G.R. No. 91980 - Ilaw at Buklod ng Manggagawa vs. National Labor Relations Commission

Case Summary (G.R. No. 91980)

Relevant Dates and Events

RA 6727 took effect June 5, 1989. The union demanded correction of wage distortions after the Act’s effectivity. IBM members implemented an eight-hour shift beginning October 16, 1989. SMC filed an arbitration complaint on October 18, 1989 (NLRC-NCR Case No. 00-10-04917) and a separate petition with the NLRC on December 8, 1989 seeking injunctive relief. The NLRC issued a temporary restraining order (TRO) by Resolution dated December 19, 1989. Subsequent hearings occurred December 1989 and January 1990; the union filed the certiorari and prohibition petition in February 1990. The Supreme Court issued the decision denying the petition and granting the counter-petition.

Factual Background

After RA 6727’s enactment, IBM demanded correction of alleged significant wage distortions; SMC offered an across-the-board P7 per day raise while the union sought P25 (later reduced to P15). When SMC rejected the reduced demand, some 800 daily-paid workers at Polo Brewery’s production line and others refused to render overtime, reverting from a longstanding schedule (ten-hour first, 10–14-hour second shifts weekdays; eight hours Saturdays) to an eight-hour shift starting October 16, 1989. SMC contended this schedule change caused substantial production losses and revenue decline despite efforts (third shift, communications) to avert disruption.

Union’s Conduct and Notice

The union circulated a joint notice indicating members would temporarily adopt an eight-hour shift pending correction of wage distortion. The union characterized the action as enforcing the eight-hour labor standard and as a legitimate means to compel correction of distortions allegedly caused by RA 6640 and RA 6727.

Employer’s Response and NLRC Proceedings

SMC characterized the workers’ conduct as an illegal slowdown and filed for injunctive relief with the NLRC. The NLRC First Division, after directing evidence to be presented before Labor Arbiter Carmen Talusan, issued an ex parte TRO on December 19, 1989 upon the company’s showing and bond, and set the injunction incident for hearing. Subsequent hearings included cross-examination of SMC’s witness and scheduling disputes with the union’s counsel, who at times challenged NLRC jurisdiction.

Procedural Posture Before the Supreme Court

IBM petitioned for certiorari and prohibition, asserting (1) the central issue was the application of the Eight-Hour Law; (2) the NLRC issued the TRO with undue haste and ex parte evidence; (3) NLRC members lacked confirmed appointments; and (4) the NLRC lacked jurisdiction to act in the first instance. SMC traversed and filed a counter-petition contending the activity was an illegal slowdown, that the NLRC had a duty and jurisdiction to enjoin it, and that delay in resolving the application for injunction was an abuse of discretion.

Applicable Statutes and Contractual Provisions

Republic Act No. 6727 (Wage Rationalization Act), notably Section 4(d) and Section 3 provisions prescribing negotiation, grievance procedures, voluntary arbitration, and mandatory NLRC arbitration for unresolved wage-distortion disputes; the statute also states the pendency of such disputes shall not delay wage increases.
Implementing rules issued by the Secretary of Labor and Employment pursuant to Section 13 of RA 6727; Section 16, Chapter I expressly provides that any issue involving wage distortion shall not be a ground for strike/lockout.
Labor Code provisions: Articles 218, 254, 263, and 264 (powers and limitations of NLRC; prohibition on courts issuing injunctions in labor disputes; recognition of concerted activities and prohibited acts subject to injunctive relief).
The parties’ collective bargaining agreement (CBA): Article V requires exhaustion of grievance procedure and arbitration for disputes; Article VI contains an explicit no-strike/no-slowdown/no-interference clause binding the union during the CBA’s term.

Legal Issues Presented

Whether the union members’ coordinated refusal to render overtime and reversion to an eight-hour shift constituted a protected concerted activity or an illegal slowdown/partial strike.
Whether the NLRC had authority and properly exercised its power to issue the TRO and to adjudicate injunctive relief in the first instance.
Whether the NLRC commissioners’ lack of confirmation by the Commission on Appointments, as alleged, rendered their actions void.

Court’s Analysis — Illegality under RA 6727 and Implementing Rules

The Court emphasized that RA 6727 prescribes a specific, exclusive procedure for addressing wage distortions—negotiation, grievance mechanisms, voluntary arbitration, and, if unresolved, mandatory NLRC arbitration within statutory timeframes—and that such statutory scheme implicitly excludes resort to strikes, lockouts, or similar concerted activities for that purpose. The implementing rules reinforce that “Any issue involving wage distortion shall not be a ground for a strike/lockout.” Because the workers’ action was motivated principally by wage-distortion claims under RA 6727, the resort to a concerted refusal to perform overtime violated both the statute and its implementing rules.

Court’s Analysis — Illegality under the Collective Bargaining Agreement and Nature of Slowdown

Independently of the statutory prohibition, the CBA explicitly barred strikes, walkouts, slowdowns, and other interference with company operations and required grievance procedures and arbitration for disputes involving wages, hours, and conditions. The Court found the union’s action contravened the CBA’s no-strike clause. The Court also agreed with the characterization of the conduct as a slowdown—an installment strike involving willful reduction of work output—and reiterated that such a tactic is generally illicit because employees selectively withhold performance to the employer’s damage while still accepting wages. The union’s attempt to recast the dispute as merely enforcing the eight-hour labor law was seen as a stratagem to evade RA 6727’s prohibition; the underlying motive was the wage-distortion issue.

