CEBU OXYGEN & ACETYLENE CO., INC. (COACO), PETITIONER, VS. SECRETARY FRANKLIN M. DRILON OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ASSISTANT REGIONAL DIRECTOR CANDIDO CUMBA OF T…

The principal issue raised in this petition is whether or not an
Implementing Order of the Secretary of Labor and Employment (DOLE) can provide
for a prohibition not contemplated by the law it seeks to implement.

The undisputed facts are as follows:

Petitioner and the union of its rank and file employees, Cebu Oxygen Acetylene and Central Visayas
Employees Association (COAVEA) entered into a collective bargaining agreement
(CBA) covering the years 1986 to 1988. 
Pursuant thereto, the management gave salary increases as follows:

“ARTICLE IV – SALARIES/RICE RATION

“Section
1.  The COMPANY agrees that for and during the three (3) year effectivity of this AGREEMENT, it will grant to all regular
covered employees the following salary increases:

Salaries:

1) For the first year
which will be paid on January 14, 1986
– P200  to each
covered employee.

IT IS HEREBY EXPRESSLY
AGREED AND UNDERSTOOD THAT THIS PAY INCREASE SHALL BE CREDITED AS PAYMENT TO
ANY MANDATED GOVERNMENT WAGE ADJUSTMENT OR ALLOWANCE INCREASES WHICH MAY BE
ISSUED BY WAY OF LEGISLATION, DECREE OR PRESIDENTIAL EDICT COUNTED FROM THE
ABOVE DATE TO THE NEXT INCREASE.

2. For the second
year which will be paid on January 16,
1987 – P200 to each covered employee.

IT IS HEREBY EXPRESSLY
AGREED AND UNDERSTOOD THAT THIS PAY INCREASE SHALL BE CREDITED AS PAYMENT TO
ANY MANDATED GOVERNMENT WAGE ADJUSTMENT OR ALLOWANCE INCREASES WHICH MAY BE
ISSUED BY WAY OF LEGISLATION, DECREE OR PRESIDENTIAL EDICT COUNTED FROM THE
ABOVE DATE TO THE NEXT INCREASE.

3) For the third year
which will be paid on January 16, 1988 – P300 to each
covered employee.

IT IS HEREBY EXPRESSLY
AGREED AND UNDERSTOOD THAT THIS PAY INCREASE SHALL BE CREDITED AS PAYMENT TO
ANY MANDATED GOVERNMENT WAGE ADJUSTMENT OR ALLOWANCE INCREASES WHICH MAY BE ISSUED
BY WAY OF LEGISLATION, DECREE OR PRESIDENTIAL EDICT COUNTED FROM THE ABOVE DATE
TO THE NEXT INCREASE.

IF THE WAGE ADJUSTMENT
OF ALLOWANCE INCREASES DECREED BY LAW, LEGISLATION OR PRESIDENTIAL EDICT IN ANY
PARTICULAR YEAR SHALL BE HIGHER THAN THE FOREGOING INCREASES IN THAT PARTICULAR
YEAR, THEN THE COMPANY SHALL PAY THE DIFFERENCE.”

On December 14, 1987,
Republic Act No. 6640 was passed increasing the minimum wage, as follows:

“Sec. 2.  The statutory minimum wage rates of workers and employees in the
private sector, whether
agricultural or non-agricultural,
shall be increased by ten pesos (P10.00) per day, except non-agricultural workers and employees outside
Metro Manila who shall receive an increase of eleven pesos (P11.00) per day: 
Provided, that those already receiving above the minimum wage up to one hundred pesos
(P100.00) shall receive an increase of ten pesos (P10.00) per day.  Excepted from the provisions of this
Act are domestic helpers and persons employed in the personal service of another.”

The Secretary of Labor
issued the pertinent rules implementing the provisions of Republic Act No.
6640.  Section 8 thereof provides:

“Section 8.  Wage Increase Under
Individual/Collective Agreements. – No wage increase shall be credited as
compliance with the increase prescribed herein unless expressly provided under
valid individual written/collective agreements; and, provided further, that
such wage increase was granted in anticipation of the legislated wage increase
under the act.  Such increases shall not
include anniversary wage increases provided on collective agreements.”

In sum, Section 8 of the implementing rules prohibits the
employer from crediting anniversary wage increases negotiated under a
collective bargaining agreement against such wage increases mandated by
Republic Act No. 6640.

Accordingly, petitioner credited the first year increase of
P200.00 under the CBA and added the difference of P61.66 (rounded to P62.00)
and P31.00 to the monthly salary and the 13th month pay, respectively, of its
employees from the effectivity of Republic Act No.
6640 on December 14, 1987
to February 15, 1988.

On February 22, 1988,
a Labor and Employment Development Officer, pursuant to Inspection Authority
No. 058-88, commenced a routine inspection of petitioner’s establishment.  Upon completion of the inspection on March 10, 1988, and based on payrolls
and other records, he found that petitioner committed violations of the law as
follows:

1.  Underpayment of Basic Wage per R.A. No. 6640
covering the period of two (2)
months representing 208 employees who are not receiving wages above P100/day
prior to the effectivity of R.A. No. 6640 in the
aggregate amount of EIGHTY THREE THOUSAND AND TWO HUNDRED PESOS (P83,200.00);
and

2.  Underpayment of 13th month pay for the year
1987, representing 208 employees who are not receiving wages above P100/day
prior to the effectivity of R.A. No. 6640 in the
aggregate amount of FORTY EIGHT THOUSAND AND FORTY EIGHT PESOS (P48,048.00).

