240 Phil.

591

CORTES, J.:

Six cases involving various private schools, their teachers and non-teaching school personnel, and
even parents with children studying in said schools, as well as the then Minister of Labor and
Employment, his Deputy, the National Labor Relations Commission, and the then Minister of
Education, Culture and Sports, have been consolidated in this single Decision in order to dispose of
uniformly the common legal issue raised therein, namely, the allocation of the incremental proceeds
of authorized tuition fee increases of private schools provided for in section 3(a) of Presidential
Decree No. 451, and thereafter, under the Education Act of 1982 (Batas Pambansa Blg. 232).

Specifically, the common problem presented by these cases requires an interpretation of section 3(a)
of Pres. Dec. No. 451 which states:

SEC 3. Limitations. --The increase in tuition or other school fees or other charges as well as the
new fees or charges authorized under the next preceding section shall be subject to the following
conditions:

(a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per
centum of the proceeds is allocated for increase in salaries or wages of the members of the faculty
and all other employees of the school concerned, and the balance for institutional development,
student assistance and extension services, and return to investments: Provided, That in no case
shall the return to investments exceed twelve (12%) per centum of the incremental proceeds;

* * *

In addition, there is also a need for a pronouncement on the effect of the subsequent enactment of
B.P. Blg. 232 which provides for the allocation of tuition fee increases in section 42 thereof.

In a nutshell, the present controversy was precipitated by the claims of some school personnel for
allowances and other benefits and the refusal of the private schools concerned to pay said allowances
and benefits on the ground that said items should be deemed included in the salary increases they
had paid out of the 60% portion of the proceeds from tuition fee increases provided for in section 3(a)
of Pres. Dec. No. 451. The interpretation and construction of laws being a matter of judicial power
and duty [Marbury v. Madison, 1 Cranch 137 (1803); Endencia v. David, 93 Phil. 696 (1953)], this Court
has been called upon to resolve the controversy.

In the process of reading and at times, having to decipher, the numerous pleadings filed in the six
cases, the Court found that the main issue has been approached by the parties from almost
diametrical points, thereby bringing into focus three sub-issues: first, whether or not allowances
and other fringe benefits of faculty members and other school employees may be charged against the
60% portion of the tuition fee increases provided for in section 3(a) of Pres. Dec. No. 451; second,
whether or not the same items may be charged against said portion under the provisions of B. P. Blg.
232; and, third, whether or not schools and their employees may enter into a collective bargaining
agreement allocating more than 60% of said incremental proceeds for salary increases and other
benefits of said employees. After these sub-issues have been resolved, the Court will tackle the
other incidents attending the individual cases, seriatim.

The factual antecedents that brought these cases before this Tribunal are as follows:

I. FACTUAL BACKGROUND OF EACH CASE

A.

CEBU INSTITUTE OF TECHNOLOGY CASE

This case originated from a Complaint filed with the Regional Office No. VII of the Ministry of Labor on
February 11, 1981 against petitioner Cebu Institute of Technology (CIT) by private respondents,
Panfilo Canete, et al., teachers of CIT, for non-payment of: a) cost of living allowances (COLA) under
Pres. Dec. Nos. 525, 1123, 1614, 1678 and 1713, b) thirteenth (13th) month pay differentials and c)
service incentive leave. By virtue of an Order issued by the then Deputy Minister of Labor Carmelo C.
Noriel, a labor-management committee composed of one representative each from the Ministry of
Labor and Employment (MOLE), the Minister of Education, Culture and Sports (MECS), and two
representatives each from CIT and from the teachers was created. Said committee was to ascertain
compliance with the legal requirements for the payment of COLA, thirteenth (13th) month pay and
service incentive leave [Rollo, p. 84].

The position taken by CIT during the conference held by the labor management committee was that it
had paid the allowances mandated by various decrees but the same had been integrated in the
teacher's hourly rate. It alleged that the payment of COLA by way of salary increases is in line with
Pres. Dec. No. 451. It also claimed in its position paper that it had paid thirteenth month pay to its
employees and that it was exempt from the payment of service incentive leave to its teachers who
were employed on contract basis [Rollo, pp. 85-86].

After the report and recommendation of the committee, herein public respondent, then Minister of
Labor and Employment issued the assailed Order dated September 29, 1981 and held that the basic
hourly rate designated in the Teachers' Program is regarded as the basic hourly rate of teachers
exclusive of the COLA, and that COLA should not be taken from the 60% incremental proceeds of the
approved increase in tuition fee. The dispositive portion of the Order reads:

PREMISES CONSIDERED, CIT is hereby ordered to pay its teaching staff the following:

1) COLA under P.D.'s 525 and 1123 from February 1978 up to 1981;

2) COLA under P.D.'s 1614, 1634, 1678 and 1713; and

3) Service incentive leave from 1978 up to 1981.

CIT is further directed to integrate into the basic salaries of its teachers and (sic) COLA under P.D.'s
525 and 1123 starting on January 1981, pursuant to P.D. 1751. For purposes of integration, the
hourly rate shown in its Teachers' Program for school year 1981-82 shall be considered as the basic
hourly rate.

SO ORDERED.

Petitioner assails the aforesaid Order in this Special Civil Action of Certiorari with Preliminary
Injunction and/or Restraining Order. The Court issued a Temporary Restraining Order on December
7, 1981 against the enforcement of the questioned Order of the Minister of Labor and Employment.

B.

DIVINE WORD COLLEGE OF LEGAZPI CASE

Upon a complaint filed by ten faculty members for alleged non-compliance by herein petitioner Divine
Word College of Legazpi with, among others, Pres. Dec. No. 451, i.e., allowances were charged to the
60% incremental proceeds of tuition fee increase, the Labor Regulation Section of Regional Office No.
V (Legazpi City) of the Ministry of Labor and Employment conducted an inspection of the employment
records of said school. On the basis of the report on the special inspection that the school did not
comply with Pres. Dec. No. 451, herein respondent Regional Director issued an Order dated May 30,
1983, requiring compliance by the Divine Word College. The latter filed a Memorandum of Appeal
from said Order which the Regional Director treated as a Motion for Reconsideration. Upon failure
of the school to comply with the aforesaid Order, another Order (August 2, 1983) was issued by
herein respondent Regional Director requiring herein petitioner to pay the faculty
members-complainants (herein private respondents) the amounts indicated therein or the total sum
of Six Hundred Seventeen Thousand Nine Hundred Sixty Seven Pesos and Seventy Seven Centavos
(P617,967.77). Petitioner's Motion for Reconsideration of the Order was denied.

On appeal, the respondent Deputy Minister of Labor and Employment affirmed the Order of the
Regional Director, viz:

* * *

Coming now to the substantial merit of the case, we share the view that the emergency allowances
due the complainants under the several presidential decrees (PD's 525, 1123, etc.) cannot be charged
by the respondent against the 60% of the incremental proceeds from increase in tuition fees
authorized under PD 451, not only because as per decision of the Supreme Court (UE vs. UE Faculty
Association, et. al., G.R. No. 57387, September 30, 1982) said allowances whether mandated by law
or secured by collective bargaining should be taken only from the return to investment referred to in
the decree if the school has no other resources to grant the allowances but not from the 60%
incremental proceeds, but also because to hold otherwise would, to our mind, inevitably result in the
loss of one benefit due the complainants - that is the salary or wage increase granted them by PD 451.

In other words, we believe that by paying the complainants' allowances out of the 60% incremental
proceeds intended for their salary increase they are practically being deprived of one benefit - their
share in the 60% incremental proceeds in terms of salary or wage increase.
WHEREFORE, for the reasons above-stated, the Order appealed from is hereby AFFIRMED, and the
appeal DISMISSED, for lack of merit.

SO ORDERED.

(Annex "K" to Petition; Rollo, p. 108, 110).

This special civil action of Certiorari and Prohibition with Preliminary Injunction questions the
interpretation of, and application by, the respondent Deputy Minister, of the provisions of Pres. Dec.
No. 451, as set forth in the assailed Order.

On March 25, 1985, after considering the allegations, issues and arguments adduced in the Petition as
well as the Comment thereon of the public respondent and dispensing with the private respondents'
Comment, the Court resolved to dismiss the Petition for lack of merit (Rollo, p. 198). On April 26,
1985, petitioner filed a Motion for Reconsideration with Motion to Consider the Case En Banc. On
June 26, 1985 the First Division of the Court referred the case to the Court En Banc for consolidation
with G.R. No. 70832, entitled "Gregorio T. Fabros, et. al. vs. Hon. Jaime C. Laya, etc." since it involves
the same issue on the application of 60% incremental proceeds of authorized tuition fee increases
[Rollo, p. 235]. The Court EN BANC resolved to accept the case. (Resolution of July 16, 1985).
These cases were further consolidated with other cases involving the same issues.

C.

FAR EASTERN UNIVERSITY CASE

On December 17, 1978, petitioner Union filed with the Ministry of Labor and Employment a
complaint against respondent University for non-payment of legal holiday pay and under-payment of
the thirteenth (13th) month pay. On July 7, 1979, while the case was pending, the Union President,
in his personal capacity, filed another complaint for violation of Pres. Dec. No. 451 against the same
respondent.

The two cases were forthwith consolidated and jointly heard and tried. On March 10, 1980, Labor
Arbiter Ruben A. Aquino promulgated a decision the dispositive portion of which is quoted
hereunder:

RESPONSIVE TO THE FOREGOING, respondent is hereby directed, within ten (10) days from receipt
hereof, to:

1. To (sic) pay the paid legal holidays that it withdrew since January 14, 1976 up to the present;
and

2. Pay the 13th month pay differential of complainants for the covered period December 16,
1975 to December 17, 1978, date of filing of complaint for non-payment of legal holiday pay and
under payment of the 13th month pay, and thereafter. Barred forever are money claims beyond
three (3) years from the time the course (sic) of action occurred. Respondent's formula on
transportation allowance which was deducted from the 13th month pay is thus subject to this
prescriptive period, for purposes of computation of differentials for the 13th month pay.

The claim under PD 451 is hereby dismissed for lack of merit.

SO ORDERED.

(Annex "E" to Petition; Rollo, p. 55, 65-66).

Both parties appealed the decision of the Labor Arbiter. On September 18, 1984, the respondent
Commission disposed of the appeal in the following manner:

RESPONSIVE TO THE FOREGOING, the Decision of Labor Arbiter Ruben A. Aquino in the instant case
dated March 10, 1980 is hereby Modified in the sense that complainant's claims for legal holiday pay
and 13th month pay are likewise dismissed for lack of merit and the dismissal of the claim under P.D.
451 is hereby Affirmed en (sic) toto.

(Annex "A" to Petition; Rollo, p. 24, 35).

Petitioner's Motion for Reconsideration dated September 29, 1984 was denied for lack of merit on
November 8, 1984. Before this Court is the petition on certiorari filed by the Union assailing the
abovementioned decision of the Commission.

D.

FABROS CASE

This petition is in the nature of a class suit brought by petitioners in behalf of the faculty members
and other employees of more than 4000 private schools nationwide. Petitioners seek to enjoin the
implementation of paragraphs 7 to 7.5 of MECS Order No. 5, series of 1985 on the ground that the
said order is null and void for being contrary to Pres. Dec. No. 451 and the rulings of the Supreme
Court in the cases of University of the East v. UE Faculty Association [G.R. No. L-57387, September 20,
1982, 117 SCRA 554], University of Pangasinan Faculty Union v. University of Pangasinan and NLRC
[G.R. No. 63122, February 20, 1984, 127 SCRA 691], St. Louis University Faculty Club v. NLRC and St.
Louis University [G.R. No. 65585, September 28, 1984, 132 SCRA 380].

