Master Iron Labor Union vs. NLRC

A strike staged on grounds of unfair labor practice, such as the employer's violation of a collective bargaining agreement, is legal and does not violate a no-strike, no-lockout clause in the CBA, which applies only to economic strikes.

Master Iron Works and Construction Corporation (the Corporation) and the Master Iron Labor Union (MILU) were parties to a collective bargaining agreement (CBA) effective from December 1, 1986, to November 30, 1989. The CBA contained a no-strike, no-lockout clause and provided for service allowances for workers assigned outside the company plant. Shortly after the CBA's execution, the Corporation began subcontracting outside workers to perform jobs ordinarily done by its regular employees, resulting in reduced workdays for union members. Despite MILU's requests to implement the CBA's grievance procedure and a subsequent agreement brokered by the Department of Labor and Employment (DOLE) to restore work to regular employees, the Corporation continued the practice and suspended the union president for insubordination when he insisted on performing his regular duties.

• Parties and CBA: The Master Iron Works and Construction Corporation (Corporation) and the Master Iron Labor Union (MILU) were bound by a CBA from December 1, 1986, to November 30, 1989. The CBA included a no-strike/no-lockout clause (Section 1) and provisions for service allowances for work outside the plant (Section 2).
• Employer's Subcontracting: Immediately after signing the CBA, the Corporation subcontracted outside workers to perform jobs regularly done by its unionized employees, reducing the latter's work to a rotation basis of approximately ten days per month.
• Failed Grievance and DOLE Intervention: MILU's request to invoke the CBA's grievance procedure was ignored. After MILU filed a notice of strike in April 1987, DOLE intervention led to an agreement where the Corporation promised to restore work to regular employees. This agreement was not honored.
• Suspension and Further Conciliation Failure: The union president, Wilfredo Abulencia, was suspended for three days for insubordination after attempting to perform his regular work. Subsequent conciliation conferences called by the DOLE were ignored by the Corporation, which maintained that hiring casual workers was a management prerogative.
• Strike and Dispersal: MILU filed a new notice of strike on July 9, 1987, citing violation of CBA, discrimination, unreasonable suspension of union officials, and refusal to entertain grievances. The strike commenced on July 24, 1987. On July 28, 1987, CAPCOM soldiers summoned by the Corporation's counsel dispersed the peaceful picket line, arresting several strikers on charges of illegal possession of firearms and weapons, which were later dismissed.
• Offer to Return to Work: On October 22, 1987, MILU's president sent a letter offering to return to work, expressing a desire for continued dialogue to maintain a good relationship.
• Lower Court Findings: The Labor Arbiter found that the CAPCOM dispersal was unwarranted as no widespread violence had occurred. The Arbiter nevertheless declared the strike illegal based on the CBA's no-strike clause.

• Nature of the Strike: Petitioners argued that the strike was legal because its grounds (CBA violation, discrimination, suspension of officials, refusal to entertain grievances) were non-economic and constituted unfair labor practices, making the no-strike clause in the CBA inapplicable.
• Exhaustion of Grievance Procedure: Petitioners maintained that they had sought to implement the grievance procedure but the Corporation ignored their requests, thus exhausting administrative remedies or being excused from doing so.
• Unconditional Offer to Return: Petitioners contended that their offer to return to work was unconditional; the mention of continuing talks for a peaceful relationship did not constitute a condition.
• Bias and Abuse of Discretion: Petitioners charged the NLRC with bias for failing to give weight to the dismissal of criminal charges against them and for improperly crediting the Corporation's witnesses without allowing cross-examination.

• Economic Nature of the Strike: Respondent Corporation countered that the union's demand for the implementation of the service allowance provision was an economic issue, thus bringing the strike within the scope of the no-strike clause.
• Management Prerogative: Respondent argued that the hiring of casual/subcontracted workers was a valid exercise of management prerogative.
• Conditional Offer to Return: Respondent asserted that the union's offer to return to work was conditional because it mentioned the continuation of negotiations.
• Failure to Exhaust Grievance Procedure: Respondent implied that the union had not fully exhausted the grievance machinery provided in the CBA before staging the strike.

