NOTES ON STRIKES AND LOCK OUT ANSWERS

(November 2019)

Pasintabi:
I write these notes to clarify issues arising from the different answers (not necessarily
conflicting) in some of the questions on strikes lifted from the bar exams. As I have discussed in
previous lectures, the insufficiency of the facts in the bar exam questions (perhaps an
unavoidable situation) render the answering sometimes problematic. And at times, Supreme
Court decisions and “suggested answers” spew dubious ideas. I have second thoughts in giving
you these notes, since the questioning of the orthodox views may hinder you from giving the
“correct” way of answering bar exams. Let me just say that I would want you to be good law
practitioners, and I trust in your ability (most of you anyway) to pass the bar.

A. Question 13
As a result of a bargaining deadlock between Lazo Corporation and Lazo Employees Union, the latter staged a
strike. During the strike, several employees committed illegal acts. Eventually, its members informed the
company of their intention to return to work.

Can Lazo Corporation refuse to admit the strikers? Assuming the company admits the strikers, can it later on
dismiss those employees who committed illegal acts?

Comments

Note at once that the question did not state that the strike (despite the illegal acts committed
by some of the strikers) has been declared illegal. The employees have the right to return to
work since a strike does not sever the employer–employee relationship. There is no confusion
on this part of the question.

The confusion lies in the second aspect. Several of you answered that the company, by
admitting back to work the strikers who committed illegal acts, is estopped from imposing
disciplinary sanction against said employees. On its face, I find this answer difficult to
comprehend. Since the employer is compelled by law to accept the returning workers, why
should such compliance be deemed a waiver of its right to initiate disciplinary proceedings?
This would lead to contradictory positions, as exemplified in this answer:

No. The Commission of illegal acts during a strike does not automatically bring
about loss of employment status. Due process must be observed by the employer
before any dismissal can be made.

No. The employer may be considered as having waived its right to dismiss
employees who committed illegal acts during the strike.

What’s the use of admitting the strikers in order to give them due process, only to prohibit the
company from exercising its right to discipline them on the ground of estoppel or waiver? It
does not make sense.

I looked up at the “suggested answers” and I found out that this particular answer cited
Reformist Union vs. NLRC (G.R. No. 120482, 27 January 1997) as precedent. This is unfortunate,
because the admission of the strikers in that case was due to a settlement agreement.

“The dispute or strike was settled when the company and the union entered into an
agreement on 19 January 1990 where the private respondents agreed to accept all
employees who by then, had not yet returned to work. By acceding to the peaceful
settlement brokered by the NLRC, the private respondents waived the issue of the
illegality of the strike”.

There is no settlement agreement in the facts of the Bar Question. Hence, the concept of
waiver or estoppel is entirely out of place.

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ATTY. PACIANO F. FALLAR JR. 1
The correct answer would be like this (from another student):

Nevertheless, should the company admit the strikers who committed illegal
acts during the strike, it could terminate or dismiss the said employees after
due process.

I am extremely gratified that one of you took the time to read the commentaries (and perhaps
the cases). The answer was complete (albeit its comprehensiveness may not be necessary for
purposes of an exam):

(b) YES, the employers may still dismiss the strikers once found to have
committed illegal acts during a strike provided that the admission after the strike
did not amount to a waiver, such as when the admission was a result of a
compulsory arbitration (Reformist Union v. NLRC, G.R. No. 120482, January 27,
1997) or when the employers admitted them without making any reference to the
pending case involving the issue of the illegality (Citizens’ Labor Union vs.
Standard Vacuum Oil Co., G.R. No.L-7478, May 6, 1955).

B. Question No. 14
Luningning Foods engaged the services of Lamitan Manpower, Inc., a bona fide independent contractor, to
provide “tasters” that will check on food quality. Subsequently, these “tasters” joined the union of rank -and-
file employees of Luningning and demanded that they be made regular employees of the latter as they are
performing functions necessary and desirable to operate the company’s business. Luningning rejected the
demand for regularization. On behalf of the “tasters”, the union then filed a notice of strike with the
Department of Labor and Employment (DOLE). In response, Luningning sought a restraining order from the
Regional Trial Court (RTC) arguing that the DOLE does not have jurisdiction over the case since it does not
have an employer-employee relationship with the employees of an independent contractor.

If you were the RTC judge, would you issue a restraining order against the union?

Comments

There are those who found persuasive the “suggested answer” that the RTC may issue an
injunction, since there is no employer-employee relationship between the company and the
“tasters”. Setting aside the fact that employer-employee relationship is not always
determinative of a labor agency’s jurisdiction (there is also no employer-employee relationship
between an OFW and the local recruitment agency, yet the former’s cases against the latter are
filed with Labor Arbiter), it must be noted that the parties to the injunction case are the union
(which comprises both employees of the principal and the contractor) and the principal/
employer—Luningning Foods. There is undoubtedly employer-employer relationship between
Luningning Foods and the members of the union.

