MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CABANA, LOPITO SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR ARANES, ELY BORROMEO, DANIEL BACOLON, MATIAS PAJIMUL…

The petition for certiorari before us seeks to annul and
to set aside the decision of the National Labor Relations Commission (Second
Division) dated July 12, 1986 which affirmed that of Labor Arbiter Fernando V.
Cinco declaring illegal the strike staged by petitioners and terminating the
employment of the individual petitioners.

The Master Iron Works Construction Corporation (Corporation for
brevity) is a duly organized corporate entity engaged in steel fabrication and
other related business activities. Sometime in February 1987, the Master Iron Labor Union (MILU) entered
into a collective bargaining agreement (CBA) with the Corporation for the
three-year period between December 1, 1986 and November 30, 1989 (Rollo, p.
7). Pertinent provisions of the CBA
state:

“Section 1. That there shall be no strike and no lockout,
stoppage or shutdown of work, or any other interference with any of the
operation of the COMPANY during the term of this AGREEMENT, unless allowed and
permitted by law.”

“Section 2. Service Allowance – The COMPANY agrees to continue
the granting of service allowance of workers assigned to work outside the
company plant, in addition to his daily salary, as follows:

(a) For those assigned to work outside the plant
but within Metro Manila, the service allowance shall be P12.00;

(b) For those assigned to work outside Metro
Manila, the service allowance shall be P25.00/day;

(c) The present
practice of conveying to and from the jobsites of workers assigned to work
outside of the company plant shall be maintained.”

Right after the signing of the CBA, the Corporation subcontracted
outside workers to do the usual jobs done by its regular workers including
those done outside of the company plant. As a result, the regular workers were scheduled by the management to
work on a rotation basis allegedly to prevent financial losses thereby allowing
the workers only ten (10) working days a month (Rollo, p. 8). Thus, MILU requested implementation of the
grievance procedure which had also been agreed upon in the CBA, but the
Corporation ignored the request.

Consequently, on April 8, 1987, MILU filed a notice of strike
(Rollo, p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE, through
one Atty. Bobot Hernandez, the Corporation and MILU reached an agreement
whereby the Corporation acceded to give back the usual, work to its regular
employees who are members of MILU (Rollo, p. 55).

Notwithstanding said agreement, the Corporation continued the
practice of hiring outside workers. When the MILU president, Wilfredo Abulencia, insisted in doing his
regular work of cutting steel bars which was being done by casual workers, a
supervisor reprimanded him, charged him with insubordination and suspended him
for three (3) days (Rollo, pp. 9 & 51-52). Upon the request of MILU, Francisco Jose of the DOLE called for
conciliation conferences. The
Corporation, however, insisted that the hiring of casual workers was a
management prerogative. It later
ignored subsequent scheduled conciliation conferences (Rollo, pp. 51-52 &
57-58).

Hence, on July 9, 1987, MILU filed a notice of strike on the
following grounds: (a) violation of
CBA; (b) discrimination; (c) unreasonable suspension of union officials; and   (d) unreasonable refusal to entertain
grievance (Rollo, p. 9). On July 24,
1987, MILU staged the strike, maintaining picket lines on the road leading to
the Corporation’s plant entrance and premises.

At about 11 o’clock in the morning of July 28, 1987, CAPCOM
soldiers, who had been summoned by the Corporation’s counsel, came and arrested
the picketers. They were brought to
Camp Karingal and, the following day, to the Caloocan City jail. Charges for illegal possession of firearms
and deadly weapons were lodged against them. Later, however, those charges were dismissed for failure of the
arresting CAPCOM soldiers to appear at the investigation (Rollo, p. 10). The dispersal of the picketlines by the
CAPCOM also resulted in the temporary lifting of the strike.

On August 4, 1987, the Corporation filed with the NLRC National
Capital Region arbitration branch a petition to declare the strike illegal
(Rollo, p. 40). On September 7, 1987,
MILU, with the assistance of the Alyansa ng Manggagawa sa Valenzuela (AMVA),
re-staged the strike. Consequently, the
Corporation filed a petition for injunction before the NLRC which, on September
24, 1987, issued an order directing the workers to remove the barricades and
other obstructions which prevented ingress to and egress from the company
premises. The workers obliged on
October 1, 1987 (Rollo, p. 25). On
October 22, 1987, through its president, MILU offered to return to work in a
letter which states:

“22
Okt. 1987

Mr. Elieze Hao

Master Iron Works & Construction Corp.

