Republic of the Philippines in the said estate.
Anselmo Salvatierra represented his father Macario, who
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 107797 August 26, 1996
PURITA SALVATIERRA, ELENITA SALVATIERRA NUNEZ, ANSELMO
SALVATIERRA, JR., EMELITA SALVATIERRA, and ROMEL
SALVATIERRA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and SPS. LINO LONGALONG
and PACIENCIA MARIANO, respondents.
HERMOSISIMA, JR. J.:p
The intricate yet timeworn issue of prescription has come to the fore in this
case. Which prescriptive period for actions for annulment should prevail, Art.
1391 of the New Civil Code which limits the filing of actions to four (4) years
or Art. 1144 of the same Code which limits the period of the filing of actions
on certain grounds to ten years? Likewise, at issue is whether or not there
was a double sale to a party or parties under the facts obtaining.
The petitioners in this case filed the herein petition for certiorari, assailing as
they do the decision of the Court of Appeals which held 1:
WHEREFORE, the decision appealed from is herein REVERSED,
defendants-appellees are ordered to reconvey to plaintiffs-appellants
the 149-sq. m. portion of Lot. 26 registered in the name of Anselmo
Salvatierra under OCT 0-4221 as described in the deed of sale Exh.
"A" or "1" of this case; and defendants-appellees are furthermore
ordered to pay plaintiffs-appellants the amount of P5,000.00 as
attorney's fees.
The antecedent facts are not disputed:
In 1930, Enrique Salvatierra died intestate and without any issue. He was
survived by his legitimate
brothers: Tomas, Bartolome, Venancio and Macario, and sister Marcela, all
surnamed Salvatierra. His estate consisted of three (3) parcels of land, more
particularly described in the following manner:
Cad. Lot No. 25 covered by Tax Declaration No. 11950
A parcel of land Lot No. 25, situated at Poblacion, San Leonardo, Nueva
Ecija. Bounded on the NE-Lots Nos. 26 & 27; on the SE-Rizal St., SW-
Lot No. 24; and on the NW-Bonifacio Street. Containing an area of ONE
THOUSAND ONE HUNDRED AND SIXTEEN (1,116) sq. m. more or
less and assessed at P1,460.00.
Cad. Lot No. 26 covered by Tax Decl. No. 11951
A parcel of land situated at Poblacion, San Leonardo, Nueva Ecija, Lot
No. 26, bounded on the NE-Lot No. 29 & 27; on the SE-Lot No. 25; and
on the NW-Bonifacio St. Containing an area of SEVEN HUNDRED
FORTY NINE (749) sq. m. more or less and assessed at P720.00.
Cad. Lot No. 27 Covered by Tax Decl. No. 11949
A parcel of land situated at Poblacion, San Leonardo, Nueva Ecija, Lot
No. 27, bounded on the NE-Lot No. 28; SE-Rizal St.; SW-Lot No. 25 and
on the NW-Lot No. 26. Containing an area of SIX HUNDRED SEVENTY
(670) sq. m. more or less.
(Exh. :B: or "2")
On May 4, 1966, Macario Salvatierra sold Lot No. 26 to his son, Anselmo
Salvatierra by means of a deed of sale, and in consideration of the amount of
P1,000.00. Meanwhile, Marcela, prior to her death sold her 1/5 undivided
share in the Estate of Enrique Salvatierra to her brother, Venancio. After the
death of Bartolome, his heirs Catalina and Ignacia Marquez sold his 1/5
undivided share to Tomas and his wife, Catalina Azarcon.
On September 24, 1968, an "Extrajudicial Partition with Confirmation of Sale"
was executed by and among the surviving legal heirs and descendants of
Enrique Salvatierra, which consisted of the aforementioned Lot No. 25, 26
and 27. By virtue of the sale executed by Marcela in favor of Venancio, the
latter now owns 2/5 shares of the estate. By virtue of the sale by Bartolome's
heirs Catalina and Ignacia, of his undivided shares to Tomas, now deceased,
represented by his widow, Catalina Azarcon, the latter now owns 2/5 shares
had already died. The extrajudicial partition with confirmation of sale summed
up the shares assigned to the heirs of Enrique Salvatierra:
To: VENANCIO SALVATIERRA — 1,041 sq. m. known
as Lot
No. 27 covered by Tax Decl. N. 11949 and portion of Lot
No. 26 covered by Tax Decl. No. 11951;
To: Macario Salvatierra now ANSELMO SALVATIERRA — 405 sq.
m. known as Lot No. 26-part and covered by Tax. Decl. No. 11951;
To: HEIRS OF TOMAS SALVATIERRA — 1,116 sq. m. the whole
of Lot No. 25 and declared under Tax Decl. No. 11950.
Legal Heirs of Tomas Salvatierra are:
Montano Salvatierra
Anselmo Salvatierra
Donata Salvatierra
Francisco Salvatierra
Cecilio Salvatierra
Leonilla Salvatierra
(Exhs. "B-1", and 2-B", p. 8, id.).2
(Emphasis supplied)
Thereafter, on June 15, 1970, Venancio sold the whole of Lot No. 27 and a
149-sq. m. portion of Lot 26 for the consideration of P8,500.00 to herein
respondent spouses Lino Longalong and Paciencia Mariano. The Longalongs
took possession of the said lots. It was discovered in 1982 (through a
relocation survey) that the 149 sq. m. portion of Lot No. 26 was outside their
fence. It turned out that Anselmo Salvatierra was able to obtain a title, Original
Certificate of Title No. 0-4221 in his name, the title covering the whole of Lot
No. 26 which has an area of 749 sq. m.
Efforts to settle the matter at the barangay level proved futile because Purita
Salvatierra (widow of Anselmo) refused to yield to the demand of Lino
Longalong to return to the latter the 149 sq. m. portion of Lot No. 26.
Private respondents Longalong then filed a case with the RTC for the
reconveyance of the said portion of Lot 26. The court a quo dismissed the
case on the following grounds: 1) that Longalong, et al. failed to establish
ownership of the portion of the land in question, and 2) that the prescriptive
period of four (4) years from discovery of the alleged fraud committed by
defendants' predecessor Anselmo Salvatierra within which plaintiffs should
have filed their action had already elapsed. 3
On appeal, the Court of Appeals ruled:
To start with, a vendor can sell only what he owns or what he is
authorized to sell (Segura v. Segura, 165 SCRA 368). As to the co-
owner of a piece of land, he can of course sell his pro indiviso share
therein to anyone (Art. 493, New Civil Code; Pamplona v. Moreto,
96 SCRA 775), but he cannot sell more than his share therein.
The deed of extrajudicial partition with confirmation of previous sale
Exh. "B" or "2" executed by the heirs of Enrique Salvatierra was
explicit that the share of Anselmo Salvatierra which he got from his
father Macario Salvatierra thru sale, was only Four Hundred Five
(405) sq. mts. out of Lot No. 26 (Exhs. "B-1" and "B-2"), the whole
lot of which has an area of 749 sq. mts., so that 344 sq. mts. of said
lot do not pertain to Anselmo Salvatierra and his heirs, herein
defendants-appellees. This must be the reason why, in said deed
of extrajudicial partition, Venancio Salvatierra was still given a
"portion of Lot No. 26 covered by Tax Declaration No. 11951" (Exh.
