G.R. No. L-60403 August 3, 1983
ALLIANCE OF GOVERNMENT WORKERS (AGW), et al., petitioners, vs. THE HONORABLE MINISTER OF LABOR AND EMPLOYMENT, et al., respondents.

FACTS

Petitioner Alliance of Government Workers (AGW), a registered labor federation, and its affiliate unions filed this petition. Their members are employees of various government-owned or controlled corporations and institutions, including the Philippine National Bank, Metropolitan Waterworks and Sewerage System, Government Service Insurance System, Social Security System, Philippine Virginia Tobacco Administration, Philippine Normal College, and Polytechnic University of the Philippines. They sought to compel these government entities to pay the 13th-month pay mandated by Presidential Decree No. 851.
Presidential Decree No. 851, issued on December 16, 1975, explicitly requires “All employers” to pay a 13th-month pay to employees receiving a basic salary of not more than P1,000 a month. The sole exemption under the decree itself, per its Section 2, is for employers already paying such benefit. However, the Rules and Regulations Implementing P.D. No. 851, promulgated by the then Secretary of Labor, included a broader exemption in its Section 3(b). This provision exempted “The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the government.” The petitioners assailed this implementing rule as an ultra vires act that unlawfully expanded the exemptions beyond the text of the decree.

ISSUE

Whether the implementing rule (Section 3(b) of the Rules and Regulations Implementing P.D. No. 851) that exempts the government, its subdivisions, and government-owned or controlled corporations from the 13th-month pay requirement is valid.

RULING

No. The Supreme Court declared Section 3(b) of the implementing rules null and void for being contrary to the law it sought to implement. The legal logic is anchored on the principle that an administrative agency cannot amend or expand the law through its rule-making power. P.D. No. 851 is clear and unambiguous: it applies to “all employers,” with only one specific exception for those already paying the benefit. The decree does not authorize the Minister of Labor to create additional exemptions.
The Court emphasized that the power to promulgate implementing rules is limited to carrying out the provisions of the law, not altering them. By inserting an exemption for government entities, the implementing rule effectively amended the presidential decree, which is a legislative act beyond the authority of an administrative officer. Furthermore, the Court found no substantial distinction that would justify excluding government corporation employees from the benefit while granting it to private-sector employees. Such discrimination violates the constitutional guarantees of social justice and equal protection, as both classes of workers are similarly situated in their need for the protective measure. Consequently, the government corporations in question are required to pay the 13th-month pay under P.D. No. 851.