Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-49582 January 7, 1986

CBTC EMPLOYEES UNION, petitioner,

vs.
THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant, and
COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES, respondents.

Francisco F. Angeles for petitioner.

Pacis, Reyes, De Leon & Cruz Law, Office for respondent CBTC.

Edmundo R. AbigaN, Jr. for respondent Union.

DE LA FUENTE, J.:

Petition for certiorari seeking to annul and set aside the decision of the respondent Presidential
Executive Assistant 1 affirming that of the Acting Secretary of Labor who reversed the decision
of the National Labor Relations Comission which upheld the Voluntary Arbitrator's order
directing the private respondent bank to pay its monthly paid employees their "legal holiday
pay."

Petitioner Commercial Bank and Trust Company Employees' Union (Union for short) lodged a
complaint with the Regional Office No. IV, Department of Labor, against private respondent
bank (Comtrust) for non-payment of the holiday pay benefits provided for under Article 95 of
the Labor Code in relation to Rule X, Book III of the Rules and Regulations Implementing the
Labor Code.

Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit their
dispute for voluntary arbitration. The issue presented was: "Whether the permanent employees of
the Bank within the collective bargaining unit paid on a monthly basis are entitled to holiday pay
effective November 1, 1974, pursuant to Article 95 (now Article 94) of the Labor Code, as
amended and Rule X (now Rule IV), Book III of the Rules and Regulations Implementing the
Labor Code. "

In addition, the disputants signed a Submission Agreement stipulating as final, unappealable and
executory the decision of the Arbitrator, including subsequent issuances for clarificatory and/or
relief purposes, notwithstanding Article 262 of the Labor Code which allow appeal in certain
instances. 2

1
In the course of the hearing, the Arbitrator apprised the parties of an interpretative bulletin on
"holiday pay" about to be issued by the Department of Labor. Whereupon, the Union filed a
Manifestation 3 which insofar as relevant stated:

6. That complainant union . . . has manifested its apprehension on the contents of

the said Interpretative Bulletin in view of a well-nigh irresistible move on the part
of the employers to exclude permanent workers similarly situated as the
employees of Comtrust from the coverage of the holiday pay benefit despite the
express and self-explanatory provisions of the law, its implementing rules and
opinions thereon . . . .

7. That in the event that said Interpretative Bulletin regarding holiday pay would
be adverse to the present claim . . . in that it would in effect exclude the said
employees from enjoyment of said benefit, whether wholly or partially,
complainant union respectfully reserves the right to take such action as may be
appropriate to protect its interests, a question of law being involved. . . . An
Interpretative Bulletin which was inexistent at the time the said commitment was
made and which may be contrary to the law itself should not bar the right of the
union to claim for its holiday pay benefits.

On April 22, 1976, the Arbitrator handed down an award on the dispute. Relevant portions
thereof read as follows:

The uncontroverted facts of this case are as follows:

(1) That the complainant Union is the recognized sole and exclusive collective
bargaining representative of all the permanent rank-and-file employees of the
Bank with an existing Collective Bargaining Agreement covering the period from
July 1, 1974 up to June 30, 1977;

(2) That ... the standard workweek of the Bank generally consists of five (5) days
of eight (8) hours each day which, . . . said five days are generally from Monday
thru Friday; and, as a rule, Saturdays, Sundays and the regular holidays are not
considered part of the standard workweek.

(3) That, in computing the equivalent daily rate of its employees covered by the
CBA who are paid on a monthly basis, the following computation is used, as per
the provisions of Section 4, Article VII, of the CBA (Annex "A"):

Daily Rate = Basic Monthly Salary plus CLA x 12 250

Basic Hourly Rate = Daily Rate 8

(4) That the divisor of '250', . . . was arrived at by subtracting the 52 Sundays, 52
Saturdays, the 10 regular holidays and December 31 (secured thru bargaining), or
a total of 115 off-days from the 365 days of the year or a difference of 250 days.

2
Considering the above uncontroverted facts, the principal question to be resolved
is whether or not the monthly pay of the covered employees already includes what
Article 94 of the Labor Code requires as regular holiday pay benefit in the amount
of his regular daily wage (100% if unworked or 200% if worked) during the
regular holidays enumerated therein, i.e., Article 94(c) of the Labor Code.

