San Miguel Corporation vs. NLRC

A strike declared after the NCMB has converted the union’s notice of strike into preventive mediation is illegal for lack of a valid notice, and the NLRC has the power and duty under Article 218(e) of the Labor Code to enjoin such actual or threatened unlawful strike; failure to do so is grave abuse of discretion. The union’s failure to exhaust the CBA grievance and arbitration procedure further justifies injunctive relief.

San Miguel Corporation (SMC) and Ilaw at Buklod ng Manggagawa (IBM), the exclusive bargaining agent of SMC’s daily-paid rank-and-file employees, were parties to a Collective Bargaining Agreement (CBA). The CBA established grievance and arbitration machinery for all disputes and included a mutually enforceable no-strike no-lockout agreement. The dispute implicated the Labor Code provisions governing injunctions in labor disputes, strikes, and preventive mediation, including Articles 218(e), 254, 263, and 264, and the Implementing Rules on strike notices.

San Miguel Corporation (SMC) and Ilaw at Buklod ng Manggagawa (IBM), the exclusive bargaining agent of SMC’s daily-paid rank-and-file employees, executed a Collective Bargaining Agreement (CBA). The CBA required all disputes to be submitted to grievance and arbitration proceedings, included a mutually enforceable no-strike no-lockout agreement, and provided that no strike or lockout could be declared during the term of the agreement so long as the grievance procedure was followed.

On April 11, 1994, IBM, through vice-president Alfredo Colomeda, filed with the National Conciliation and Mediation Board (NCMB) a notice of strike docketed as NCMB-NCR-NS-04-180-94 against SMC for alleged illegal dismissal of union members, illegal transfer, violation of CBA, contracting out of jobs, labor-only contracting, harassment of union officers and members, non-recognition of duly-elected union officers, and other acts of unfair labor practice. The next day, IBM, through president Edilberto Galvez, filed another notice of strike docketed as NCMB-NCR-NS-04-182-94, raising similar grounds. The Galvez group requested consolidation of the notices, but the Colomeda group opposed, alleging Galvez’s lack of authority. SMC then filed a Motion for Severance of Notices of Strike with Motion to Dismiss, arguing that the notices raised non-strikeable issues and affected four corporations that were separate and distinct from each other.

After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that the real issues involved were non-strikeable. On May 2, 1994, he issued separate letter-orders to both union groups converting their notices of strike into preventive mediation, noting that the issues affected not only SMC but also Magnolia-Nestle Corporation, San Miguel Foods, Inc., and San Miguel Juices, Inc., which were separate and distinct corporate entities. On May 16, 1994, while separate preventive mediation conferences were ongoing, the Colomeda group filed with the NCMB a notice of holding a strike vote. SMC opposed this by invoking PAL vs. Drilon, and the NCMB reiterated the conversion of the notice of strike into preventive mediation and emphasized that the grounds raised centered only on an intra-union conflict, which was not strikeable.

On May 23, 1994, the Galvez group filed its second notice of strike against SMC, docketed as NCMB-NCR-NS-05-263-94, adding grounds of discrimination, coercion of employees, illegal lockout, and illegal closure. The NCMB found these grounds to be mere amplifications of those alleged in the first notice and ordered the consolidation of the second notice with the preceding one already reduced to preventive mediation. On the same date, the group notified the NCMB of its intention to hold a strike vote on May 27, 1994. On May 27, 1994, the Colomeda group notified the NCMB of strike vote results favoring a strike, but the NCMB advised that the notice of strike was deemed not filed and that any subsequent strike would be invalid for lack of compliance with the notice requirement.

Despite the pending preventive mediation proceedings, IBM went on strike on June 4, 1994. The strike paralyzed SMC’s operations and allegedly caused losses worth P29.98 million in daily lost production. Two days later, SMC filed with the NLRC an amended Petition for Injunction with prayer for a temporary restraining order, free ingress and egress order, and deputization order. After hearing and ocular inspection, the NLRC on June 13, 1994 issued a TRO directing free ingress to and egress from SMC’s plants, without prejudice to the union’s right to peaceful picketing and continuous hearings on the injunction case. To minimize further damage, SMC entered into a Memorandum of Agreement with IBM on June 16, 1994, calling for the lifting of picket lines and resumption of work in exchange for good faith talks; the MOA stated that the cases filed in relation to the dispute would continue and would not be affected by the agreement. The picket lines ended and work resumed.