There is also, and this is more significant, the existence of a “labor dispute” defined by law as
“any controversy or matter concerning terms and conditions of employment…regardless of
whether the disputants stand in the proximate relations of employer and employee”. The issue
of regularization is clearly a “labor dispute”. Thus, the Labor Code provision that “no temporary
or permanent injunction or restraining order in any case involving or arising out of labor
disputes shall be issued by any court” squarely applies. Furthermore, It is inevitable that the
meat of the dispute would have to be resolved by reference to the Labor Code (labor-only
contracting and related issues), and not by the application of the rules of court (injunction).

Hence, the correct answer is the RTC has no jurisdiction because the case involves a labor
dispute.

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ATTY. PACIANO F. FALLAR JR. 2
C. Question 15
Liwanag Corporation is engaged in the power generation business. A stalemate was reached during the
collective bargaining negotiations between its management and the union. After following all the requisites
provided by law, the union decided to stage a strike. The management sought the assistance of the Secretary
of Labor and Employment, who assumed jurisdiction over the strike and issued a return-to-work order. The
union defied the latter and continued the strike. Without providing any notice, Liwanag Corporation declared
everyone who participated in the strike as having lost their employment.

Was Liwanag Corporation’s action valid?

Comments

Most answered that the company’ action is valid, since defiance of a return-to-work order is an
illegal act which results in forfeiture of employment. Some examples:

Yes. The moment a worker defies an assumption order and a return-to-work

order, he is deemed to have abandoned his employment. This is in itself
knowingly participating in an illegal act. Hence, the workers could be validly
dismissed (St. Scholastica’s College v. Torres,G.R. No. 100158, June 2, 1992).

Yes, Liwanag Corporation’s action is valid. In a case decided by the Court it held
that the moment a worker defies an assumption or certification order, which in
itself is equivalent to a return-to-work order, the employer is deemed to have
abandoned his employment. Also, the Labor Code provides that non-compliance
by the strikers with the return-to-work order by the SOLE, may subject them to
immediate disciplinary action, including dismissal or loss of employment status
and even to criminal prosecution.

I would have no problem agreeing that the dismissal would be valid, albeit the denial of due
process may result in the award of nominal damages.

My problem is the wording of the bar question. If the company “did not provide any notice”,
how would any employee know that he has been deemed terminated by the company?
Perhaps what the bar question meant is that the company did not give the employees a notice
of charge, but proceeded immediately to inform them that they are already terminated.
Otherwise stated, the company did not observe due process.

The situation contemplated by the bar question will hardly occur in real life. As the strikers had
defied the return-to-work order, why would the company bother at this point declare them
dismissed from employment? The strikers are on the picket lines, not inside the company
premises. Any company declaration that the strikers are already dismissed is pointless, as it has
no real consequence. Besides, terminating the strikers may even be a violation of the
assumption order which generally prescribes the observance of the status quo ante. What the
company would have done is to submit as an issue for resolution by the Secretary of DOLE the
unionists’ defiance of the return-to-work order, and argue that the Secretary should consider
them by their illegal act to have forfeited their right to their employment. The Secretary, under
his plenary authority, would have the right to declare the unionists’ loss of employee status.

D. Question 18
The Collective Bargaining Agreement (CBA) between Libra Films and its union, Libra Films Employees’ Union
(LFEU), contains a maintenance of membership clause.

While Libra Films and LFEU are in re-negotiations for an extension of the CBA, LFEU discovers that some of
its members have resigned from the union. LFEU demands that Libra Films institute administrative
proceedings to terminate those union members who resigned in violation of the CBA’ s maintenance of
membership clause. Libra Films refuses, citing its obligation to remain a neutral party. As a result, LFEU

NOTES ON STRIKES AND LOCK OUT ANSWERS (November 2019)

ATTY. PACIANO F. FALLAR JR. 3
declares a strike and after filing a notice of strike and taking a strike vote, goes on strike. The union claims
that Libra Films grossly violated the terms of the CBA and engaged in unfair labor practice.

Are LFEU’s claims correct? Explain.

Comments

I have two issues with the question.

First, it is unfortunate that the bar question is not clear whether the CBA “re-negotiations”
happen within the prescribed period for the negotiations of the non-representation item (“not
later than 3 years after its execution”) or else within the “freedom period” (the 60-day period
immediately preceding the CBA’s expiry date). This distinction is important. If the freedom
period had set in, the maintenance of membership clause would no longer apply. The
company by then is not required to observe the clause. Hence, ULP would not be an issue.