On September 11, 1982, Batas Pambansa Blg. 232 (Education Act of 1982) was signed into law. On
the matter of tuition and other school fees of private schools, section 42 of said law provides as
follows:

SEC. 42. Tuition and other School Fees. - Each private school shall determine its rate of tuition and
other school fees or charges. The rates and charges adopted by schools pursuant to this provision
shall be collectible, and their application or use authorized, subject to rules and regulations
promulgated by the Ministry of Education, Culture and Sports. (Underscoring supplied).
Invoking section 42 of B. P. Blg. 232, among others, as its legal basis, the then Minister of Education
Jaime C. Laya promulgated on April 1, 1985 the disputed MECS Order No. 25, s. 1985 entitled Rules
and Regulations To Implement the Provisions of B. P. Blg. 232, The Education Act of 1982, Relative to
Student Fees for School Year 1985-1986. The relevant portions of said Order are quoted hereunder:

7. Application or Use of Tuition and Other School Fees or Charges.

7.1 The proceeds from tuition fees and other school charges as well as other income of each
school, shall be treated as an institutional fund which shall be administered and managed for the
support of school purposes strictly: Provided, That for the purpose of generating additional financial
resources or income for the operational support and maintenance of each school, two or more
schools may pool their institutional funds, in whole or in part, subject to the prior approval of their
respective governing boards.

7.2 Tuition fees shall be used to cover the general expenses of operating the school in order to
allow it to meet the minimum standards required by the Ministry or any other higher standard to
which the school aspires. They may be used to meet the costs of operation for maintaining or
improving the quality of instruction/training/research through improved facilities and through the
payment of adequate and competitive compensation for its faculty and support personnel, including
compliance with mandated increases in personnel compensation and/or allowance.

7.3 Tuition fees shall be used to cover minimum and necessary costs including the following: (a)
compensation of school personnel such as teaching or academic staff, school administrators,
academic non-teaching personnel, and non-academic personnel, (b) maintenance and operating
expenses, including power and utilities, rentals, depreciation, office supplies; and (c) interest
expenses and installment payments on school debts.

7.4 Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or
wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance,
imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions,
social security, medicare, unpaid school personnel claims, and payments as may be prescribed by
mandated wage orders, collective bargaining agreements and voluntary employer practices, Provided:
That increases in fees specifically authorized for the purposes listed in paragraph 4.3.3 hereof shall be
used entirely for those purposes. (Emphasis supplied).

7.5 Other student fees and charges as may be approved, including registration, library, laboratory,
athletic, application, testing, fees and charges shall be used exclusively for the indicated purposes,
including (a) the acquisition and maintenance of equipment, furniture and fixtures, and buildings, (b)
the payment of debt amortization and interest charges on debt incurred for school laboratory,
athletic, or other purposes, and (c) personal services and maintenance and operating expenses
incurred to operate the facilities or services for which fees and charges are collected.

The Petition prayed for the issuance of a temporary restraining order which was granted by this Court
after hearing. The dispositive portion of the resolution dated May 28, 1985 reads as follows:

After due consideration of the allegations of the petition dated May 22, 1985 and the arguments of
the parties, the Court Resolved to ISSUE, effective immediately and continuing until further orders
from this Court, a TEMPORARY RESTRAINING ORDER enjoining the respondent from enforcing or
implementing paragraphs 7.4 to 7.5 of MECS Order No. 25, s. 1985, which provide for the use and
application of sixty per centum (60%) of the increases in tuition and other school fees or charges
authorized by public respondent for the school year 1985-1986 in a manner inconsistent with section
3(a), P. D. No. 451, (which allocates such 60% of the increases exclusively 'for increases in salaries or
wages of the members of the faculty and other employees of the school concerned.') and directing
accordingly that such 60% of the authorized increases shall be held in escrow by the respective
colleges and universities, i.e., shall be kept intact and not disbursed for any purpose pending the
Court's resolution of the issue of the validity of the aforementioned MECS Order in question.

(Rollo, p. 21).

In the same resolution, the Philippine Association of Colleges and Universities (PACU) was impleaded
as respondent.

Subsequent to the issuance of this resolution, four (4) schools, represented in this petition, moved for
the lifting of the temporary restraining order as to them. In separate resolutions, this Court granted
their prayers.

Ateneo de Manila University, De La Salle University (Taft Avenue) and De La Salle University-South,
through their respective counsels, manifested that for the school year 1985-1986, tuition fee increase
was approved by the MECS and that on the basis of Pres. Dec. No. 451, 60% of the tuition fee
increases shall answer for salary increase. However, a budgeted salary increase, exclusive of living
allowances and other benefits, was approved for the same school year which when computed
amounts to more than the 60%.

This Court granted the motions in separate resolutions lifting the temporary restraining order with
respect to these schools in order that they may proceed with the implementation of the general
salary increase for their employees.

In the case of St. Louis University, its Faculty Club, Administrative Personnel Association and the
University itself joined in a petition seeking for leave that 49% of the increase in tuition and other fees
for school year 1985-1986 be released. Petitioners manifested that the remaining balance shall
continue to be held in escrow by the University.

In a resolution dated January 28, 1986, the Court resolved as follows:

Accordingly, the Temporary Restraining Order issued by this Court on May 28, 1985 is hereby ordered
LIFTED with respect to Saint Louis University of Baguio City in order that it may proceed immediately
with the implementation of salary increases for its employees.

D.

BISCOCHO CASE

The Espiritu Santo Parochial School and the Espiritu Santo Parochial School Faculty Association were
parties to a labor dispute which arose from a deadlock in collective bargaining. The parties entered
into conciliation proceedings. The union went on strike after efforts at the conciliation failed.
Subsequently, a return to work agreement was forged between the parties and both agreed to submit
their labor dispute to the jurisdiction of the Minister of Labor.

In the exercise of his power to assume jurisdiction, the Ministry of Labor and Employment issued an
Order dated April 14, 1986 which provides for the following:

IN CONSIDERATION OF ALL THE FOREGOING, the Ministry hereby declares the strike staged by the
Union to be legal and orders the following:

a) the School to submit the pertinent record of employment of Romualdo Noriego to the
Research and Information Division of the NLRC for computation of his underpayment of wages and
for the parties to abide by the said computation;

b) the School to submit all pertinent record of collections of tuition fee increases for school
year (sic) 1982-1983, 1983-1984 and 1984-1985 to the Research and Information Division of the NLRC
for proper computation and for equal distribution of the amount to all employees and teachers during
the above mentioned school year (sic) as their salary adjustment under P.D. 451;

c) the parties to wait for the final resolution of the illegal dismissal (case) docketed as NLRC
NCR Case No. 5-1450-85 and to abide by the said resolution;

d) to furnish the MECS a copy of this order for them to issue the guidelines in the
implementation of PRODED Program;

e) the parties to execute a collective bargaining agreement with an economic package

equivalent to 90% of the proceeds from tuition fee increases for school year 1985-1986, and another
90% for school year 1986-1987 and 85% for school year 1987-1988. The amount aforementioned
shall be divided equally to all members of the bargaining unit as their respective salary adjustments.
Such other benefits being enjoyed by the members of the bargaining unit prior to the negotiation of
the CBA shall remain the same and shall not be reduced.

f) the School to deduct the amount equivalent to ten (10%) per cent of the backwages
payable to all members of the bargaining unit as negotiation fee and to deliver the same to the Union
Treasurer for proper disposition. (Emphasis supplied).

SO ORDERED.

(Rollo, pp. 16-17)

Pursuant to the said order, private respondent Union agreed to incorporate in their proposed
collective bargaining agreement (CBA) with the School the following:

2) The Union and School Administration will incorporate the following in their CBA -

1) The computation of the tuition fee increase shall be gross to gross from which the corresponding
percentage of 90% will be taken. The resulting amount will be divided among 141.5 employees for
1985-86 and 132.5 employees for 1986-87.

1/2 of the resulting increase will be added to basic and divided by 13.3 to arrive at monthly increase
in basic. The other 1/2 will be divided by 12.3 to arrive at monthly increase in living allowance.
* * *

4) xxx

Upon request/demand of the Union, School will deduct from backwages of managerial employees
and others outside the bargaining unit what Union will charge its own members in the form of
attorney's fees, special assessment and union dues/agency fee.

5) The signing of the CBA and payment of backwages and others shall be on November 26, 1986 at
the Espiritu Santo Parochial School Library.

(Rollo, pp. 3-4).

The herein petitioners, Jasmin Biscocho and 26 others, all employees and faculty members of the
respondent School, filed the present petition for prohibition to restrain the implementation of the
April 14, 1986 Order of respondent Labor Minister as well as the agreements arrived at pursuant
thereto. They contend that said Order and agreements affect their rights to the 60% incremental
proceeds under Pres. Dec. No. 451 which provide for the exclusive application of the 60% incremental
proceeds to basic salary.

Acting on the petitioners' prayer, this Court immediately issued a temporary restraining order on
November 25, 1986 ". . . enjoining the respondents from enforcing, implementing and proceeding
with the questioned order of April 14, 1986 and collective bargaining agreement executed between
respondents Union and the School Administration in pursuance thereof." [Rollo, p. 20].

F.

VALMONTE CASE

This Petition was filed by parents with children studying at respondent school, Espiritu Santo
Parochial School to nullify the Order dated April 14, 1986 issued by public respondent, then Minister
of Labor and Employment, specifically paragraphs (e) and (f) thereof, quoted in the Biscocho case.

The award contained in the said Order is the result of the assumption of jurisdiction by the public
respondent over a labor dispute involving the private respondents school and faculty association.
The latter had earlier filed a notice of strike because of a bargaining deadlock on the demands of its
members for additional economic benefits. After numerous conciliation conferences held while the
union was on strike, the parties voluntarily agreed that the public respondent shall assume
jurisdiction over all the disputes between them. As to the subject matter of the instant case, the
public respondent found that the latest proposals of the respondent school was to give 85% of the
proceeds from tuition fee increases for the school years to be divided among the teachers and
employees as salary adjustments. What the respondent faculty association offered to accept was a
package of 95% for school year 1985-1986, 90% for school year 1986-1987. The respondent school
offered to strike the middle of the two positions, hence the Order complained of by the petitioners
[See Annex "A", Petition; Rollo, pp. 9, 14-15; Comment of the Respondent Faculty Association; Rollo, p.
26].
II. RESOLUTION OF THE COMMON LEGAL ISSUE

This long-drawn controversy has sadly placed on the balance diverse interests, opposed yet
intertwined, and all deserving, and demanding, the protection of the State. On one arm of the
balance hang the economic survival of private schools and the private school system, undeniably
performing a complementary role in the State's efforts to maintain an adequate educational system
in the country. Perched precariously on the other arm of the same balance is the much-needed
financial uplift of schoolteachers, extolled for all times as the molders of the minds of youth, hence of
every nation's future. Ranged with them with needs and claims as insistent are other school
personnel. And then, anxiously waiting at the sidelines, is the interest of the public at large, and of
the State, in the continued availability to all who desire it, high-standard education consistent with
national goals, at a reasonable and affordable price.

