Philippine Apparel Workers Union v.

NLRC GR L-50320, 31 July 1981 (105 SCRA 444) First Division, Makasiar (p): 3 concurring Facts: In anticipation of the expiration of their 1973-1976 collective bargaining agreement, the Union submitted a set of bargaining proposals to the company. Negotiations were held thereafter, but due to the impasse, the Union filed a complaint with the Department of Labor praying that the parties be assisted in concluding a collective agreement. Notwithstanding the complaint, the parties continued with negotiations. Finally, on 3 September 1977, the parties signed the agreement providing for a three-stage wage increase for all rank and file employees, retroactive to 1April 1977. Meanwhile, on 21 April 1977, Presidential Decree 1123 was enacted to take effect on 1 May 1977 providing for an increase by P60.00 in the living allowance ordained by Presidential Decree 525. This increase was implemented effective 1 May 1977 by the company. The controversy arose when the petitioner union sought the implementation of the negotiated wage increase of P0.80 as provided for in the collective bargaining agreement. The company alleges that it has opted to consider the P0.80 daily wage increase (roughly P22 per month) as partial compliance with the requirements of PD 1123, so that it is obliged to pay only the balance of P38 per month, contending that that since there was already a meeting of the minds between the parties as early as 2 April 1977 about the wage increases which were made retroactive to 1 April 1977, it fell well within the exemption provided for in the Rules Implementing PD 1123. The Union, on the other hand, maintains that the living allowance under PD 1123 (originally PD 525) is distinct from the negotiated daily wage increase of P0.80. On 13 February 1978, the Union filed a complaint for unfair labor practice and violation of the CBA against the company. On 30 May 1978, an Order was issued by the Labor Arbiter dismissing the complaint and referred the case to the parties to resolve their disputes in accordance with the machinery established in the Collective Bargaining Agreement. From this order, both parties appealed to the Commission. On 1 September 1978, the Commission (Second Division) promulgated its decision, setting aside the order appealed from and entering a new one dismissing the case for obvious lack of merit, relying on a letter of the Undersecretary of Labor that agreement between the parties was made 2 April 1977 granting P27 per month retroactive to 1 April 1977 which was squarely under the exceptions provided for in paragraph k of the rules implementing PD 1123. The union filed for reconsideration, but the Commission en banc dismissed the same on 8 February 1979. Hence, the petition. Issue: Whether the Commission was correct in determining the agreement falls under the exceptions. Held: The collective bargaining agreement was entered into on 3 September1977, when PD 1123 was already in force and effect, although the increase on the first year was retroactive to 1 April 1977. There is nothing in the records that the negotiated wage increases were granted or paid before May 1977, to allow the company to fall within the exceptions provided for in paragraph k of the rules implementing PD 1123. There was neither a perfected contract nor an actual payment of said increase. There was no grant of said increases yet, despite the contrary opinion expressed in the letter of the Undersecretary of Labor. It must be noted that the letter was based on a wrong premise or representation on the part of the company. The company had declared that the parties have agreed on 2 April 1977 in recognition of the imperative need for employees to cope up with inflation brought about by, among others, another increase in oil price, but omitting the fact that negotiations were still being held on other unresolved economic and non-economic bargaining items (which were only agreed upon on 3 September 1977).