Second, it is not clear if the union frames two issues: (a) that the company violated the terms of
the CBA; and, (b) it is engaged in unfair labor practice. It must be noted that ULP has several
varieties, and violation of the CBA is just one of them (the last one listed in fact in the Labor
Code).

The “suggested answer” cites BPI Employees Union-Davao City vs. BPI (G.R. No. 164301, 10
August 2010) as the applicable jurisprudence. The BPI case actually involved outsourcing , not
union security clause. Its value as precedent is not as much as the “suggested answer” extols.

In Shell Oil Workers’ Union v. Shell Company of the Philippines, Ltd., (i48-A Phil. 229 [1971), the
company dissolved its security guard section and replaced it with an outside agency, claiming
that such act was a valid exercise of management prerogative. The Supreme Court, however,
ruled against the said outsourcing because there was an express assurance in the CBA that the
security guard section would continue to exist. Having failed to reserve its right to effect a
dissolution, the company’s act of outsourcing and transferring security guards was invalidated
by the Supreme Court, ruling that the unfair labor practice strike called by the Union did have
the impression of validity.

With the amendment of the Labor Code however, the Supreme Court in the BPI case held that
only gross violations of the economic provisions of the CBA are treated as ULP. The alleged
violation of the union shop agreement in the CBA, even assuming it was malicious and flagrant,
was deemed not a violation of an economic provision in the agreement. The implication is that
violation of non-economic provision (like union security clause) cannot be a ULP. This seems to
be a drastic interpretation, because it would render meaningless the other situations of ULP
which may have a CBA stipulation.

The Labor Code does not define what are the “economic” and “non-economic” provisions in the
CBA. The BPI and other cases do not throw light on the precise meaning of the concept. The BPI
case simply held that union shop is not an economic item, perhaps implicitly limiting the term
“economic” to salaries and benefits (or those quantifiable in money terms). But a union shop
clause, from a certain perspective, does have an economic aspect. Certainly, a decrease in
union membership because the union security clause is not observed would mean reduced
finances for the union in terms of union dues and special assessment. This “dual”
characterization is not peculiar to union security clause. Union leaves may be viewed as an
economic provision, though it may be viewed as part of the union’s right to represent its
members in grievance meetings as well as CBA negotiations.

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ATTY. PACIANO F. FALLAR JR. 4
Independently of the argument that a union security clause has an economic aspect, its
violation could be framed as ULP, albeit not as violation of the CBA. Instead, the union may
argue that the violation of the maintenance of membership clause “interferes with, restrains, or
coerces employees in the exercise of their right to self-organization”. Certainly, the union has
the right to expect that its stability though the maintenance of membership clause is preserved.

My suggested approach then to the issue is to frame the violation of the maintenance of
membership clause not as violation of the CBA but as ULP because it “interferes with, restrains,
or coerces employees in the exercise of their right to self-organization”.

E. Question No. 19
Due to business recession, Ballistic Company retrenched a part of its workforce. Opposing the retrenchment,
some of the affected employees staged a strike. Eventually, the retrenchment was found to be justified, and
the strike was declared illegal. Hence, the leaders of the strike, including the retrenched employees, were
declared to have lost their employment status.

Are the striking retrenched employees still entitled to separation pay under Sec. 298 (283) of the Labor Code
despite the illegality of their strike? Explain your answer.

Side notes

Since the facts do not mention a CBA deadlock, the strike here could only be a ULP strike. The
bar question did not state whether the case is an assumption case (Secretary of DOLE, or NLRC
if it was certified to the latter) or an illegal dismissal case filed with the Labor Arbiter. Lastly, the
bar question did explain why the strike was declared illegal. Since only the “leaders”
(presumably, the officers of the union) of the strike were declared to have lost their
employment status, we may assume that the strike was declared illegal because it did not
comply with the procedural requirements and not because violence and other illegal acts
attended the actual strike.

I find these matters important because a ULP strike, even though the ground is eventually
determined to be non-existent, may still be declared legal if the union acted in good faith and
the surrounding circumstances warrant the belief that ULP was committed by the employer
(Hotel Enterprises of the Phil. vs. Samahan ng Mga Manggagawa sa Hyatt, G.R. No. 165756, 05
June 2009).

Comments

Some students answered in the negative:

No, they are not entitled to separation pay. The Supreme Court has ruled that
when a strike is declared illegal, the union officers and members are considered
dismissed for committing illegal acts during the illegal strike. Such illegal acts
constitute serious misconduct which warrants the denial of separation pay to
them.

Most answered in the affirmative, and the similarity of the wordings suggest it’s taken from the
same source:

The strikers including the union officers should be entitled to their separation pay
by reason of retrenchment notwithstanding the illegal strike conducted. The issue
on entitlement to separation pay due to authorized cause and the ground for
termination due to knowingly participating in illegal strike are 2 distinct matters.

