PHILIPPINE APPAREL WORKERS UNION, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE APPAREL, INC., RESPONDENTS.

Petition for certiorari
to review the decision dated September 1, 1978 of respondent Commission which sustained the
position of respondent employer and dismissed the case for lack of merit.

It appears from the
records that the petitioner, in anticipation of the expiration of their
1973-1976 collective bargaining agreement on July 31, 1976, and as an initial step for its renewal,
submitted to the respondent company a set of bargaining proposals dated June 2,
1976.  Negotiations were held thereafter between the
parties; but because of an impasse, the complainant (petitioner herein) filed
on September 15, 1976 a complaint with the Department of Labor praying that the parties
therein be assisted in concluding a collective agreement.  Notwithstanding the complaint, the parties
nevertheless continued their negotiations.

On September
3, 1977, the private respondent and petitioner
concluded and signed a collective bargaining agreement which, among other
things, provided for a 3-stage wage increase for all rank and file
employees.  The terms of the agreement on
wage increase, which were retroactive to April 1, 1977, follow:

“(a) Effective April 1, 1977, EIGHTY CENTAVO [P0.80] will be
added to the basic daily wages of all said employees.

“(b) Effective April 1,
1978, FIFTY CENTAVOS [P0.50] will be added to the basic daily wages
of all said employees.

“(c) Effective April 1,
1979, FIFTY CENTAVOS [P0.50] will be added to the basic daily wages
of all said employees.”

Meanwhile, on April
21, 1977, P.D. 1123
was enacted to take effect on May 1, 1977 providing for an increase by P60.00 in the
living allowance ordained by P.D. 525. 
This increase was implemented effective May 1, 1977 by the respondent company, as shown by
Memorandum No. 6-77 of the respondent company’s General Manager to all employees
dated April 23, 1977
(p. 12, rec.).

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 respondent 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 said decree, so that it is obliged to pay
only the balance of P38 per month.  In
effect, the payment of the additional P60 covers both the requirements of the
decree and the negotiated wage increase of P0.80 daily.  Respondent company asserts that since there
was already a meeting of the minds between the parties as early as April 2,
1977 about the wage
increases which were made retroactive to April 1, 1977, it fell well within the exemption provided
for in the Rules Implementing P.D. 112, as follows:

“Section 1.  Coverage. – These
rules shall apply to all employers except the following:

xx                       xx                     xx

“(k)   Those that have
granted in addition to the allowance under P.D. 525, at least P60.00 monthly
wage increase on or after January 1,
1977, provided that those who paid less than this amount shall pay
the difference.”

On the other hand,
petitioner maintains that the living allowance under P.D. 1123 (originally P.D.
525) is distinct and separate from the negotiated wage increase of P0.80 daily
[pp. 6 & 96, rec.].  In fact, it
adds, when the CBA was signed by the parties on September 3, 1977, the
respondent company was fully aware of the effectivity
of P.D. 1123 and had already been paying the increased allowance provided
therein [p. 94, rec.]. 
Hence, the respondent company acted in bad faith when it refused to pay
the negotiated wage increase in violation of the collective bargaining
agreement and the respondent company is guilty of unfair labor practice,
pursuant to the following provisions of the Labor Code:

“Article 248.  Unfair Labor Practices of
Employers. — It shall be unfair labor practice for an employer:

xx                       xx                     xx

“(J) To violate a collective bargaining
agreement.”

On February
13, 1978, the
petitioner filed a complaint dated February 10, 1978 for unfair labor practice and violation of
the CBA against the respond­ent company [pp. 13-16, rec.].  On May 30, 1978, an Order [p. 18, rec.] was issued by Labor
Arbiter Conrado B. Maglaya,
the dispositive portion of which reads as follows:

“WHEREFORE, premises considered, and by authority of Article
263 of the Labor Code as amended, let this case be, as it is hereby, DISMISSED
and the same is referred to the parties or disputants for them to resolve their
disputes, grievances or matters arising
from the implementation, application or interpretation of their Collective
Bargaining Agreement in accordance with the Machinery established in the
CBA.”

From this order, both
parties appealed to the respondent Commission.

