Sukhothai Cuisine and Restaurant vs. Court of Appeals

A strike staged during the pendency of voluntary arbitration proceedings is illegal under Article 264 of the Labor Code, regardless of the grounds asserted. Union officers who knowingly participate in an illegal strike, and workers or union officers who knowingly participate in the commission of illegal acts during a strike (such as violence, intimidation, or obstruction of business operations), may be declared to have lost their employment status. In cases of dismissal of union officers constituting union busting, only the 15-day cooling-off period is dispensed with; the notice of strike, strike vote, and seven-day reporting requirement remain mandatory prerequisites.

The case arose from a labor dispute between Sukhothai Cuisine and Restaurant (owned and managed by Rosemich, Inc.) and its employees who organized themselves into the Philippine Labor Alliance Council (PLAC) Local 460 Sukhothai Restaurant Chapter in March 1998. In December 1998, the Union filed a Notice of Strike alleging unfair labor practices, including harassment and union busting. Following conciliation conferences, the parties entered into a Submission Agreement on January 21, 1999, submitting the dispute to voluntary arbitration to prevent the strike. Despite this agreement, the Union staged a "wildcat strike" in June 1999, claiming that the employer violated the agreement by dismissing union members during the arbitration proceedings.

• In March 1998, the majority of petitioner's employees organized themselves into PLAC Local 460 Sukhothai Restaurant Chapter (Union) and affiliated with the Philippine Labor Alliance Council (PLAC).
• On December 3, 1998, the Union filed a Notice of Strike with the NCMB alleging unfair labor practices, specifically acts of harassment, fault-finding, and union busting through coercion and interference with union affairs.
• On December 10, 1998, during a conciliation conference, petitioner agreed not to terminate employees during the pendency of the case, reserving only the right to issue memos for violations of company policies.
• On December 11, 1998, a Strike Vote was conducted and supervised by NCMB personnel, with results submitted on December 21, 1998.
• On January 21, 1999, the parties executed a Submission Agreement, agreeing to submit the unfair labor practice issues to voluntary arbitration to prevent the strike.
• On March 24, 1999, during the pendency of voluntary arbitration, petitioner dismissed Eugene Lucente, a union member, allegedly due to a petty quarrel with a co-employee.
• On the morning of June 24, 1999, petitioner terminated Jose Lanorias, a union member and cook, which immediately triggered a "wildcat strike" by the respondents.
• On June 25, 1999, the Union re-filed a Notice of Strike, converting the protest into a "sit-down strike," which became an "actual strike" on June 26, 1999.
• The strike was characterized by widespread commission of prohibited acts, including: intimidation and harassment of customers to discourage them from entering the restaurant; shouting "Huwag kayong pumasok sa Sukhothai!" (Don't enter Sukhothai!) and "Nilagyan na namin ng lason ang pagkain d'yan!" (We have poisoned the food there!); preventing entry of customers; using abusive language such as "Putang ina niyong lahat!" toward management and non-strikers; physically blocking non-strikers from entering the premises and sharply bumping into them; threatening non-strikers with bodily harm ("Pag hindi sila pumayag, upakan mo!"); and shouting "Granada!" (Grenade) at security guards, causing panic among customers.
• Petitioner filed a complaint for illegal strike on June 29, 1999, seeking to declare the strike illegal and to declare respondents as having lost their employment status.

• The strike was illegal because the Union failed to comply with the mandatory requisites for a lawful strike under Article 263 of the Labor Code; the December 1998 Notice of Strike and Strike Vote could not apply to the June 1999 strike as they were stale and pertained to a dispute already submitted for voluntary arbitration.
• There were no strikeable issues because the alleged dismissals of Lucente and Lanorias were connected to the issues under voluntary arbitration, which should have been resolved through that forum or through separate legal remedies such as illegal dismissal cases, rather than through a strike.
• The Union committed illegal and prohibited acts during the strike, including obstruction of free ingress and egress, intimidation, threats, and violence against customers and non-striking employees, which rendered the strike illegal regardless of its purpose.
• Union officers and members who participated in the illegal strike and committed illegal acts should be declared to have lost their employment status under Article 264(a) of the Labor Code.

