SAN MIGUEL CORPORATION v.

NLRC
June 10, 2003 | Azcuna, J. | General RuleProhibition | Conejero

PETITIONER: San Miguel Corporation (SMC)

RESPONDENTS: National Labor Relations Commission (2nd Division), Ilaw at Buklod ng Manggagawa (IBM)

SUMMARY: IBMs President Galvez and VP Colomeda filed separate notices of strike. The NCMB found that the issues involved were
non-strikeable and converted the notices into cases of preventive mediation. When the Colomeda group filed a notice of, and held, a
strike vote, NCMB said that following PAL v. Drilon any strike during preventive mediation is illegal but IBM still continued with a strike.
SMC filed a petition for injunction and was granted a TRO by the NLRC. SMC and IBM then entered into a Memorandum of
Agreement for the resumption of work in exchange of good faith talks between them, after which IBM moved to dismiss SMCs petition
for it becoming moot and academic given the cessation of its picketing activities. The NLRC denied the injunction case since the
circumstances did not constitute an actual or threatened commission of unlawful acts. The SC here said that the NLRC should have
issued injunction. See Issue.

DOCTRINE:
General rule: Article 254 of the Labor Code provides that 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 of the Labor Code.
Exceptions:
o the NLRC has power to enjoin or restrain actual and threatened commission of any or all prohibited or unlawful acts,
or to require performance of an act in any labor dispute which, if not done, may cause grave or irreparable damage
to any party or render ineffectual any decision in their favor (Article 218 (e))
o the labor organization or the employer engages in any prohibited activities (enumerated in Article 264)
o Pursuant to Article 218 (e), injunction may also restrain an actual or threatened unlawful strike
SMC v. NLRC: NLRCs duty to enjoin an unlawful strike was violated when it denied the petition for
injunction to restrain the union from declaring a strike based on non-strikeable grounds
IBM v. NLRC: it is the legal duty and obligation of the NLRC to enjoin a partial strike staged in violation of
the law. Failure of the NLRC to issue injunction was an abuse of discretion.

FACTS:
IBM is the exclusive bargaining agent of SMCs daily-paid rank and file employees. Its CBA with SMC had an
agreement to submit all disputes to grievance and arbitration proceedings, as well as a mutually enforceable no-
strike no-lockout agreement.
o Article IV on grievance machinery: all disputes should be solved by friendly negotiations
o Article V on arbitration: Section 1 states that labor conditions and relations disputes submitted after duly
exhausting the grievance procedure shall be settled by Committee arbitration
o Article VI on strikes and work stoppages: Section 1 says the Union agrees to no strikes, boycotts,
pickets, etc. or any interference with company operations, while Section 2 says that SMC agrees to no
lockout so lock as the Union follows Article IV procedures
VP Alfredo Colomeda filed a notice of strike for IBM with NCMB against SMC for illegal dismissal of union members,
illegal transfer, violation of CBA, contracting our of union members jobs, other acts of ULP, labor-only contracting,
harassment of union members, and non-recognition of elected union officers.
President Edilberto Galvez filed another notice of strike for IBM raising the same first five grounds as the Colomeda
group (he filed a second notice eventually, which was consolidated with one).
NCMB Director Reynaldo Ubaldo issued letter-orders to both union groups, converting their notices of strike into
preventive mediation.
o The real issues (illegal dismissal, labor-only contracting, and internal union disputes) involved were found to
be non-strikeable.
o The conversion considered that SMC is the only impleaded employer-respondent and that the 4 affected
companies (Magnolia-Nestle, San Miguel Foods, San Miguel Juices, and SMC) are separate and distinct.
NCMB Director Ubaldo wrote to the Colomeda group both after receiving the notice of strike vote and the notice of the
positive result, advising them that their notice of strike is deemed not to have been filed
o SMCs opposition argument citing PAL v. Drilon was used for the rule that a strike cant be declared during
pendency of preventive mediation
o The conversion of the notices to preventive mediation meant that their notices were dismissed.
IBM went on strike on June 4, 1994 which paralyzed SMC operations and caused P29.98M in losses.
Two days later SMC filed with NLRC an amended Petition for Injunction
o with Prayer for Issuance of TRO, Free Ingress and Egress Order and Deputization Order
o TRO was granted after due hearing and ocular inspection, without prejudice to the unions right to peaceful
picketing and continuous hearings on the injunction case.
 SMC entered into a Memorandum of Agreement (MOA) with IBM in presence of DOLE officials, which:
o allowed for lifting of picket lines and resumption of work in exchange of good faith talks between the
management and the labor management committees
o stated that related cases filed will continue and will not be affected whatsoever by the agreement
IBM moved to dismiss the injunction case as moot and academic given cessation of its picketing activities.
o SMC opposed, showing flyers circulated by IBM as proof of an alleged threat to revive the strike.
o NLRC did not rule on SMCs opposition and allowed it to lapse.
NLRC denied SMCs petition for injunction for lack circumstances did not constitute an actual or threatened
commission of unlawful acts; it also denied MR.

