When is a National Union Liable for an Illegal Strike? Lessons from the Philippine Supreme Court

TLDR: This case clarifies that in the Philippines, a national labor union is generally not held directly liable for damages resulting from an illegal strike staged by its local chapter. The local union, as the principal, bears primary responsibility, even if the national union provided assistance. This highlights the importance of understanding the agency relationship between national and local unions in labor disputes.

G.R. No. 115180, November 16, 1999

INTRODUCTION

Imagine a company facing significant financial losses due to a strike it claims was illegal. Who is responsible for those losses? Is it just the local workers who walked out, or could the larger national union backing them also be held accountable? This question is critical in labor disputes, where the lines of responsibility can become blurred. The Philippine Supreme Court case of Filipino Pipe and Foundry Corporation vs. National Labor Relations Commission delves into this very issue, providing crucial insights into the liability of national labor unions for strikes initiated by their local chapters. In this case, a company sought to hold a national union and its president liable for damages caused by a strike declared illegal by labor authorities. The central legal question was whether the national union, by assisting its local chapter, became primarily responsible for the illegal strike and its financial repercussions.

LEGAL CONTEXT: Strikes, Illegal Strikes, and Union Responsibility in Philippine Labor Law

Philippine labor law recognizes the right to strike as a fundamental tool for workers to address grievances and bargain for better terms and conditions of employment. However, this right is not absolute and is governed by specific rules and procedures outlined in the Labor Code and its Implementing Rules. A strike, to be considered legal, must adhere to these regulations, particularly concerning the grounds for striking, notice requirements, and the conduct of strike activities.

The Labor Code stipulates that strikes are permissible in cases of bargaining deadlocks and unfair labor practices. Rule XXII, Book V, Section 1 of the Rules Implementing the Labor Code explicitly states: “A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practices. Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on issues brought to voluntary or compulsory arbitration.”

Furthermore, procedural requirements are mandatory. Section 3 of the same Rule mandates: “Notice of strike or lockout.- In cases of bargaining deadlocks, a notice of strike or lockout shall be filed with the regional branch of the Board at least thirty (30) days before the intended date thereof, a copy of said notice having been served on the other party concerned.” This notice period, often referred to as the “cooling-off period,” is designed to allow for conciliation and mediation efforts to avert a strike.

Failure to comply with these substantive and procedural requirements can render a strike illegal. An illegal strike can have serious consequences for the union and its members, potentially leading to disciplinary actions against striking workers and liability for damages incurred by the employer. However, the question of who bears the responsibility for damages when a strike is organized by a local chapter of a national union remained somewhat nuanced until cases like Filipino Pipe and Foundry provided greater clarity. The concept of agency, where a national union might act as an agent for its local affiliate, becomes crucial in determining liability.

CASE BREAKDOWN: The Filipino Pipe and Foundry Strike

The story began when the Filipino Pipe Workers Union-National Labor Union (FPWU-NLU), a local chapter of the National Labor Union-Trade Union Congress of the Philippines (NLU-TUCP), filed a notice of strike against Filipino Pipe and Foundry Corporation. The stated grounds were union busting and non-implementation of their Collective Bargaining Agreement (CBA). Atty. Eulogio Lerum, the national president of NLU-TUCP, signed the strike notice on behalf of the local union.

However, before the scheduled conciliation conference could even take place, and without furnishing the company a copy of the strike notice, FPWU-NLU went on strike. This strike lasted for over three months, causing significant disruption to the company’s operations.

Filipino Pipe and Foundry Corporation swiftly filed a case with the Labor Arbiter, seeking to declare the strike illegal and claim damages against FPWU-NLU, NLU-TUCP, and Atty. Lerum. The company argued that the strike was premature, procedurally flawed due to lack of notice, and substantively unjustified as their demands were already being addressed through a pending execution of a previous labor case.

The Labor Arbiter initially sided with the company, declaring the strike illegal and holding NLU-TUCP liable for substantial damages, including lost revenue, damages to business standing, and exemplary damages. Atty. Lerum was absolved of personal liability, and the case against individual striking workers was dismissed based on a return-to-work agreement.

On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision concerning NLU-TUCP and Atty. Lerum’s liability. The NLRC reasoned that the national union merely assisted the local chapter and was not primarily responsible for the strike. Dissatisfied, Filipino Pipe and Foundry Corporation elevated the case to the Supreme Court.

