Case Summary (G.R. No. L-52415)
Legislative Amendments and Administrative Guidelines
Presidential Decree No. 850 (December 16, 1975) amended Article 94 of the Labor Code, reinforcing workers’ right to holiday pay and authorizing compensation for work on holidays. Pursuant to Article 5, the Department of Labor issued implementing rules on February 16, 1976, presuming monthly‐paid employees earning at least the minimum wage were already paid for all days of the month. Policy Instruction No. 9 (April 23, 1976) clarified that this presumption applied if monthly pay was uniform, at least equal to P240, and holiday‐month deductions were absent.
Conflict over Holiday Pay Implementation
Relying on the new rule and instruction, the bank ceased holiday‐pay disbursements for monthly‐paid employees. On August 30, 1976, the union sought writs of execution to enforce the arbiter’s decision. The bank opposed, arguing the 1976 rules and instruction repealed the prior award. The arbiter, on October 18, 1976, enjoined the bank to resume holiday‐pay payments, deeming the decision final and res judicata.
Procedural History before NLRC and Deputy Minister
The bank appealed the arbiter’s injunction to the NLRC. On June 20, 1978, the Commission en banc dismissed the appeal, set aside the injunction, and ordered execution. Service delays prompted the bank to file a motion for reconsideration/appeal with the Minister of Labor on February 21, 1979. The union opposed, asserting lack of jurisdiction and the finality of the arbiter’s decision. Pending appeals and execution motions ensued until Deputy Minister Inciong, on November 10, 1979, annulled the NLRC resolution, dismissing the case for lack of merit.
Issue Presented
Whether the Deputy Minister could set aside a final and partially executed arbiter’s award, affirmed by the NLRC, on the basis of implementing rules and a policy instruction issued after the award became final.
Nullity of the Implementing Rule and Policy Instruction
The Court held that Section 2, Rule IV of the implementing rules and Policy Instruction No. 9 effectively amended statutory provisions by excluding monthly‐paid employees from holiday‐pay benefits, contrary to clear mandates of Articles 94 and 82 of the Labor Code. Such administrative issuances exceeded the Secretary’s rule‐making authority and violated the Labor Code’s directive to resolve doubts in favor of labor. Precedents confirmed that administrative regulations cannot enlarge or alter substantive coverage provided by statute.
Finality of the Arbiter’s Decision and Non-Retroactivity
The decision of Labor Arbiter Soriano became final and exe
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Antecedent Facts
- On June 20, 1975, the Insular Bank of Asia and America Employees’ Union (IBAAEU) filed a holiday pay complaint against the Insular Bank of Asia and America before the NLRC, Regional Office No. IV.
- Both parties jointly requested certification for arbitration, which was ordered on July 7, 1975.
- Labor Arbiter Ricarte T. Soriano issued a decision on August 25, 1975, finding that bank employees were entitled to holiday pay under Article 208 of the Labor Code because the employer’s use of a 303-day divisor in computing daily rates presumes exclusion of the ten regular holidays.
- The arbiter’s judgment directed the bank to pay holiday wages to all its employees for regular holidays from November 1, 1974 onward.
- The respondent bank did not appeal the arbiter’s decision and voluntarily paid holiday pay through January 1976.
Statutory Amendments and Implementing Rules
- Presidential Decree No. 850, effective December 16, 1975, amended Article 94 of the Labor Code on holiday pay, prescribing (a) payment of regular daily wages on holidays, (b) double rate for work on holidays, and (c) a fixed list of ten legal holidays.
- Pursuant to Article 5 of the Labor Code, the Department of Labor promulgated implementing rules on February 16, 1976; Rule IV, Section 2, Book III, presumes monthly-paid employees earning at least the minimum wage are already paid for all days in the month, worked or not.
- On April 23, 1976, Policy Instruction No. 9 interpreted that monthly-paid employees receiving P240 or more and uniform pay need not be paid the ten legal holidays unless deductions are made on holiday months.
Subsequent Proceedings and Conflicting Orders
- In August 1976, IBAAEU moved for writ of execution to enforce the August 25, 1975 award; the bank opposed, invoking PD 850 rules and Policy Instruction No. 9.
- On October 18, 1976, Arbiter Soriano enjoined the bank to continue holiday pay, citing res judicata/body of findings and partial implementation that rendered the award unappealable.
- The bank appealed this order to the NLRC on November 17, 1976, reasserting reliance on the implementing rule and contesting the factual finding of discontinued pay.
- On June 20, 1978, the NLRC en banc dismissed the bank’s appeal, set aside the a