"B-3", p. 7, Rec.), for logically, if the whole of Lot No. 26 measuring
749 sq. mts. had been given to Anselmo Salvatierra, Venancio
Salvatierra would no longer be entitled to a portion of said lot. And
as both parties to this case do not at all dispute the truth,
correctness, and authenticity of the deed of extrajudicial partition
with confirmation of sale Exh. "B" or "2" dated September 24, 1968,
as in fact both parties even marked the same as their own exhibit,
we have no choice but simply to enforce the provisions of said
deed.
Now, as we have stated earlier, Macario Salvatierra, even before
the extrajudicial partition of the three lots left by the late Enrique
Salvatierra among his heirs, could very well dispose only of his pro
indiviso share in said lots, as he in fact did on May 4, 1966 in a
deed of sale in favor of his son Anselmo Salvatierra; and two years
later, on September 24, 1968, when the deed of extrajudicial
partition Exh. "B" or "2" was executed by the heirs of Enrique
Salvatierra, it was stipulated that Macario's share in Lot No. 26 was
only 405 sq. mts. thereof, which share Macario had already sold to
his son Anselmo Salvatierra. As of September 24, 1968, the date
of said deed of partition, then, Anselmo Salvatierra already knew
that he had only acquired 405 sq. mts. of Lot No. 26 from his father
Macario Salvatierra, and yet on May 20, 1980, or 12 years later, he
proceeded with the registration of the earlier deed of sale between
him and his father and of the whole Lot No. 26 with an area of 749
sq. mts. although he already knew through the deed of extrajudicial
partition Exh. "A" or "1" that he was only entitled to 405 sq. mts. out
of Lot No. 26, and which knowledge he could not deny as he was
one of the signatories to said deed of extrajudicial partition (Exh.
"B-1" or "2-b").
It is, therefore, obvious and clear, on the basis of the evidence on
record, that when Anselmo Salvatierra registered the deed of sale
Exh. "7" dated May 4, 1966 between him and his father Macario
Salvatierra on May 20, 1980, and when he obtained a title in his
name over the whole of Lot No. 26 with an area of 749 sq. mts., he
did so with intent to defraud the other heirs of the late Enrique
Salvatierra, particularly Venancio Salvatierra and the latter's heirs
and successors-in-interest, for he, Anselmo Salvatierra, knew that
he was entitled to only 405 sq. mts. out of the whole Lot No. 26 with
an area of 749 sq. mts. In fact, a closer look at the deed of sale
Exh. "7" dated May 4, 1966 between father and son, Macario and
Anselmo, reveals that the word and figure "SEVEN HUNDRED
FORTY NINE (749)" sq. mts. written therein appear to have been
only superimposed over another word and figure that had been
erased, and even the word "FORTY NINE" was merely inserted
and written above the regular line, thereby creating the strong
conviction that said word and figure were altered to suit Anselmo's
fraudulent design (p. 12, Rec.).
Apparently, the lower court failed to examine carefully the deed of
extrajudicial partition Exh. "B" or "2" and the deed of sale Exh. "7"
between Macario Salvatierra and his son Anselmo Salvatierra, for
had it done so, it could not have failed to notice that Anselmo
Salvatierra received only 405 sq. mts. out of Lot No. 26 from his
father Macario Salvatierra, not the whole Lot No. 26 measuring 749
sq. mts. The lower court was also of the mistaken impression that
this case involves a double sale of Lot No. 26, when the truth is that
Macario Salvatierra could only sell and, therefore, sold only 405 sq.
mts. out of Lot No. 26 to his son Anselmo by virtue of the deed of
sale Exh. "7", not the whole 749 sq. mts. of said lot, and plaintiffs
in turn bought by virtue of the deed of sale Exh. "A" 149 sq. mts.
out of the remaining area of 344 sq. mts. of Lot No. 26 from
Venancio Salvatierra, to whom said 344-sq. mt. portion of Lot No.
26 was given under the deed of partition Exh. "B" or "2".
Neither can we agree with the lower court that even if plaintiffs-
appellants had established their ownership over the 149-sq. mt.
portion of Lot No. 26 in question, they are already barred by
prescription to recover said portion from defendants. In this
connection, the lower court ratiocinated that an action for
reconveyance should be filed within four (4) years from the
discovery of the fraud, citing Esconde v. Barlongay, 152 SCRA
603, which in turn cited Babin v. Medalla, 108 SCRA 666, so that
since plaintiffs-appellants filed their action for reconveyance only
on November 22, 1985 or five years after the issuance of Anselmo
Salvatierra's title over Lot No. 26 on May 20, 1980, said court held
that appellant's action for reconveyance against defendants has
already prescribed.
At this juncture, we find the need to remind the court a quo as well
as other trial courts to keep abreast with the latest jurisprudence so
as not to cause possible miscarriages of justice in the disposition
of the cases before them. In the relatively recent case of Caro
v. CA, 180 SCRA 401, the Supreme Court clarified the seemingly
confusing precedents on the matter of prescription of actions for
reconveyance of real property, as follows:
We disagree. The case of Liwalug Amerold, et al.
v. Molok Bagumbaran, G.R. L-33261, September 30,
1987, 154 SCRA 396 illuminated what used to be a gray
area on the prescriptive period for an action to reconvey
the title to real property and corrollarily, its point of
reference:
. . . It must be remembered that before August 30, 1950,
the date of the effectivity of the new Civil Code, the Old
Code of Civil Procedure (Act No. 190) governed
prescription. It provided:
Sec. 43. Other civil actions; how limited. — Civil actions
other than for the recovery of real property can only be
brought within the following periods after the right of
action accrues:
3. Within four years: . . . An action for relief on the ground
of fraud, but the right of action in such case shall not be
deemed to have accrued until the discovery of the fraud:
xxx xxx xxx
In contract under the present Civil Code, we find that just
as an implied or constructive trust in an offspring of the
law (Art. 1465, Civil Code), so is the corresponding
obligation to reconvey the property and the title thereto
in favor of the true owner. In this context, and vis-a-
vis prescription, Article 1144 of the Civil Code is
applicable.