In its latest Memorandum, filed on March 26, 1976, the Bank relies
heavily on the provisions of Section 2, Rule IV, Book 111, of the
Rules and Regulations implementing particularly Article 94
(formerly Article 208) of the Labor Code, which Section reads as
follows:

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. (Emphasis supplied).

While admitting that there has virtually been no change effected by Presidential
Decree No. 850, which amended the Labor Code, other than the re-numbering of
the original Article 208 of said Code to what is now Article 94, the Bank,
however, attaches a great deal of significance in the above-quoted Rule as to
render the question at issue 'moot and academic'.

On the other hand, the Union maintains, in its own latest Memorandum, filed also
on March 26, 1976, that the legal presumption established in the above-quoted
Rule is merely a disputable presumption. This contention of the Union is now
supported by a pronouncement categorically to that effect by no less than the
National Labor Relations Commission (NLRC) in the case of The Chartered Bank
Employees Association vs. The Chartered Bank. NLRC Case No. (s) RB-IV-1739-
75 (RO4-5-3028-75), which reads, in part, as follows:

. . . A disputable presumption was sea in that it would be presumed

the salary of monthly-paid employees may already include rest
days, such as Saturdays, Sundays, special and legal holidays,
worked or unworked, in effect connoting that evidence to the
contrary may destroy such a supposed legal presumption. Indeed,
the Rule merely sets a presumption. It does not conclusively
presume that the salary of monthly-paid employees already
includes unworked holidays. . . .

The practice of the Bank of paying its employees a sum equivalent

to Base pay plus Premium on Saturdays, Sundays and special and
legal holidays, destroys the legal presumption that monthly pay is

3
 for an days of the month. For if the monthly pay is payment for all
days of the month, then why should the employee be paid again
for working on such rest days. (Emphasis supplied)

There is no reason at present not to adopt the above ruling of the Honorable
Comission, especially considering the fact that this Arbitrator, in asking a query
on the nature of the presumption established by the above Rule, from the Director
of Labor Standards in the PMAP Conference held at the Makati Hotel on March
13, 1976, was given the categorical answer that said presumption is merely
disputable. This answer from the Labor Standards Director is significant
inasmuch as it is his office, the Bureau of Labor Standards, that is reportedly
instrumental in the preparation of the implementing Rules, particularly on Book
III of the Labor Code on Conditions of Employment, to which group the present
Rule under discussion belongs.

So, rather than rendering moot and academic the issue at hand, as suggested by
the Bank, the more logical step to take is to determine whether or not there is
sufficient evidence to overcome the disputable presumption established by the
Rule.

It is unquestioned, and as provided for in the CBA itself, that the divisor used in
determining the daily rate of the monthly-paid employees is '250'.

xxx xxx xxx

Against this backdrop, certain relevant and logical conclusions result, namely:

(A) The Bank maintains that, since its inception or start of operations in 1954, all
monthly-paid employees in the Bank are paid their monthly salaries without any
deduction for unworked Saturdays, Sundays, legals and special holidays. On the
other hand, it also maitains that, as a matter of fact, 'always conscious of its
employee who has to work, on respondent's rest days of Saturdays and Sundays or
on a legal holiday, an employee who works overtime on any of said days is paid
one addition regular pay for the day plus 50% of said regular pay (Bank's
Memorandum, page 3, filed January 21, 1976). . . .

xxx xxx xxx

On the other hand, there is more reason to believe that, if the Bank has never
made any deduction from its monthly-paid employees for unworked Saturdays,
Sundays, legal and special holidays, it is because there is really nothing to deduct
properly since the monthly, salary never really included pay for such unworked
days-and which give credence to the conclusion that the divisor '250' is the proper
one to use in computing the equivalent daily rate of the monthly-paid employees.

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(B) The Bank further maintains that the holiday pay is intended only for daily-
paid workers. In this regard, the NLRC has this to say , in the same above-quoted
Chartered Bank case:

It is contended that holiday pay is primarily for daily wage earners.