Petitioner filed its appeal on June 28, 1978 [pp. 31-34, rec.]
assailing the order of Labor Arbiter Maglaya as
contrary to law and the evidence adduced during the hearing, which constitutes
grave abuse of discretion amounting to lack of jurisdiction.  It avers that the matter had already been
taken up on grievance but the respondent company refused to implement the P0.80
wage increase under the CBA, and
that it further refuses to submit to voluntary arbitration.  Hence, it prays for the setting aside of the
Labor Arbiter’s Order and for the parties to submit to voluntary arbitration as
provided for in their CBA and the provisions of the Labor Code.

On the other hand, respondent company filed on July 5, 1978 a
partial appeal [pp. 19-27, rec.], accepting the dismissal of the complaint but
assail­ing that portion of the Labor Arbiter’s Order declaring the subject
matter as grievable and therefore threshable
under the parties’ CBA.  Its prayer was
for affirmance of the dismissal, reversal of the
referral to the parties for threshing out under their CBA, and for a
declaration that it has not committed an unfair labor practice nor violated the
CBA.

On September 1, 1978,
the respondent 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.  The dismissal is
predicated on the opinion [p. 45,
rec.] of the Undersecretary of Labor when he said:

xx                  xx                     xx

“If as you said, management and labor had agreed on April 2, 1977 to grant an amount of
P22.00 (roughly) per month to its employees retroactive to April 1, 1977, then the exemption is squarely in
point, notwithstanding that the CBA was signed in May or June.  This must be so for reason that on April 2, 1977, there was already the
meeting of the minds of the parties and for legal purposes,
the contract was already perfected as of said date.”

Said the respondent Commission:

“We fully subscribe to this view.  It needs no further elaboration to
demonstrate that by the facts and the terms of the law, the respondent has to
pay each of the employees concerned a total of P60.00 monthly for it to satisfy
payment of both the wage increase and the allowance.

“In resume, we find the refusal of the respondent to submit to
voluntary arbitration to be validly grounded and, therefore, not constitutive
of unfair labor practice.  We further
find to be untenable the complainant’s claim for full payment of both the P0.80
daily wage increase under the CBA and the P60 allowance under P.D. 1123″
[pp. 45-46, rec.].

Petitioner then filed its
motion for reconsideration but the NLRC en banc dismissed the
same in its resolution of February 8, 1979 [pp. 48-54, rec.], pursuant to Section 7, Rule II of the Rules and Regulations Implementing P.D. No. 1391, which became effective on
September 15, 1978 and provides thus —

“Sec. 7.  Decisions of the Commissions.  There shall henceforth be no appeal from such
decisions to the Minister of Labor except as provided in P.D. 1367 and its
implementing rules concerning appeals to the Prime Minister, and the decisions
of the Commission en banc or any of its Decisions shall be final
and executory.”

Hence,
the instant petition.

Petitioner maintains that private respondent violated the CBA and
committed an ULP when it refused to pay the negotiated wage increase of P0.80
daily effective April 1, 1977,
to the employees within the bargaining unit. 
Private respondents, however, contend that there was no violation of the
CBA and that its application of the negotiated wage increase as partial
compliance with P.D. 1123 is well within the provisions of the latter.

A perusal of the CBA shows that it was made and entered into on
the 3rd day of September, 1977 by and between the parties herein (p1. see p. 1
of Annex “B” at p. 7 of NLRC rec.) although the first year of its
increase was retroactive to April 1,
1977.  At the time it was
perfected and signed by the parties, P.D. 1123 was already in force and
effect.  A sample pay advice [p. 11 –
insert, rec.] and the Memorandum No. 6-77 dated April 23, 1977 [p. 12, rec.] signed by the General Manager
of respondent company show that the said P.D. was implemented by respondent
company on May 1, 1977.

On the other hand, there is nothing in the records to indicate
that the negotiated wage increases were granted or paid before May, 1977.  Hence, it cannot be said that the respondent
Company falls within the exceptions provided for in paragraph (k) of the rules
implementing P.D. 1123.  At the time the said P.D. took effect, there was neither
a perfected contract nor an actual payment of the said increase.  There was therefore no grant of said
increases as yet, despite the contrary opinion expressed in the letter of
Undersecretary of Labor Amado G. Inciong.