ISSUE: Whether NLRC must compel arbitration and enjoin strikes in violation of a no-strike clauseYES. 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. NCMB converted IBMs notices into preventive mediation as it found
that the real issues raised are non-strikeable, and such conversion had the effect of dismissing their notices of strike filed as well as of
making subsequent strikes illegal (PAL v. Drilon).

The NLRC erred by ignoring the fatal lack of notice of strike, and issuing a decision after 5 months summarily rejecting petitioners cited
jurisprudence, especially since there was factual basis for the injunction in the form of IBM flyers threatening to revive the strike.
Lastly, strikes held in violation of the CBA terms are illegal especially when they provide for conclusive and mandatory arbitration
clauses which IBM did not comply with.

RATIO:
Lack of notice of strike. The filing of a valid notice of strike with the NCMB is a mandatory procedural requisite prescribed by
Article 263 of the Labor Code and its Implementing Rules. Imposed for the purpose of encouraging the voluntary settlement
of disputes, its absence shall render a strike illegal.
o No notice upon conversion: PAL v. Drilon held that a strike is illegal for lack of a valid notice of strike, in view of the
NCMBs declaration of conversion of the notice therein into a preventive mediation case. The effect of that
declaration is 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.
o Strike without notice, ground for injunction: Article 264(a) of the Labor Code[39] 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 under Article 254.
o Lack of notice as bad faith: In NUWHRAIN v. NLRC, NUWHRAIN similarly held a strike and defied an NCMB
prohibition when the latter found no ULP and no strikeable issues involved, showing bad faith in violation of the duty
to bargain collectively in good faith.
NCMBs conversion. This is in pursuance of its duty to exert all efforts at mediation and conciliation to enable the parties to
settle the dispute amicably, and in line with the state policy of favoring voluntary modes of settling labor disputes.
Factual basis for injunction. There existed a threat to revive the unlawful strike as evidenced by IBM-NCR Council flyers
dated a day after IBMs manifestation with the NLRC that there existed no threat of commission of prohibited activities. The
flyers stated: Ipaalala nyo sa management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras ay pwede
nating muling itirik ang picket line.
IBMs failure to observe CBA provisions on grievance and arbitration.
o Notice without using CBA remedies as violation. In San Miguel Corp. v. NLRC we 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.
o SMC willing to negotiate. It sought an order from the NLRC to compel observance of the grievance and arbitration
proceedings.
o Non-exhaustion of CBA remedies. Respondent however resorted to force without exhausting all available means
within its reach. 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.[41]
o No-strike clauses. They only bar strikes which are economic in nature, but not strikes grounded on unfair labor
practices such as those alleged in the notices filed in this case. The determination of ULP would entail fact-finding
that is best left for the labor arbiters. Nevertheless, the invalidity of the notices of strike dispenses with the need to
discuss this issue.

DISPOSITIVE: Petition granted. NLRC decision and resolution reversed and set aside. SMC and IBM are directed to submit the
issues raised in the dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as prescribed in their
CBA, if necessary.