• Validity of the Strike: Whether the strike staged by MILU was illegal for violating the no-strike clause in the CBA.
• Termination of Employees: Whether the individual petitioners' employment was validly terminated due to their participation in the strike.
• Legality of the Picket Line Dispersal: Whether the dispersal of the picket line by CAPCOM soldiers was lawful.

• Validity of the Strike: The strike was legal. The no-strike clause in a CBA applies only to economic strikes (those seeking wage or other concessions not required by law). Here, the strike was grounded on the employer's unfair labor practices—specifically, violation of the CBA by subcontracting work to circumvent service allowances and refusing to process grievances. Such grounds are non-economic, and a strike to protest unfair labor practice is protected activity.
• Termination of Employees: The termination of the individual petitioners was invalid. Because the strike was legal, participation in it was a protected concerted activity. The employees are entitled to reinstatement with backwages for three years (as the amendatory law on full backwages, R.A. 6715, was not yet effective at the time of the Labor Arbiter's decision).
• Legality of the Picket Line Dispersal: The dispersal was unlawful. Article 264(d) of the Labor Code prohibits public officials or police from entering a picket line unless actual violence or other criminal acts occur. The Labor Arbiter found no pervasive violence, and the subsequent dismissal of criminal charges against the strikers confirmed the absence of justification for the CAPCOM's intervention.

• Economic vs. Non-Economic Strikes — An economic strike is one aimed at forcing wage or other concessions from the employer that are not legally mandated. A no-strike clause in a CBA is applicable only to such economic strikes. A strike based on unfair labor practice (e.g., violation of a CBA) is non-economic and is not barred by a no-strike clause.
• Limitations on Management Prerogative — While hiring, firing, and subcontracting are management prerogatives, they are not absolute. They are subject to limitations imposed by law, the collective bargaining agreement, and the general principles of fair play and justice. An exercise of prerogative that violates a CBA constitutes unfair labor practice.
• Protected Strike Activity and Individual Liability — A strike is presumed legal. If a strike is grounded on unfair labor practice, it remains legal even if tainted with some isolated acts of violence, unless the violence is pervasive and deliberate as a matter of policy. Responsibility for illegal acts during a strike should be individual, not collective, to avoid rendering the right to strike illusory.

• "A no-strike clause in a CBA is applicable only to economic strikes. Corollarily, if the strike is founded on an unfair labor practice of the employer, a strike declared by the union cannot be considered a violation of the no-strike clause."
• "The Corporation's assertion that it was exercising a management prerogative in hiring outside workers being contrary to the contract of employment which, of necessity, states the expected wages of the workers, as well as the CBA, is therefore untenable."
• "The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak of violence, was clearly in violation of [Article 264(d) of the Labor Code]."

• Philippine Metal Foundries, Inc. vs. CIR, 90 SCRA 135 (1979) — Cited as controlling authority that a no-strike clause in a CBA applies only to economic strikes.
• Consolidated Labor Association of the Philippines vs. Marsman & Co., Inc., 11 SCRA 589 (1964) — Used to define an economic strike as one to force concessions not required by law.
• Shell Oil Workers' Union vs. Shell Company of the Philippines, Ltd., 39 SCRA 276 (1971) — Cited for the principle that responsibility for violence during a strike should be individual, not collective, to preserve the right to strike, especially when unfair labor practice is involved.
• National Federation of Labor Unions vs. NLRC, 202 SCRA 346 (1991) and University of Sto. Tomas vs. NLRC, 190 SCRA 758 (1990) — Cited to establish that management prerogatives are subject to legal and contractual limitations.

• Article 248(i), Labor Code — Defines unfair labor practices of employers to include violation of a collective bargaining agreement. The Court found the Corporation's subcontracting in violation of the CBA constituted ULP under this provision.
• Article 264(d), Labor Code — Prohibits public officials or police from bringing in or escorting individuals into a strike area or entering picket lines unless actual violence or criminal acts occur. The Court held the CAPCOM dispersal violated this provision.
• Article 263(b), Labor Code — Cited as embodying the state policy to encourage free trade unionism and recognize the right to strike and picket.

• Justice Jose C. Melo (Ponente)
• Justice Florenz D. Regalado
• Justice Abdulwahid A. Bidin
• Justice Josue N. Bellosillo
• Justice Jose A. R. Melo