The said letter dated May
13, 1977 [p. 33, NLRC rec.] of Undersecretary Inciong
is based on a wrong premise and misrepresentation on the part of respondent
company.  It was alleged in the letter of
respondent company that the wage increases were “agreed upon by the
company and the bargaining union on April 2, 1977 in recognition of the
imperative need for employees to cope up with inflation brought about by, among
others, another increase in oil price” [p. 31, NLRC rec.].  It was not, however stated that at the time the said letter was written,
negotiations were still being held “on other unresolved economic and
non-economic bargaining items and it was only on September 3, 1977 when they
reached agreement thereon” [p1. see p. 7 of private respondent’s
Memorandum, p. 107, rec.].

There was therefore no binding contract between the parties
before September 3, 1977.  For “if any essential item is left open
for future consideration, there is no binding contract, and an agreement to
reach an agreement imposes no obligation on the parties thereto” [17 Am. Jur., 2d
362].

Such being the case, and without actual payment of the agreed
P0.80 wage increase, there could have been no “grant” of wage increases
within the contemplation of paragraph K, Section 1 of the Rules implementing
P.D. 1123 to place the respondent company within the purview of the exemption
provided for in the said rules.

Consequently, its refusal to implement the P0.80 wage increase for
the first year of the CBA constitutes a violation thereof and makes the
respondent company guilty of unfair labor practice.

The respondent company is also guilty of bad faith when it signed
the CBA on September 3, 1977
without in any way letting the petitioner union know that it was going to apply
part of the allowances being paid under P.D. 1123 to the wage increases
provided for in the CBA.  Between the time of the implementation of
P.D. 1123 on May 1, 1977 and
the signing of the CBA on September 3,
1977, nothing was said between the parties about the wage increase
despite the fact that negotiations were still going on between the
parties.  The exchange of letters between the respondent company and Labor
Undersecretary Inciong appears to have been concealed from the union.  According to the respondent
Commission, “the wage increase (however) was not immediately implemented
because Mr. Alfred Flug who was to bring home funds
was still in the United
States” [p.
40, rec.].  It was only upon
arrival from the U.S.A.
on January 19, 1978 of Robert Flug,
son of said Alfred Flug, that the union had an inkling that the company will not pay the negotiated wage
increase.  At this point the CBA was
already per­fected and signed by the parties, so that its terms and stipulations
have the force of law between them.

A collective bargaining
agreement is the law between the parties (Kapisanan
ng mga Manggagawa
sa La Suerte-FOITAF
vs. Noriel, 77 SCRA 414).  In the construction or interpretation of such
a contract, the primary purpose and guideline and indeed the very
foundation of all the rules for such construction or interpretation is the
intention of the parties (17 Am. Jur. 2d., 631).

What was the intention of the parties relative to the wage
increases?  A cursory reading of the CBA
indicates that the benefits provided therein are not exclusive of other
benefits, as may be gleaned from the provisions of its Section 4, Article XIV
[p. 42 of the CBA at p. 6, NLRC rec.], which speaks of “any other benefits
or privileges which are not expressly provided in this Agreement, even if now
accorded or hereafter accorded to the employees and workers, shall be deemed
purely acts of grace x x x.”

Likewise, in the accompanying Memorandum of Understanding [pp.
82-83, NLRC rec.] dated September 3, 1977, the parties have
agreed as follows:

“1.  As long as it does not contravene the law and
its implementing rules and regulations the COMPANY agrees to effect a uniform
and indiscriminate wage increase in the salaries of its employees within the
bargaining unit represented by the UNION regardless of their position and pay
rates, in the event that the government shall direct another increase(s) in the statutory minimum wage fixed under
P.D. 928 within the period of three years from the signing of this
instrument.  The uniform increase
contemplated in this instrument will be equivalent to the amount of the statutory
wage increase or adjustment.”

The bases of the dissent
of Madame Justice Herrera are that:

I.     The
P0.80 per day increase was already granted as early as April 2, 1977 when the company agreed to give wage
increases to its employees effective April
1, 1977.  Hence, such grant
should be credited against the emergency cost of living allowance (ECOLA)
provided for by P.D. 1123.

II.    The Department’s (Labor) view on the matter of exemptions from
P.D. 1123 should be given weight since it was not interpreting or construing a
statute but explaining the extent of its own rule.

