GR 117878; (November, 1996) (Digest)
G.R. No. 117878 November 13, 1996
MANILA FASHIONS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG MANGGAGAWA NG MANILA FASHIONS, INC., respondents.
FACTS
The labor union filed a complaint on behalf of its members against Manila Fashions, Inc. for non-compliance with Wage Orders NCR-02 and 02-A, which mandated a P12.00 wage increase. This resulted in the underpayment of basic wages and other statutory benefits. The company defended its non-compliance by citing tremendous financial losses and a subsequent strike. It presented a Collective Bargaining Agreement (CBA) provision wherein the union, recognizing the company’s financial distress, agreed to condone the implementation of the said wage orders.
The complainants admitted the CBA’s existence but challenged the validity of the condonation clause, arguing it was made without proper consultation with the union members. The Labor Arbiter declared the provision void, ruling it was contrary to law, as only the Tripartite Wage and Productivity Board could grant exemptions from a Wage Order. The Arbiter ordered the company to pay the underpayments totaling P900,012.00. The NLRC affirmed this decision.
ISSUE
Was the condonation of the wage increase in the CBA valid and binding upon the parties?
RULING
No, the condonation clause is void and cannot exempt the employer from its legal obligation. The Court sustained the rulings of the Labor Arbiter and the NLRC. While a CBA is a negotiated contract, its provisions must not be contrary to law, morals, good customs, public order, or public policy. The condonation clause directly contravened the mandatory wage increase prescribed by Wage Orders NCR-02 and 02-A, which have the force and effect of law.
The legal logic is clear: the authority to exempt an establishment from the coverage of a wage order is vested exclusively in the Tripartite Wage and Productivity Board, not in the contracting parties. If the company was indeed financially distressed, the proper recourse was to apply for an exemption from the Board. Allowing the parties to privately agree to waive a statutory wage increase would render the wage-fixing authority of the state nugatory and could coercively place employees in a position to accept substandard wages. The cases on compromise settlements cited by the petitioner are inapplicable, as they involve settlements to end existing labor disputes, not a preemptive contractual waiver of a non-waivable statutory right. The alternative argument on erroneous computation was rejected for being raised for the first time on appeal.