Cebu Oxygen v. Drilon

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Constitutional Law I

, Ponente: GANCAYCO, J.

Key words: Non-delegation; Administrative Administrative agency; Administrative regulations; Wage Increases

I. Terms (CBA)  - a process of negotiation between employers and a group of employees • Collective Bargaining Agreement (CBA) (commonly a union) aimed at reaching agreements to regulate working conditions. Wage - the lowest daily or monthly remuneration that employers may legally pay to workers. • Minimum Wage Agency - an official governmental body empowered with the authority to direct and supervise the • Administrative Agency implementation of particular legislative acts. Employment - the Cabinet of the Philippines member in charge of the Department of • Secretary of Labor and Employment Labor and Employment (DOLE) • Department of Labor and Employment (DOLE) - the executive department of the Philippine Government mandated to formulate policies, implement programs and services, and serve as the policy-coordinating arm of the Executive Brand in the field of labor and employment. It is tasked with the enforcement of the provisions of the Labor Code. II. Relief Reliefs s Sought Sought PETITION to PETITION to review the order of the Department of Labor and Employment. III. III. Facts Facts • Petitioner Cebu Oxygen & Acetylene Co., Inc. (COACO) entered into a collective bargaining agreement (CBA) with the union of its rank and file employees, Cebu Oxygen, Acetylene and Central Visayas Employees Association (COAVEA), (COAVEA), covering the years 1986-1988, which grants salary increases to all regular covered employees during the 3 year effectivity of the agreement. • Salaries for 1st year (to be paid on Jan. 14, 1986) —P200 to each covered employee. • Salaries for 2nd year (to be paid on Jan. 16, 1987) — P200 to each covered employee. • Salaries for 3rd year (to be paid on Jan. 16, 1988) — P300 to each covered employee. • But if any mandated government wage adjustment or allowance increase is issued by way of legislation, decree or presidential edict from the specified date of payment to the next increase, the provided salary increases shall be credited as payment. Furthermore, if Furthermore, if the wage adjustment in any particular year will be any higher than the salary increases provided in that particular year, then the company shall pay the difference. | 1C

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Constitutional Law I

• On Dec. 14, 1987, Republic Act No. 6640 was passed, increasing the minimum wage by 10 pesos per day for private • • •

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sector employees and 11 pesos per day for non-agricultural workers outside Metro Manila (Sec. 2, RA No. 6640). The Secretary of Labor issued an Implementing Order which prohibits the employer from crediting CBA anniversary wage increases for purposes of compliance with Section 8 of RA No. 6640. Accordingly, petitioner credited the first year increase of P200.00 under the CBA and added the difference of P62.00 and P31.00 to the monthly salary and the 13th month pay, respectively, of its employees from the effectivity of RA No. 6640 on Dec. 14 1987 to Feb. 15, 1988 (a period of 2 months). From Feb. 22 - Mar. 10, 1988, a Labor and Employment Development Officer conducted a routine inspection of petitioner’s establishment and alleged that petitioner committed violations of the law, constituting underpayment of both basic wage (for the mentioned period of 2 months) and 13th month pay (for the year 1987), representing 208 employees in the aggregate amount of P131,248.00. Soon after, on April 7, 1988, respondent Assistant Regional Director issued an Order instructing petitioner to said amount to its 208 employees. Petitioner protested the Order, bringing the case immediately to this Court with the argument that Section 8 of the rules implementing the provisions of RA No. 6640, particularly the its provision excluding anniversary wage increases from being credited to the wage increase, is null and void on the ground that it unduly expands the provisions of the said law.

IV. Issue/s and Held A. Principal Issue: 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. Held: NO. The Implementing Order cannot provide such prohibition. Ratio: • RA No. 6640 does not prohibit the crediting of CBA anniversary wage increases. • Implementing rules cannot add or detract from the provisions of law it is designed to implement. • And so, the implementing rules cannot provide for such a prohibition not contemplated by the law. • Administrative regulations adopted under legislative authority should 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 cannot be expanded by such regulations. • An administrative act cannot amend an act of Congress.

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Constitutional Law I

B. Marginal Issue: Whether or not petitioner should have first appealed to the Secretary of Labor before going directly to the Court. Held: NO. Failure to exhaust administrative remedies cannot be considered fatal to this petition. Ratio: • 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. The questions raised in this petition are questions of law. Hence, the failure to exhaust administrative remedies cannot be considered fatal to this petition. C. Conclusion • Petition is hereby GRANTED. • Section 8 of the rules implementing RA No. 6640 is hereby declared null and void in so far as it excludes the anniversary wage increases negotiated under CBA’s from being credited to the wage increase provided for under RA No. 6640. Decision is immediately executory. V. Notes • Section 2, Republic Act No. 6640: “Sec. 2. The statutory minimum wage rates of workers and employees in the private sector, whether agricultural or nonagricultural 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.”

• Section 8, Implementing Order of Secretary of Labor and Employment: “Sec. 8. Wage Increase Under Individual/Collective Agreements. — No wage increase shall be credited as compliance with the increase prescribes herein unless expressly provided under valid individual written/collective agreements; and provided further, that such wage increase was granted in anticipation of the legislative wage increase under the act. Such increases shall not include anniversary wage increase provided on collective agreements.”

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Constitutional Law I

• The rule of exhaustion of all administrative remedies before resorting to court is not absolute except where the questions involved are essentially judicial.

• Administrative remedies need not be exhausted where issue is a purely legal and constitutional one.

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