Philippine Apparel Workers Union vs.

NLRC
Case No. 119G.R. No. L-50320 (March 30, 1988)

FACTS:
A collective bargaining agreement was made between Petitioners and Management of Philippine Apparel
Inc. (PAI) on April 2, 1977 and was signed on September 7, 1977. CBA stipulated a P22.00 increase in monthly
wage of workers that will retroact from April 1, 1977. However, on May of the same year, P.D. 1123 granted a
P60.00 increase in living allowance which will take effect from January 1, 1977, provided that those who
were granted an increase of less that P60.00 will be given t h e d i f f e r e n c e . M a n a g e m e n t a r g u e s t h a t s i n c e
o n A p r i l 2 , t h e r e h a s b e e n a n agreement to a P22.00 increase, PAI only had to pay the difference of
P38.00. Moreover, PAI was able to get the opinion of the Undersecretary of Labor supporting t h e P A I
M a n a g e m e n t . L a b o r c o n t e n d s t h a t i n c r e a s e d o e s n o t f a l l w i t h i n t h e exemption since the CBA was
signed on September after P.D. 1123 has been passed.

ISSUE:
W/N the case falls under the exception of P.D. 1123.

HELD:
No. There was no formal agreement on April 2, 1977 regarding the increase. Moreover, the opinion of the
Undersecretary of Labor was based on a wrong premise and misinterpretation by PAI Management. It was unlawful
and beyond the scope of law

LATIN MAXIM: 2A

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).

The Department of Labor had the right to construe the word “grant” as used in its rules implementing PD 1123, and its explanation
regarding the exemptions to PD 1123 should be given weight; but, when it is based on misrepresentations as to the existence of an
agreement between the parties, the same cannot be applied. There is no distinction between interpretation and explaining the extent
and scope of the law; because where one explains the intent and scope of a statute, he is interpreting it. Thus, the construction or
explanation of Labor Undersecretary is not only wrong as it was purely based on a misapprehension of facts, but also unlawful because
it goes beyond the scope of the law.The writ of certiorari was granted. The Supreme Court set aside the decision of the commission,
and ordered the company to pay, in addition to the increased allowance provided for in PD 1123, the negotiated wage increase of
P0.80 daily effective 1 April 1977 as well as all other wage increases embodied in the Collective Bargaining Agreement, to all covered
employees; with costs against the company