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Constitutional Law I

<CEBU OXYGEN & ACETYLENE CO., INC. vs. SEC. DRILON>

<GR No. 82849>, <August 2, 1989>
Ponente: GANCAYCO, J.

Key words: Non-delegation; Administrative agency;

Administrative regulations; Wage Increases

I. Terms
Collective Bargaining Agreement (CBA) - a process of negotiation between employers and a group of employees
(commonly a union) aimed at reaching agreements to regulate working conditions.
Minimum Wage - the lowest daily or monthly remuneration that employers may legally pay to workers.
Administrative Agency - an official governmental body empowered with the authority to direct and supervise the
implementation of particular legislative acts.
Secretary of Labor and Employment - the Cabinet of the Philippines member in charge of the Department of
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. Reliefs Sought
PETITION to review the order of the Department of Labor and Employment.
III. 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),
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 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.
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On Dec. 14, 1987, Republic Act No. 6640 was passed, increasing the minimum wage by 10 pesos per day for private

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
petitioners 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 CBAs 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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