Steel Corporation of the Philippines vs. SCP Employees Union-NAFLU

A union-recognition strike staged after the labor dispute has been certified for compulsory arbitration and in defiance of the Secretary of Labor's return-to-work order is illegal, and union officers who knowingly participate in such illegal strike may be declared to have lost their employment status. The employer possesses the option to terminate union officers under Article 264 of the Labor Code, while mere participation by ordinary union members in a lawful strike does not constitute sufficient ground for termination.

Steel Corporation of the Philippines (SCP) is a manufacturer of construction materials, supplying approximately fifty percent of domestic roofing material needs. Two labor organizations sought to represent SCP's rank-and-file employees: SCP-Federated Union of the Energy Leaders – General and Allied Services (FUEL-GAS) and SCP Employees Union (SCPEU) – National Federation of Labor Unions (NAFLU), herein respondent. The dispute over which union was entitled to act as exclusive bargaining agent generated multiple certification elections, election protests, appeals, and cross-petitions before the Med-Arbiter, the Department of Labor and Employment, the National Labor Relations Commission, and the Court of Appeals, producing overlapping proceedings that culminated in the strike at issue.

Steel Corporation of the Philippines (SCP) is engaged in manufacturing construction materials, supplying approximately fifty percent of the domestic need for roofing materials. Two labor organizations competed to represent SCP's rank-and-file employees: FUEL-GAS and respondent SCP Employees Union (SCPEU) – NAFLU. On August 17, 1998, FUEL-GAS filed a petition for certification election; respondent sought to intervene but was denied for having filed out of time. A consent election conducted on September 14, 1998, with "FUEL-GAS" and "NO UNION" as choices, was declared a failure because less than a majority of employees cast their votes. FUEL-GAS filed an election protest alleging irregularities. On September 21, 1998, NAFLU, the mother federation of respondent, filed its own petition for certification election on behalf of its affiliate. The Med-Arbiter denied FUEL-GAS's protest and granted NAFLU's petition, ordering an election with "NAFLU" and "NO UNION" as choices. Both SCP and FUEL-GAS appealed to the Secretary of Labor.

On August 27, 1999, the DOLE Undersecretary rendered a consolidated decision ordering a certification election with "FUEL-GAS," respondent, and "NO UNION" as choices; motions for reconsideration were denied on October 18, 1999. SCP and FUEL-GAS appealed to the CA. On April 14, 2000, the certification election proceeded with FUEL-GAS participating without prejudice to the pending CA petition. Respondent emerged as winner, prompting FUEL-GAS's second election protest. On July 12, 2000, the CA in CA-G.R. SP No. 55721 annulled the Undersecretary's decision and directed a certification election with "FUEL-GAS" and "NO UNION" only, to the exclusion of respondent. On July 31, 2000, the Med-Arbiter dismissed FUEL-GAS's protest but deferred respondent's request to be declared winner pending resolution of the CA petitions. Respondent appealed to the Labor Secretary and filed a manifestation before the CA pointing out its victory in the April 14, 2000 election as an intervening event sufficient to bar another certification election; the CA dismissed the manifestation on December 28, 2000.

On October 16, 2000, the Undersecretary certified respondent as the exclusive bargaining agent. Respondent sent CBA proposals to petitioner, but petitioner held any action in abeyance in view of its pending motion for reconsideration. On December 11, 2000, respondent filed a Notice of Strike with the NCMB, charging petitioner with unfair labor practice for refusal to bargain. On February 27, 2001, the Undersecretary affirmed its October 16, 2000 decision. On March 16, 2001, the labor dispute was certified to the NLRC for compulsory arbitration as Cert. Case No. 000200-01. On April 2, 2001, respondent filed another Notice of Strike alleging refusal to bargain, non-recognition, discrimination, harassment, illegal dismissal, and union busting, which was consolidated with the certified case. On April 17, 2002, the NLRC in the first certified case declared that petitioner had no obligation to recognize respondent, dismissed the ULP charge, declared the strike illegal, and declared loss of employment of the union officers. Both parties filed motions for reconsideration.