IBM thereafter moved to reconsider the issuance of the TRO and sought to dismiss the injunction case in view of the cessation of its picketing activities as a result of the MOA, arguing that the case had become moot and academic because there were no more prohibited activities to restrain, actual or threatened. SMC opposed and submitted copies of flyers being circulated by IBM as proof of the union’s alleged threat to revive the strike. The NLRC did not rule on the opposition to the TRO and allowed it to lapse. On November 29, 1994, the NLRC denied the petition for injunction for lack of factual basis, finding that the circumstances at the time did not constitute or no longer constituted an actual or threatened commission of unlawful acts. It denied SMC’s motion for reconsideration on February 1, 1995. The flyers, dated June 19, 1994, just a day after the union’s manifestation that there existed no threat of commission of prohibited activities, were not denied by respondent and declared: “Ipaalala n’yo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line.”

• Enforcement of CBA and Arbitration: Petitioner argued that the NLRC gravely abused its discretion when it failed to enforce, by injunction, the parties’ reciprocal obligations to submit to arbitration and not to strike.
• Injunctive Relief as Substitute: Petitioner maintained that the NLRC gravely abused its discretion in withholding injunction, which is the only immediate and effective substitute for the disastrous economic warfare that arbitration is designed to avoid.
• TRO Lapse and Denial: Petitioner contended that the NLRC gravely abused its discretion in allowing the TRO to lapse without resolving the prayer for injunction, denying injunction without expressing the facts and the law on which it is based, and issuing its denial five months after the lapse of the TRO.

• Mootness: Respondent argued that the injunction case had become moot and academic because its picketing activities ceased after the MOA, leaving no prohibited activities, actual or threatened, to restrain.
• Intra-Union Authority: The Colomeda group opposed the Galvez group’s request for consolidation, alleging Galvez’s lack of authority in filing the notice of strike.

• NLRC Duty to Enjoin Unlawful Strike: Whether the NLRC gravely abused its discretion in failing to enjoin IBM’s strike despite the NCMB’s conversion of the notices of strike into preventive mediation and the lack of a valid notice of strike.
• Existence of Actual or Threatened Unlawful Acts: Whether the NLRC gravely abused its discretion in denying injunctive relief for lack of factual basis despite evidence of a threatened revival of the strike.
• CBA Grievance and Arbitration: Whether the union’s failure to exhaust the CBA grievance and arbitration procedures justified injunctive relief against the strike.
• Procedural Lapse: Whether the NLRC gravely abused its discretion in allowing the TRO to lapse without resolving the injunction prayer and in denying injunction without stating the facts and law on which it was based.

• NLRC Duty to Enjoin Unlawful Strike: Yes. The NLRC gravely abused its discretion in denying the injunction. Under Article 218(e) of the Labor Code, it has the power and duty to enjoin actual or threatened unlawful acts, and a strike without a valid notice is illegal.
• Existence of Actual or Threatened Unlawful Acts: Yes. The flyers circulated by the IBM-NCR Council threatening to revive the picket line established a threatened unlawful act, contrary to the NLRC’s finding of no factual basis.
• CBA Grievance and Arbitration: Yes. The union’s failure to exhaust the CBA grievance and arbitration procedures violated the CBA and further justified injunctive relief.
• Procedural Lapse: Yes. The NLRC allowed the TRO to lapse without resolving the injunction prayer and denied the injunction without substantiating its conclusion, contributing to the grave abuse of discretion.