I am inclined to adopt the second answer, but I find the reasoning quite unsatisfactory.

NOTES ON STRIKES AND LOCK OUT ANSWERS (November 2019)

ATTY. PACIANO F. FALLAR JR. 5
The question is from the 2017 bar exam, and I have no copy of the suggested answers (if any of
you have access, kindly provide me). Hence, I could not be certain if the suggested answer that
separation pay should be given is anchored on jurisprudence. I do not exactly get the point that
just because the two issues (of retrenchment and strike) are distinct, then separation pay
should still be given. Perhaps, what is meant is that the illegality of the strike has no bearing on
the right to retrenchment pay because the illegality of the strike has consequences other than
loss of employment (e.g., the union could be assessed damages).

My proposed answer is this: Since the employees were already retrenched, and retrenchment
brought about the end their employment by an act of the employer, the latter could not again
terminate them for another cause. The union may be assessed damages for the illegality of the
strike but the retrenched employees’ right to separation benefits cannot be forfeited.

F. Question 20
Upon compliance with the legal requirements on the conduct of a strike, Navarra Union staged a strike
against Newfound Corporation on account of a collective bargaining deadlock. During the strike, some
members of Navarra Union broke the windows and punctured the tires of the company-owned buses. The
Secretary of Labor and Employment assumed jurisdiction over the dispute.

Should all striking employees be admitted back to work upon the assumption of jurisdiction by the Secretary
of Labor and Employment? Will these include striking employees who damaged company properties?

Comments

A minority of students answered in the negative:

No, they should not be admitted back to work. Commission of illegal acts
during a strike shall warrant dismissal subject to the observance of due
process. The destruction of the company-owned bus herein consists of illegal acts
which is a valid cause for the employees responsible thereat.

Most answered in the affirmative, basically because the wording of the law is categorial that
ALL employees must be ordered to return to work and be admitted back under the same terms
and conditions prevailing before the strike.

Yes, all striking employees should be admitted back to work including those
striking employees who damaged company properties. The Labor Code provides
that the assumption of jurisdiction of the Secretary of Labor shall have the effect
of automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. Once an
assumption/certification order is issued, strikes are enjoined, or if one have
already taken place, all strikers shall immediately return to work.

I think the confusion in those who answered in the negative springs from the pronouncements
of the Supreme Court that those who commit illegal acts during strikes “automatically lose their
employment status” or else are “deemed to have forfeited their employment status” or words
to the same effect. These are not careful statements, and susceptible to the interpretation that
due process should no longer be observed. In my view, the commission of the illegal acts
(including the defiance of the return-to-work order) must still be established in a legal
proceedings either as part of the assumption case, in the illegal strike case filed with the Labor
Arbiter, or in the company-level disciplinary proceedings.

I recommend this answer, because it is complete:

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ATTY. PACIANO F. FALLAR JR. 6
 Yes, all striking employees should be admitted to work upon the assumption of
jurisdiction of the Labor Secretary. The issuance of an assumption order
automatically carries with it an implied return-to-work order with a correlative
order to the employer to re-admit all workers under the same terms and conditions
prevailing before the strike or lockout.

Yes, including striking employees who damaged the company properties. After
reinstatement, the employer, however, is not precluded from instituting a
disciplinary action, including dismissal of the erring employees, provided the twin
notice rule is observed.

G. Question No. 7
Several employees and members of Union A were terminated by Western Phone Co. on the ground of
redundancy. After complying with the necessary requirements, the Union staged a strike and picketed the
premises of the company. The management then filed a petition for the Secretary of Labor and Employment
to assume jurisdiction over the dispute. The Secretary issued an Order to assume jurisdiction and directed all
striking workers to return to work within 24 hours, except those who were terminated due to redundancy.
Was the Order legal? Explain.

Comments

Prescinding from the categorical language of the law, it is correct to answer that:

No. The Order was not legal because the law is clear and unequivocal in stating
that all striking employees shall be readmitted to work under the same terms and
conditions prevailing before the strike. Hence, the return to work order should
have included all striking workers and should not have excluded the workers
affected by redundancy.

But the following answer is better because it gave the rationale for the legal provision:

No, the Order was not legal because the law is clear in stating that all striking
employees shall be readmitted to work under the same terms and conditions
prevailing before the strike. In this case, excepting the employees terminated due
to redundancy from those who are required to return to-work, which was the very
labor dispute that sparked the union to strike, the Secretary of Labor comes short
of his duty under the Labor Code to maintain status quo or the terms and
conditions prevailing before the strike.

Technically, the Order is not entirely invalid. It is only the part excluding the laid off employees
which is invalid; the rest of the assumption order is valid.
P F F A L L A R J R. SSCR

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ATTY. PACIANO F. FALLAR JR. 7