Art. 1144. The following actions must be brought within
ten years from the time the right of action accrues:
1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment;
xxx xxx xxx
An action for reconveyance based on an implied or constructive
trust must perforce prescribe in ten years and not otherwise. A long
line of decisions of this Court, and of very recent vintage at that,
illustrated this rule. Undoubtedly, it is now well-settled that an
action for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over
the property. The only discordant note, it seems, is Balbin
v. Medalla, which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be
explained by the erroneous reliance on Gerona v. de Guzman. But
in Gerona, the fraud was discovered on June 25, 1948, hence
Section 43(3) of Act No. 190 was applied, the New Civil Code not
coming into effect until August 30, 1950 as mentioned earlier. It
must be stressed, at this juncture, that Article 1144 and Article
1456, are new provisions. They have "no counterparts in the old
Civil Code or in the old Code of Civil Procedure, the latter being
than resorted to as legal basis of the four-year prescriptive period
for an action for reconveyance of title of real property acquired
under false pretenses.
An Action for reconveyance has its basis in Section 53, paragraph
3 of Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner
may pursue all his legal and equitable remedies against
the parties to such fraud without prejudice, however, to
the rights of any innocent holder of the decree of
registration on the original petition or application, . . .
This provision should be read in conjunction with Article 1456 of
the Civil Code, which provides:
Art. 1456. If property is acquire through mistake or fraud,
the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person
from whom the property comes.
The law thereby creates the obligation of the trustee to
reconvey the property and the tile thereto in favor of the
true owner. Correlating Section 53, paragraph 3 of
Presidential Decree No. 1529 and Article 1456 of the
Civil Code with Article 1144 (2) of the Civil Code, supra,
the prescriptive period for the reconveyance of
fraudulently registered real property is ten (10) years
reckoned from the date of the issuance of the certificate
of title. In the present case, therefore, inasmuch as Civil
Case No. 10235 was filed on June 4, 1975, it was well-
within the prescriptive period of ten (10) years from the
date of the issuance of "Original Certificate of Title No.
0-6836 on September 17, 1970."
(All Emphasis Supplied).
 And the above ruling was re-affirmed in the very recent case
of Tale vs. C.A. G.R. No. 101028, promulgated only last April 23,
1992.
Guided by the above clarificatory doctrine on prescription of actions
for reconveyance of real property, it is obvious that the lower court
erred in relying on the discredited ruling in Esconde
v. Barlongay, supra, which case in turn relied on the earlier
discredited case of Balbin v. Medalla, also supra, which mistakenly
limited the running of the prescriptive period in an action for
reconveyance of real property to only four (4) years form the
issuance of the certificate of title.
Since OCT No. 0-4221 over Lot No. 26 was issued to Anselmo
Salvatierra on May 20, 1980, appellants' filing of the instance
action for reconveyance on November 22, 1985 was well within the
ten (10) year prescriptive period provided by law for such action.
A motion for reconsideration having been denied, petitioners brought this
petition to set aside the decision of the respondent appellate court and to
affirm in toto the decision of the trial court.
Petitioners assail the decision of the respondent appellate court for its failure
to consider the application and interpretation of certain provisions of the New
Civil Code in the case at bar, namely Articles 1134, 493, 1088, 1544, 1431,
1396, and 1391. 4
Since petitioners invoke the abovementioned provisions of law, it is apparent
that they rely on the theory that this is a case of double sale of Lot No. 26 to
both petitioners and respondents Longalong, et al. A perusal of the records
and evidence (exhibits and annexes), however, reveals otherwise. Both
parties did not dispute the existence and contents of the Extrajudicial Partition
with Confirmation of Sale, as both presented them as their respective exhibits
(Exh. "B-1" and "2"). The parties may not have realized it, but the deciding
factor of this dispute is this very document itself. It is very clear therein that
Macario Salvatierra's share in the estate of the deceased Enrique Salvatierra
is only 405 sq. m. out of the 749 sq. m. comprising Lot No. 26. Since Venancio
Salvatierra, under this document, is to get a portion of Lot No. 26 in addition
to Lot No. 27, then it follows that Venancio is entitled to the remaining 344 sq.
m. of Lot No. 26, after deducting the 405 sq. m. share of Macario.
We find no ambiguity in the terms and stipulations of the extrajudicial partition.
The terms of the agreement are clear and unequivocal, hence the literal and
plain meaning thereof should be observed. 5 The applicable provision of law
in the case at bar is Article 1370 of the New Civil Code which states:
Art. 1370. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of
its stipulation shall control.
Contracts which are the private laws of the contracting parties, should be
fulfilled according to the literal sense of their stipulations, if their terms are
clear and leave no room for doubt as to the intention of the contracting parties,
for contracts are obligatory, no matter what their forms maybe, whenever the
essential requisites for their validity are present. 6
As such, the confirmation of sale between Macario and his son Anselmo,
mentioned in the extrajudicial partition involves only the share of Macario in
the estate. The law is clear on the matter that where there are two or more
heirs, the whole estate of the decedent its, before its partition, owned in
common by such heirs, 7and hence, the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which
may be alloted to him in the division upon the termination of the co-
ownership. 8
It goes without saying, therefore, that what Anselmo bought from his father in
1966 was only his father's share in the estate which turned out to be 405 sq.
m. of Lot No. 26, as agreed upon during their extrajudicial partition, in which
Anselmo was a signatory. The registration of the whole Lot No. 26 in the name
of Anselmo Salvatierra was therefore, done with evident bad faith. A careful
examination of Deed of Sale (Exh. 7) dated May 4, 1966 between Macario
and Anselmo (father and son) shows that an alteration was perpetrated by
the superimposition of the words and figure SEVEN HUNDRED FORTY NINE
(749) sq. m. over other words and figures therein. Besides, when Anselmo
Salvatierra obtained the Original Certificate of Title No. 0-4221 covering the
whole of Lot No. 26 on May 20, 1980, he had already known that he was
entitled to only 405 sq. m. of the said lot since the extrajudicial partition has
already been executed earlier in 1968. Obviously, Anselmo's act of
registering the whole Lot No. 26 in his name was intended to defraud
Venancio who was then legally entitled to a certain portion of Lot No. 26 by
the extrajudicial partition.
