G.R. No. L-60328; July 16, 1987
KAPISANANG MANGGAGAWANG PINAGYAKAP, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FRANKLIN BAKER COMPANY OF THE PHILIPPINES, respondents.

FACTS

Petitioner union and respondent company entered into a Collective Bargaining Agreement (CBA) on March 7, 1977, which included a negotiated daily wage increase of P1.33, retroactive to January 1, 1977. Subsequently, Presidential Decree No. 1123 was issued on April 21, 1977, effective May 1, 1977, mandating a P60.00 monthly (P2.00 daily) emergency cost of living allowance (ECOLA) increase for private sector workers. The company credited the earlier CBA wage increase against this statutory ECOLA, effectively nullifying the negotiated gain. The labor arbiter upheld this deduction, relying on Section 1(k) of the implementing rules of P.D. 1123, which exempted employers who had granted at least a P60.00 monthly wage increase on or after January 1, 1977.
Petitioner appealed to the National Labor Relations Commission (NLRC). The NLRC, however, peremptorily dismissed the appeal on a procedural technicality, ruling that the union failed to furnish the adverse party with a copy of its memorandum of appeal.

ISSUE

The primary issue is whether a wage increase voluntarily granted by an employer under a CBA can be credited against the mandatory emergency cost of living allowance decreed by P.D. 1123. The secondary issue is whether the NLRC correctly dismissed the appeal on a procedural technicality.

RULING

The Supreme Court granted the petition, setting aside both the labor arbiter’s decision and the NLRC’s resolution. On the substantive issue, the Court ruled that the wage increase under the CBA cannot be deducted from the ECOLA mandated by P.D. 1123. The labor arbiter’s reliance on the exemption in Section 1(k) of the implementing rules was erroneous. Following its precedent in Philippine Apparel Workers Union vs. NLRC, the Court declared said exemption void for contravening the clear language and intent of P.D. 1123. The decree was intended to provide an additional allowance to protect workers from inflation, over and above any existing or negotiated wage rates. Crediting the CBA increase would nullify the hard-earned benefits obtained through collective bargaining, which the law seeks to protect.
On the procedural issue, the Court ruled that the NLRC’s dismissal of the appeal based solely on the failure to furnish a copy of the memorandum of appeal was a misuse of procedural technicality. Citing Estrada vs. NLRC, the Court emphasized that labor laws must be interpreted liberally in favor of workers. The dismissal was not warranted as it was not a jurisdictional defect, and the employer was not denied due process since the entire record was open for review. Technicalities should not defeat substantial justice and the constitutional mandate for labor protection.
Accordingly, the respondent company was ordered to pay the P.D. 1123 ECOLA separately and distinctly from the CBA wage increase. The decision was declared immediately executory.