Amidst these opposing forces the task at hand becomes saddled with the resultant implications that
the interpretation of the law would bear upon such varied interests. But this Court can not go
beyond what the legislature has laid down. Its duty is to say what the law is as enacted by the
lawmaking body. That is not the same as saying what the law should be or what is the correct rule in
a given set of circumstances. It is not the province of the judiciary to look into the wisdom of the
law nor to question the policies adopted by the legislative branch. Nor is it the business of this
Tribunal to remedy every unjust situation that may arise from the application of a particular law. It
is for the legislature to enact remedial legislation if that be necessary in the premises. But as always,
with apt judicial caution and cold neutrality, the Court must carry out the delicate function of
interpreting the law, guided by the Constitution and existing legislation and mindful of settled
jurisprudence. The Court's function is therefore limited, and accordingly, must confine itself to the
judicial task of saying what the law is, as enacted by the lawmaking body.

FIRST SUB-ISSUE

A. Whether or not allowances and other fringe benefits of employees may be charged against the
60% portion of the incremental proceeds provided for in sec. 3(a) of Pres. Dec. No. 451

1. Arguments raised in the Cebu Institute of Technology case

In maintaining its position that the salary increases it had paid to its employees should be considered
to have included the COLA, Cebu Institute of Technology (CIT) makes reference to Pres. Dec. No. 451
and its Implementing Rules. The line of reasoning of the petitioner appears to be based on the
major premise that under said decree and rules, 60% of the incremental proceeds from tuition fee
increases may be applied to salaries, allowances and other benefits of teachers and other school
personnel. In support of this major premise, petitioner cites various implementing rules and
regulations of the then Minister of Education, Culture and Sports, to the effect that 60% of the
incremental proceeds may be applied to salaries, allowances and other benefits for members of the
faculty and other school personnel [Petition citing Implementing Rules and Regulations of Pres. Dec.
No. 451 of various dates; Rollo, pp. 318-320]. Petitioner concludes that the salary increases it had
granted the CIT teachers out of the 60% portion of the incremental proceeds of its tuition fee
increases from 1974-1980 pursuant to Pres. Dec. No. 451 and the MECS implementing rules and
regulations must be deemed to have included the COLA payable to said employees for those years
[Rollo, pp. 9-11].
With leave of Court, the Philippine Association of Colleges and Universities, filed its Memorandum as
Intervenor in support of the proposition that schools may pay the COLA to faculty members and other
employees out of the 60% of the increase in tuition fees. In addition to the arguments already set
forth in the memorandum of the petitioner CIT, intervenor PACU attacks the Decision of this Court in
University of the East v. University of the East Faculty Association, et. al., G.R. No. 57387 as "not
doctrinal" and inapplicable to the CIT case. The Court held in the UE case, which was promulgated
on September 30, 1982, during the pendency of these cases, that:

. . . allowances and benefits should be chargeable to the return to investment referred to in Sec. 3(a),
if the schools should happen to have no other resources than incremental proceeds of authorized
tuition fee increases. . . (See Dispositive Portion of the Decision)

Intervenor PACU alleges that the aforecited U.E. decision does not categorically rule that COLA and
other fringe benefits should not be charged against the 60% incremental proceeds of the authorized
tuition fee increase.

The Solicitor General, on the other hand, argues in support of the Order of the public respondent that
Pres. Dec. No. 451 allocates the 60% proceeds of tuition fee increases exclusively for salary increases
of teachers and non-teaching supportive personnel of the school concerned, and that the Decree
does not provide that said salary increases would take the place of the COLA [Rollo, p. 244-245]. He
cites as authority for this stance, two (2) memoranda of the then President dated June 6, 1978 and
March 30, 1979 both of which provide that the 60% incremental proceeds of tuition fee increases
"shall be allocated for the increase in the salaries of teachers and supportive personnel". Anent the
U.E. case, the Solicitor General states that the Supreme Court in deciding said case took note of the
stand of the Office of the President that the 60% incremental proceeds shall be solely applied to
salaries of faculty members and employees.

On August 7, 1986, considering the supervening events, including the change of administration, that
have transpired during the pendency of these cases, the Court required the Solicitor General to state
whether or not he maintains the action and position taken by his predecessor-in-office. In his
Compliance with said Resolution, the Solicitor General Manifested the position that:

a. If the tuition fee increase was collected during the effectivity of Presidential Decree No. 451,
60% thereof shall answer exclusively for salary increase of school personnel. Other employment
benefits shall be covered by the 12% allocated for return of investment, this is in accordance with the
ruling of this Honorable Court in University of the East vs. U.E. Faculty Association, et. al. (117 SCRA
554), * * * and reiterated in University of Pangasinan Faculty Union v. University of Pangasinan, et. al
(127 SCRA 691) and St. Louis Faculty Club v. NLRC (132 SCRA 380).

b. If the salary increase was collected during the effectivity of Batas Pambansa Bldg. (sic) 232,
60% thereof shall answer not only for salary increase of school personnel but also for other
employment benefits.

(Rollo, at pp. 513-514)

2. Arguments raised in the Divine Word College Case

Petitioner Divine Word College of Legazpi (DWC) advances the theory that the COLA, 13th month pay
and other personnel benefits decreed by law, must be deemed chargeable against the 60% portion
allocated for increase of salaries or wages of faculty and all other school employees. In support of
this stance, petitioner points out that said personnel benefits are not included in the enumeration of
the items for which the balance (less 60%) or 40% portion of the incremental proceeds may be
allotted under section 3(a) of Pres. Dec. No. 451 [Rollo, pp. 29-30. Petitioner likewise cites the
interpretation of the respondent Minister of Education, Culture and Sports [embodied in the
Implementing Rules and Regulations of P.D. 451, DEC Issuance, May 13, 1987; Rollo, p. 30], that the
60% incremental proceeds of authorized tuition fee increases may be applied to increases in
emoluments and/or benefits for members of faculty, including staff and administrative employees of
the school as the valid interpretation of the law, as against that made by the respondent Deputy
Minister of Labor in the assailed Order. If the latter interpretation is upheld, petitioner would go as
far as questioning the constitutionality of Pres. Dec. No. 451 upon the ground that the same
discriminates against the petitioner and other private schools as a class of employers. According to
the petitioner, the discrimination takes the form of requiring said class of employers to give 60% of
their profits to their employees in addition to the COLA mandated by law, while other employers have
to contend only with salary increases and COLA [Petition; Rollo, p. 46].

With regard to the Decision of this Court in the U.E. case, petitioner claims exemption therefrom
upon the ground that the Court's interpretation of a law cannot be applied retroactively to parties
who have relied upon the previous administrative interpretation which has not been declared invalid
or unconstitutional [Petition; Rollo, pp. 50-51]. Petitioner further argues on this point that if the
court had intended to invalidate the MECS interpretation of the Decree, it should have positively
stated so in the Decision [Petition; Rollo, p. 50].

The Comment of the public respondents cite as settled jurisprudence applicable to the case at bar,
the ruling of this Court in the U.E, case, supra, which was reiterated in the subsequent cases of
University of Pangasinan Faculty Union v. University of Pangasinan, et al., and St. Louis Faculty Club v.
NLRC, et al..

Public respondents Deputy Minister of Labor and Employment and Regional Director of the MOLE
(Region V) likewise attack the validity of the Revised Implementing Rules and Regulations of Pres. Dec.
No. 451 cited by the petitioner insofar as said rules direct the allotment of the 60% of incremental
proceeds from tuition fee hikes for retirement plan, faculty development and allowances. They
argue that said rules and regulations were invalid for having been promulgated in excess of the
rule-making authority of the then Minister of Education under Pres. Dec. No. 451 which mandates
that the 60% of incremental proceeds from tuition fee hikes should be allotted solely for salary
increases [Comment; Rollo, pp. 184-185]. Finally, with respect to the issue on the alleged
unconstitutionality of Pres. Dec. No. 451, the public respondents posit that a legislation (such as Pres.
Dec. No. 451) which affects a particular class does not infringe the constitutional guarantee of equal
protection of the law as long as it applies uniformly and without discrimination to everyone of that
class [Comment; Rollo, p. 14].

3. Arguments raised in the Far Eastern University case

It is the petitioner's contention that in respect of Pres. Dec. No. 451, the decision of the NLRC is a
defiance of the rulings of this Court in the cases of University of the East v. U.E. Faculty Association, et
al. and of University of Pangasinan Faculty Union v. University of Pangasinan and NLRC (supra). The
Union submits that monetary benefits, other than increases in basic salary, are not chargeable to the
60% incremental proceeds.

The respondent University in its Comment dated June 13, 1982 refers to Article 97(f) of the Labor
Code which provides a definition of the term "wages" to support its position that "salaries or wages"
as used in Pres. Dec. No. 451 should be interpreted to include other benefits in terms of money.

As mentioned in the Cebu Institute of Technology case, the Solicitor General filed its Compliance with
this Court's resolution dated August 7, 1986 requiring him to manifest whether public respondents
maintain the position they have taken in these consolidated cases. The resolution of September 25,
1986 required petitioners to Comment on said Compliance.

The Comment dated December 6, 1986 was received by this Court after petitioner Union was
required to show cause why no disciplinary action should be taken against them for failure to comply
earlier. The Union agreed with the position taken by the Solicitor General that under Pres. Dec. No.
451, 60% of the tuition fee increases, shall answer exclusively for salary increase. However, it
expressed disagreement with the opinion that during the effectivity of B.P. Blg. 232, the 60%
incremental proceeds shall answer not only for salary increases but also for other employment
benefits. The Union argues that whereas "Pres. Dec. No. 451 is a law on a particular subject, viz.,
increase of tuition fee by educational institutions and how such increase shall be allocated, B. P. Blg.
232 is not a law on a particular subject of increase of tuition fee. . .; at most it is a general legislation
on tuition fee as it touches on such subject in general." [Comment on Compliance; Rollo, p. 376].
Suppletory to its argument that B. P. Blg. 232 did not impliedly repeal Pres. Dec. No. 451, the Union
also invokes the principle that a special or particular law cannot be repealed by a general law.

RESOLUTION OF THE FIRST SUB-ISSUE

This Court has consistently held, beginning with the University of the East case, that if the schools
have no resources other than those derived from tuition fee increases, allowances and benefits
should be charged against the proceeds of tuition fee increases which the law allows for return on
investments under section 3(a) of Pres. Dec. No. 451, therefore, not against the 60% portion allocated
for increases in salaries and wages (See 117 SCRA at 571). This ruling was reiterated in the
University of Pangasinan case and in the Saint Louis University case.

There is no cogent reason to reverse the Court's ruling in the aforecited cases. Section 3(a) of Pres.
Dec. No. 451 imposes among the conditions for the approval of tuition fee increases, the allocation of
60% per cent of the incremental proceeds thereof for increases in salaries or wages of school
personnel, and not for any other item such as allowances or other fringe benefits. As aptly put by
the Court in University of Pangasinan Faculty Union v. University of Pangasinan, supra:
* * * The sixty (60%) percent incremental proceeds from the tuition increase are to be devoted
entirely to wage or salary increases which means increases in basic salary. The law cannot be
construed to include allowances which are benefits over and above the basic salaries of the
employees. To charge such benefits to the 60% incremental proceeds would be to reduce the
increase in basic salary provided by law, an increase intended also to help the teachers and other
workers tide themselves and their families over these difficult economic times. [Emphasis supplied]
(127 SCRA 691, 702).