III.   It is inequitable that an employer who has granted increases in pay
to his employees on a given day is further ordered to give additional increases
one, two or three days thereafter.

IV.  Social justice requires that the broader requirements of a stable
economy should be taken into account in resolving conflicts between labor and
management.

I

There is no controversy
that the first year’s wage increase under the CBA was supposed to retroact to April 1,
1977.  There is likewise no question that had the company paid the eighty centavos
daily increase in April 1977, the conclusion would have been unquestionable
that such negotiated wage increase (NWI) should be credited against the
emergency cost of living allowance (ECOLA) under P.D. 1123.

The question arose because, first, there was no such payment either before or after the effectivity of P.D. 1123 on May 1, 1977; and second, because there was no binding
contract to speak of on May 1, 1977.

It is conceded that the
word “grant” in its broader sense may include “to agree or
assent to; to allow to be
fulfilled; to accord; to bestow or confer; and is synonymous with ‘concede’
which means to agree on the idea of bestowal or acknowledgment especially of a
right or privilege” (Woods vs. Reilly, 211 S.W. 2d 591, 597).  Such being the case, the “grant”
could be said to have been made at the time of the agreement, although there
may not have been payment as yet.

But the question is, when was the inception or actual birth of the agreement?  The company contends that it was on April 2,
1977, whereas the Union alleges that it was only on September
3, 1977, the date of
the CBA.

Paragraph 1 of the CBA reads:

“This agreement, made and entered into this 3rd day of
September 1977 x x” (p. 7, NLRC rec.).

On
the other hand, there is nothing in the record to indicate that the P0.80 wage
increase was indeed agreed upon on April 2, 1977.  Aside
from the self-serving statements of the company in its various communications
(pp. 121, 125 and 128, rec.) and pleadings (pp. 73 and 102, rec.), the only
other reference to said date is found on the second paragraph of page
1 of the Memorandum of Understanding dated September 3, 1977 (p. 82, NLRC rec.)
which, however, does not mention anything about the 80-centavo increase effective
April 1, 1977.  In fact, the said
paragraph speaks of the company’s commitment to effect uniform and
indiscriminate wage increases among its employees within the bargaining unit
represented by the union in the event that the government shall, within a
period of three (3) years from
execution hereof, direct additional increases in the statutory minimum wage
fixed under P.D. 928.  In other words,
what was agreed upon on April 2, 1977, was a conditional increase contingent upon
the government’s increasing of the statutory minimum wage then prevailing.  Is it not
possible that the company’s decision to give the P0.80 daily increase effective
April 1, 1977 was influenced by the knowledge that it could be absorbed by the
additional ECOLA provided for by P.D. 1123, and that such decision was
definitely made after receipt of the letter dated July 15, 1977 of then
Undersecretary Inciong (p. 130, rec.)?

In any case, the company
admits that after April 1977 there were “negotiations on other unresolved
economic and non-economic bargaining items and it was only on September 3, 1977 when they reached agreement thereon”
(p. 107, rec.).

This brings us to no
other conclusion that the agreement was born only on September
3, 1977:

“Mere preliminary negotiations as to the terms of an agreement
do not constitute a contract.  A complete
contract is effected generally only by an agreement as to all the terms which
the parties intend to introduce into the contract, and where such is the
intention of the parties, by the execution of a formal written instrument
embodying those terms” (17 C.J.S. 390).

“Where preliminary negotiations are consummated by a written
contract, or an oral agreement is evidenced by a subsequent agreed memorandum
in writing, the writing supersedes all previous understandings and the intent
of the parties must be ascertained therefrom.  xx xx” (17 C.J.S. 750).

In the light of the
foregoing, there was therefore no “grant” of the wage increase as of May 1,
1977 to enable the
company to avail of the exemption under P.D. 1123.

II

It is also conceded that the Department of Labor had the right to
construe the word “grant” as used in its rules implementing P.D.
1123, and its explanation regarding the exemptions to P.D. 1123 should be given
weight.  However, when it is based on
misrepresentations as to the existence of an agreement between the parties, the
same cannot be applied.  At any rate, the
opinion of then Undersecretary Inciong about the
matter is based on the wrong premise that there was already an agreement (“If as you said management and
labor agreed on April 2, 1977
x x x“, p. 33, NLRC
rec.).  There is no such agreement perfected on April 2, 1977.