On February 4, 2003, respondent went on strike. On February 7, 2003, the Labor Secretary certified the dispute to the NLRC and directed the employees to return to work, docketed as NLRC NCR CC No. 00253-03. On September 8, 2003, the NLRC in the second certified case ordered petitioner to bargain collectively with respondent and ordered reinstatement of the employees dismissed in connection with the February 4, 2003 strike, without loss of seniority rights and without diminution of salary. Petitioner's motion for reconsideration was denied on January 26, 2004. Meanwhile, on February 12, 2003, the NLRC in the first certified case resolved the parties' motions for reconsideration collectively, modifying its earlier resolution by ordering the reinstatement of the union officers it had previously ordered terminated. Petitioner's motion for reconsideration was denied on June 30, 2003. The CA consolidated the petitions arising from both certified cases. On February 28, 2005, the CA denied the petition in CA-G.R. SP No. 79446 and partially granted the petition in CA-G.R. SP No. 82314, decreeing the parties to comply with the CA's directives in CA-G.R. SP No. 55721. Petitioner's motion for reconsideration was denied on September 22, 2005.

• Illegality of the February 2003 Strike: Petitioner contended that the February 2003 strike was illegal as a union-recognition strike, staged to compel petitioner to recognize respondent over the other union despite respondent's doubtful majority status and lack of formal certification as exclusive representative.
• Violation of Article 264: Petitioner argued that the strike was manifestly illegal for gross violation of Article 264 of the Labor Code, which expressly prohibits the declaration of a strike over an issue pending compulsory arbitration between the parties, as the first certified case involving the same labor dispute was still pending at the time of the strike.
• Res Judicata: Petitioner maintained that the NLRC's decision in Cert. Case No. 000200-01, which had already resolved the illegality of a March 2001 strike over the same labor dispute, constituted res judicata in the second certified case, NLRC NCR CC No. 00253-03.
• Termination of Union Officers: Petitioner argued that union officers who participated in the illegal strike were deemed to have lost their employment, as the law distinguishes between union members and union officers — mere participation of union officers in an illegal strike warrants termination, unlike ordinary members whose dismissal requires proof of illegal acts.
• Reinstatement of Employees Who Defied Return-to-Work Order: Petitioner maintained that the CA erred in affirming the NLRC decision ordering reinstatement of employees dismissed for refusing to comply with the Labor Secretary's return-to-work order, as the termination was due to such refusal, not merely participation in the strike.
• Procedural Error — NLRC Reconsideration: Petitioner averred that the CA committed serious procedural error in concluding that the NLRC may reconsider in one certified case its decision in another certified case which had become final and executory.

• Validity of the Strike: Whether the strike conducted by respondent on February 4, 2003 was illegal.
• Reinstatement of Union Officers: Whether the CA erred in affirming the NLRC's order to reinstate the union officers who participated in the illegal strike.
• Return-to-Work Order Compliance: Whether the employees who defied the Secretary of Labor's return-to-work order could be ordered reinstated.
• NLRC Reconsideration Across Cases: Whether the NLRC may reconsider in the second certified case its decision in the first certified case which had become final and executory.

• Validity of the Strike: Yes, the strike was illegal. It was a union-recognition strike not sanctioned by labor laws, staged after the dispute had been certified for compulsory arbitration, and conducted in violation of the Secretary of Labor's return-to-work order.
• Reinstatement of Union Officers: No, the order to reinstate the union officers was reversed and set aside. Under Article 264 of the Labor Code, the employer possesses the right and prerogative to terminate union officers who knowingly participated in an illegal strike.
• Return-to-Work Order Compliance: No, employees who defied the return-to-work order could not be ordered reinstated. A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived; workers who choose not to obey do so at the risk of severing their relationship with the employer.
• NLRC Reconsideration Across Cases: N/A — the Court did not separately rule on this procedural issue, having resolved the petition on the illegality of the strike and the termination of union officers.