This interpretation of the law is consistent with the legislative intent expressed in the Decree itself,
i.e., to alleviate the sad plight of private schools and that of their personnel wrought by slump in
enrolment and increasing operational costs on the part of the schools, and the increasing costs of
living on the part of the personnel (Preamble, Pres. Dec. No. 451). While coming to the aid of the
private school system by simplifying the procedure for increasing tuition fees, the Decree imposes as
a condition for the approval of any such increase in fees, the allocation of 60% of the incremental
proceeds thereof, to increases in salaries or wages of school personnel. This condition makes for a
quid pro quo of the approval of any tuition fee hike by a school, thereby assuring the school
personnel concerned, of a share in its proceeds. The condition having been imposed to attain one of
the main objectives of the Decree, which is to help the school personnel cope with the increasing
costs of living, the same cannot be interpreted in a sense that would diminish the benefit granted said
personnel.

In the light of existing laws which exclude allowances from the basic salary or wage in the
computation of the amount of retirement and other benefits payable to an employee, this Court will
not adopt a different meaning of the terms "salaries or wages" to mean the opposite, i.e. to include
allowances in the concept of salaries or wages.

As to the alleged implementing rules and regulations promulgated by the then MECS to the effect
that allowances and other benefits may be charged against the 60% portion of the proceeds of tuition
fee increases provided for in Section 3(a) of Pres. Dec. No. 451, suffice it to say that these were issued
ultra vires, and therefore not binding upon this Court.

The rule-making authority granted by Pres. Dec. No. 451 is confined to the implementation of the
Decree and to the imposition of limitation upon the approval of tuition fee increases, to wit:

SEC 4. Rules and Regulations. -- The Secretary of Education and Culture is hereby authorized,
empowered and directed to issue the requisite rules and regulations for the effective implementation
of this Decree. He may, in addition to the requirements and limitations provided for under Sections
2 and 3 hereof, impose other requirements and limitations as he may deem proper and reasonable.

The power does not allow the inclusion of other items in addition to those for which 60% of the
proceeds of tuition fee increases are allocated under Section 3(a) of the Decree.

Rules and regulations promulgated in accordance with the power conferred by law would have the
force and effect of law [Victorias Milling Company, Inc. v. Social Security Commission, 114 Phil. 555
(1962)] if the same are germane to the subjects of the legislation and if they conform with the
standards prescribed by the same law [People v. Maceren, G.R. No. L-32166, October 18, 1977, 79
SCRA 450]. Since the implementing rules and regulations cited by the private schools adds
allowances and other benefits to the items included in the allocation of 60% of the proceeds of tuition
fee increases expressly provided for by law, the same were issued in excess of the rule-making
authority of said agency, and therefore without binding effect upon the courts. At best the same
may be treated as administrative interpretations of the law and as such, they may be set aside by this
Court in the final determination of what the law means.

SECOND SUB-ISSUE

B. Whether or not allowances and other fringe benefits may be charged against the 60% portion of
the incremental proceeds of tuition fee increases upon the effectivity of the Education Act of 1982
(B.P. Blg. 232).

1. Arguments raised in the Fabros case

In assailing MECS Order No. 25, s. 1985, petitioners argue that the matter of allocating the proceeds
from tuition fee increases is still governed by Pres. Dec. No. 451. It is their opinion that section 42 of
B.P. Blg. 232 did not repeal Pres. Dec. No. 451 for the following reasons: first, there is no conflict
between section 42 of B. P. Blg. 232 and section 3(a) of Pres. Dec. No. 451 or any semblance of
inconsistency to deduce a case of a repeal by implication; second, Pres. Dec. No. 451 is a specific law
upon a particular subject - the purposes and distribution of the incremental proceeds of tuition fee
increases, while B. P. Blg. 232 is a general law on the educational system; as such, a specific law is not
repealed by a subsequent general law in the absence of a clear intention; and third, Pres. Dec. No.
451 is still the only law on the subject of tuition fee increases there being no prescription or provision
in section 42 of B.P. Blg. 232 or elsewhere in the law. They furthermore aver that the disputed
MECS Order which imposed additional burdens against the 60% incremental proceeds of tuition fee
increases are not provided in either Pres. Dec. No. 451 or B. P. Blg. 232. The logical result as
intimated by petitioners is that the inclusion of paragraph 7.4 and related paragraphs 7 to 7.3 and 7.5
in the questioned MECS order contravenes the statutory authority granted to the public respondent,
and the same are therefore, void.

Respondent PACU takes the contrary view contending that MECS Order No. 25, s. 1985, complies with
the mandate of section 42 of B. P. Blg. 232 which law had already repealed Pres. Dec. No. 451. PACU
notes that the University of the East case invoked by petitioners is not applicable because the issue in
that case does not involve the effect of B. P. Blg. 232 on Pres. Dec. No. 451.

The Solicitor General, representing the public respondent, after giving a summary of the matters
raised by petitioner and respondent PACU, points out that the decisive issue in this case is whether B.
P. Blg. 232 has repealed Pres. Dec. No. 451 because on the answer to this question depends the
validity of MECS Order No. 25, s. 1985. Public respondent holds the view consistent with that of
PACU on the matter of B. P. Blg. 232 having repealed Pres. Dec. No. 451. To support this contention,
the Solicitor General compared the respective provisions of the two laws to show the inconsistency
and incompatibility which would result in a repeal by implication.

RESOLUTION OF THE SECOND SUB-ISSUE

On the matter of tuition fee increases section 42 of B.P. Blg. 232 provides:

SEC. 42. Tuition and Other School Fees. - Each private school shall determine its rate of tuition and
other school fees or charges. The rates and charges adopted by schools pursuant to this provision
shall be collectible and their application or use authorized, subject to rules and regulations
promulgated by the Ministry of Education, Culture and Sports. (Emphasis supplied).

The enactment of B. P. Blg. 232 and the subsequent issuance of MECS Order No. 25, s. 1985 revived
the old controversy on the application and use of the incremental proceeds from tuition fee increases.
As can be gleaned from the pleadings and arguments of the parties in these cases, one side,
composed of the teachers and other employees of the private schools, insist on the applicability of
section 3(a) of Pres. Dec. No. 451 as interpreted and applied in the University of the East, University of
Pangasinan and St. Louis University cases, while the private schools uphold the view that the matter
of allocating the incremental proceeds from tuition fee increases is governed by section 42 of B.P. Blg.
232 as implemented by the MECS Rules and Regulations. As stated, the latter's argument is
premised on the allegation that B.P. Blg. 232 impliedly repealed Pres. Dec. No. 451.

On the second sub-issue, therefore, this Court upholds the view taken by the Solicitor General in the
Fabros case, that the decisive issue is whether B.P. Blg. 232 has repealed Pres. Dec. No. 451.

In recognition of the vital role of private schools in the country's educational system, the government
has provided measures to regulate their activities. As early as March 10, 1917, the power to inspect
private schools, to regulate their activities, to give them official permits to operate under certain
conditions and to revoke such permits for cause was granted to the then Secretary of Public
Instruction by Act No. 2706 as amended by Act No. 3075 and Commonwealth Act No. 180. Republic
Act No. 6139, enacted on August 31, 1970, provided for the regulation of tuition and other fees
charged by private schools in order to discourage the collection of exorbitant and unreasonable fees.
In an effort to simplify the "cumbersome and time-consuming" procedure prescribed under Rep. Act.
No. 6139 and "to alleviate the sad plight of private schools", Pres. Dec. No. 451 was enacted on May
11, 1974. While this later statute was being implemented, the legislative body envisioned a
comprehensive legislation which would introduce changes and chart directions in the educational
system, hence, the enactment of B.P. Blg. 232. What then was the effect of B.P. Blg. 232 on Pres.
Dec. No. 451?

The Court after comparing section 42 of B.P. Blg. 232 and Pres. Dec. No. 451, particularly section 3(a)
thereof, finds evident irreconcilable differences.

Under Pres. Dec. No. 451, the authority to regulate the imposition of tuition and other school fees or
charges by private schools is lodged with the Secretary of Education and Culture (Sec. 1), whereas
section 42 of B.P. Blg. 232 liberalized the procedure by empowering each private school to determine
its rate of tuition and other school fees or charges.

Pres. Dec. No. 451 provides that 60% of the incremental proceeds of tuition fee increases shall be
applied or used to augment the salaries and wages of members of the faculty and other employees of
the school, while B.P. Blg. 232 provides that the increment shall be applied or used in accordance with
the regulations promulgated by the MECS.
A closer look at these differences leads the Court to resolve the question in favor of repeal. As
pointed out by the Solicitor General, three aspects of the disputed provisions of law support the
above conclusion. First, the legislative authority under Pres. Dec. No. 451 retained the power to
apportion the incremental proceeds of the tuition fee increases; such power is delegated to the
Ministry of Education and Culture under B.P. Blg. 232. Second, Pres. Dec. No. 451 limits the
application or use of the increment to salary or wage increase, institutional development, student
assistance and extension services and return on investment, whereas B.P. Blg. 232 gives the MECS
discretion to determine the application or use of the increments. Third, the extent of the
application or use of the increment under Pres. Dec. No. 451 is fixed at the predetermined percentage
allocations: 60% for wage and salary increases, 12% for return in investment and the balance of 28%
to institutional development, student assistance and extension services, while under B.P. Blg. 232, the
extent of the allocation or use of the increment is likewise left to the discretion of the MECS.

The legislative intent to depart from the statutory limitations under Pres. Dec. No. 451 is apparent in
the second sentence of section 42 of B. P. Blg. 232. Pres. Dec. No. 451 and section 42 of B.P. Blg.
232 which cover the same subject matter, are so clearly inconsistent and incompatible with each
other that there is no other conclusion but that the latter repeals the former in accordance with
section 72 of B.P. Blg. 232 to wit:

SEC. 72. Repealing clause. - All laws or parts thereof inconsistent with any provision of this Act
shall be deemed repealed or modified, as the case may be.

Opinion No. 16 of the Ministry of Justice dated January 29, 1985, quoted below, supports the above
conclusion:

Both P.D. No. 451 and B.P. Blg. 232 deal with the imposition of tuition and other school fees or
charges and their use and application, although the latter is broader in scope as it covers other
aspects of the educational system. We note substantial differences or inconsistencies between the
provisions of the two laws. P.D. No. 451 prescribes certain limitations in the increase of tuition and
other school fees and their application, whereas the latter law, B.P. Blg. 232 is silent on the matter.
Under P.D. 451, rates of tuition/school fees need prior approval of the Secretary of Education, Culture
(now Minister of Education, Culture and Sports), who also determines the reasonable rates for new
school fees, whereas under B.P. Blg. 232, each private school determines its rate of tuition and other
school fees or charges. P.D. No. 451 authorizes the Secretary of Education and Culture to issue
requisite rules and regulations to implement the said Decree and for that purpose, he is empowered
to impose other requirements and limitations as he may deem proper and reasonable in addition to
the limitations prescribed by the Decree for increases in tuition fees and school charges, particularly,
the limitations imposed in the allocation of increases in fees and charges, whereas under B.P. Blg. 232,
the collection and application or use of rates and charges adopted by the school are subject to rules
and regulations promulgated by the Ministry of Education, Culture and Sports without any mention of
the statutory limitations on the application or use of the fees or charges. The authority granted to
private schools to determine its rates of tuition and unconditional authority vested in the Ministry of
Education, Culture and Sports to determine by rules and regulations the collection and application or
use of tuition or fees rates and charges under B.P. Blg. 232 constitute substantial and irreconcilable
incompatibility with the provisions of P.D. No. 451, which should be for that reason deemed to have
been abrogated by the subsequent legislation.
Moreover, B.P. Blg. 232 is a comprehensive legislation dealing with the establishment and
maintenance of an integrated system of education and as such, covers the entire subject matter of
the earlier law, P.D. No. 451. The omission of the limitations or conditions imposed in P.D. No. 451
for increases in tuition fees and school charges is an indication of a legislative intent to do away with
the said limitations or conditions. (Crawford, supra, p. 674). It has also been said that -

an act which purports to set out in full all that it intends to contain, operates as a repeal of anything
omitted which was contained in the old act and not included in the amendatory act". (People vs.
Almuete, 69 SCRA 410; People vs. Adillo, 68 SCRA 90) (Ministry of Justice Op. No. 16, s. 1985).

