FACTS:

The case involves a dispute between the respondent San Miguel Corporation (SMC) and the union known as "Ilaw at Buklod Ng Manggagawa (IBM)" regarding wage distortions caused by Republic Act No. 6727, also known as the Wage Rationalization Act. The Union, which represents around 4,500 employees of SMC, presented a demand for correction of wage distortions but it was ignored by SMC. As a result, the union members refused to render overtime services and implemented an eight-hour work shift to compel SMC to address the wage distortions.

SMC suffered significant losses due to the change in the work schedule and made appeals to the Union members to adhere to the existing work schedule, but the losses persisted.

SMC filed a complaint with the National Labor Relations Commission (NLRC) to declare the strike or slowdown illegal and terminate the employment of union officers and shop stewards. The NLRC's First Division authorized the issuance of a Temporary Restraining Order for a period of twenty days.

On the other hand, the labor union filed a petition against SMC, alleging that the company forces its employees to work beyond the eight-hour limit and pays them wages below productivity per employee. The union also argues that the NLRC commissioners had no authority to act because their appointments were not confirmed by the Commission on Appointments. They further argue that the NLRC, as an appellate body, has no jurisdiction to handle injunction cases.

SMC contends that the workers' deliberate reduction of production efficiency constitutes an illegal and unprotected concerted activity, justifying the NLRC's issuance of an injunction. They argue that the NLRC was obligated to enjoin the slowdown and compel arbitration to uphold the national policy of peaceful settlement of labor disputes. SMC alleges that the union's activities go against the law and the collective bargaining agreement.

The Court recognizes the right of employees to engage in concerted activities for collective bargaining or their mutual benefit and protection. However, it agrees with SMC that the coordinated reduction of work time by the union is an illegal and unprotected activity, contrary to the law and the collective bargaining agreement.

This case involves a labor dispute concerning the prescribed wage increase and wage distortions within the company. Under Republic Act No. 6727, a specific procedure is prescribed to correct these distortions, which implici tly excludes strikes, lockouts, or other concerted activities as modes of settlement. Despite this provision, the labor union staged a strike and picketed the premises of the company, claiming that the wage distortions were not resolved.

The respondents filed a complaint for damages and injunction before the National Labor Relations Commission (NLRC), which ruled in their favor, finding the strike and picketing activities of the labor union to be illegal. The Court of Appeals affirmed the NLRC's ruling, prompting the labor union to file a petition for review with the Supreme Court.

ISSUES:

1. Whether the strike or concerted refusal by the Union members to follow the work schedule in order to coerce correction of wage distortions is legal.

2. Whether the dispute regarding wage distortions should be settled through voluntary negotiation or arbitration rather than through strikes or other concerted activities.

3. Whether the partial or limited strike conducted by the union was motivated by the alleged failure of correction of wage distortion or the application of the eight-hour labor law.

4. Whether the workers' concerted refusal to adhere to the work schedule constituted a slowdown.

5. Whether or not the respondent Commission violated the requirements for the issuance of a temporary restraining order (TRO) and injunction.

RULING:

1. The strike or concerted refusal by the Union members to follow the work schedule in order to coerce correction of wage distortions is illegal. The Union was prohibited from engaging in non-peaceful concerted activities for the settlement of its controversy with the employer, as stated in the collective bargaining agreement.

2. The dispute regarding wage distortions should be settled through voluntary negotiation or arbitration, as provided by Republic Act No. 6727 and the rules implementing it.

3. The Supreme Court held that the real cause of the dispute between the union and management was the alleged failure of correction of wage distortion. The work schedule issue was merely a stratagem employed by the union to remove their case from the operation of the rules implementing RA 6727. The Court ruled that the partial strike conducted by the union was illicit since it involved an issue of wage distortion, which is not a ground for a strike under RA 6727. The Court further emphasized that the workers' explicit contractual commitment prohibited strikes, walkouts, stoppage of work, among others, during the term of the collective bargaining agreement.

4. The Court did not need to decide on whether the workers' concerted refusal to adhere to the work schedule constituted a slowdown, as the activity was already deemed contrary to the law, RA 6727, and the parties' collective bargaining agreement.

5. The Supreme Court held that the respondent Commission did not violate the requirements for the issuance of a temporary restraining order (TRO) and injunction. The Commission followed the prescribed procedure and conditions for the exercise of its power to issue a TRO. It conducted a hearing, received testimonial evidence, and made a finding that prohibited or unlawful acts have been threatened and will be continued if not restrained. The TRO was also issued upon the posting of a bond. Therefore, there was no irregularity in the issuance of the TRO.

PRINCIPLES:

• The right of legitimate labor organizations to strike and picket and of employers to lock-out, consistent with the national interest, is recognized and respected. However, the legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed.

• In the case of "distortions of the wage structure within an establishment," the law prescribes a specific procedure for correction, which excludes strikes or lockouts as modes of settlement.

• The legislative intent is to seek the solution of wage distortions through voluntary negotiation or arbitration, and not through strikes, lockouts, or other concerted activities of employees or management.

• Issues involving wage distortion shall not be a ground for a strike or lockout, as stated in the implementing rules of Republic Act No. 6727.

• Collective bargaining agreements may also prohibit strikes or other similar or related concerted activities as a mode of resolving disputes or controversies. Settlement of disputes should be achieved through the stipulated grievance procedure and ultimately by arbitration.

• Wage distortion is not a ground for a strike or lockout under RA 6727.

• A slowdown is an inherently illegal activity wherein workers wilfully reduce the rate of work to restrict the output of the employer.

• The presumption of regularity in appointment and performance of official duty exists in favor of appointees whose appointments had not been duly confirmed.

• Temporary or permanent injunctions or restraining orders in labor dispute cases shall not be issued by any court or entity, except as otherwise provided in the Labor Code.

• A temporary restraining order (TRO) or injunction may be issued in labor disputes when grave or irreparable damage may result from unlawful acts or the non-performance of a particular act. It should be issued after a hearing, with notice given to all known parties and public officials, and after reception of testimonial evidence. The requirements for the issuance of a TRO or injunction are: (1) threatened and continued prohibited or unlawful acts; (2) substantial and irreparable injury to the complainant's property; (3) greater injury to the complainant without the relief; (4) no adequate remedy at law; and (5) inability or unwillingness of public officers to provide adequate protection.

• A temporary restraining order (TRO) may be issued ex parte under certain conditions, such as the allegation of substantial and irreparable injury to the complainant's property, sufficient testimony under oath, the filing of an undertaking with adequate security, and a limited duration of 20 days.

• The reception of evidence for the application of a writ of injunction may be delegated to a labor arbiter, who shall conduct hearings accessible to the parties and their witnesses and submit a recommendation to the Commission.