790 Bagbagin, Caloocan City

Dear Sir,

Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi,
nagsusuhestiyon o nag-oofer sa inyong pangasiwaan ng aming kahilingan na
bumalik na sa trabaho dahilan din lang sa kalagayan na tuloy tuloy ang ating
pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto naming manatili ang ating magandang pagtitinginan bilang
magkasangga para sa ika-uunlad ng ating kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.

Gumagalang,

(Sgd.)

WILFREDO ABULENCIA

Pangulo”

(Rollo, p. 590).

On October 30, 1987, MILU filed a position paper with
counter-complaint before the NLRC. In
said counter-complaint, the workers charged the Corporation with unfair labor
practice for subcontracting work that was normally done by its regular workers
thereby causing the reduction of the latter’s workdays; illegal suspension of
Abulencia without any investigation; discrimination for hiring casual workers
in violation of the CBA, and illegal dispersal of the picket lines by CAPCOM
agents (Rollo, pp. 26-27).

In due course, a decision dated March 16, 1988 was rendered by
Labor Arbiter Fernando Cinco declaring illegal the strike staged by MILU. The dispositive portion of the decision
reads:

“WHEREFORE, in the light of the foregoing premises, judgment
is hereby rendered, as follows:

1. Declaring the strike by the respondents
illegal and unlawful;

2. Ordering the cancellation of the registered
permit of respondent union MILU for having committed an illegal strike;

3. Ordering the termination of employment
status of the individual respondents, including the forfeiture of whatever
benefits are due them under the law, for having actively participated in an
illegal strike, namely: Wilfredo
Abulencia, President; Rogelio Cabana, Vice-President; Lopito
Saranilla, Secretary; Jesus Moises, Treasurer; Basilio
dela Cruz, Auditor; as Members of the Board: Edgar Aranes, Melchor Bose,
Restituto Payabyab, Matias Pajimula, Daniel Bacolon,
and Ely Borromeo, as Members of the Union: Teofilo Antolin, Robert
Aspuria, Justino Botor, Alfredo Fabros, Agapito
Tabios, Bernardo Alfon, Benigno Barcena, Bernardo
Navarro, Moises Labrador, Ernesto dela Cruz,
Eduardo Espiritu, Ignacio Pagtama, Bayani Perez,
Simplicio Puaso, Edwin Velarde, Beato Abogado,
Danilo San Antonio, Bermes Borromeo, and Jose
Borromeo.

The respondents as appearing in Annex ‘A’ of the Petition, but not
included as among those whose employment status were terminated as
above-mentioned, are given priority of reinstatement, without backwages, in the
event petitioner starts its normal operations, or shall be paid their
separation pay according to law.

4. Ordering the respondents to cease and desist
from further committing the illegal acts complained of;

5. Ordering Respondent Union to pay the amount
of P10,000.00 to Petitioner’s Counsel as attorney’s fees;

6. Ordering the dismissal of the claim for
damages for lack of merit; and

7. Ordering the dismissal of the
counter-complaint in view of the filing of a separate complaint by the
respondents.

SO ORDERED.” (pp. 35-36, Rollo.)

On appeal to the NLRC, MILU and the individual officers and
workers named in Labor Arbiter Cinco’s decision alleged that said labor arbiter
gravely abused his discretion and exhibited bias in favor of the Corporation in
disallowing their request to cross-examine the Corporation’s witnesses, namely,
Corporate Secretary Eleazar Hao, worker Daniel Ignacio and foreman Marcial
Barcelon, who all testified on the manner in which the strike was staged and on
the coercion and intimidation allegedly perpetrated by the strikers (Rollo, p.
151).

The Second Division of the NLRC affirmed with modifications the
decision of the labor arbiter. The
decision, which was promulgated on July 12, 1989 with Commissioners Domingo H.
Zapanta and Oscar N. Abella concurring and Commissioner Daniel M. Lucas, Jr.
dissenting, disagreed with the labor arbiter on the “summary execution of
the life of Master Iron Labor Union (MILU)” on the grounds that the
Corporation did not specifically pray for the cancellation of MILU’s
registration and that pursuant to Articles 239 and 240 of the Labor Code, only
the Bureau of Labor Relations may cancel MILU’s license or certificate of
registration. It also deleted the award
of P10,000.00 as attorney’s fees for lack of sufficient basis but it affirmed
the labor arbiter with regard to the declaration of illegality of the strike
and the termination of employment of certain employees and the rest of the
dispositive portion of the labor arbiter’s decision (Rollo, pp. 48-49).

In his dissent, Commissioner Lucas stated that he is “for
the setting aside of the decision appealed from, and remanding of the case to
the labor arbiter of origin, considering that respondent’s countercharge or
complaint for unfair labor practice was not resolved on the merits”
(Rollo, p. 49).