• The December 3, 1998 Notice of Strike and December 11, 1998 Strike Vote were applicable to the June 1999 strike under Article 263(f), which states that a strike decision is valid for the duration of the dispute based on substantially the same grounds considered when the vote was taken.
• Even assuming the December 1998 notices were inapplicable, the mandatory requirements could be dispensed with because petitioner was guilty of union busting by dismissing union officers during the voluntary arbitration proceedings, which threatened the existence of the union.
• The strike was justified because petitioner violated the Submission Agreement dated December 10, 1998 (guaranteeing no terminations during the pendency of the case) by dismissing Lucente and Lanorias, thereby committing unfair labor practice.
• The re-filing of the Notice of Strike on June 25, 1999 cured any defect in compliance with mandatory requirements.

• Procedural:
  • Whether the Court of Appeals gravely erred in failing to address all issues raised by the petitioner, amounting to a denial of due process.
• Substantive Issues:
  • Whether the strike staged by the private respondents on June 24-26, 1999 was legal or illegal.
  • Whether the December 1998 Notice of Strike and Strike Vote could be applied to the June 1999 strike under Article 263(f) of the Labor Code.
  • Whether the cooling-off period and seven-day strike ban requirements may be dispensed with in cases of alleged union busting.
  • Whether private respondents who participated in the strike and committed illegal acts were properly declared to have lost their employment status under Article 264(a) of the Labor Code.

• Procedural:
  • The Court held that the Court of Appeals did not violate the petitioner's right to due process. The CA addressed the core issues raised, and the alleged failure to address every single argument does not constitute a denial of due process where the essential issues were resolved.
• Substantive:
  • The strike was declared illegal under Article 264 of the Labor Code, which absolutely prohibits strikes or lockouts "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." Once parties submit a dispute to voluntary arbitration, the strike weapon is suspended.
  • The December 1998 Notice of Strike and Strike Vote could not apply to the June 1999 strike because the parties had already entered into a Submission Agreement on January 21, 1999, submitting the dispute to voluntary arbitration. The prohibition in Article 264 applies regardless of whether the strike is grounded on the same issues.
  • In cases of alleged union busting under Article 263(c), only the 15-day cooling-off period may be dispensed with; the requirements of filing a notice of strike, conducting a strike vote, and submitting the results to the NCMB at least seven days before the intended strike remain mandatory and cannot be waived. The implementing rules (Section 3, Rule XXII, Book V) clarify that the union may take action immediately only after the strike vote is conducted and the results submitted.
  • The strike was attended by widespread prohibited acts under Article 264(e), including violence, coercion, intimidation, obstruction of ingress and egress, and threats against non-strikers and customers. Even if the strike were lawful in purpose, the means employed were illegal.
  • Under Article 264(a), union officers who knowingly participate in an illegal strike may be declared to have lost their employment status. Ordinary workers, however, may only be terminated if they knowingly participated in the commission of illegal acts during the strike. Mere participation in a lawful strike is not a ground for termination.
  • The Court applied the distinction between union officers and members, validating the termination of union officers (Cayno, Bacus, Cablay, Arcilla, Esancha, Panaligan) who knowingly participated in the illegal strike, and validating the termination of specific union members who were proven to have committed illegal acts during the strike (Arsenal, Martinez, Raz, Lanorias, Arce, Sangreo, Fabregas, Balan, Lualhati, Enebrad, Eugenio, Agbuya, Salvador, Del Prado, Del Mundo, Eco, Talidong, Lucente, Tubaon, Naz, Salubre, Pugong, Bathan). Substantial evidence, not proof beyond reasonable doubt, is required to establish individual liability for illegal acts.