The Supreme Court upheld the NLRC’s decision. Justice Purisima, writing for the Court, emphasized the principle of agency in labor relations. The Court stated, “Evidently, direct and primary responsibility for the damages allegedly caused by the illegal strike sued upon fall on the local union FPWU, being the principal, and not on respondent NLU-TUCP, a mere agent of FPWU-NLU which assisted the latter in filing the notice of strike. Being just an agent, the notice of strike filed by Atty. Eulogio Lerum, the national president of NLU-TUCP, is deemed to have been filed by its principal, the FPWU-NLU.”

The Court underscored that even though NLU-TUCP assisted the local union, the local union remained the principal and the primary actor in staging the illegal strike. The Supreme Court also highlighted the procedural lapses committed by the local union – striking without serving a strike notice to the company and before the mandatory cooling-off period expired – further solidifying the illegality of the strike.

Ultimately, the Supreme Court dismissed the company’s petition, affirming the NLRC’s ruling and exonerating NLU-TUCP and Atty. Lerum from liability for damages arising from the illegal strike.

PRACTICAL IMPLICATIONS: Lessons for Unions and Employers

This Supreme Court decision offers several important practical takeaways for both labor unions and employers in the Philippines.

For national unions, it clarifies the extent of their liability for actions taken by their local chapters. While national unions often provide support and guidance, this case reinforces that local unions are considered the principals in labor disputes, particularly strikes. National unions should ensure their local chapters are well-versed in strike procedures and legal requirements to avoid illegal strikes that could harm both workers and the union movement.

For employers, the ruling highlights the importance of correctly identifying the responsible party in labor disputes. While it might be tempting to pursue the larger national union for damages, this case indicates that legal recourse should primarily target the local union that actually declared and conducted the illegal strike. Employers should also be meticulous in documenting procedural lapses by unions during strikes, as these can be crucial in establishing illegality and pursuing appropriate legal action.

Key Lessons:

• Local Unions as Principals: In strike actions, local unions are generally considered the principals, bearing primary responsibility for their decisions and actions.
• Limited Liability of National Unions: National unions, acting as agents, typically have limited direct liability for illegal strikes conducted by their local chapters, unless direct and malicious involvement can be proven.
• Importance of Strike Procedures: Strict adherence to notice requirements and cooling-off periods is crucial for the legality of a strike in the Philippines. Failure to comply can render a strike illegal and expose the union to potential liabilities.
• Due Diligence in Union Dealings: Employers should understand the relationship between national and local unions and direct legal actions appropriately, focusing on the principal actors in illegal strikes.

FREQUENTLY ASKED QUESTIONS (FAQs)

Q1: What makes a strike illegal in the Philippines?

A: Strikes can be declared illegal for various reasons, including substantive grounds (like striking over non-strikeable issues) and procedural violations (like failing to provide proper strike notice or observe the cooling-off period).

Q2: Can a company sue a union for damages caused by an illegal strike?

A: Yes, Philippine law allows companies to sue unions for actual damages resulting from illegal strikes. This can include lost profits and other demonstrable financial losses.

Q3: Is a national union always off the hook if a local union stages an illegal strike?

A: Generally, yes, based on the principle of agency highlighted in this case. However, if there’s evidence of direct and malicious involvement or instigation by the national union in the illegal acts, they might be held liable.

Q4: What is the “cooling-off period” in strike notices?

A: It’s a mandatory 30-day period after filing a strike notice (for bargaining deadlocks) or 15-day period (for unfair labor practices) during which parties are expected to engage in conciliation and mediation to resolve the dispute before a strike can legally commence.

Q5: What should unions do to ensure their strikes are legal?

A: Unions must strictly follow all procedural requirements for strikes, including filing proper notices, observing cooling-off periods, and ensuring the strike is based on valid grounds (bargaining deadlock or unfair labor practice).

Q6: Can individual workers be held liable for damages from an illegal strike?

A: While the union as an entity is primarily liable, individual workers participating in an illegal strike may face disciplinary actions from their employer, although damage suits usually target the union itself.

Q7: Where can I find the specific rules about strikes in the Philippines?

A: The rules governing strikes are primarily found in the Labor Code of the Philippines, specifically Book V on Labor Relations, and its Implementing Rules and Regulations, particularly Rule XXII, Book V.

ASG Law specializes in Labor Law and Litigation in the Philippines. Contact us or email hello@asglawpartners.com to schedule a consultation to discuss your labor law concerns and ensure compliance.