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.

FACTS

The petitioner Union filed a complaint against Commercial Bank & Trust Company (Comtrust) for non-payment of holiday pay under Article 94 of the Labor Code for its monthly-paid employees, effective November 1, 1974. The parties submitted the dispute to voluntary arbitration under a Submission Agreement stipulating the arbitrator’s decision as final and unappealable. The Arbitrator found that the bank’s standard workweek was five days (Monday to Friday), with Saturdays, Sundays, and holidays considered off-days. The bank computed the daily rate of monthly-paid employees using a divisor of 250 days, derived by subtracting 115 off-days from 365 days. The Arbitrator ruled in favor of the Union, ordering payment of holiday pay, a decision later affirmed by the National Labor Relations Commission.
The Acting Secretary of Labor reversed the NLRC, relying on Section 2, Rule IV, Book III of the Implementing Rules, which presumed that employees uniformly paid by the month are paid for all days in the month, whether worked or not. This reversal was affirmed by the respondent Presidential Executive Assistant. The Union thus filed this petition for certiorari, arguing that the implementing rule and related policy instructions unlawfully excluded monthly-paid employees from the holiday pay benefit mandated by the Labor Code.

ISSUE

Whether monthly-paid employees are entitled to holiday pay under Article 94 of the Labor Code, notwithstanding the presumption in the Implementing Rules that their monthly salary already includes payment for unworked days.

RULING

Yes. The Supreme Court granted the petition, setting aside the decisions of the public respondents and reinstating the Arbitrator’s award. The Court held that Article 94 of the Labor Code explicitly states that every worker shall be paid their regular holiday pay. The presumption in Section 2, Rule IV, Book III of the Implementing Rules—that monthly-paid employees are presumed paid for all days—constitutes an additional exclusion not found in the law itself. This administrative interpretation diminishes the statutory benefit for labor and is therefore ultra vires. The Court reiterated its ruling in Insular Bank of Asia and America Employees’ Union (IBAAEU) v. Inciong and The Chartered Bank Employees Association v. Ople that such interpretive rules and policy instructions cannot amend the law by enlarging the scope of exclusions. All doubts in implementing labor legislation must be resolved in favor of labor, as mandated by Article 4 of the Labor Code. Consequently, the presumption could not validly deprive the monthly-paid employees of their right to holiday pay. The Court found no need to address other ancillary issues raised by the parties.