Court’s Analysis — NLRC Jurisdiction to Issue TRO and Compliance with Procedural Safeguards

The Court held that the NLRC had express statutory authority under the Labor Code (Articles 217/218/254) to enjoin or restra

Case Syllabus (G.R. No. 91980)

Background and Origin of the Controversy

The controversy arose from alleged "wage distortions" affecting employees of respondent San Miguel Corporation (SMC) caused by Republic Act No. 6727 (Wage Rationalization Act), effective June 5, 1989.
The union Ilaw at Buklod ng Manggagawa (IBM) claimed to represent approximately 4,500 SMC employees in the National Capital Region and presented to SMC a demand for correction of significant distortions in workers' wages.
The Union explicitly invoked Section 4(d) of RA 6727, which prescribes settlement procedures and compulsory arbitration by regional branches of the NLRC for disputes arising from wage distortions, including a 20-calendar-day mandatory decision period for the NLRC and a statement that pendency of such disputes shall not delay wage increases.

Union's Demand, Proposed Settlements, and Work Action

IBM demanded correction of wage distortions; the company allegedly ignored the demand and offered an across-the-board increase of P7.00 per day per employee.
The Union initially proposed P25.00 per day per employee, later reducing the proposal to P15.00 per day per employee as an amicable settlement; SMC rejected the reduced proposal.
Following the rejection, members of the Union, on their own accord, refused to render overtime services, particularly at the Beer Bottling Plants at Polo, beginning October 16, 1989.
A joint notice by affected daily-paid workers at Polo read that they had agreed to temporarily implement an eight-hour work shift while SMC management did not implement correct wage distortion adjustments ("IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION").
Approximately 800 daily-paid workers at the Polo Plant’s production line, joined by others at statistical quality control and warehouse (all IBM members), implemented the eight-hour shift on October 16, 1989.
The prior work schedule, observed for the past five years, had been: ten (10) hours for the first shift and ten (10) to fourteen (14) hours for the second shift from Mondays to Fridays, and eight (8) hours for both shifts on Saturdays; management described this schedule as having "automatic overtime" that gave workers a steady source of extra income and around which SMC planned production and budgets.

Effects on SMC: Production Losses and Measures Taken

SMC alleged substantial losses from October 16, 1989 to November 30, 1989 due to the change in work schedule, claiming lost production of 2,004,105 cases of beer.
In monetary terms, SMC claimed lost sales of P174,657,598 and lost revenues of P48,904,311 for the same period; alleged government excise tax revenue loss amounted to P42 million, computed at P21 per case collectible at the plant.
SMC responded by organizing a third shift composed of regular employees and some contractuals and by appeals to Union members through letters, memoranda, and dialogues with plant delegates and shop stewards to adhere to the existing schedule.

SMC's Initial and Subsequent NLRC Filings

On October 18, 1989, SMC filed with the Arbitration Branch of the NLRC a complaint to declare the strike or slowdown illegal and to terminate employment of the union officers and shop stewards; docketed as NLRC-NCR Case No. 00-10-04917.
On December 8, 1989, alleging that the Arbitration Branch action had yielded no relief, SMC filed another complaint directly with the NLRC seeking to enjoin and restrain illegal slowdown and for damages, with a prayer for issuance of a cease-and-desist and temporary restraining order.

NLRC's Ex Parte Proceedings, TRO, and Subsequent Hearings

The NLRC First Division directed SMC to present evidence before Labor Arbiter Carmen Talusan; on December 19, 1989 the First Division promulgated a Resolution based on SMC's allegations and ex parte evidence.
The Resolution: (1) authorized issuance of a Temporary Restraining Order (TRO) for twenty (20) days upon a cash or surety bond of P50,000.00 directing respondents to cease and desist from not complying with the long-established work schedule; and (2) set the injunction incident for hearing before Labor Arbiter Carmen Talusan on December 27, 1989.
The Labor Arbiter scheduled hearings for December 27 and 29, 1989, and January 8, 11, 16, and 19, 1990. The first two were cancelled due to Union counsel unavailability; January 8 was postponed at the Union counsel's instance asserting the Union refused to recognize NLRC jurisdiction.
Hearings on January 11, 16, and 19, 1990 proceeded with cross-examination of SMC’s witness based on affidavit and supplemental affidavits. The Union sought additional hearings, to which SMC objected.
The Hearing Officer indicated she would submit a report to the Commission regarding extension of the TRO of December 9, 1989; the matter then rested until the Union filed a petition on February 14, 1990 commencing a special civil action of certiorari and prohibition before the Supreme Court.

Union's Petition to the Supreme Court: Claims and Reliefs Sought

The Union framed the central issue as application of the Eight-Hour Labor Law and asked whether an employer may force an employee to work every day beyond eight hours.
The Union alleged: (a) NLRC issued the TRO of December 19, 1989 hastily and based on ex parte evidence of SMC; (b) the TRO had the effect of forcing workers to work beyond eight hours daily; (c) NLRC members lacked authority because their appointments had not been confirmed by the Commission on Appointments; (d) NLRC, as essentially appellate, had no jurisdiction to act on the plea for injunction in the first instance.
The petition prayed for: annulment of the December 19, 1989 Resolution; a declaration that confirmation by the Commission on Appointments of NLRC appointments is mandatory; removal from employees’ 201 files of memoranda or disciplinary actions resulting from refusal to render overtime; and, pending judgment, restraint of NLRC Commissioners from exercising power and of Arbiter Talusan and the Commission from acting or implementing the December 19, 1989 Resolution.

SMC’s Comment and Motion to Admit as Counter-Petition: Contentions

SMC characterized the workers' abandonment of the regular work schedule and deliberate reduction in production efficiency as a slowdown, an illegal and unprotected concerted activity.
SMC asserted NLRC has jurisdiction to issue injunctive relief in the first instance against a slowdown and a positive