With regard to the issue as to prescription of the action, we agree with the
respondents appellate court that this action has not yet prescribed. Indeed,
the applicable provision in the case at bar is Art. 1144 of the New Civil Code
which provides that:
Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues:
(1) Upon written contract;
(2) Upon an obligation created by law; and
(3) Upon a judgment.
Art. 1391 9 of the same code, referred to by petitioners is not in point. This
article must be read in conjunction with Art. 1390 10 which refers to voidable
contracts. This case at hand involves fraud committed by petitioner Anselmo
Salvatierra in registering the whole of Lot No. 26 in his name, with evident
bad faith. In effect, an implied trust was created by virtue of Art. 1456 of the
New Civil Code which states:
Art. 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.
Implied trust is defined as the right, enforceable solely in equity, to the
beneficial enjoyment of property, the legal title to which is vested in another
and is further subdivided into resulting and constructive trust. 11 While
resulting trust is one raised by implication of law and presumed to have been
contemplated by the parties; constructive trust, on the other hand, is one
raised by construction of law or arising by operation of law. 12
This case more specifically involves constructive trust. In a more restricted
sense, it is a trust not created by any words, either expressly or impliedly,
evincing a direct intention to create a trust, but by the construction of equity
in order to satisfy the demands of justice. 13 It does not arise by agreement or
intention but by operation of law. 14
In this connection, we hold that an action for reconveyance of registered land
based on an implied trust may be barred by laches. The prescriptive period
for such actions is ten (10) years from the date the right of action
accrued. 15 We have held in the case of Armamento v. Central Bank 16 that
an action for reconveyance of registered land based on implied trust,
prescribes in ten (10) years even if the decree of registration is no longer
open to review.
In Duque v. Domingo, 17 especially, we went further by stating:
The registration of an instrument in the Office of the Register of
Deeds constitutes constructive notice to the whole world, and,
therefore, discovery of the fraud is deemed to have taken place at
the time of registration. Such registration is deemed to be a
constructive notice that the alleged fiduciary or trust relationship
has been repudiated. It is now settled that an action on an implied
or constructive trust prescribes in ten (10) years from the date the
right of action accrued.
The complaint for reconveyance was filed by the Longalong spouses on
November 22, 1985, only five (5) years after the issuance of the O.C.T.
No. 0-4221 over Lot No. 26 in the name of Anselmo Salvatierra. Hence
prescription has not yet set in.
We find no reason to disturb the findings of the respondent Court of Appeals
as to facts its said factual findings having been supported by substantial
evidence on record. They are final and conclusive and may not be reviewed
on appeal. The analysis by the Court of Appeals of the evidence on record
and the process by which it arrived at its findings on the basis thereof, impel
conferment of the Supreme Court's approval on said findings, on account of
the intrinsic merit and cogency thereof no less than that Court's superior
status as a review tribunal. 18 No reversible errors can be attributed to the
findings of the respondent Court of Appeals because the decision herein
assailed was properly supported by substantial evidence on record, which
were not in anyway impugned by the petitioners.
IN VIEW OF THE FOREGOING CONSIDERATIONS, we resolve to DENY
the petition for want of merit, with costs against petitioners.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-25316 February 28, 1979
KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD
COMPANY CREDIT UNION, INC., petitioner-appellant,
vs.
MANILA RAILROAD COMPANY, respondent appellee.
Gregorio E. Fajardo for appellant.
Gregorio Baroque for appellee.
FERNANDO, J.:
In this mandamus petition dismissed by the lower court, petitioner-appellant
would seek a reversal of such decision relying on what it considered to be a
right granted by Section 62 of the Republic Act No. 2023, more specifically
the first two paragraphs thereof: "... (1) A member of a cooperative may,
notwithstanding the provisions of existing laws, execute an agreement in
favor of the co-operative authorizing his employer to deduct from the salary
or wages payable to him by the employer such amount as may be specified
in the agreement and to pay the amount so deducted to the co-operative in
satisfaction of any debt or other demand owing from the member to the co-
operative. (2) Upon the exemption of such agreement the employer shall if so
required by the co-operative by a request in writing and so long as such debt
or other demand or any part of it remains unpaid, make the claimant and remit
forth with the amount so deducted to the co-operative."1
To show that such is futile, the appealed decision, as quoted in the brief for
petitioner-appellant, stated the following: "Then petitioner contends that
under the above provisions of Rep. Act 2023, the loans granted by credit
union to its members enjoy first priority in the payroll collection from the
respondent's employees' wages and salaries. As can be clearly seen, there
is nothing in the provision of Rep. Act 2023 hereinabove quoted which
provides that obligation of laborers and employees payable to credit unions
shall enjoy first priority in the deduction from the employees' wages and
salaries. The only effect of Rep. Act 2023 is to compel the employer to deduct
from the salaries or wages payable to members of the employees'
cooperative credit unions the employees' debts to the union and to pay the
same to the credit union. In other words, if Rep. Act 2023 had been enacted,
the employer could not be compelled to act as the collecting agent of the
employees' credit union for the employees' debt to his credit union but to
contend that the debt of a member of the employees cooperative credit union
as having first priority in the matter of deduction, is to write something into the
law which does not appear. In other words, the mandatory character of Rep.
Act 2023 is only to compel the employer to make the deduction of the
employees' debt from the latter's salary and turn this over to the employees'
credit union but this mandatory character does not convert the credit union's
credit into a first priority credit. If the legislative intent in enacting pars. 1 and
2 of Sec. 62 of Rep. Act 2023 were to give first priority in the matter of
payments to the obligations of employees in favor of their credit unions, then,
the law would have so expressly declared. Thus, the express provisions of
the New Civil Code, Arts. 2241, 2242 and 2244 show the legislative intent on
preference of credits. 2
Such an interpretation, as could be expected, found favor with the
respondent-appellee, which, in its brief, succinctly pointed out "that there is
nothing in said provision from which it could be implied that it gives top priority
to obligations of the nature of that payable to petitioner, and that, therefore,
respondent company, in issuing the documents known as Exhibit "3" and
Exhibit "P", which establish the order of priority of payment out of the salaries
of the employees of respondent-appellee, did not violate the above-quoted
Section 62 of Republic Act 2023. In promulgating Exhibit "3", [and] Exhibit "P"
respondent, in effect, implemented the said provision of law. 3
This petition being one for mandamus and the provision of law relied upon
being clear on its face, it would appear that no favorable action can be taken
on this appeal. We affirm.