Having concluded that under B.P. Blg. 232 the collection and application or use of tuition and other
school fees are subject only to the limitations under the rules and regulations issued by the Ministry,
the crucial point now shifts to the said implementing rules.

The guidelines and regulations on tuition and other school fees issued after the enactment of B.P. Blg.
232 consistently permit the charging of allowances and other benefits against the 60% incremental
proceeds. Such was the tenor in the MECS Order No. 23, s. 1983; MECS Order No. 15, s. 1984; MECS
Order No. 25, s. 1985; MECS Order No. 22, s. 1986; and DECS Order No. 37, s. 1987. The pertinent
portion of the latest order reads thus:

In any case of increase at least sixty percent (60%) of the incremental proceeds should be allocated
for increases in or provisions for salaries or wages, allowances and fringe benefits of faculty and other
staff, including accruals to cost of living allowance, 13th month pay, social security, medicare and
retirement contribution and increases as may be provided in mandated wage orders, collective
bargaining agreements or voluntary employer practices.

The validity of these orders, particularly MECS Order No. 25, s. 1985, is attacked on the ground that
the additional burdens charged against ". . . the 60% of the proceeds of the increases in tuition fees
constitute both as [sic] an excess of statutory authority and as [sic] a substantial impairment of the
accrued, existing and protected rights and benefits of the members of faculty and non-academic
personnel of private schools." [Memorandum for Petitioners; Rollo, p. 191]. Petitioners allege that
these additional burdens under the MECS Order are not provided in the law itself, either in section 42
of B.P. Blg. 232 or section 3(a) of Pres. Dec. No. 451, except increases in salaries in the latter
provision.

Section 42 of B.P. Blg. 232 grants to the Minister of Education (now Secretary of Education)
rule-making authority to fill in the details on the application or use of tuition fees and other school
charges. In the same vein is section 70 of the same law which states:

SEC. 70. Rule-making Authority. - The Minister of Education, Culture and Sports charged with the
administration and enforcement of this Act, shall promulgate the necessary implementing rules and
regulations.

Contrary to the petitioners' insistence that the questioned rules and regulations contravene the
statutory authority granted to the Minister of Education, this Court finds that there was a valid
exercise of rule-making authority.
The statutory grant of rule-making power to administrative agencies like the Secretary of Education is
a valid exception to the rule on non-delegation of legislative power provided two conditions concur,
namely: 1) the statute is complete in itself, setting forth the policy to be executed by the agency,
and 2) said statute fixes a standard to which the latter must conform [Vigan Electric Light Co., Inc. v.
Public Service Commission, G.R. No. L-19850, January 30, 1964, and Pelaez v. Auditor General, G.R. No.
L-23825, December 24, 1965].

The Education Act of 1982 is "an act providing for the establishment and maintenance of an
integrated system for education" with the following basic policy:

It is the policy of the State to establish and maintain a complete, adequate and integrated system of
education relevant to the goals of national development. Toward this end, the government shall
ensure, within the context of a free and democratic system, maximum contribution of the educational
system to the attainment of the following national development goals:

1. To achieve and maintain an accelerating rate of economic development and social progress;

2. To assure the maximum participation of all the people in the attainment and enjoyment of
the benefits of such growth; and

3. To achieve and strengthen national unity and consciousness and preserve, develop and
promote desirable cultural, moral and spiritual values in a changing world.

The State shall promote the right of every individual to relevant quality education, regardless of sex,
age, creed, socio-economic status, physical and mental conditions, racial or ethnic origin, political or
other affiliation. The State shall therefore promote and maintain equality of access to education as
well as the enjoyment of the benefits of education by all its citizens.

The State shall promote the right of the nation's cultural communities in the exercise of their right to
develop themselves within the context of their cultures, customs, traditions, interests and belief, and
recognizes education as an instrument for their maximum participation in national development and
in ensuring their involvement in achieving national unity. (Section 3, Declaration of Basic Policy).

With the foregoing basic policy as well as specific policies clearly set forth in its various provisions, the
Act is complete in itself and does not leave any part of the policy-making, a strictly legislative function,
to any administrative agency.

Coming now to the presence or absence of standards to guide the Minister of Education in the
exercise of rule-making power, the pronouncement in Edu v. Ericta [G.R. No. L-32096, October 24,
1970, 35 SCRA 481, 497] is relevant:

The standard may be either expressed or implied. If the former, the non-delegation objection is
easily met. The standard though does not have to be spelled out specifically. It could be implied
from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the
legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is "safe
transit upon the roads". (Underscoring supplied).

Thus, in the recent case of Tablarin, et al. v. Hon. Gutierrez, et al., [G.R. No. 78164, July 31, 1987], the
Court held that the necessary standards are set forth in Section 1 of the 1959 Medical Act, i.e., "the
standardization and regulation of medical education" as well as in other provisions of the Act.
Similarly, the standards to be complied with by Minister of Education in this case may be found in the
various policies set forth in the Education Act of 1982.

MECS Order No. 25, s. 1985 touches upon the economic relationship between some members and
elements of the educational community, i.e., the private schools and their faculty and support staff.
In prescribing the minimum percentage of tuition fee increments to be applied to the salaries,
allowances and fringe benefits of the faculty and support staff, the Act affects the economic status
and the living and working conditions of school personnel, as well as the funding of the private
schools.

The policies and objectives on the welfare and interests of the various members of the educational
community are found in section 5 of B. P. Blg. 232, which states:

SEC. 5. Declaration of Policy and Objectives - It is likewise declared government policy to foster, at
all times, a spirit of shared purposes and cooperation among the members and elements of the
educational community, and between the community and other sectors of society, in the realization
that only in such an atmosphere can the true goals and objectives of education be fulfilled.

Moreover, the State shall:

1. Aid and support the natural right and duty of parents in the rearing of the youth through the
educational system.

2. Promote and safeguard the welfare and interests of the students by defining their rights and
obligations, according them privileges, and encouraging the establishment of sound relationships
between them and the other members of the school community.

3. Promote the social and economic status of all school personnel, uphold their rights, define
their obligations, and improve their living and working conditions and career prospects.

4. Extend support to promote the viability of those institutions through which parents,
students and school personnel seek to attain their educational goals.

On the other hand, the policy on the funding of schools in general, are laid down in section 33:

SEC. 33. Declaration of Policy - It is hereby declared to be a policy of the State that the national
government shall contribute to the financial support of educational programs pursuant to the goals of
education as declared in the Constitution. Towards this end, the government shall:

1. Adopt measures to broaden access to education through financial assistance and other
forms of incentives to schools, teachers, pupils and students; and

2. Encourage and stimulate private support to education through, inter alia, fiscal and other
assistance measures.

Given the abovementioned policies and objectives, there are sufficient standards to guide the
Minister of Education in promulgating rules and regulations to implement the provisions of the
Education Act of 1982. As in the Ericta and Tablarin cases, there is sufficient compliance with the
requirements of the non-delegation principle.
THIRD SUB-ISSUE

C. Whether or not schools and their employees may enter into a collective bargaining agreement
allocating more than 60% of said incremental proceeds for salary increases and other benefits of said
employees.

1. Arguments raised in the Biscocho and Valmonte cases

Assailed by the petitioners in the Biscocho and the Valmonte cases is the Order of the respondent
Minister of Labor directing the execution of a CBA between the school and the respondent Espiritu
Santo Parochial School Faculty Association which provides for an economic package equivalent to 90%
of the proceeds of tuition fee increases for school year 1985-1986, another 90% for school year
1986-1987 and 85% for school year 1987-1988. Pursuant to said Order, petitioners in the Biscocho
case allege that the parties had agreed to incorporate in their CBA a provision which allocates
one-half (1/2) of the 90% portion of the proceeds or 45% to increases in the monthly basic salaries
and the other one-half (1/2) or 45% to increases in monthly living allowance.

The petitioners in the two cases seek the nullification of the MOLE Order for exactly opposite reasons.
In the Biscocho case, the controversy springs from what petitioners perceive to be a diminution of the
benefits to be received by the school employees insofar as the CBA allocates only 45% for salary
increases instead of 60%, which petitioners claim to be the portion set aside by Pres. Dec. No. 451 for
that purpose. Parenthetically, the case questions the allocation of the remaining 45% of the 90%
economic package under the CBA, to allowances. Stripped down to its essentials, the question is
whether or not the 90% portion of the proceeds of tuition fee increases alloted for the economic
package may be allocated for both salary increases and allowances.

On the other hand, petitioners in the Valmonte case believe that the MOLE cannot order the
execution of a CBA which would allocate more than 60% of the proceeds of tuition fee increases for
salary increases of school employees. Furthermore, petitioners question the authority of the then
Minister of Labor and Employment to issue the aforequoted Order insofar as this allocates the tuition
fee increases of the respondent private school. According to them, only the Minister of Education,
Culture and Sports has the authority to promulgate rules and regulations on the use of tuition fees
and increases thereto, pursuant to the provisions of B.P. Blg. 232. They further argue that the
assailed Order collides with the provisions of Pres. Dec. No. 451 insofar as it allocates 90% of the
tuition fee increases for salary adjustments of the members of the bargaining unit which exceeds the
60% of the said increases allocated by the Decree for the same purpose.

Before delving further into the questions raised, this Court notes that in the Valmonte case,
respondent Minister and respondent Faculty Association raise a procedural objection to the filing of
the Petition: the standing of the petitioners to bring this suit. Both respondents decry the
petitioners' lack of the interest required in Rule 65 of the Rules of Court for the filing of the Petition
for Certiorari and Prohibition, since the latter do not appear to be in any way aggrieved by the
enforcement of the Order. Petitioners-parents did not even participate in the proceedings below
which led to the issuance of the assailed Order.
This Court finds merit in the respondents' objection. Under Rule 65 of the Rules of Court (Secs. 1
and 2), only a person aggrieved by the act or proceeding in question may file a petition for certiorari
and/or prohibition. The Valmonte petition fails to indicate how the petitioners would be aggrieved
by the assailed Order. It appears that the petitioners are not parties and never at any time
intervened in the conciliation conferences and arbitration proceedings before the respondent
Minister. The parties therein, who stand to be directly affected by the Order of the respondent
Minister, do not contest the validity of said Order. The petition does not even state that petitioners
act as representative of the parents' association in the School or in behalf of other parents similarly
situated.