• Primacy of Voluntary Arbitration and Arbitration Agreements — The State policy emphasizes the primacy of free collective bargaining and voluntary arbitration as modes of settling labor disputes. Once a dispute is submitted to voluntary arbitration, the parties are bound by the agreement, and strikes are absolutely prohibited to prevent interference with the arbitral process. The rationale is that once jurisdiction is acquired by a competent authority, it should not be interfered with by the coercive processes of a strike.
• Mandatory Requirements for Lawful Strike — The cooling-off period and the seven-day strike ban after submission of strike vote results are mandatory. In cases of dismissal of union officers constituting union busting where the existence of the union is threatened, only the 15-day cooling-off period is dispensed with under Article 263(c); the notice of strike, strike vote, and seven-day report period remain mandatory prerequisites that cannot be waived.
• Distinction Between Union Officers and Members in Illegal Strikes — Article 264(a) distinguishes between union officers and ordinary workers. Union officers who knowingly participate in an illegal strike may be terminated. Ordinary workers cannot be terminated for mere participation in an illegal strike; there must be proof that they committed illegal acts during the strike. Liability for illegal acts must be determined on an individual basis with substantial evidence.
• Good Faith Not a Defense — Good faith is not a valid defense to justify a strike staged in violation of a submission agreement for voluntary arbitration when the union is fully aware that arbitration proceedings are pending.

• "No strike or lockout shall be declared after assumption of jurisdiction by the President or the Secretary or 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."
• "The rationale of the prohibition under Article 264 is that once jurisdiction over the labor dispute has been properly acquired by competent authority, that jurisdiction should not be interfered with by the application of the coercive processes of a strike."
• "Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike."
• "In all cases, the striker must be identified. But proof beyond reasonable doubt is not required. Substantial evidence available under the attendant circumstances, which may justify the imposition of the penalty of dismissal, may suffice."
• "The claim of good faith is not a valid excuse to dispense with the procedural steps for a lawful strike."

• San Miguel Corp. v. National Labor Relations Commission — Cited for the principle that strikes staged in violation of agreements providing for arbitration are illegal, as these agreements must be strictly adhered to and respected.
• Alliance of Government Workers v. Minister of Labor — Cited for the doctrine that industrial peace cannot be secured through compulsion by law and that relations between private employers and employees rest on an essentially voluntary basis, subject to minimum requirements of labor laws.
• Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc. — Cited for the distinction between union officers and ordinary workers regarding liability for illegal strikes; union officers may be terminated for knowingly participating in an illegal strike, while workers must have committed illegal acts during the strike.
• Telefunken Semiconductors Employees Union v. Court of Appeals — Cited for the rationale behind Article 264's prohibition against strikes during the pendency of arbitration proceedings.
• National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN)-Peninsula Manila Chapter v. National Labor Relations Commission — Cited for the principle that disputes pending in voluntary arbitration cannot be the subject of a strike notice and that alternative remedies (grievance machinery, voluntary arbitration, illegal dismissal cases) should be exhausted instead of resorting to strikes.

• Article 263 of the Labor Code — Prescribes the mandatory requirements for a lawful strike, including the cooling-off period (15 days for unfair labor practice, 30 days for bargaining deadlocks), the requirement for a secret ballot strike vote approved by majority of total union membership, and the seven-day reporting period before the intended strike. Also provides for the exception in cases of union busting where only the cooling-off period is dispensed with.
• Article 264 of the Labor Code — Prohibits strikes or lockouts after submission of the dispute to voluntary or compulsory arbitration; enumerates prohibited activities during strikes (violence, coercion, intimidation, obstruction of ingress/egress); and provides for the liability of union officers and workers who participate in illegal strikes or commit illegal acts during strikes.
• Article 211 of the Labor Code — Declares the State policy to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, as modes of settling labor disputes.
• Article 260 of the Labor Code — Provides for grievance machinery and voluntary arbitration in collective bargaining agreements.
• Article 262 of the Labor Code — Grants voluntary arbitrators jurisdiction over other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the parties.
• Section 3, Rule XXII, Book V of the Rules Implementing the Labor Code — Clarifies that in cases of union busting, the fifteen-day cooling-off period shall not apply, but the union may take action only immediately after the strike vote is conducted and the results submitted to the NCMB.