• NLRC Duty to Enjoin Unlawful Strike: Article 254 of the Labor Code generally prohibits injunctions in labor disputes except as provided in Articles 218 and 264. Article 218(e) confers upon the NLRC the power to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party. Article 264(a) makes a declaration of strike without first having filed the required notice a prohibited activity, which may be prevented through an injunction under Article 254. A strike must be pursued within legal bounds, and Article 263 and its Implementing Rules require the filing of a valid notice of strike with the NCMB. In this case, the NCMB converted IBM’s notices into preventive mediation after finding that the real issues were non-strikeable. Under the Implementing Rules, the conversion had the effect of dismissing the notices of strike. PAL vs. Drilon held that the effect of such a declaration is to drop the case from the docket of notice of strikes, as if there was no notice of strike, and that no strike could be legally declared during the pendency of preventive mediation. IBM nevertheless proceeded with the strike while mediation was ongoing and despite NCMB advisories warning of the lack of notice. The NLRC had the legal duty and obligation to enjoin the unlawful strike. San Miguel Corporation vs. NLRC and IBM vs. NLRC held that the NLRC committed grave abuse of discretion when it denied a petition for injunction to restrain a strike based on non-strikeable grounds and when it failed to enjoin a partial strike staged in violation of law. The NLRC issued only a TRO for free ingress and egress but did not enjoin the unlawful strike itself. Its failure to do so was grave abuse of discretion.
• Existence of Actual or Threatened Unlawful Acts: The NLRC ruled that there was a lack of factual basis for issuing the injunction. Contrary to this finding, at the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM-NCR Council which led the union. These flyers categorically declared: “Ipaalala n’yo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede nating muling itirik ang picket line.” The flyers were not denied by respondent and were dated June 19, 1994, just a day after the union’s manifestation with the NLRC that there existed no threat of commission of prohibited activities. Article 264(a) explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. The NLRC should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike.
• CBA Grievance and Arbitration: The CBA provisions on grievance and arbitration required that all disputes be settled through the grievance machinery and arbitration, and that no dispute be presented for arbitration until all steps of the grievance procedure were exhausted. SMC evinced its willingness to negotiate by seeking an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent, however, resorted to force without exhausting all available means within its reach. San Miguel Corp. vs. NLRC ruled that the union therein violated the mandatory provisions of the CBA when it filed a notice of strike without availing of the remedies prescribed therein, and that the notice of strike should have been dismissed and the union ordered to proceed with the grievance and arbitration proceedings. Insurefco Paper Pulp & Project Workers’ Union vs. Insular Sugar Refining Corp. held that strikes held in violation of the terms contained in a collective bargaining agreement are illegal, especially when they provide for conclusive arbitration clauses. Such infringement of the CBA provisions constituted further justification for the issuance of an injunction against the strike.
• Procedural Lapse: The NLRC issued a TRO only for free ingress to and egress from SMC’s plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike and, five months after the lapse of the TRO, came out with a decision summarily rejecting petitioner’s cited jurisprudence by stating that the cited jurisprudence did not squarely cover and apply in the case, without stating any reason to substantiate the conclusion. The NLRC also allowed the TRO to lapse without resolving the prayer for injunction. These circumstances formed part of the grave abuse of discretion.

• Injunctive Relief in Labor Disputes — Article 254 generally prohibits injunctions in labor disputes except as provided in Articles 218 and 264. Article 218(e) empowers the NLRC to enjoin actual and threatened prohibited or unlawful acts, or to require performance of a particular act, where failure may cause grave or irreparable damage or render ineffectual a decision. Article 264(a) makes a strike without the required notice a prohibited activity. The Court applied these provisions to hold that the NLRC should have enjoined IBM’s strike.
• Valid Notice of Strike as Mandatory Requisite — Article 263 and the Implementing Rules require a valid notice of strike, imposed to encourage voluntary settlement. A strike without such notice is illegal. The NCMB’s conversion of IBM’s notices into preventive mediation meant the notices were dismissed, so the subsequent strike lacked the mandatory notice.
• Effect of Conversion to Preventive Mediation — When the NCMB converts a notice of strike into preventive mediation because the issues are non-strikeable, the case is dropped from the docket of notice of strikes as if no notice had been filed. During preventive mediation, no strike may be legally declared. IBM’s strike during ongoing mediation was therefore illegal.
• NLRC’s Duty to Enjoin Unlawful Strikes — The NLRC has the legal duty and obligation to enjoin a strike staged in violation of law. Failure promptly to issue an injunction is an abuse of discretion. The Court found grave abuse because the NLRC issued only a free ingress and egress TRO and later denied the injunction.
• Exhaustion of CBA Grievance and Arbitration Procedures — Where the CBA provides grievance and arbitration machinery, the union must exhaust all steps before filing a notice of strike or staging a strike. A strike held in violation of CBA terms is illegal, especially where the CBA provides for conclusive arbitration clauses. IBM’s failure to exhaust these procedures further justified the injunction.
• No-Strike Clause Scope — No-strike clauses bar economic strikes but not strikes grounded on unfair labor practices, the initial determination of which is for labor arbiters. The Court noted this rule but did not rely on it because the invalidity of the notices of strike already disposed of the issue.
• Strikes as Legitimate but Subject to Judicial Intervention — Trade unionism and strikes are legitimate weapons granted by statute, but their misuse may be subject to judicial intervention to forestall grave injury to a business enterprise. The Court applied this principle in granting the injunction.