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.

The construction or explanation of then Undersecretary Inciong 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 as hereinafter demonstrated.

III

The CBA entered into between the parties on September 3, 1977 created certain obligations
between the parties which they are bound to keep without being
“ordered” to do so.  The
principle of equity need not even come in, for “unless fraud, mistake or
the like is set up, a court will not disturb contract rights as evidenced by a
writing which purports to express the intention
or will of the parties.  x x x” (27 Am. Jur.
594).

A cursory reading of the CBA dated September 3, 1977 reveals the following intentions of the
parties:

a.    That the wage increases thereunder
should be staggered for a 3-year period retroactive to April 1, 1977 (see page 2 of Private Respondent’s Memorandum, p. 102,
rec.); and

b.    That such wage increases are exclusive of
any statutory increase in the minimum wage, obliging the company to effect a
uniform and indiscriminate wage increase equivalent to the increase or
adjustment in the minimum wage that may be decreed within a period of three years
from the signing of the instrument on September 3, 1977 (see par. 1 of the Memorandum of Understanding, p. 83, NLRC rec.).

The staggered wage
increase will not be achieved if the same were to be absorbed by the
P60-increase in the ECOLA.  For a computation of the NWI under the CBA
will approximately amount to the following:

First year ——– P0.80 daily or
approximately P22/mo.

Second year —       .50 daily or approximately   13.75/mo.

Third year ——-      .50 daily or approximately   13.75/mo.

Monthly total for 3 years . . . . .
. . . .   P49.50

Thus, it will be seen
that because the resultant total in the monthly-wage increase over the 3-year
period under the CBA is less than P60.00, the same will always be covered by
the ECOLA, and there will be no
occasion for a staggered increase during the period other than what the law may
provide — which is not the intention of the parties.

It is submitted that had
the parties intended that to be the end, they should have incorporated the same
in their CBA or in their Memorandum of Understanding.

It is also apparent that
the crediting of the NWI in the ECOLA was an afterthought on the part of the
company.  If not, then the company was in
bad faith when it did not mention its plan to credit the NWI to the ECOLA during the
negotiations prior to the signing of the CBA on September 3, 1977, as soon as
it received the opinion of then Under-Secretary Inciong
in his letter of July 13, 1977 (p. 130, rec.).

IV

It is submitted that the
principle of social justice will be better served by upholding the protection
to labor policy guaranteed by the Constitution.

The Honorable Chief
Justice Enrique M. Fernando, in explaining the concept of social justice,
wrote:

“What is thus stressed is that a fundamental principle as
social justice, identified as it is with the broad scope of the police power,
has an even more basic role to play in aiding those whose lives are spent in
toil, with destitution an ever-present threat, to attain a certain degree of
economic well-being.  Precisely, through
the social justice coupled with the protection to labor provisions, the
government is enabled to pursue an active and militant policy to give reality
and substance to the proclaimed aspiration of a better life and more decent
living conditions for all.  It is in that
spirit that in 1969, in Del Rosario vs. Delos Santos (L-20586, March 21, 1969,
22 SCRA 1196), reference was made to what the social justice concept signifies
in the realistic language of the late President Magsaysay:  ‘He who has less in life should have more in
law.’ After tracing the course of decisions which spoke uniformly to the effect
that the tenancy legislation, now on the statute books, is not vitiated by
constitutional infirmity, the Del Rosario opinion made clear why it is easily
understandable ‘from the enactment of the Constitution with its avowed concern
for those who have less in life, [that] the constitutionality of such
legislation has been repeatedly upheld.’ What is sought to be accomplished by the
above fundamental principle is to assure the effectiveness of the community’s
effort to assist the economically underprivileged.  For under existing conditions, without succor
and support, they might not, unaided, be able to secure justice for themselves”
(Fernando, Enrique M., Constitution of the Philippines, pp. 80-81 [1974]).

More than elusive justice, survival is the daily problem of the
worker and his family.  The employer is
not faced with such a problem.  More
often than not, the employer dissipates part of his income or profit in pleasures of the
flesh and gambling aside from luxuries, fabulous parties and conspicuous
consumption.