Let us examine the law, more specifically Article 95 (now Article
94) of the Labor Code to see whether it supports this contention.
The words used in the Decree are 'every worker', while the framers
of the Implementing Rules preferred the use of the phrase 'all
employees.' Both the decree itself and the Rules mentioned
enumerated the excepted workers. It is a basic rule of statutory
construction that putting an exception limits or modifies the
enumeration or meaning made in the law. it is thus easy to see that
a mere reading of the Decree and of the Rules would show that the
monthly-paid employees of the Bank are not expressly included in
the enumeration of the exception.

Special notice is made of the fact that the criteria at once readable
from the exception referred to is the nature of the job and the
number of employees involved, and not whether the employee is a
daily-wage earner or a regular monthly-paid employee.

There is no reason at all to digress from the above-quoted observation of the

Honorable Commission for purposes of the present case.

xxx xxx xxx

Finally, inasmuch as Article 94 of the Labor Code is one of its so-called self-
executing provisions, conjointly with its corresponding implementing Rules, it is
to be taken to have taken effect, as of November 1, 1974, as per Section I (1),
Rule IV, Book III , of the Implementing Rules.

WHEREAS, all the above premises considered, this Arbitrator rules that:

(1) All the monthly-paid employees of the Bank herein represented by the Union
and as governed by their Collective Bargaining Agreement, are entitled to the
holiday pay benefits as provided for in Article 94 of the labor Code and as
implemented by Rule IV, Book III, of the corresponding implementing Rules,
except for any day or any longer period designated by lawor holding a general
election or referendum;

(2) Paragraph (1) hereof means that any covered employee who does not work on
any of the regular holidays enumerated in Article 94 (c) of the Labor Code, except
that which is designated for election or referendum purposes, is still entitled to
receive an amount equivalent to his regular daily wage in addition to his monthly
salary. If he work on any of the regular holidays, other than that which is

5
 designated for election or referendum purposes, he is entitled to twice, his regular
daily wage in addition to his monthly salary. The 50% premium pay provided for
in the CBA for working on a rest day (which has been interpreted by the parties to
include the holidays) shall be deemed already included in the 200% he receives
for working on a regular holiday. With respect to the day or any longer period
designated by law for holding a general election or referendum, if the employee
does not work on such day or period he shall no longer be entitled to receive any
additional amount other than his monthly salary which is deemed to include
already his regular daily wage for such day or period. If he works on such day or
period, he shall be entitled to an amount equivalent to his regular daily wage
(100%) for that day or period in addition to his monthly salary. The 50% premium
pay provided for in the CBA for working on that day or period shall be deemed
already included in the additional 100% he receives for working on such day or
period; and

(3) The Bank is hereby ordered to pay all the above employees in accordance with
the above paragraphs (1) and (2), retroactive from November 1, 1974.

SO ORDERED.

April 22, 1976, Manila, Philippines. 4

The next day, on April 23, 1976, the Department of Labor released Policy Instructions No. 9,
hereinbelow quoted:

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 considered
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 P
240, 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 still entitled to the ten (10) paid
legal holidays.

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 These new interpretations must be uniformly and consistently upheld.

This issuance shall take effect immediately.

After receipt of a copy of the award, private respondent filed a motion for reconsideration,
followed by a supplement thereto. Said motion for reconsideration was denied. A copy of the
order of denial was received by private respondent on July 8, 1976.

Said private respondent interposed an appeal to the National Labor Relations Commission
(NLRC), contending that the Arbitrator demonstrated gross incompetence and/or grave abuse of
discretion when he entirely premised the award on the Chartered Bank case and failed to apply
Policy Instructions No. 9. This appeal was dismissed on August 16, 1976, by the NLRC because
it was filed way beyond the ten-day period for perfecting an appeal and because it contravened
the agreement that the award shall be final and unappealable.

Private respondent then appealed to the Secretary of Labor. On June 30, 1977, the Acting
Secretary of Labor reversed the NLRC decision and ruled that the appeal was filed on time and
that a review of the case was inevitable as the money claim exceeded P100,000.00. 5 Regarding
the timeliness of the appeal, it was pointed out that the labor Department had on several
occasions treated a motion for reconsideration (here, filed before the Arbitrator) as an appeal to
the proper appellate body in consonance with the spirit of the Labor Code to afford the parties a
just, expeditious and inexpensive disposition of their claims, liberated from the strict technical
rules obtaining in the ordinary courts.