• Validity of the Strike: The strike was patently illegal for three independent reasons. First, it was a union-recognition strike — respondent's notices of strike were founded on petitioner's continued refusal to bargain, and the strike was staged to compel petitioner to recognize respondent as the collective bargaining agent. A union-recognition strike is calculated to compel the employer to recognize one union over contending groups despite the striking union's doubtful majority status and lack of formal certification. The certification election in which respondent emerged as winner was not recognized as valid, as the CA in CA-G.R. SP No. 55721 had nullified it and directed another election excluding respondent. Having been settled with finality that respondent was not the recognized bargaining agent, it had no authority to represent the rank-and-file employees and could not compel petitioner to bargain. Second, the strike was undertaken after the dispute had been certified for compulsory arbitration. Article 264 of the Labor Code expressly prohibits the declaration of a strike after certification or submission of the dispute to compulsory arbitration or during the pendency of cases involving the same grounds. Respondent filed multiple notices of strike, all founded on substantially the same grounds — petitioner's refusal to recognize it — and staged the strike after the dispute had been certified to the NLRC. Third, the strike was conducted in defiance of the Secretary's return-to-work order. Under Article 263(g), the Secretary's assumption of jurisdiction automatically enjoins an impending strike or requires the lifting of one already taken place; the mere issuance of an assumption order carries with it a return-to-work order even if not expressly stated. A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. Regardless of their motives or the validity of their claims, striking workers must cease and desist from acts that undermine the authority of the Secretary of Labor once an assumption or certification order is issued.

• Reinstatement of Union Officers: Article 264 of the Labor Code makes a distinction between union members and union officers. A worker merely participating in an illegal strike may not be terminated; only when he commits illegal acts during a strike may he be declared to have lost employment status. For union officers, however, knowingly participating in an illegal strike is sufficient ground for termination. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost employment status. Otherwise, workers would simply refuse to return to work and cause a standstill in company operations while retaining the positions they refuse to discharge and preventing management from filling up their positions. Since the strike was illegal, the termination of the union officers who knowingly participated was warranted, and the CA's order to reinstate them could not stand.

• Return-to-Work Order Compliance: The return-to-work order imposed an obligation, not a waivable right. The extraordinary authority given to the Secretary of Labor under Article 263(g) is aimed at arriving at a peaceful and speedy solution to labor disputes without jeopardizing national interests. Regardless of their motives or the validity of their claims, striking workers must cease and desist from any acts that undermine the authority of the Secretary of Labor once an assumption or certification order is issued. They cannot ignore return-to-work orders by citing unfair labor practices to justify their action. Employees who defied the return-to-work order did so at the risk of severing their relationship with the employer.

• NLRC Reconsideration Across Cases: The Court did not separately resolve this procedural issue, having determined that the strike was illegal and that the union officers' termination was warranted, which disposed of the need to address whether the NLRC could reconsider across cases.

• Union-Recognition Strike — A union-recognition strike is one calculated to compel the employer to recognize one's union and not other contending groups as the employees' bargaining representative, despite the striking union's doubtful majority status to merit voluntary recognition and lack of formal certification as the exclusive representative in the bargaining unit. Such strikes are not sanctioned by labor laws and are illegal.

• Automatic Return-to-Work Order Upon Assumption of Jurisdiction — The moment the Secretary of Labor assumes jurisdiction over a labor dispute in an industry indispensable to national interest, such assumption automatically enjoins an impending strike or requires the lifting of one already taking place. The mere issuance of an assumption order carries with it a return-to-work order, even if the directive to return to work is not expressly stated in the assumption order.

• Prohibition Against Strikes During Compulsory Arbitration — Under Article 264 of the Labor Code, no strike or lockout shall be declared after certification or submission of the dispute to compulsory or voluntary arbitration, or during the pendency of cases involving the same grounds for the strike or lockout. A strike staged after certification and based on substantially the same grounds is a prohibited activity and is illegal.

• Distinction Between Union Members and Union Officers in Illegal Strikes — The law distinguishes between union members and union officers regarding the consequences of participating in an illegal strike. A worker merely participating in an illegal strike may not be terminated; termination requires proof that the worker committed illegal acts during the strike. For union officers, however, knowingly participating in an illegal strike is sufficient ground for termination. The employer possesses the right and prerogative to declare a union officer who participated in an illegal strike as having lost employment status.