The
stability of the economy does not depend on the employer alone, but on
government economic policies concerning productivity in all areas and not only
in the clothing or textile industries. 
There is not even an intimation that the company is losing.  It is the living wage of the workers which is
the basis of a stable economy.  If the
company cannot pay a living wage, it has no business operating at the expense
of the lives of its workers from the very start.

The
preservation of the lives of the citizens is a basic duty of the State, more
vital than the preservation of the profits of the corporation.  When the State is engaged in a life-and-death
struggle, like war or rebellion, it is the citizen worker who fights in defense
of the State and for the preservation of the existence of corporations and
businesses within its territorial confines. 
When the life of the State is threatened from within and without, it is
the citizen, not the corporation or business enterprise, that mans the weapons
of war and march into battle.

To
invoke the nebulous term “stable economy” to justify rejection of the
claims of the workers as against the assets of the employer,
is to regard human life as more expendable than corporate capital.  There is nothing in the Constitution that
expressly guarantees the viability of business enterprises much less assuring
them of profits.

V

Moreover,
it must be pointed out that the Secretary of Labor has exceeded his authority
when he included paragraph (k) in Section 1 of the Rules Implementing P.D.
1123.

Section
1 of said decree spells out the scope of its benefits, as follows:

“Section 1.  In the Private Sector.
– In the private sector, an across-the-board increase of sixty pesos (P60.00)
in emergency allowance as provided in P.D. 525 shall be paid by all
employers to their employees effective 1
May 1977.  Accordingly, the
monthly emergency allowance under P.D. 525 is hereby amended as follows:

“a) For workers being paid P50.00 —
P110

“b) For workers being paid P30.00 —     90

“c) For workers being paid P15.00 —     75.”

To implement the same, the then Secretary of Labor was authorized
in Section 4 of the same decree to issue appropriate rules and
regulations.  Such authority is quoted
hereunder:

“Sec. 4.  The Secretary of Labor and the Commissioner
of the Budget shall issue appropriate rules and regulations to implement this
Decree for their respective sectors.  Under such rules and regulations, distressed employers whether
public or private may be exempted while in such condition in the interest of
development and employment.”

By virtue of such rule-making authority, the Secretary of Labor
issued on May 1, 1977 a set of rules which exempts not only distressed
employers (see paragraph 1, Section 1 as well as Sections 6, 7, 8 and 9 of said
rules) but also “those who have granted in addition to the allowance under
P.D. 525, at least P60.00 monthly wage increase on or after January 1, 1977,
provided that those who paid less than this amount shall pay the difference
(see paragraph k of said rules).

Clearly, the inclusion of paragraph k contravenes the
statutory authority granted to the Secretary of Labor, and the same is
therefore void, as ruled by this Court in a long line of cases, among which
are:

1. Teozon vs. Members of the Board of
Administrators, PVA (33 SCRA 585, 588-589):

“The recognition of the power of administrative officials to
promulgate rules in the administration of the statute, necessarily limited to
what is provided for in the legislative enactment, may be found in the early
case of United States vs. Barrios decided in 1908.  Then came in a 1914 decision, United
States vs. Tupasi
Molina (29 Phil. 119) delineation of the scope of such competence.  Thus: 
‘Of course the regulations adopted under legislative authority by a
particular department must be in harmony with the provisions of the law, and
for the sole purpose of carrying into effect its general provisions.  By such regulations, of course, the law
itself cannot be extended.  So long,
however, as the regulations relate solely to carrying into effect the provisions
of the law, they are valid.’ In 1936, in People vs. Santos,
this Court expressed its disapproval of an administrative order that would
amount to an excess of the regulatory power vested in an administrative
official.  We reaffirmed such a doctrine
in a 1951 decision, where we again made clear that where an administrative order
betrays inconsistency or repugnancy to the provisions of the Act, ‘the mandate
of the Act must prevail and must be followed.’ 
Justice Barrera, speaking for the Court in Victorias
Milling Inc. vs. Social Security Commission, citing Parker as well as Davis
did tersely sum up the matter thus:  ‘A
rule is binding
on the Courts so long as the procedure fixed for its promulgation is followed
and its scope is within the statutory authority granted by the legislature,
even if the courts are not in agreement with the policy stated therein or its
innate wisdom x xx.  On the other hand, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally determine
what the law means.’