1. The applicable provision of Republic Act No. 2023 quoted earlier, speaks
for itself. There is no ambiguity. As thus worded, it was so applied. Petitioner-
appellant cannot therefore raise any valid objection. For the lower court to
view it otherwise would have been to alter the law. That cannot be done by
the judiciary. That is a function that properly appertains to the legislative
branch. As was pointed out in Gonzaga v. Court of Appeals: 4 "It has been
repeated time and time again that where the statutory norm speaks
unequivocally, there is nothing for the courts to do except to apply it. The law,
leaving no doubt as to the scope of its operation, must be obeyed. Our
decisions have consistently born to that effect. 5.
2. Clearly, then, mandamus does not lie. Petitioner-appellant was unable to
show a clear legal right. The very law on which he would base his action fails
to supply any basis for this petition. A more rigorous analysis would have
prevented him from instituting a a suit of this character. In J.R.S. Business
Corporation v. Montesa, 6 this Court held. "Man-damus is the proper remedy
if it could be shown that there was neglect on the part of a tribunal in the
performance of an act, which specifically the law enjoins as a duty or an
unlawful exclusion of a party from the use and enjoyment of a right to which
he is entitled. 7 The opinion continued in this wise:"According to former Chief
Justice Moran," only specific legal rights may be enforced by mandamus if
they are clear and certain. If the legal rights are of the petitioner are not well
defined, clear, and certain, the petition must be dismissed. In support of the
above view, Viuda e Hijos de Crispulo Zamora v. Wright was cited. As was
there categorically stated: "This court has held that it is fundamental that the
duties to be enforced by mandamus must be those which are clear and
enjoined by law or by reason of official station, and that petitioner must have
a clear, legal right to the thing and that it must be the legal duty of the
defendant to perform the required act.' As expressed by the then Justice
Recto in a subsequent opinion: "It is well establish that only specific legal
rights are enforceable by mandamus, that the right sought to be enforced
must be certain and clear, and that the writ not issue in cases where the right
is doubtful." To the same effect is the formulation of such doctrine by former
Justice Barrera: "Stated otherwise, the writ never issues in doubtful cases. It
neither confers powers nor imposes duties. It is simply a command to
exercise a power already possessed and to perform a duty already
imposed." 8 So it has been since then. 9 The latest reported case, Province.
of Pangasinan v. Reparations Commission, 10 this court speaking through
Justice Concepcion Jr., reiterated such a well-settled doctrine: "It has also
been held that it is essential to the issuance of the writ of mandamus that the
plaintiff should have a clear legal right to the thing demanded, and it must be
the imperative duty of the defendant to perform the act required. It never
issues in doubtful cases. 11
WHEREFORE, the appealed decision is affirmed. No pronouncement as to
costs.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27760 May 29, 1974
CRISPIN ABELLANA and FRANCISCO ABELLANA, petitioners,
vs.
HONORABLE GERONIMO R. MARAVE, Judge, Court of First Instance
of Misamis Occidental, Branch II; and GERONIMO CAMPANER,
MARCELO LAMASON, MARIA GURREA, PACIENCIOSA FLORES and
ESTELITA NEMEN0, respondents.
Prud. V. Villafuerte for petitioners.
Hon. Geronimo R. Marave in his own behalf.
FERNANDO, J.:p
This petition for certiorari is characterized by a rather vigorous insistence on
the part of petitioners Crispin Abellana and Francisco Abellana that an order
of respondent Judge was issued with grave abuse of discretion. It is their
contention that he ought to have dismissed an independent civil action filed
in his court, considering that the plaintiffs, as offended parties, private
respondents here,1 failed to reserve their right to institute it separately in the
City Court of Ozamis City, when the criminal case for physical injuries through
reckless imprudence was commenced. Such a stand of petitioners was
sought to be bolstered by a literal reading of Sections 1 and 2 of Rule 111.2 It
does not take into account, however, the rule as to a trial de novo found in
Section 7 of Rule 123.3 What is worse, petitioners appear to be oblivious of
the principle that if such an interpretation were to be accorded the applicable
Rules of Court provisions, it would give rise to a grave constitutional question
in view of the constitutional grant of power to this Court to promulgate rules
concerning pleading, practice, and procedure being limited in the sense that
they "shall not diminish, increase, or modify substantive rights."4 It thus
appears clear that the petition for certiorari is without merit.
The relevant facts were set forth in the petition and admitted in the answer.
The dispute had its origins in a prosecution of petitioner Francisco Abellana
of the crime of physical injuries through reckless imprudence in driving his
cargo truck, hitting a motorized pedicab resulting in injuries to its passengers,
namely, private respondents Marcelo Lamason, Maria Gurrea, Pacienciosa
Flores, and Estelita Nemeño. The criminal case was filed with the city court
of Ozamis City, which found the accused Francisco Abellana guilty as
charged, damages in favor of the offended parties likewise being awarded.
The accused, now petitioner, Francisco Abellana appealed such decision to
the Court of First Instance.5 At this stage, the private respondents as the
offended parties filed with another branch of the Court of First Instance of
Misamis Occidental, presided by respondent Judge, a separate and
independent civil action for damages allegedly suffered by them from the
reckless driving of the aforesaid Francisco Abellana. 6 In such complaint, the
other petitioner, Crispin Abellana, as the alleged employer, was included as
defendant. Both of them then sought the dismissal of such action principally
on the ground that there was no reservation for the filing thereof in the City
Court of Ozamis. It was argued by them that it was not allowable at the stage
where the criminal case was already on appeal. 7
Respondent Judge was not persuaded. On April 28, 1967, he issued the
following order: "This is a motion to dismiss this case on the ground that in
Criminal Case No. OZ-342 which was decided by the City Court and appealed
to this Court, the offended parties failed to expressly waive the civil action or
reserve their right to institute it separately in said City Court, as required in
Section 1, Rule 111, Rules of Court. From the Records of Criminal Case No.
OZ-342, it appears that the City Court convicted the accused. On appeal to
this Court, the judgment of the City Court was vacated and a trial de novo will
have to be conducted. This Court has not as yet begun trying said criminal
case. In the meantime, the offended parties expressly waived in this Court
the civil action impliedly instituted with the criminal action, and reserve their
right to institute a separate action as in fact, they did file. The Court is of the
opinion that at this stage, the offended parties may still waive the civil action
because the judgment of the City Court is vacated and a trial de novo will
have to be had. In view of this waiver and reservation, this Court would be
precluded from judging civil damages against the accused and in favor of the
offended parties. [Wherefore], the motion to dismiss is hereby denied.
..."8 There was a motion for reconsideration which was denied. Hence this
petition.