MILU filed a motion for the reconsideration but the same was
denied by the NLRC for lack of merit in its Resolution of August 9, 1989
(Rollo, p. 50). Hence, the instant
petition^[1].

Petitioners contend that notwithstanding the non?strike
provision in the CBA, the strike they staged was legal because the reasons
therefor are non-economic in nature. They assert that the NLRC abused its discretion in holding that there
was “failure to exhaust the provision on grievance procedure” in view
of the fact that they themselves sought grievance meetings but the Corporation
ignored such requests. They charge the
NLRC with bias in failing to give weight to the fact that the criminal charges
against the individual petitioners were dismissed for failure of the CAPCOM
soldiers to testify while the same individual strikers boldly faced the charges
against them. Lastly, they aver that
the NLRC abused its discretion in holding that the workers’ offer to return to
work was conditional.

In holding that the strike was illegal, the NLRC relied solely on
the no-strike no-lockout provision of the CBA afortquoted. As this Court has held in Philippine Metal
Foundries, Inc. vs. CIR (90 SCRA 135 [1979]), 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.

An economic strike is defined as one which is to force wage or
other concessions from the employer which he is not required by law to grant (Consolidated
Labor Association of the Philippines vs.
Marsman & Co., Inc., 11 SCRA 589 [1964]). In this case, petitioners enumerated in
their notice of strike the following grounds: violation of CBA or the Corporation’s practice of subcontracting
workers; discrimination; coercion of employees; unreasonable suspension of
union officials, and unreasonable refusal to entertain grievance.

Private respondent contends that petitioners’ clamor for the
implementation of Section 2, Article VIII, of the CBA on service allowances
granted to workers who are assigned outside the company premises is an economic
issue (Rollo, p. 70). On the contrary,
petitioners       decry  the violation of the CBA, specifically the
provision granting them service allowances. Petitioners are not, therefore, already asking for an economic benefit
not already agreed upon, but are merely asking for the implementation of the
same. They aver that the Corporation’s
practice of hiring subcontractors to do jobs outside of the company premises
was a way “to dodge paying service allowance to the workers” (Rollo,
pp. 61 & 70).

Much more than an economic issue, the said practice of the
Corporation was a blatant violation of the CBA – an unfair labor practice on
the part of the employer under Article 248(i) of the Labor Code. Although the end result, should the
Corporation be required to observe the CBA, may be economic in nature because
the workers would then be given their regular working hours and therefore their
just pay, not one of the said grounds is an economic demand within the meaning
of the law on labor strikes. Professor
Perfecto Fernandez, in his book Law on Strikes, Picketing
and Lockouts (1981 edition, pp. 144-145), states that an economic
strike involves issues relating to demands for higher wages, higher pension or
overtime rates, pensions, profit sharing, shorter working hours, fewer work
days for the same pay, elimination of night work, lower retirement age, more healthful
working conditions, better health services, better sanitation and more safety
appliances. The demands of the
petitioners, being covered by the CBA, are definitely within the power of the
Corporation to grant and therefore the strike was not an economic strike.

The other grounds, i.e., discrimination, unreasonable suspension
of union officials and unreasonable refusal to entertain grievance, had been
ventilated before the Labor Arbiter. They
are clearly unfair labor practices as defined in Article 248 of the Labor Code.^[2]The subsequent withdrawal of petitioners’ complaint for unfair labor practice
(NLRC-NCR Case No. 00-11-04132-87) which was granted by Labor Arbiter Ceferina
Diosana who also considered the case closed and terminated (Rollo, pp. 97 &
109) may not, therefore, be considered as having converted their other
grievances into economic demands.

Moreover, petitioners staged the strike only after the
Corporation had failed to abide by the agreement forged between the parties
upon the intervention of no less than the DOLE after the union had complained
of the Corporation’s unabated subcontracting of workers who performed the usual
work of the regular workers. The
Corporation’s insistence that the hiring of casual employees is a management
prerogative betrays its attempt to coat with legality the illicit curtailment
of its employees’ rights to work under the terms of the contract of employment
and to a fair implementation of the CBA.

While it is true that an employer’s exercise of management
prerogatives, with or without reason, does not per se constitute
unjust discrimination, such exercise, if clearly shown to be in grave abuse of
discretion, may be looked into by the courts (National Federation
of Labor Unions vs. NLRC, 202 SCRA 346
[1991]). Indeed, the hiring, firing,
transfer, demotion, and promotion of employees are traditionally identified as
management prerogatives. However, they
are not absolute prerogatives. They are
subject to limitations found in law, a collective bargaining agreement, or
general principles of fair play and justice (University of Sto.
Tomas vs. NLRC, 190 SCRA 758 [1990] citing Abbott Laboratories
[Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]. 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.