If indeed, petitioners Valmonte and Badiola are aggrieved by the said Order, they should have
intervened and moved for a reconsideration of respondent Minister's Order before filing the instant
petition. Petitioners failed to show that the case falls under any one of the recognized exceptions to
the rule that a motion for reconsideration should first be availed of before filing a petition for
certiorari and prohibition.

In view of the foregoing, the resolution of the third sub-issue will be based mainly on the arguments
raised in the Biscocho case.

RESOLUTION OF THE THIRD SUB-ISSUE

The Biscocho case involves the issue on the allocation of the incremental proceeds of the tuition fee
increases applied for by the respondent Espiritu Santo Parochial School for school years 1985-1986,
1986-1987, and 1987-1988. With the repeal of Pres. Dec. No. 451 by B.P. Blg. 232, the allocation of
the proceeds of any authorized tuition fee increase must be governed by specific rules and
regulations issued by the Minister (now Secretary) of Education pursuant to his broadened
rule-making authority under section 42 of the new law. Thus, insofar as the proceeds of the
authorized tuition fee increases for school year 1985-1986 are concerned, the allocation must
conform with the pertinent section of MECS Order No. 25 s. 1985, to wit:

7. Application or Use of Tuition and Other School Fees or Charges.

* * *

7.4 Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or
wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance,
imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions,
social security, medicare, unpaid school personnel claims, and payments as may be prescribed by
mandated wage orders, collective bargaining agreements and voluntary employer practices:
Provided, That increases in fees specifically authorized for the purposes listed in paragraph 4.3.3
hereof shall be used entirely for those purposes.

* * *

With regard to the proceeds of the tuition fee increases for school year 1986-1987, the applicable
rules are those embodied in MECS Order No. 22, s. 1986 which made reference to MECS Order No. 25,
s. 1985, the pertinent portion of which is quoted above.
Finally, as to the proceeds of the tuition fee increases for school year 1987-1988, DECS Order No. 37, s.
1987 must apply:

c. Allocation of Incremental Proceeds

(1) In any case of increase at least sixty percent (60%) of the incremental proceeds should be
allocated for increases in or provisions for salaries or wages, allowances and fringe benefits of faculty
and other staff, including accruals to cost of living allowance, 13th month pay, social security,
medicare and retirement contributions and increases as may be provided in mandated wage orders,
collective bargaining agreements or voluntary employer practices.

(2) Provided, that in all cases of increase the allocation of the incremental proceeds shall be
without prejudice to the Supreme Court cases on the interpretation and applicability of existing
legislations on tuition and other fees especially on the allocation and use of any incremental proceeds
of tuition and other fees increases. (Underscoring supplied).

* * *

Based on the aforequoted MECS and DECS rules and regulations which implement BP Blg. 232, the
60% portion of the proceeds of tuition fee increases may now be allotted for both salaries and
allowances and other benefits. The 60% figure is, however, a minimum which means that schools
and their employees may agree on a larger portion, or in this case, as much as 90% for salaries and
allowances and other benefits. This is not in anyway to allow diminution or loss of the portion
allotted for institutional development of the school concerned. Thus, paragraph 7.5 of MECS Order
No. 25, series of 1985 specifically provides that other student fees and charges like registration,
library, laboratory or athletic fees shall be used exclusively for the purposes indicated.

III. RESOLUTION OF THE SPECIFIC ISSUES

CEBU INSTITUTE OF TECHNOLOGY CASE

Petitioner assigns three other errors in the petition for certiorari:

RESPONDENT MINISTER OF THE MINISTRY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO A DENIAL OF DUE PROCESS OF LAW IN DIRECTLY ISSUING THE
ORDER DATED SEPTEMBER 29, 1981 WITHOUT CONDUCTING A FORMAL INVESTIGATION AND
ARBITRATION PROCEEDINGS.

2
PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PETITIONER IS EXEMPTED AND/OR NOT
OBLIGED TO PAY SERVICE INCENTIVE LEAVE.

PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PRIVATE RESPONDENTS' CLAIMS FOR COLA
AND SERVICE INCENTIVE LEAVE ARE FULLY BARRED BY LACHES AND/OR EXTINGUISHED BY
PRESCRIPTION.

1. Petitioner assails the Order of the Minister of Labor on the ground that the same was issued
without the benefit of a hearing and was merely based on the report of the labor-management
committee which is allegedly without power to pass upon the issues raised. On this premise,
petitioner claims that it was denied its right to due process.

Petitioner's contention is without merit. The Labor-Management Committee was empowered to

investigate the complaint against the petitioner for non-payment of the cost of living allowance, 13th
month pay and service incentive leave from 1974-1981 [Annex "F"; Rollo, p. 37]. In the committee,
petitioner was represented by its counsel, registrar and assistant accountant and in the conferences
that were held, the representatives of the petitioner were present. Furthermore, the petitioner's
position paper submitted to the committee reflects that in all the deliberations, it was never denied
the right to present evidence and be heard on all the issues raised, particularly to demonstrate that it
had complied with the various COLA, 13th month pay and service incentive leave decrees. The
evidence presented during the conferences and the position paper of the parties were made the basis
of the committee's report and recommendation which in turn became the basis of the order of the
Minister of Labor directing the petitioner to pay the complainants their COLA and service incentive
leave benefits.

It could not therefore be contended that the petitioner was deprived of his right to be heard when it
appears on the record that it was permitted to ventilate its side of the issues. There was sufficient
compliance with the requirements of due process. In the face of the well-settled principle that
administrative agencies are not strictly bound by the technical rules of procedure, this Court dismisses
the petitioner's claim that formal investigative and arbitration proceedings should be conducted.
"While a day in court is a matter of right in judicial proceedings, in administrative proceedings it is
otherwise since they rest upon different principles" [Cornejo v. Gabriel and Provincial Board of Rizal,
41 Phil. 188 (1920); Tajonera v. Lamaroza, G.R. Nos. L-48907 and L-49035, December 19, 1981, 110
SCRA 438].

2. Going now to the matter of service incentive leave benefits, petitioner claims that private
respondents are engaged by the school on a contract basis as shown by the individual teachers
contract which defines the nature, scope and period of their employment; hence, they are not
entitled to the said benefit according to Rule V of the Implementing Rules and Regulations of the
Labor Code to wit:

SEC. 1. Coverage - This rule [on Service Incentive Leave] shall apply to all employees, except:

* * *
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid in a fixed amount for performing work irrespective of the time consumed in the performance
thereof; (MOLE Rules and Regulations, Rule V, Book III).

The phrase "those who are engaged on task or contract basis" should however, be related with "field
personnel", applying the rule on ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow. [Vera v. Cuevas, G.R. No. L-33693, May 31, 1979, 90
SCRA 379]. Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers
"to non-agricultural employees who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines].
Petitioner's claim that private respondents are not entitled to the service incentive leave benefit
cannot therefore be sustained.

3. As a last ditch effort to bar private respondents' claims, petitioner asserts that the same are
barred by laches and/or extinguished by prescription according to Article 291 of the Labor Code which
provides:

Art. 291. Money claims. - All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three (3) years from the time the cause of
action accrued; otherwise, they shall be forever barred.

All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate
entities established under this Code within one (1) year from the date of effectivity, and shall be
processed or determined in accordance with implementing rules and regulations of the Code;
otherwise, they shall be forever barred.

* * *

Considering that the complaint alleging non-payment of benefits was filed only on February 11, 1981,
petitioner argues that prescription has already set in.

From the aforequoted provision, it is not fully accurate to conclude that the entire claims for COLA
and service incentive leave are no longer recoverable. This Court finds no reason to disturb the
following pronouncement of the Minister of Labor:

* * *

Simply stated, claims for COLA under P.D. 525, which took effect on August 1, 1974, for the months of
August, September and October 1974 must be filed within one (1) year from November 1, 1974,
otherwise they shall be considered prescribed; claims under the same decree that accrued on or after
November 1, 1974 should be initiated within three (3) years from the date of accrual thereof,
otherwise the same shall be deemed extinguished. Although this particular claim was filed on
February 11, 1981, petitioners herein are entitled to COLA under P.D. 525 from February 1978 up to
the present since the COLA that accrued in February 1978 has not yet prescribed at the time that the
claim was filed in February 1981. In the same vein, petitioners herein should be granted COLA under
P.D. 1123 from February 1978 up to 1981 inasmuch as said decree became effective only on May 11,
1977. Further, petitioners are entitled to the full amount of COLA provided under P.D.'s 1614, 1634,
1678 and 1713. It must be pointed out that the earliest of the just cited four (4) decrees, i.e., P.D.
1614, just took effect on April 1, 1979. Thus, the prescriptive period under Art. 292 of the Labor
Code, as amended, does not as yet apply to money claims under the just mentioned decrees.

DIVINE WORD COLLEGE CASE

In assailing the disputed Order, petitioner contends that the public respondents acted with grave and
patent abuse of discretion amounting to lack of jurisdiction in that:

1. The Regional Director has no jurisdiction over money claims arising from
employer-employee relationship; and

2. The Regional Director and Deputy Minister of Labor adopted the report of the Labor
Standards Division without affording the petitioner the opportunity to be heard.

1. Petitioner school claims that the case at bar is a money claim and should therefore be within the
original and exclusive jurisdiction of the Labor Arbiter pursuant to article 217 of the Labor Code, as
amended.

It appears from the record, however, that the original complaint filed by ten (10) faculty members of
the Divine Word College was for non-compliance with Pres. Dec. No. 451 and with Labor Code
provisions on service incentive leave, holiday and rest day pay and which complaint specifically
prayed that an inspection of the College be conducted.

Contrary to the petitioner's protestation of lack of jurisdiction, the Secretary of Labor or his duly
authorized representatives (which includes Regional Directors) are accorded the power to investigate
complaints for non-compliance with labor laws, particularly those which deal with labor standards
such as payment of wages and other forms of compensation, working hours, industrial safety, etc..
This is provided for in article 128 of the Labor Code, as amended:

Art. 128. Visitorial and enforcement power.

(a) The Secretary of Labor or his duly authorized representatives, including labor regulation
officers, shall have access to employers' records and premises at any time of the day or night,
whenever work is being undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be necessary to determine
violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules
and regulations issued pursuant thereto.

(b) The Secretary of Labor or his duly authorized representatives shall have the power to order
and administer, after due notice and hearing, compliance with the labor standards provisions of this
Code based on the findings of labor regulation officers or industrial safety engineers made in the
course of inspection, and to issue writs of execution to the appropriate authority for the enforcement
of their order, except in cases where the employer contests the findings of the labor regulations
officer and raises issues which cannot be resolved without considering evidentiary matters that are
not verifiable in the normal course of inspection. (Emphasis supplied).

Furthermore, Policy Instruction No. 6 which deals with the distribution of jurisdiction over labor cases
restates inter alia that "(L)abor standards cases arising from violation of labor standards laws
discovered in the course of inspection or complaints where employer-employee relations still exist"
are under the exclusive original jurisdiction of the Regional Director.

Even assuming that respondent Regional Director was without jurisdiction to entertain the case at bar,
petitioner is now barred at this stage to claim lack of jurisdiction having actively participated in the
proceedings below. Petitioner never questioned the jurisdiction of the respondent Regional
Director.