The only basis of petitioners for the imputation that in the issuance of the
challenged order there was a grave abuse of discretion, is their reading of the
cited Rules of Court provision to the effect that upon the institution of a
criminal action "the civil action for recovery of civil liability arising from the
offense charge is impliedly instituted with the criminal action, unless the
offended party ...reserves his right to institute it
separately."9 Such an interpretation, as noted, ignores the de novo aspect of
appealed cases from city courts.10 It does likewise, as mentioned, give rise to
a constitutional question to the extent that it could yield a meaning to a rule
of court that may trench on a substantive right. Such an interpretation is to be
rejected. Certiorari, to repeat, clearly does not lie.
1. In the language of the petition, this is the legal proposition submitted for
the consideration of this Court : "That a separate civil action can be legally
filed and allowed by the court only at the institution, or the right to file such
separate civil action reserved or waived, at such institution of the criminal
action, and never on appeal to the next higher court."11 It admits of no doubt
that an independent civil action was filed by private respondents only at the
stage of appeal. Nor was there any reservation to that effect when the criminal
case was instituted in the city court of Ozamis. Petitioners would then take
comfort from the language of the aforesaid Section 1 of Rule 111 for the
unwarranted conclusion that absent such a reservation, an independent civil
action is barred. In the first place, such an inference does not per se arise
from the wording of the cited rule. It could be looked upon plausibly as a non-
sequitur. Moreover, it is vitiated by the grievous fault of ignoring what is so
explicitly provided in Section 7 of Rule 123: "An appealed case shall be tried
in all respects anew in the Court of First Instance as if it had been originally
instituted in that court."12 Unlike petitioners, respondent Judge was duly
mindful of such a norm. This Court has made clear that its observance in
appealed criminal cases is mandatory.13 In a 1962 decision, People v.
Carreon,14Justice Barrera, as ponente, could trace such a rule to a 1905
decision, Andres v. Wolfe.15 Another case cited by him is Crisostomo v.
Director of Prisons,16 where Justice Malcolm emphasized how deeply rooted
in Anglo-American legal history is such a rule. In the latest case in
point, People v. Jamisola,17 this Court, through Justice Dizon, reiterated such
a doctrine in these words: "The rule in this jurisdiction is that upon appeal by
the defendant from a judgment of conviction by the municipal court, the
appealed decision is vacated and the appealed case 'shall be tried in all
respects anew in the court of first instance as if it had been originally instituted
in that court.'"18 So it is in civil cases under Section 9 of Rule 40. 19 Again,
there is a host of decisions attesting to its observance. 20 It cannot be said
then that there was an error committed by respondent Judge, much less a
grave abuse of discretion, which is indispensable if this petition were to
prosper.
2. Nor is the above the only ground for rejecting the contention of petitioners.
The restrictive interpretation they would place on the applicable rule does not
only result in its emasculation but also gives rise to a serious constitutional
question. Article 33 of the Civil Code is quite clear: "In cases of ... physical
injuries, a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Such civil action shall
proceed independently of the criminal prosecution, and shall require only a
preponderance of evidence."21 That is a substantive right, not to be frittered
away by a construction that could render it nugatory, if through oversight, the
offended parties failed at the initial stage to seek recovery for damages in a
civil suit. As referred to earlier, the grant of power to this Court, both in the
present Constitution and under the 1935 Charter, does not extend to any
diminution, increase or modification of substantive right. 22 It is a well-settled
doctrine that a court is to avoid construing a statute or legal norm in such a
manner as would give rise to a constitutional doubt. Unfortunately, petitioners,
unlike respondent Judge, appeared to lack awareness of the undesirable
consequence of their submission. Thus is discernible another insuperable
obstacle to the success of this suit.
3. Nor is this all that needs to be said. It is understandable for any counsel to
invoke legal propositions impressed with a certain degree of plausibility if
thereby the interest of his client would be served. That is though, merely one
aspect of the matter. There is this other consideration. He is not to ignore the
basic purpose of a litigation, which is to assure parties justice according to
law. He is not to fall prey, as admonished by Justice Frankfurter, to the vice
of literalness. The law as an instrument of social control will fail in its function
if through an ingenious construction sought to be fastened on a legal norm,
particularly a procedural rule, there is placed an impediment to a litigant being
given an opportunity of vindicating an alleged right.23 The commitment of this
Court to such a primordial objective has been manifested time and time
again.24
WHEREFORE, this petition for certiorari is dismissed.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 123169 November 4, 1996
DANILO E. PARAS, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
FRANCISCO, J.:
Petitioner Danilo E. Paras is the incumbent Punong Barangay of Pula,
Cabanatuan City who won during the last regular barangay election in 1994.
A petition for his recall as Punong Barangay was filed by the registered voters
of the barangay. Acting on the petition for recall, public respondent
Commission on Elections (COMELEC) resolved to approve the petition,
scheduled the petition signing on October 14, 1995, and set the recall election
on November 13,
1995.1 At least 29.30% of the registered voters signed the petition, well above
the 25% requirement provided by law. The COMELEC, however, deferred the
recall election in view of petitioner's opposition. On December 6, 1995, the
COMELEC set anew the recall election, this time on December 16, 1995. To
prevent the holding of the recall election, petitioner filed before the Regional
Trial Court of Cabanatuan City a petition for injunction, docketed as SP Civil
Action No. 2254-AF, with the trial court issuing a temporary restraining order.
After conducting a summary hearing, the trial court lifted the restraining order,
dismissed the petition and required petitioner and his counsel to explain why
they should not be cited for contempt for misrepresenting that the barangay
recall election was without COMELEC approval.2
In a resolution dated January 5, 1996, the COMELEC, for the third time, re-
scheduled the recall election an January 13, 1996; hence, the instant petition
for certiorari with urgent prayer for injunction. On January 12, 1996, the Court
issued a temporary restraining order and required the Office of the Solicitor
General, in behalf of public respondent, to comment on the petition. In view
of the Office of the Solicitor General's manifestation maintaining an opinion
adverse to that of the COMELEC, the latter through its law department filed
the required comment. Petitioner thereafter filed a reply.3
Petitioner's argument is simple and to the point. Citing Section 74 (b) of
Republic Act No. 7160, otherwise known as the Local Government Code,
which states that "no recall shall take place within one (1) year from the date
of the official's assumption to office or one (1) year immediately preceding a
regular local election", petitioner insists that the scheduled January 13, 1996
recall election is now barred as the Sangguniang Kabataan (SK) election was
set by Republic Act No. 7808 on the first Monday of May 1996, and every
three years thereafter. In support thereof, petitioner cites Associated Labor
Union v. Letrondo-Montejo, 237 SCRA 621, where the Court considered the
SK election as a regular local election. Petitioner maintains that as the SK
election is a regular local election, hence no recall election can be had for
barely four months separate the SK election from the recall election. We do
not agree.
