [1967]) — Cited for the principle that grievance procedures are part of the continuous process of collective bargaining.
• Shell Oil Workers' Union vs. Shell Company of the Philippines, Ltd. (39 SCRA 276 [1971]) — Cited for the distinction between valid strike ends and illegal means, and the rule on individual rather than collective responsibility for violence.
• Ferrer, et al. vs. Court of Industrial Relations (17 SCRA 352 [1966]) — Cited for the protection of strikes called in good faith to protest perceived unfair labor practices.
• People's Industrial and Commercial Employees and Workers Org. [FFW] vs. People's Industrial and Commercial Corporation (112 SCRA 440 [1982]) — Cited for the presumption of legality of strikes based on good faith belief of ULP even if allegations prove untrue.

• Article 248(i) of the Labor Code — Defines violation of a collective bargaining agreement as an unfair labor practice.
• Article 263 of the Labor Code — Establishes the State policy to encourage free trade unionism and guarantees the right to strike and picket for collective bargaining or mutual benefit and protection.
• Article 264 of the Labor Code — Prohibits the bringing of armed forces or armed persons to picket lines unless actual violence or other criminal acts occur.
• Articles 239 and 240 of the Labor Code — Establish that only the Bureau of Labor Relations may cancel a union's certificate of registration.
• Article 279 of the Labor Code — Governs reinstatement and backwages; the Court noted that Republic Act No. 6715, which amended this article to provide for full backwages, was not applicable because the Labor Arbiter's decision predated the law's effectivity.