“It cannot be otherwise as the Constitution limits the
authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed.  No lesser administrative executive office or
agency then can, contrary to the express language of the Constitution, assert
for itself a more extensive prerogative. 
Necessarily, it is bound to observe the constitutional mandate.  There must be strict compliance with the
legislative enactment.  Its terms must be
followed.  The statute requires adherence
to, not departure from its provisions. 
No deviation is allowable.  In the
terse language of the present Chief Justice, an administrative agency ‘cannot
amend an act of Congress.’ Respondents can be sustained, therefore, only if it
could be shown that the rules and regulations promulgated by them were in
accordance with what the Veterans Bill of Rights provides” (underlining
supplied).

2. Santos vs. Hon. Estenzo, et al. (109 Phil. 419):

“It is of elementary knowledge that an act of Congress cannot
be amended by a rule promulgated by the Workmen’s Compensation Commis­sion.”

3.  Hilado
vs. Collector of Internal Revenue (100 Phil. 295):

“It seems too clear for serious argument that an
administrative officer cannot change a law enacted by Congress.  A regulation that is merely an interpretation
of the statute when once determined to have
been erroneous becomes a nullity.”

4. Sy Man vs. Jacinto & Fabros (93 Phil. 1093):

“x x x We
also find and hold that the memorandum order of the Insular collector of Customs
of August 18, 1947, is void and of no effect, not only because it has
not been duly approved by the Department Head and fully published as required
by Section 551 of the Revised Administrative Code but also because it is inconsistent
with law.  x x x” (underlining supplied).

5. Olsen & Co., Inc. vs. Aldanese
and Trinidad (43 Phil. 259):

“The important question here involved is the construction of
Sections 6, 7 and 11 of Act No. 2613 of the Philippine Legislature, and Section
9 of the ‘Tobacco Inspection Regulations,’ promulgated by Administrative Order
No. 35.  It must be conceded that the
authority of the Collector of Internal Revenue to make any rules and
regulations must be founded upon some legislature act, and that they must
follow and be within the scope and purview of the act.”

In the light of the foregoing, paragraph (k) of the Rules
Implementing P.D. 1123 must be declared void. 
Consequently, the argument about crediting the NWI against the ECOLA has
no more leg to stand on and must perforce fall.

It is also obvious that the negotiated wage increases provided for in the CBA are intended to
be distinct and separate from any other benefit or privilege that may be
forthcoming to the workers.

The respondent company
must perforce pay both the benefits under P.D. 1123 and the CBA.  Its refusal to pay the wage increase provided
for in the latter constitutes a question that should have been settled before a
voluntary arbitrator.

Moreover, in case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for the
laborer (Insular Lumber Co. vs. CA, 80 SCRA 28, citing Art. 1702, Civil Code of
the Philippines).

Consequently, We find that the
respondent Commission acted with grave abuse of discretion when it dismissed
petitioner’s case and upheld the private respondent’s posture in the absence of
substantial evidence in support thereof.

WHEREFORE, THE WRIT OF CERTIORARI IS HEREBY
GRANTED, THE DECISION OF THE RESPONDENT COMMIS­SION IS HEREBY SET ASIDE, AND
PRIVATE RESPONDENT IS HEREBY DIRECTED TO PAY, IN ADDITION TO THE INCREASED
ALLOWANCE PROVIDED FOR IN P.D. 1123, THE NEGOTIATED WAGE INCREASE OF P0.80
DAILY EFFECTIVE APRIL 1, 1977 AS WELL AS ALL OTHER WAGE INCREASES EMBODIED IN
THE COLLECTIVE BAR­GAINING AGREEMENT, TO ALL COVERED EMPLOYEES.  COSTS AGAINST PRIVATE
RESPONDENT.

THIS DECISION IS IMMEDIATELY EXECUTORY.

SO ORDERED.

Fernandez, Guerrero, and
De Castro, JJ., concur.

Teehankee, J., (Chairman), concurs in a separate opinion.

Melencio-Herrera, J., dissents in a separate opinion.