Private respondent’s failure to traverse petitioners’ allegation
that the NLRC abused its discretion in holding that the provision on grievance
procedure had not been exhausted clearly sustains such allegation and upholds
the petitioners’ contention that the Corporation refused to undergo said
procedure. It should be remembered that
a grievance procedure is part of the continuous process of collective
bargaining (Republic Savings Bank vs. CIR, et
al., 21 SCRA 226 [1967]). It is
intended to promote a friendly dialogue between labor and management as a means
of maintaining, industrial peace. The
Corporation’s refusal to heed petitioners’ request to undergo the grievance
procedure clearly demonstrated its lack of intent to abide by the terms of the
CBA.

Anent the NLRC’s finding that Abulencia’s offer to return to work
is conditional, even a cursory reading of the letter aforequoted would reveal
that no conditions had been set by petitioners. It is incongruous to consider as a “condition” the
statement therein that the parties would continue talks for a peaceful working
relationship (“tuloy tuloy ang ating pag-uusap sa ikatitiwasay ng ating
relasyon”). Conferences form part
of the grievance procedure and their mere mention in Abulencia’s letter did not
make the same “conditional”.

In the same manner, the following findings of the Labor Arbiter
showed the illegal breakup of the picket lines by the CAPCOM:

“d) On 28 July
1987, CAPCOM soldiers, on surveillance mission, arrived at the picket line of
respondents and searches were made on reported deadly weapons and firearms in
the possession of the strikers. Several
bladed weapons and firearms in the possession of the strikers were confiscated
by the CAPCOM soldiers, as a result of which, the apprehended strikers were
brought to Camp Tomas Karingal in Quezon City for proper investigation and
filing of the appropriate criminal charges against them. The strikers who were charged of illegal
possession of deadly weapon and firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato Abogado,
Lopito, Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana. Criminal informations were filed by Inquest
Fiscal, marked as Exhibits ‘E’, ‘E-1 to E-8’. These strikers were jailed for sometime until they were ordered released
after putting up the required bail bond. Other strikers were also arrested and brought to Camp Tomas Karingal,
and after proper investigation as to their involvement in the offense charged,
they were released for lack of prima facie evidence. They are Edwin Velarde, Bayani Perez, Daniel
Bacolon, Jesus Moises, Robert Aspurias and Benigno Barcena.

After the strikers who were arrested were brought to Camp Tomas
Karingal on 28 July 1987, the rest of the strikers removed voluntarily their
human and material barricades which were placed and posted at the road leading
to the premises of the Company.” (Rollo, p. 32).

The bringing in of CAPCOM soldiers to the peaceful picket lines
without any reported outbreak of violence, was clearly in violation of the following
prohibited activity under Article 264 of the Labor Code:

“(d) No public official or employee, including
officers and personnel of the New Armed Forces of the Philippines or the
Integrated National Police, or armed person, shall bring in, introduce or
escort in any manner any individual who seeks to replace strikers in entering
or leaving the premises of a strike area, or work in place of the
strikers. The police force
shall keep out of the picket lines
unless actual violence or other criminal
acts occur therein: Provided, That nothing herein shall be interpreted to prevent any public
officer from taking any measure necessary to maintain peace and order, protect
life and property, and/or enforce the law and legal order.” (Underscoring
supplied.)

As the Labor Arbiter himself found, no pervasive or widespread
coercion or violence were perpetrated by the petitioners as to warrant the
presence of the CAPCOM soldiers in the picket lines. In this regard, worth quoting is the following excerpt of the decision
in Shell Oil Workers’ Union vs. Shell
Company of the Philippines, Ltd., 39 SCRA
276 [1971], which was decided by the Court under the old Industrial Peace Act
but which excerpt still holds true:

“. . . 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. That the law recognizes
as a right. There is though a
disapproval of the utilization of force to attain such an objective. For implicit in the very concept of a legal
order is the maintenance of peaceful ways. A strike otherwise valid, if violent in character, may be placed beyond
the pale. Care is to be taken, however,
especially where an unfair labor practice is involved, to avoid stamping it
with illegality just because it is tainted by such acts. To avoid rendering illusory the recognition
of the right to strike, responsibility in such a case should be individual and
not collective. A different conclusion
would be called for, of course, if the existence, of force while the strike
lasts is pervasive and widespread, consistently and deliberately resorted to as
a matter of policy. It could be
reasonably concluded then that even if justified as to ends, it becomes illegal
because of the means employed.” (at p. 292.)