2. The petitioner claims that it was never afforded the opportunity to be heard and was therefore
denied due process.

There is no dispute that an inspection of the College was conducted after a complaint by some faculty
members was filed with the Regional Office of the Ministry of Labor and Employment. A report was
submitted on the basis of the findings contained therein. Petitioner was furnished a copy of said
report to which it filed a comment. Finding this to be without merit, the Regional Director issued an
order giving petitioner ten (10) days to manifest its compliance with the findings, otherwise, another
would be issued to enforce payment. Petitioner appealed but instead of resolving the memorandum
of appeal, which the Regional Director treated as a motion for reconsideration, said Director issued
another Order dated August 2, 1983 directing the payment of the employees' share in the sixty (60%)
percent incremental proceeds. Petitioner moved for a reconsideration of the latest order which the
Regional Director, however, denied, thereby elevating the case to the Office of the Minister of Labor
and Employment.

The foregoing facts demonstrate that petitioner had the opportunity to refute the report on the
inspection conducted. It submitted a comment thereto, which was in effect its position paper. The
arguments therein and evidence attached thereto were considered by respondent Regional Director
in the order issued subsequently. They, therefore, had ample opportunity to present their side of
the controversy.

What due process contemplates is not merely the existence of an actual hearing. The "right to be
heard" focuses more on the substance rather than the form. In the case at bar, petitioner was
actually heard through the pleadings that it filed with the Regional Office V. As it itself admitted in
its petition that it was afforded the right to be heard on appeal [See Rollo, p. 58], petitioner cannot
therefore insist that it was denied due process.

FAR EASTERN UNIVERSITY CASE

Two other issues are raised in this petition, to wit:

1
WHETHER OR NOT 'TRANSPORTATION ALLOWANCE' SHOULD BE CONSIDERED AS 'EQUIVALENT' TO
13TH-MONTH PAY UNDER PRES. DEC. NO. 851.

WHETHER OR NOT LEGAL-HOLIDAY PAY BENEFIT COULD BE VALIDY WITHDRAWN AFTER BEING
PRACTICED CONTINUOUSLY FOR EIGHT (8) MONTHS.

1. The issue on the thirteenth (13th) month pay involves an interpretation of the provisions of Pres.
Dec. No. 851 which requires all employers "to pay all their employees receiving a basic salary of not
more than P1,000 a month, regardless of the nature of the employment, a 13th-month pay" (Sec. 1).
However, "employer[s] already paying their employees a 13th-month pay or its equivalent are not
covered" (Sec. 2). (Underscoring supplied)

The Rules and Regulations Implementing Pres. Dec. No. 851 provide the following:

SEC. 3. Employees - The Decree shall apply to all employers except to:

* * *

c) Employers already paying their employees 13-month or more in a calendar year or its equivalent
at the time of this issuance;

* * *

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the
basic salary but shall not include cash and stock dividends, cost of living allowances and all other
allowances regularly enjoyed by the employer, as well as non-monetary benefits. Where an
employer pays less than 1/12th of the employees basic salary, the employer shall pay the difference.

In the case at bar, the 13th month pay is paid in the following manner:

FOR REGULAR EMPLOYEES:

Transportation Allowance (TA)

50% of basic for the first year of service plus additional 5% every year thereafter but not to exceed
100% of basic salary

Christmas Bonus (CB)

50% of basic salary for the first year of service plus additional 5% every year thereafter but not to
exceed 100% of basic salary

For employees who have served the University for more than 10 years, the University pays them
emoluments equivalent to the 14 months salaries.

13th Month Pay Formula:

Monthly Rate X No. of months served for the year

Less TA/CB = 13th Mo. pay

---------------------------------------------------------------

12 months

FOR CASUAL EMPLOYEES:

13th Month Pay Formula:

Add salaries from 16 December of previous year to 15th December of present year [and] divide by 12
months = 13th Mo. Pay (Rollo, pp. 60, 72).

The University's answer to the Union's claim of underpayment of the 13th month pay is that the
"transportation allowance" paid to its employees partakes the nature of a mid-year bonus which
under section 2 of Pres. Dec. No. 851 and section 3(c) of the Implementing Rules and Regulations is
equivalent to the 13th month pay.

The Labor Arbiter ordered FEU to pay the 13th month pay differentials of the complainants reasoning
that:

CLEARLY, transportation allowance cannot be considered as "equivalent" of 13th month pay as it is

neither a Christmas bonus, midyear bonus, profit sharing payment, or other cash bonuses, pursuant
to paragraphs (c) and (e), Section 3 of PD 851. The regularity of its payment further cements this
proposition.

PERFORCE, complainants are underpaid of their 13th month pay in an amount equivalent to 50% of
their basic salary for the 1st year of service, plus additional 5% every year thereafter but not to
exceed 100% of their basic salary which, per respondent's formula, corresponds to their
transportation allowance.

(Rollo, p. 61).

On appeal, the Third Division of the National Labor Relations Commission reversed the Labor Arbiter's
ruling by dismissing the complainant's claim for underpayment of the 13th month pay for lack of
merit. The NLRC ruled that:

From the above findings and conclusion, it is clear that insofar as employees with ten (10) years of
service or more are concerned, they receive the equivalent of one (1) month pay for Christmas bonus
and another one (1) month pay as transportation allowance or a total of fourteen (14) months salary
in a year. Obviously, this group of employees are fully paid of their 13th month pay and are not
therefore subject to the instant claim. As it is, only those with less than ten (10) years of service are
included or encompassed by the Labor Arbiter's resolution on this particular issue. With this
clarification, we shall now proceed to discuss the crux of the controversy, that is, the determination of
whether or not the so designated "transportation allowance" being paid to the employees should be
considered among those deemed equivalent to 13th month pay. As adverted earlier, the Labor
Arbiter opined that it cannot be so considered as the equivalent of 13th month pay.

* * *

In passing upon the issue, we deemed it best to delve deeper into the nature and intendment of the
transportation allowances as designated by both the complainants and the respondent.
Complainants claim that the transportation allowance they enjoy has always been called and termed
allowance and never as bonus since the time the same was given to them. They assert that it simply
was intended as an allowance and not a bonus. It would appear however that complainants do not
dispute respondent's stand that transportation allowance is being paid only every March of each year
as distinguished from other allowances that are being paid on a monthly basis or on a bi-monthly
basis; that the amount of transportation allowance to be paid is dependent on the length of service of
the employee concerned (i.e. 50% basic in the first year and additional 5% for each succeeding years,
etc.); that the said method of computing the amount of the transportation allowance to be paid the
complainants is identical to that used in determining Christmas bonus (respondent's exhibit 8) that
the reason behind said transportation allowance is to financially assist employees in meeting their tax
obligations as the same become due on or about the month of March of each year.

* * *

We are inclined to believe and so hold that by the manner by which said transportation allowance is
being paid (only once a year) as well as the method in determining the amount to be paid (similar to
Christmas bonus) and considering further the reason behind said payment (easing the burden of
taxpayer-employee), the said transportation allowance given out by respondent while designating as
such, partakes the nature of a mid-year bonus. It bears to note in passing that in providing for
transportation allowance, respondent was not compelled by law nor by the CBA (Annex "A" of
respondent's Appeal) as nowhere in the CBA nor in the Labor Code can be found any provision on
transportation allowance. It was therefore a benefit that stemmed out purely from the voluntary
act and generosity of the respondent FEU. Moreover, said transportation allowance is only being
paid once a year. On the other hand, regular allowances not considered as 13th month pay
equivalent under P.D. 851, to our mind, refer to those paid on regular intervals and catering for
specific employees' needs and requirements that recur on a regular basis. Verily, if the intendment
behind the disputed transportation allowance is to answer for the daily recurring transportation
expenses of the employees, the same should have been paid to employees on regular periodic
intervals. All indications, as we see it, point out to conclusion that the disputed transportation
allowance, while dominated as such apparently for lack of better term, is in fact a form of bonus
doled out by the respondent during the month of March every year.

Hence, we hold that it is one of those that can very well be considered as equivalent to the 13th
month pay (Rollo, pp. 73, 74, 75, 76).

This Court sustains the aforequoted view of public respondent. The benefit herein designated as
"transportation allowance" is a form of bonus equivalent to the 13th month pay. Nevertheless,
where this does not amount to 1/12 of the employees basic salary, the employer shall pay the
difference.

The evident intention of the law was to grant an additional income in the form of a 13th month pay to
employees not already receiving the same. This Court ruled in National Federation of Sugar Workers
(NFSW) v. Ovejera: [G.R. No. 59743, May 31, 1982, 114 SCRA 354].

Otherwise put, the intention was to grant some relief - not to all workers - but only to the unfortunate
ones not actually paid a 13th month salary or what amounts to it, by whatever name called; but it was
not envisioned that a double burden would be imposed on the employer already paying his
employees a 13th month pay or its equivalent - whether out of pure generosity or on the basis of a
binding agreement and, in the latter case, regardless of the conditional character of the grant (such as
making the payment dependent on profit), so long as there is actual payment. Otherwise, what was
conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay.
* * *

Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual
bonuses for the purpose of determining liability for the 13th month pay. To require employers
(already giving their employees a 13th month salary or its equivalent) to give a second 13th month
pay would be unfair and productive of undesirable results. To the employer who had acceded and is
already bound to give bonuses to his employees, the additional burden of a 13th month pay would
amount to a penalty for his munificence or liberality. The probable reaction of one so circumstanced
would be to withdraw the bonuses or resist further voluntary grants for fear that if and when a law is
passed giving the same benefits, his prior concessions might not be given due credit; and this negative
attitude would have an adverse impact on the employees (pp. 369, 370).

The case of Dole Philippines, Inc. v. Leogardo [G.R. No. 60018, October 23, 1982, 117 SCRA 938
(1982)], citing the ruling in the above case also pointed out that:

To hold otherwise would be to impose an unreasonable and undue burden upon those employers
who had demonstrated their sensitivity and concern for the welfare of their employees. A contrary
stance would indeed create an absurd situation whereby an employer who started giving his
employees the 13th month pay only because of the unmistakable force of the law would be in a far
better position than another who, by his own magnanimity or by mutual agreement, had long been
extending his employees the benefits contemplated under PD No. 851, by whatever nomenclature
these benefits have come to be known. Indeed, PD No. 851, a legislation benevolent in its purpose,
never intended to bring about such oppressive situation. (p. 944)

2. Presidential Decree No. 570-A was issued on November 1, 1974 amending certain articles of
Presidential Decree No. 442 (Labor Code of the Philippines promulgated on May 1, 1974 which took
effect six months thereafter). Section 28 thereof provides that:

Section 28. A new provision is hereby substituted in lieu of the original provision of Article 258 of
the same Code to read as follows:

Art. 258. Right to holiday pay -

(a) Every worker shall be paid his regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers;

(b) The term 'holiday' as used in this Chapter, shall include: New Year's day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty fifth and thirtieth of December and the day designated by law for holding a
general election.

(c) When employer may require work on holidays. The employer may require an employee to
work on any holiday but such employee shall be paid a compensation equivalent twice his regular
rate.

Presidential Decree No. 850 issued on December 16, 1975 also amending certain articles of Pres. Dec.
No. 442 adopted the aforequoted provision. Two months later, on February 16, 1976, the Rules and
Regulations Implementing the Labor Code, as amended, was released the pertinent portion of which
states that:

Section 2. Status of employees paid by the month - Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the month whether worked or
not.

For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve.