The subject provision of the Local Government Code provides:
Sec. 74. Limitations on Recall. — (a) Any elective local
official may be the subject of a recall election only once
during his term of office for loss of confidence.
(b) No recall shall take place within one (1) year from the
date of the official's assumption to office or one (1) year
immediately preceding a regular local election.
[Emphasis added]
It is a rule in statutory construction that every part of the statute must be
interpreted with reference to the context, i.e., that every part of the statute
must be considered together with the other parts, and kept subservient to the
general intent of the whole enactment.4 The evident intent of Section 74 is to
subject an elective local official to recall election once during his term of office.
Paragraph (b) construed together with paragraph (a) merely designates the
period when such elective local official may be subject of a recall election,
that is, during the second year of his term of office. Thus, subscribing to
petitioner's interpretation of the phrase regular local election to include the SK
election will unduly circumscribe the novel provision of the Local Government
Code on recall, a mode of removal of public officers by initiation of the people
before the end of his term. And if the SK election which is set by R.A No. 7808
to be held every three years from May 1996 were to be deemed within the
purview of the phrase "regular local election", as erroneously insisted by
petitioner, then no recall election can be conducted rendering inutile the recall
provision of the Local Government Code.
In the interpretation of a statute, the Court should start with the assumption
that the legislature intended to enact an effective law, and the legislature is
not presumed to have done a vain thing in the enactment of a statute.5 An
interpretation should, if possible, be avoided under which a statute or
provision being construed is defeated, or as otherwise expressed, nullified,
destroyed, emasculated, repealed, explained away, or rendered insignificant,
meaningless, inoperative or nugatory.6
It is likewise a basic precept in statutory construction that a statute should be
interpreted in harmony with the Constitution. 7 Thus, the interpretation of
Section 74 of the Local Government Code, specifically paragraph (b) thereof,
should not be in conflict with the Constitutional mandate of Section 3 of Article
X of the Constitution to "enact a local government code which shall provide
for a more responsive and accountable local government structure instituted
through a system of decentralization with effective mechanism of recall,
initiative, and referendum . . . ."
Moreover, petitioner's too literal interpretation of the law leads to absurdity
which we cannot countenance. Thus, in a case, the Court made the following
admonition:
We admonish against a too-literal reading of the law as
this is apt to constrict rather than fulfill its purpose and
defeat the intention of its authors. That intention is
usually found not in "the letter that killeth but in the spirit
that vivifieth". . .8
The spirit, rather than the letter of a law determines its construction;
hence, a statute, as in this case, must be read according to its spirit
and intent.
Finally, recall election is potentially disruptive of the normal working of the
local government unit necessitating additional expenses, hence the
prohibition against the conduct of recall election one year immediately
preceding the regular local election. The proscription is due to the proximity
of the next regular election for the office of the local elective official
concerned. The electorate could choose the official's replacement in the said
election who certainly has a longer tenure in office than a successor elected
through a recall election. It would, therefore, be more in keeping with the
intent of the recall provision of the Code to construe regular local election as
one referring to an election where the office held by the local elective official
sought to be recalled will be contested and be filled by the electorate.
Nevertheless, recall at this time is no longer possible because of the limitation
stated under Section 74 (b) of the Code considering that the next regular
election involving the barangay office concerned is barely seven (7) months
away, the same having been scheduled on May 1997. 9
ACCORDINGLY, the petition is hereby dismissed for having become moot
and academic. The temporary restraining order issued by the Court on
January 12, 1996, enjoining the recall election should be as it is hereby
made permanent.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-43760 August 21, 1976
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS
(PAFLU), petitioner
vs.
BUREAU OF LABOR RELATIONS, HONORABLE CARMELO C.
NORIEL, NATIONAL FEDERATION OF FREE LABOR UNIONS (NAFLU),
and PHILIPPINE BLOOMING MILLS CO., INC., respondents.
Guevara, Pineda, Guevara & Castillon for petitioner.
Olalia Dimapilis & Associates for respondent Union (NAFLU)
Assistant Solicitor General Reynato S. Puno and Solicitor Jesus V. Diaz for
respondent Bureau of Labor Relations, etc., et al.
FERNANDO, Acting C.J.:
A certification by respondent Director of Labor Relations, Carmelo C. Noriel,
that respondent National Federation of Free Labor Unions (NAFLU) as the
exclusive bargaining agent of all the employees in the Philippine Blooming
Mills, Company, Inc. disregarding the objection raised by petitioner, the
Philippine Association of Free Labor Unions (PAFLU), is assailed in this
certiorari proceeding. Admittedly, in the certification election held on February
27, 1976, respondent Union obtained 429 votes as against 414 of petitioner
Union. Again, admittedly, under the Rules and Regulations implementing the
present Labor Code, a majority of the valid votes cast suffices for certification
of the victorious labor union as the sole and exclusive bargaining
agent.1 There were four votes cast by employees who did not want any union.
2 On its face therefore, respondent Union ought to have been certified in
accordance with the above applicable rule. Petitioner, undeterred, would
seize upon the doctrine announced in the case of Allied Workers Association
of the Philippines v. Court of Industrial Relations3 that spoiled ballots should
be counted in determining the valid votes cast. Considering there were
seventeen spoiled ballots, it is the submission that there was a grave abuse
of discretion on the part of respondent Director. Implicit in the comment of
respondent Director of Labor Relations, 4 considered as an answer, is the
controlling weight to be accorded the implementing rule above-cited, no
inconsistency being shown between such rule and the present Labor Code.
Under such a view, the ruling in the Allied Workers Association case that
arose during the period when it was the Industrial Peace Act 5, that was in
effect and not the present law, no longer possesses relevance. It cannot and
should not be applied. It is not controlling. There was no abuse of discretion
then, much less a grave one.
This Court is in agreement. The law is on the side of respondent Director, not
to mention the decisive fact appearing in the Petition itself that at most, only
ten of the spoiled ballots "were intended for the petitioner Union," 6 thus
rendering clear that it would on its own showing obtain only 424 votes as
against 429 for respondent Union. certiorari does not lie.
1. What is of the essence of the certification process, as noted in Lakas Ng
Manggagawang Pilipino v. Benguet Consolidated, Inc.7 "is that every labor
organization be given the opportunity in a free and honest election to make
good its claim that it should be the exclusive collective bargaining
representative."8 Petitioner cannot complain. It was given that opportunity. It
lost in a fair election. It came out second best. The implementing rule favors,
as it should, respondent Union, It obtained a majority of the valid votes cast.
