7. Cebu Institute of Technology vs. Hon.

Blas Ople
FACTS:
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 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.
Decree No. 451.
1

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.
2

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. Decree No. 451. The interpretation
and construction of laws being a matter of judicial power

1
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;
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2
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).
and this Court has been called upon to resolve the
controversy.
ISSUE(S):
(1) WON 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:
(2) WON the same items may be charged against said
portion under the provisions of B.P. Blg. 232: and,
(3) WON 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.
HELD:
(1) NO. 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 and not
against the 60% portion allocated for increases in
salaries and wages.
(2) YES. BP Blg. 232 repealed PD 451 to the effect that
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 guidelines and regulations
issued by the Ministry 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.
(3) YES. The 60% figure is a minimum which means
that schools and their employees may agree on a
larger portion it may even be as much as 90%
for salaries and allowances and other benefits.
This is not in any way to allow diminution or loss
of the portion allotted for institutional
development of the school concerned.
RATIO DECIDENDI:
First issue
This Court has consistently held 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
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. [Italics
supplied] (127 SCRA 691, 702).
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.
Second issue
The 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. 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),
where 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 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.
Having concluded that under B.P. Big. 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.
Third issue
Insofar as the proceeds of the authorized tuition fee
increases 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.
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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 fisted in
paragraph 4.3.3 hereof shall be used entirely for
those purposes.
xxx xxx xxx
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 lncremental 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. (Emphasis supplied).
xxx xxx xxx
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.