Section 3. Holiday Pay - Every employer shall pay his employees their regular daily wage for any
unworked regular holiday.

As used in the Rule, the term 'holiday' shall exclusively refer to: New Year's Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and thirtieth of December and the day designated by law for a general
election or national referendum or plebiscite (MOLE Rules and Reg. Book III, Rule IV, sec. 2 (1976).

After one week, on February 23, 1976, the Minister of Labor issued Policy Instruction No. 9, to clarify
further the right to holiday pay, thus:

The Rules Implementing PD 850 have clarified the policy in the implementation of the ten (10) paid
legal holidays. Before PD 850, the number of working days a year in a firm was considered
important in determining entitlement to the benefit. Thus, where an employee was working for at
least 313 days, he was definitely already paid. If he was working for less than 313, there was no
certainty whether the ten (10) paid legal holidays were already paid to him or not.

The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees.
In the case of monthly, only those whose monthly salary did not yet include payment for the ten (10)
paid legal holidays are entitled to the benefit.

Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on
the entitlement of monthly paid employees. The new determining rule is this: If the monthly paid
employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay
is uniform from January to December, he is presumed to be already paid the ten (10) paid legal
holidays. However, if deductions are made from his monthly salary on account of holidays in
months where they occur, then he is entitled to the ten (10) legal holidays.

These new interpretations must be uniformly and consistently upheld.

This issuance shall take effect immediately.

In the meantime, respondent University paid its employees holiday pay for the following days:

DATE

HOLIDAYS PAID

June 9, 1975

for the previous nine legal holidays

August, 1975

for the previous June 12 and July 4

Jan. 14, 1976

for the previous Nov. 30, Dec. 25 and 30 and Jan. 1

After January 14, 1976, however, the University ceased paying the holiday pay allegedly by reason of
Policy Instruction No. 9. Specifically, the University claimed that the monthly salary of its employees
was, as of 1976, more than P240.00 without deductions from their monthly salary on account of
holidays in months where they occurred and that therefore, by virtue of Policy Instruction No. 9, they
were no longer entitled to the ten paid legal holidays.

Petitioners, upon the other hand, contend that Policy Instruction No. 9 could not have possibly been
the reason that prompted the University to withdraw such benefits from its faculty and employees
because said implementing rule was issued only on April 23, 1976 or four months later.

The Labor Arbiter ruled in favor of the complainant Union for the reason that ". . . the payment of the
10-paid legal holiday benefits from June 8, 1975 up to January 14, 1976 is considered an employer
practice that can no longer be withdrawn". [Decision; Rollo, p. 59].

As in the case of the 13th month pay, the NLRC reversed the Labor Arbiter's ruling. The NLRC held
that:

Apparently, Arbiter Ruben Aquino concluded that payment by the respondent of the legal holiday pay
preceded the effectivity of the Rules and Regulations Implementing P.D. 850 and which rules took
effect on February 16, 1976. Hence, his conclusion that the payment of the legal holiday pay
stemmed out from company practice and not from law. Tracing back, however, the payments made
by respondent of said holiday pay will show that, if ever, the same was made pursuant to P.D. 570-A
which took effect on November 1, 1974. Noteworthy is the undisputed fact that respondent first
paid its employees legal holiday pay in June 1975 corresponding to nine (9) legal holidays. It bears
to note that from the time of the effectivity of P.D. 570-A which was in November of 1974 up to June
of 1975, the time respondent first paid legal holiday pay for nine (9) legal holidays, there, were indeed
more or less nine legal holidays that transpired to wit: November 30, 1974, December 25, 1974,
December 30, 1974, January 1, 1975, February 27, 1975 (Referendum Day), Maundy Thursday of 1975,
Good Friday of 1975, April 9, 1975 and finally, May 1st of 1975. We are therefore inclined to lend
credence to respondent's claim that the payment of legal holiday pay was in fact made pursuant to
law, P.D. 570-A in particular, it is not one that arose out of company practice or policy.

Finding that said payment was made based on an honest although erroneous interpretation of law,
which interpretation was later on corrected by the issuance (sic) of Policy Instruction No. 9 and which
issuance prompted respondent to withdraw the holiday pay benefits extended to the employees who
were paid on a regular monthly basis, and finding further that under Policy Instructions No. 9, said
subject employees are deemed paid their holiday pay as they were paid on a monthly basis at a wage
rate presumably above the statutory minimum, we believe and so hold that the withdrawal of said
holiday pay benefit was valid and justifiable under the circumstances (Rollo, pp. 33-4).

This Court cannot sustain the foregoing decision of public respondent. Said decision relied on
Section 2, Rule IV, Book III of the implementing rules and on Policy Instruction No. 9 which were
declared by this Court to be null and void in Insular Bank of Asia and America Employee's Union
(IBAAEU) v. Inciong [G.R. No. 52415, October 23, 1984, 132 SCRA 663]. In disposing of the issue at
hand, this Court reiterates the ruling in that case, to wit:
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules
and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in the guise
of clarifying the Labor Code's provision on holiday pay, they in fact amended them by enlarging the
scope of their exclusion.

* * *

It is elementary in the rules of statutory construction that when the language of the law is clear and
unequivocal the law must be taken to mean exactly what it says. In the case at bar, the provisions of
the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit - it provides for
both the coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then Secretary
of Labor went as far as to categorically state that the benefit is principally intended for daily paid
employees, when the law clearly states that every worker shall be paid their regular holiday pay.
This is a flagrant violation of the mandatory directive of Article 4 of the Labor Code, which states that
"All doubts in the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." Moreover, it shall always be
presumed that the legislature intended to enact a valid and permanent statute which would have the
most beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112). (pp. 673-4).

BISCOCHO CASE

At issue also in this petition is whether the 60% incremental proceeds may be subjected to attorney's
fees, negotiation fees, agency fees and the like.

The Court notes the fact that there are two classes of employees among the petitioners: (1) those
who are members of the bargaining unit and (2) those who are not members of the bargaining unit.
The first class may be further subdivided into two: those who are members of the collective
bargaining agent and those who are not.

It is clear that the questioned Order of the respondent Minister applies only to members of the
bargaining unit. The CBA prepared pursuant to said Order, however, covered employees who are
not members of the bargaining unit, although said CBA had not yet been signed at the time this
petition was filed on November 24, 1986. Assuming it was signed thereafter, the inclusion of
employees outside the bargaining unit should be nullified as this does not conform to said order
which directed private respondents to execute a CBA covering only members of the bargaining unit.

Being outside the coverage of respondent Minister's order, and thus, not entitled to the economic
package involved therein, employees who are non-members of the bargaining unit should not be
assessed negotiation fees, attorney's fees, agency fees and the like, for the simple reason that the
resulting collective bargaining agreement does not apply to them. It should be clear, however, that
while non-members of the bargaining unit are not entitled to the economic package provided by said
order, they are, in lieu thereof, still entitled to their share in the 60% incremental proceeds of
increases in tuition or other school fees or charges.

As far as assessment of fees against employees of the collective bargaining unit who are not members
of the collective bargaining agent is concerned, Article 249 of the Labor Code, as amended by B.P. Blg.
70, provides the rule:
Art. 249. Unfair labor practices of employers. -

* * *

(e) x x x Employees of an appropriate collective bargaining unit who are not members of the
recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and
other fees paid by members of the recognized collective bargaining agent, if such non-union members
accept the benefits under the collective agreement. . .

Employees of the collective bargaining unit who are not members of the collective bargaining agent
have to pay the foregoing fees if they accept the benefits under the collective bargaining agreement
and if such fees are not unreasonable. Petitioners who are members of the bargaining unit failed to
show that the equivalent of ten (10%) percent of their backwages sought to be deducted is
unreasonable.

WHEREFORE, the Court rules:

CEBU INSTITUTE OF TECHNOLOGY CASE

In G.R. No. 58870, the Order of respondent Minister of Labor and Employment dated September 29,
1981 is SUSTAINED insofar as it ordered petitioner Cebu Institute of Technology to pay its teaching
staff the following:

(1) Cost of living allowance under Pres. Dec. Nos. 525 and 1123 from February 1978 up to 1981;

(2) Cost of living allowance under Pres. Dec. Nos. 1614, 1634, 1678 and 1713; and

(3) Service incentive leave due them from 1978.

The Temporary Restraining Order issued by this Court on December 7, 1981 is hereby LIFTED and SET
ASIDE. No costs.

DIVINE WORD COLLEGE CASE

The petition in G.R. No. 68345 is DENIED for lack of merit. The questioned Orders of respondent
Deputy Minister of Labor and Employment, dated December 19, 1983 and July 4, 1984 are SUSTAINED
insofar as said Orders denied the payment of the emergency cost of living allowances of private
respondents faculty teachers of the Divine Word College of Legazpi out of the sixty (60%) incremental
proceeds of tuition and other school fee increases collected during the effectivity of Pres. Dec. No.
451. The Rules and Regulations implementing Pres. Dec. No. 451 are hereby declared invalid for
being ultra vires. No costs.

FAR EASTERN UNIVERSITY CASE

The Decision of public respondent National Labor Relations Commission dated September 18, 1984 is
REVERSED insofar as it affirmed in toto the dismissal of petitioner Far Eastern University Employee
Labor Union's claim under Pres. Dec. No. 451 and its claim for payment of holiday pay. Private
respondent Far Eastern University is therefore ordered to pay its employees the following:

(1) Their sixty (60%) percent share in the increases in tuition and other school fees or charges which
shall be allocated exclusively for increase in salaries or wages if the tuition or other school fee
increase was collected during the effectivity of Pres. Dec. No. 451;

(2) Their claim for holiday pay which was withdrawn since January 14, 1976 up to the present.

The Decision of respondent National Labor Relations Commission, however, is SUSTAINED insofar as it
denied petitioner's claim for thirteenth (13th) month pay. No costs.

FABROS CASE

In G.R. No. 70832, the Petition for Certiorari andd Prohibition is DISMISSED. MECS Order No. 25, s.
1985, particularly paragraphs 7.0 to 7.5 thereof, which provide for the use and application of sixty
(60%) percent of the increases in tuition and other school fees or charges, having been issued
pursuant to B.P. Blg 232 which repealed Pres. Dec. No. 451, is hereby declared VALID. The
Temporary Restraining Order issued by this Court dated May 29, 1985 is LIFTED and SET ASIDE. No
costs.

BISCOCHO CASE

The assailed portions of the Order of the Minister of Labor and Employment dated April 14, 1986 are
AFFIRMED. The collective bargaining agreement prepared pursuant thereto should, however, be
MODIFIED to cover only members of the bargaining unit. Only petitioners who are members of the
collective bargaining unit, if they accept the benefits under the resulting collective bargaining
agreement, shall be charged ten (10%) percent of the payable backwages as negotiation fees. The
Temporary Restraining Order dated November 25, 1986 is LIFTED and SET ASIDE. No costs.

VALMONTE CASE

The petition in G.R. No. 76596 is DISMISSED for lack of merit.

Effective September 11, 1982, the application and use of the proceeds from increases in tuition fees
and other schools fees or charges shall be governed by section 42 of B.P. Blg. 232 as implemented by
the Rules and Regulations issued by the then Ministry, now Department of Education, Culture and
Sports.

SO ORDERED.
Teehankee, C.J., Yap, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, and
Sarmiento, JJ., concur.

Fernan, Narvasa, Cruz, and Padilla, JJ., no part.