Anent the issue whether or not the agreement barred the appeal, it was noted that the
Manifestation, supra, "is not of slight significance because it has in fact abrogated complainant's
commitment to abide with the decision of the Voluntary Arbitrator without any reservation" and
amounted to a "virtual repudiation of the agreement vesting finality" 6 on the arbitrator's
disposition.

And on the principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions
No. 9, applied the same retrospectively, among other things.

In due time, the Union appealed to the Office of the President. In affirming the assailed decision,
Presidential Executive Assistant Jacobo C. Clave relied heavily on the Manifestation and Policy
Instructions No. 9.

Hence, this petition.

On January 10, 1981, petitioner filed a motion to substitute the Bank of the Philippine Islands as
private respondent, as a consequence of the Articles of Merger executed by said bank and
Commercial Bank & Trust Co. which inter alia designated the former as the surviving corporate
entity. Said motion was granted by the Court.

We find the petitioner impressed with merit.

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In excluding the union members of herein petitioner from the benefits of the holiday pay law,
public respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to
implement Article 94 of the labor Code promulgated by the then Secretary of labor and Policy
Instructions No. 9.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, 7 this Court's
Second Division, speaking through former Justice Makasiar, expressed the view and declared
that the aforementioned section and interpretative bulletin are null and void, having been
promulgated by the then Secretary of Labor in excess of his rule-making authority. It was
pointed out, inter alia, that in the guise of clarifying the provisions on holiday pay, said rule and
policy instructions in effect amended the law by enlarging the scope of the exclusions. We
further stated that the then Secretary of Labor went as far as to categorically state that the benefit
is principally intended for daily paid employees whereas the law clearly states that every worker
shall be paid their regular holiday pay-which is incompatible with the mandatory directive, in
Article 4 of the Labor Code, that "all doubts in the implementation and interpretation of the
provisions of Labor Code, including its implementing rules and regulations, shall be resolved in
favor of labor." Thus, there was no basis at all to deprive the union members of their right to
holiday pay.

In the more recent case of The Chartered Bank Employees Association vs. Hon. Ople, 8 this
Court in an en banc decision had the occasion to reiterate the above-stated pronouncement. We
added:

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the
Secretary's Policy Instruction No. 9 add another excluded group, namely,
'employees who are uniformly paid by the month'. While the additional exclusion
is only in the form of a presumption that all monthly paid employees have already
been paid holiday pay, it constitutes a taking away or a deprivation which must be
in the law if it is to be valid. An administrative interpretation which diminishes
the benefits of labor more than what the statute delimits or withholds is obviously
ultra vires.

In view of the foregoing, the challenged decision of public respondent has no leg to stand on as it
was premised principally on the same Section 2, Rule IV, Book III of the Implementing Rules
and Policy Instructions No. 9. This being the decisive issue to be resolved, We find no necessity
to pass upon the other issues raised, such as the effects of the Union's Manifestation and the
propriety of applying Policy Instructions No. 9 retroactively to the instant case.

WHEREFORE, the questioned decisions of the respondent Presidential Executive Assistant and
the Acting Secretary of labor are hereby set aside, and the award of the Arbitrator reinstated.
Costs against the private respondent.

IT IS SO ORDERED.

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and Patajo, JJ., concur.

8
Melencio-Herrera, J., took no part.

Footnotes

1 dated Dec. 8, 1978, Annex "J" , pp. 73-78, Rollo.

2 However, voluntary arbitration awards or decisions on money claims involving

an amount exceeding P100,000 or forty percent (40%) of the paid-up capital of
the respondent employer, whichever is lower, may be appealed to the National
Labor Relations Commission on any of the following grounds: (a) Abuse of
discretion; and (b) Gross incompetence.

3 pp. 50-51, Rollo.

4 pp. 53-61, Rollo.

5 the Socio-Economic Analyst of the Department having reported that the money,
value of the holiday pay amounted to P432,122.88.

6 p. 69, Rollo.

7 G.R. No. 52415, 132 SCRA 663.

8 G.R. No. L-44717, August 28, 1985.