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 (Ferrer,
et al. vs. Court of Industrial Relations,
et al., 17 SCRA 352 [1966]). Verily, such presumption of legality prevails even if the allegations of
unfair labor practices, are subsequently found out to be untrue (People’s
Industrial and Commercial Employees and Workers
Org. [FFW] vs. People’s Industrial and Commercial
Corporation, 112 SCRA 440 [1982]). Consonant with these jurisprudential pronouncements, is Article 263 of
the Labor Code which clearly states “the policy of the State to encourage
free trade unionism and free collective bargaining”. Paragraph (b) of the same article guarantees
the workers’ “right to engage in concerted activities for purposes of
collective bargaining or for their mutual benefit and protection” and
recognizes the “right of legitimate labor organizations to strike and
picket and of employers to lockout” so long as these actions are
“consistent with the national interest” and the grounds therefor do
not involve inter-union and intra-union disputes.

The strike being legal, the NLRC gravely abused its discretion in
terminating the employment of the individual petitioners, who, by operation of
law, are entitled to reinstatement with three years backwages. Republic Act No. 6715 which amended Art. 279
of the Labor Code by giving “full backwages inclusive of allowances”
to reinstated employees, took effect fifteen days from the publication of the
law on March 21, 1989. The decision of
the Labor Arbiter having been promulgated on March 16, 1988, the law is not
applicable in this case.

WHEREFORE, the questioned decision and resolution of the
NLRC as well as the decision of the Labor Arbiter are hereby SET ASIDE and the
individual petitioners are reinstated to their positions, with three years
backwages and without loss of seniority rights and other privileges. Further, respondent corporation is ordered
to desist from subcontracting work usually performed by its regular workers.

SO ORDERED.

Feliciano, (Acting Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.

---

^[1] The Solicitor General at first refused to file a comment on the petition in
view of his stand which is contrary to that of the NLRC (Rollo, p.
81). Hence, the NLRC itself was
directed to file comment on the petition in the Resolution of June 20, 1990 (Rollo,
p. 83). The NLRC’s Legal Division filed
two motions for extension of time to file comment (Rollo, pp. 86 &
90). However, in the Resolution of November 14, 1990 (Rollo, p. 110),
the Court noted the private respondent’s manifestation and motion “pending
filing of comment by the Solicitor General on the petition.” The NLRC
Legal Division having failed to file comment within the extended period to file
the same, in the Resolution of December 10, 1990, the Court dispensed with the
filing of the NLRC’s comment. On December 14, 1990, the Solicitor General,
taking note of the Resolution of November 14, 1990, requested a new period
within which to file comment for the NLRC. On January 21, 1991, he filed said
comment praying that the NLRC decision be set aside and instead judgment, be
rendered directing the reinstatement of the individual petitioners with
backwages and without loss of seniority rights and other employment privileges
and enjoining the private respondent from subcontracting work regularly within
the functions of petitioners. (Rollo, p. 122).

^[2]  “ART. 248. Unfair labor practices of employers. – It shall be unlawful for
an employer to commit any of the following unfair labor practice:

(a) To interfere with, restrain or
coerce employees in the exercise of their right to self-organization;

(b)  To require as a condition of employment that a person or an
employee shall not join a labor organization or shall withdraw from one to
which he belongs;

(c)  To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees in the
exercise of their right to self-organization;

(d)  To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including the giving of
financial or other support to it or its organizations or supporters;

(e)  To discriminate in regard to wages, hours of work, and other terms
and conditions of employment in order to encourage or discourage membership in
any labor organization. Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining agent
as a condition for employment, except those employees who are already members
of another union at the time of the signing of the collective bargaining
agreement. Employees of an appropriate collective bargaining unit who are not
members of the recognized collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and other fees paid by members of the
recognized collective bargaining agent, if such non-union members accept the
benefits under the collective agreement: Provided, that the individual authorization required under Article 242,
paragraph (o) of this Code shall not apply to the non-members of the recognized
collective bargaining agent;

(f)   To dismiss, discharge, or otherwise prejudice or discriminate
against an employee for having given or being about to give testimony under
this Code;

(g)  To violate the duty to bargain collectively as, prescribed by this
Code;

(h)  To pay negotiation or attorney’s fees to the union or its officers
or agents as part of the settlement of any issue in collective bargaining or
any other dispute; or

(i)   To violate a collective bargaining agreement.

The provisions of the preceding
paragraph notwithstanding, only the officers and agents of corporations,
associations or partnerships who have actually participated in, authorized or
ratified unfair labor practices shall be held criminally liable.”