G.R. No. 76883 September 7, 1989
VASSAR INDUSTRIES, INC., petitioner, vs. VASSAR INDUSTRIES EMPLOYEES UNION (VIEU) and/or DANILO ORDOÑEZ, President, and LABOR ARBITER CORNELIO L. LINSANGAN, respondents.

FACTS

A Collective Bargaining Agreement (CBA) between Vassar Industries, Inc. and the Vassar Industries Employees Union, effective October 1, 1978, required re-negotiation for salary increases in its second and third years. In 1980, the parties failed to agree on the third-year increase, leading to compulsory arbitration. Labor Arbiter V.G. Son brokered an amicable settlement on March 6, 1981, granting a P1.25 daily wage increase effective October 1, 1980. Subsequently, on March 26, 1981, Wage Order No. 1 was promulgated, mandating a P2.00 daily cost-of-living allowance (COLA) for non-agricultural workers. Section 6 of the Wage Order allowed employers to credit wage increases granted between January 1 and March 22, 1981, against this new COLA. Implementing rules issued by the National Wages Council, however, excluded “anniversary increases under Collective Bargaining Agreements” from such crediting.
Vassar implemented Wage Order No. 1 by paying only an additional P0.75 daily, crediting the earlier P1.25 settlement against the P2.00 COLA. The Union contested this, arguing the P1.25 was an un-creditable “anniversary increase” under the implementing rules and thus payable on top of the full COLA. The Labor Arbiter and the National Labor Relations Commission (NLRC) ruled in favor of the Union. Vassar filed this petition for certiorari, asserting grave abuse of discretion and citing applicable jurisprudence.

ISSUE

Whether the P1.25 daily wage increase granted pursuant to the March 6, 1981 amicable settlement is creditable against the P2.00 daily COLA mandated by Wage Order No. 1.

RULING

The Supreme Court granted the petition, nullifying the NLRC decision. The legal logic centers on the supremacy of the law (Wage Order No. 1) over its implementing rules. The Wage Order itself, promulgated under legislative authority, explicitly allowed crediting of “all increases in wages granted unilaterally or by CBA” within the specified period, without any qualification or exclusion for “anniversary increases.” The implementing rule that created such an exclusion contravened the clear and unambiguous text of the law it sought to implement. An administrative agency cannot, through its rules, amend, restrict, or expand the law’s scope.
The Court found the P1.25 increase was a general wage adjustment arising from CBA re-negotiation, squarely falling under Section 6 of Wage Order No. 1 as a creditable increase granted within the covered period. To allow the implementing rule’s exclusion would impose a “double burden” on the employer—paying both the negotiated increase and the full COLA—contrary to the law’s explicit crediting provision. This interpretation is consistent with cited precedents which prevent imposing additional financial obligations on employers absent a clear statutory mandate. The quitclaims executed by some employees, raised in a supplemental petition, were rendered moot by this dispositive ruling on the main legal issue.