• Return-to-Work Order as Duty, Not Waivable Right — A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. While workers may choose not to obey, they do so at the risk of severing their relationship with the employer. Returning to work in this situation is not a matter of option or voluntariness but of obligation.

• "The strike undertaken by the officers of respondent union is patently illegal for the following reasons: (1) it is a union-recognition-strike which is not sanctioned by labor laws; (2) it was undertaken after the dispute had been certified for compulsory arbitration; and (3) it was in violation of the Secretary's return-to-work order." — This passage states the ratio decidendi, articulating the three independent grounds for declaring the strike illegal.

• "The mere issuance of an assumption order by the Secretary of Labor automatically carries with it a return-to-work order, even if the directive to return to work is not expressly stated in the assumption order." — This formulation of the automatic return-to-work doctrine is frequently cited in subsequent labor jurisprudence on Article 263(g).

• "A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. While the workers may choose not to obey, they do so at the risk of severing their relationship with their employer." — This passage defines the legal character of return-to-work orders as obligations rather than waivable rights, a principle central to the Court's ruling on the termination of employees who defied the order.

• "The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service." — This passage articulates the distinction between union members and union officers under Article 264, establishing that the employer's option to terminate union officers is a matter of right, not discretion.

• Association of Independent Unions in the Philippines (AIUP) vs. NLRC, 354 Phil. 697 — Cited for the proposition that the strike is a legitimate weapon in the human struggle for a decent existence but must be pursued within legal bounds, and for the definition of a union-recognition strike as calculated to compel employer recognition despite doubtful majority status.

• Philcom Employees Union vs. Philippine Global Communications and Philcom Corporation, G.R. No. 144315, July 17, 2006, 495 SCRA 214 — Cited for the characterization of the Secretary's powers under Article 263(g) as an exercise of police power aimed at promoting the public good, and for the principle that a return-to-work order imposes a duty rather than a waivable right.

• Telefunken Semiconductors Employees Union vs. Court of Appeals, 401 Phil. 776 — Cited for the doctrine that the mere issuance of an assumption order by the Secretary of Labor automatically carries with it a return-to-work order, even if not expressly stated.

• Manila Hotel Employees Association vs. Manila Hotel Corporation, G.R. No. 154591, March 5, 2007, 517 SCRA 349 — Cited for the principle that returning to work after an assumption or certification order is not a matter of option or voluntariness but of obligation, and that workers cannot ignore return-to-work orders by citing unfair labor practices.

• Santa Rosa Coca-Cola Plant Employees Union vs. Coca-Cola Bottlers Phils., Inc., G.R. Nos. 164302-03, January 24, 2007, 512 SCRA 437 — Cited for the effects of strikes on the relationship between labor and management and on the general peace and progress of society, and for the distinction between union members and union officers regarding termination for participation in an illegal strike.

• Stamford Marketing Corp. vs. Julian, G.R. No. 145496, February 24, 2004, 423 SCRA 633 — Cited in support of the rule that a union officer may be terminated from employment for knowingly participating in an illegal strike.

• Article 263(g), Labor Code — Authorizes the Secretary of Labor to assume jurisdiction over labor disputes in industries indispensable to national interest and to certify the same to the Commission for compulsory arbitration. The provision provides that such assumption or certification automatically enjoins an impending strike or lockout and requires striking employees to immediately return to work. The Court applied this provision to hold that the Secretary's certification of the dispute to the NLRC automatically carried a return-to-work order, which respondent violated by staging the February 4, 2003 strike.

• Article 264, Labor Code (Prohibited Activities) — Prohibits the declaration of a strike or lockout after assumption of jurisdiction by the Secretary or after certification of the dispute to compulsory or voluntary arbitration, or during the pendency of cases involving the same grounds. The provision further distinguishes between union members and union officers: any union officer who knowingly participates in an illegal strike may be declared to have lost employment status, while mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination. The Court applied this provision to declare the strike illegal and to uphold the termination of union officers who knowingly participated.

Puno, C.J. (Chairperson), Carpio (on leave), Corona, and Leonardo-de Castro, JJ., concurred.