• "The NCMB had declared the notice of strike as "appropriate for preventive mediation." The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike. During the pendency of preventive mediation proceedings no strike could be legally declared... The strike which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by the petitioner as "an ambush."" — This passage, quoted from PAL vs. Drilon, states the controlling effect of converting a notice of strike into preventive mediation and explains why IBM’s strike was illegal for lack of a valid notice.
• "Contrary to the NLRC’s finding, we find that at the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM-NCR Council which led the union." — This passage rejects the NLRC’s factual finding that there was no actual or threatened unlawful act and establishes the basis for injunctive relief.
• "As in the abovecited case, petitioner herein evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent however resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike." — This passage holds that the union’s failure to exhaust the CBA grievance and arbitration procedures independently justified the injunction.
• "Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved." — This passage states the canonical rule on the illegality of strikes that violate CBA terms, which the Court applied to IBM’s conduct.

• San Miguel Corporation vs. NLRC, 304 SCRA 1 (1999) — Controlling precedent; the NLRC committed grave abuse of discretion when it denied a petition for injunction to restrain a union from declaring a strike based on non-strikeable grounds.
• IBM vs. NLRC, 198 SCRA 586 (1991) — Held that the NLRC has the legal duty and obligation to enjoin a partial strike staged in violation of law, and that failure promptly to issue an injunction is an abuse of discretion.
• PAL vs. Drilon, 193 SCRA 223 (1991) — Controlling precedent; a strike was declared illegal for lack of a valid notice of strike because the NCMB had converted the notice into preventive mediation, and no strike could be legally declared during the pendency of such proceedings.
• NUWHRAIN vs. NLRC, 287 SCRA 192 (1998) — The union’s refusal to heed the NCMB’s prohibition to strike after the notices of strike were dismissed was reflective of bad faith.
• Insurefco Paper Pulp & Project Workers’ Union vs. Insular Sugar Refining Corp., 95 Phil. 761 (1954) — Strikes held in violation of CBA terms are illegal, especially when the CBA provides for conclusive arbitration clauses.
• MSMG-UWP vs. Ramos, et al., 326 SCRA 428 (2000), citing Master Iron Labor Union et al., vs. NLRC et al., 219 SCRA 47 (1993) — No-strike clauses only bar economic strikes, not strikes grounded on unfair labor practices; the Court noted this rule but did not rely on it because the notices of strike were invalid.
• AIUP et al., vs. NLRC et al., 305 SCRA 219 (1999) — A strike must be pursued within legal bounds; the Court cited this in holding IBM’s strike unlawful.

• Article 254, Labor Code — No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity except as otherwise provided in Articles 218 and 264. The Court used this as the starting point for analyzing the NLRC’s injunctive power.
• Article 218(e), Labor Code — The NLRC has the power to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts, or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party. The Court held that this power should have been exercised to enjoin IBM’s unlawful strike.
• Article 263, Labor Code — Prescribes the procedural requisites for a valid strike, including the filing of a valid notice of strike with the NCMB. The requirement is mandatory, and lack of a valid notice renders a strike illegal.
• Article 264(a), Labor Code — A declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. The Court cited this to confirm that IBM’s strike was enjoined.
• Article 211(a), Labor Code — Declares the state policy of favoring voluntary modes of settling labor disputes. The NCMB’s conversion of the notices into preventive mediation was in pursuance of this policy.
• Book V, Rule XXII, Sec. 1, Implementing Rules of the Labor Code — Provides the grounds for strike and lockout and states that no strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on issues brought to voluntary or compulsory arbitration. This supported the NCMB’s finding that the issues were non-strikeable.
• Book V, Rule XXII, Sec. 3, Implementing Rules of the Labor Code — Any notice which does not conform with the requirements shall be deemed as not having been filed. This supported the conclusion that IBM’s notices were dismissed upon conversion to preventive mediation.
• Book V, Rule XXII, Sec. 6, Implementing Rules of the Labor Code — The NCMB is duty-bound to exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably, and parties are obliged to bargain collectively in good faith and are prohibited from impeding or disrupting the proceedings. IBM’s strike during preventive mediation violated this provision.
• Article XIII, Section 3, Constitution — Affirms the state’s commitment to enforce mutual compliance with labor laws to foster industrial peace. The Court cited this in condemning IBM’s disregard of legal requirements.

Davide, Jr., C.J. (Chairman), Vitug, Ynares-Santiago, and Carpio, JJ., concur.