GR L 44717; (August, 1985) (Digest)
G.R. No. L-44717 August 28, 1985
THE CHARTERED BANK EMPLOYEES ASSOCIATION, petitioner, vs. HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and THE CHARTERED BANK, respondents.
FACTS
The Chartered Bank Employees Association filed a complaint against the Chartered Bank for payment of ten unworked legal holidays and premium/overtime differentials for worked holidays from November 1, 1974. The bank’s monthly-paid employees, governed by a Collective Bargaining Agreement (CBA), received salaries well above minimum wage with no deductions for holidays. The CBA stipulated overtime and premium pay for work on holidays, using a 251-day divisor for computing daily rates. The Labor Arbiter and National Labor Relations Commission ruled in favor of the employees, ordering payment of holiday pay and differentials.
On appeal, the Secretary of Labor reversed the NLRC decision, dismissing the claims. He based his ruling on Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9, which created a presumption that monthly-paid employees receiving not less than the minimum wage are already paid for all days in the month, including unworked holidays. The petitioner association challenged these issuances as contrary to law and a grave abuse of discretion.
ISSUE
Whether the Secretary of Labor gravely abused his discretion in promulgating and applying Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9 to deny the monthly-paid employees’ claim for holiday pay and differentials.
RULING
Yes. The Supreme Court ruled that the Secretary of Labor committed grave abuse of discretion. The legal logic is anchored on the principle that administrative rules cannot amend or restrict substantive law. Articles 82 and 94 of the Labor Code mandate holiday pay for all employees, with specific exceptions not including monthly-paid employees. The challenged rule and policy instruction effectively created a new exclusionary category not found in the statute, which is beyond the Secretary’s rule-making authority. The Court emphasized that the law’s coverage is broad, and any doubt in its interpretation must be resolved in favor of labor.
Furthermore, the bank’s own CBA and payroll practice contradicted the presumption. The use of a 251-day divisor for computing overtime pay indicated that the monthly salary was based on actual working days, not inclusive of unworked holidays. Crucially, when employees worked on a holiday, they received a 100% base pay plus a 50% premium pay. If their monthly salary already included holiday pay, they would only be entitled to the premium pay for work performed. This practice confirmed that holiday pay was not integrated into their monthly salary. The Court reinstated the NLRC decision, granting the employees’ claims.