On April 7, 1988,
respondent Assistant Regional Director, issued an Order instructing petitioner
to pay its 208 employees the aggregate amount of P131,248.00,
computed as follows:

Computation sheet of
differentials due to COACO-Cebu Workers.

Salary Differentials:

“a) From December 14/87 to February 15/88

= P200.00/mo. x 2 months

= P400.00

= P400 x 208 employees (who are not
receiving above P100/day as wages before the effectivity
of R.A. No. 6640)

= P83,200.00

“b) 13th month pay differentials of the
year 1987:

= P231.00 x 208
employees (who are not receiving above P100/day as wages before the effectivity of R.A. No. 6640)

= P 48, 048.00

Total  
= P131,248.00

In sum, the Assistant Regional Director ordered petitioner to pay
the deficiency of P200.00 in the monthly salary and P231.00 in the 13th month
pay of its employees for the period stated.

Petitioner protested the Order of the Regional Director on the
ground that the anniversary wage increases under the CBA can be credited
against the wage increase mandated by Republic Act No. 6640.  Hence, petitioner contended that inasmuch as
it had credited the first year
increase negotiated under the CBA, it was liable
only for a salary differential of P62.00 and a 13th month pay differential of P31.00.  Petitioner argued that the payment of the differentials
constitutes full compliance with Republic Act No. 6640.  Apparently, the protest was not entertained.

Petitioner brought the case immediately to this Court without
appealing the matter to the Secretary of Labor and Employment.  On May
9, 1988, this Court issued a temporary restraining order enjoining
the Assistant Regional Director from enforcing his Order dated April 7, 1988.^[1]

The thrust of the argument of petitioner is that Section 8 of the
rules implementing the provisions of Republic Act No. 6640 particularly the
provision excluding anniversary wage increases from being credited to the wage
increase provided by said law is null and void on the ground that the same
unduly expands the provisions of
the said law.

This petition is impressed with merit.

Public respondents aver that petitioner should have first
appealed to the Secretary of Labor before going to court.  It is fundamental that in a case where only pure questions of law are raised,
the doctrine of exhaustion of administrative remedies cannot apply because
issues of law cannot be resolved with finality by the administrative officer. 
Appeal to the administrative officer of orders involving
questions of law would be an exercise in
futility since administrative officers cannot decide such issues with
finality.^[2]
The questions raised in this petition are questions of law.  Hence, the
failure to exhaust administrative
remedies cannot be considered fatal to this petition.

As to the issue of the validity of Section 8 of the rules
implementing Republic Act No. 6640, which prohibits the employer from crediting
the anniversary wage increases provided in collective bargaining agreements, it
is a fundamental rule that implementing rules cannot add or detract from the
provisions of law it is designed to implement. 
The provisions of Republic Act No. 6640, do not
prohibit the crediting of CBA anniversary wage increases for purposes of
compliance with Republic Act No. 6640. 
The implementing rules cannot provide for such a prohibition not
contemplated by the law.

Administrative regulations adopted under legislative authority by
a particular department must be in harmony with the provisions of the law, and
should be for the sole purpose of carrying into effect its general provisions.  The law itself cannot be expanded by such
regulations.  An administrative agency
cannot amend an act of Congress.^[3]

Thus petitioner’s contention that the salary increases granted by
it pursuant to the existing CBA including anniversary wage increases should be
considered in determining compliance with the wage increase mandated by
Republic Act No. 6640, is correct.  However, the amount that should only be
credited to petitioner is the wage increase for 1987 under the CBA when the law
took effect.  The wage increase for 1986
had already accrued in favor of the employees even before the said law was
enacted.

Petitioner therefor correctly credited
its employees P62.00 for the differential of two (2) months increase and P31.00
each for the differential in 13th month pay, after deducting the P200.00
anniversary wage increase for 1987 under the CBA.

Indeed, it is stipulated in the CBA that in case any wage
adjustment or allowance increase decreed by law, legislation or presidential
edict in any particular year shall be
higher than the foregoing increase in that particular year, then the company
(petitioner) shall pay the difference.

WHEREFORE, the petition is hereby GRANTED.  The Order of the respondent Assistant
Regional Director dated April 7, 1988
is modified in that petitioner is directed to pay its 208 employees so entitled
the amount of P62.00 each as salary differential for two (2) months and P31.00
as 13th month pay differential in full compliance with the provisions of Republic
Act No. 6640.  Section 8 of the rules
implementing Republic 6640, is hereby declared null and void in so far as it
excludes the anniversary wage increases negotiated under collective bargaining
agreements from being credited to the wage increase provided for under Republic
Act No. 6440.  This decision is
immediately executory.

SO ORDERED.

Fernan, C.J., Narvasa,
Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin,
Sarmiento, Cortes, Griño-Aquino,
Medialdea, and
Regalado, JJ., concur.

^[1]
Pages 36 and 37, Rollo.

^[2]
Pascual vs.
Provincial Board of Nueva Ecija,
106 Phil. 466 (1959); Mondano vs. Silvosa, 97 Phil. 143 (1955).

^[3]
Manuel vs. General Auditing Office, 42 SCRA 660
(1971).