So our law Prescribes. It is equally the case in the United States as this
excerpt from the work of Cox and Bok makes clear: "It is a well-settled rule
that a representative will he certified even though less than a majority of all
the employees in the unit cast ballots in favor of the union. It is enough that
the union be designated by a majority of the valid ballots, and this is so even
though only a small proportion of the eligible voters participates. Following
the analogy of political elections, the courts have approved this practice of
the Board."9
2. There is this policy consideration. The country is at present embarked on
a wide-scale industrialization project. As a matter of fact, respondent firm is
engaged in such activity. Industrialization, as noted by Professor Smith,
Merrifield and Rothschild, "can thrive only as there is developed a. stable
structure of law and order in the productive sector." 10That objective is best
attained in a collective bargaining regime, which is a manifestation of
industrial democracy at work, if there be no undue obstacles placed in the
way of the choice of a bargaining representative. To insist on the absolute
majority where there are various unions and where the possibility of invalid
ballots may not be ruled out, would be to frustrate that goal. For the probability
of a long drawn-out, protracted process is not easy to dismiss. That is not
unlikely given the intensity of rivalry among unions capable of enlisting the
allegiance of a group of workers. It is to avoid such a contingency that there
is this explicit pronouncement in the implementing rule. It speaks
categorically. It must be obeyed. That was what respondent Director did.
3. Nor can fault of a grave and serious character be imputed to respondent
Director presumably because of failure to abide by the doctrine or
pronouncement of this Court in the aforesaid Allied Workers Association
case. The reliance is on this excerpt from the opinion: "However, spoiled
ballots, i.e., those which are defaced, torn or marked (Rules for Certification
Elections, Rule II, sec. 2[j]) should be counted in determining the majority
since they are nevertheless votes cast by those who are qualified to do so."
11 Nothing can be clearer than that its basis is a paragraph in a section of the
then applicable rules for certification elections. 12 They were promulgated
under the authority of the then prevailing Industrial Peace Act. 13 That
Legislation is no longer in force, having been superseded by the present
Labor Code which took effect on November 1, 1974. This certification election
is governed therefore, as was made clear, by the present Labor Code and
the Rules issued thereunder. Absent a showing that such rules and
regulations -are violative of the Code, this Court cannot ignore their existence.
When, as should be the case, a public official acts in accordance with a norm
therein contained, no infraction of the law is committed. Respondent Director
did, as he ought to, comply with its terms. He took into consideration only the
"valid votes" as was required by the Rules. He had no choice as long as they
remain in force. In a proper showing, the judiciary can nullify any rule it found
in conflict with the governing statute. 14 That was not even attempted here. All
that petitioner did was to set forth in two separate paragraphs the applicable
rule followed by respondent Director 15and the governing article. 16 It did not
even bother to discuss why such rule was in conflict with the present Labor
Code. It failed to point out any repugnancy. Such being the case, respondent
Director must be upheld.
4. The conclusion reached by us derives further support from the deservedly
high repute attached to the construction placed by the executive officials
entrusted with the responsibility of applying a statute. The Rules and
Regulations implementing the present Labor Code were issued by Secretary
Blas Ople of the Department of Labor and took effect on February 3, 1975,
the present Labor Code having been made known to the public as far back
as May 1, 1974, although its date of effectivity was postponed to November
1, 1974, although its date of effectivity was postponed to November 1, 1974.
It would appear then that there was more than enough time for a really serious
and careful study of such suppletory rules and regulations to avoid any
inconsistency with the Code. This Court certainly cannot ignore the
interpretation thereafter embodied in the Rules. As far back as In re
Allen," 17 a 1903 decision, Justice McDonough, as ponente, cited this excerpt
from the leading American case of Pennoyer v. McConnaughy, decided in
1891: "The principle that the contemporaneous construction of a statute by
the executive officers of the government, whose duty it is to execute it, is
entitled to great respect, and should ordinarily control the construction of the
statute by the courts, is so firmly embedded in our jurisprudence that no
authorities need be cited to support it." 18 There was a paraphrase by Justice
Malcolm of such a pronouncement in Molina v. Rafferty," 19 a 1918 decision:
"Courts will and should respect the contemporaneous construction placed
upon a statute by the executive officers whose duty it is to enforce it, and
unless such interpretation is clearly erroneous will ordinarily be controlled
thereby." 20 Since then, such a doctrine has been reiterated in numerous
decisions . 21 As was emphasized by Chief Justice Castro, "the construction
placed by the office charged with implementing and enforcing the provisions
of a Code should he given controlling weight. " 22
WHEREFORE, the petition for certiorari is dismissed. Costs against petitioner
Philippine Association of Free Labor Unions (PAFLU).
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-50320 March 30, 1988
PHILIPPINE APPAREL, WORKERS UNION, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION APPAREL
PHILIPPINE APPAREL, INC., respondents.
RESOLUTION
PARAS, J. :
This is a classic case of dilatory tactics employed to obstruct justice.
On July 31, 1981, this Court rendered Judgment in this case, the dispositive
portion of which reads:
WHEREFORE, the writ of certiorari is hereby granted, the decision
of the respondent Commission is hereby set aside, and private
respondent is hereby directed to pay, in addition to the increased
allowance provided for in P.D. 1123, the negotiated wage increase
of P0.80 daily effective April 1, 1977 as well as all other wage
increases embodied in the collective bargaining agreement, to all
covered employees. Costs against private respondent.
This decision, is immediately executory (p. 178, rec.).
A motion for reconsideration of the July 31, 1981 decision. this Court was filed
by private respondent. Petitioner, through the Paterno D. Menzon Law Office,
filed a comment thereon. This Court, on October 21, 1981 denied the
aforesaid motion for reconsideration and the denial was declared final Entry
of judgment was made on October 30, 1981 (Rollo, p. 244).
On December 18, 1981 the respondent NLRC issued an order, through Labor
Arbiter Antonio Tria Tirona, directing the Chief of the Research and
Information Division of the NLRC to designate a Socio-Economic Analyst to
compute the awards due the members of the petitioner union in accordance
with the final disposition of this case.
On January 10, 1983 petitioner flied an "Urgent Manifestation and Motion"
claiming that despite its filing of a motion for execution dated November 12,
1981, a manifestation and motion dated February 10, 1982, and another
manifestation and motion dated February 26, 1982, the execution arm of
public respondent NLRC continued to fail to implement the decision of this
Court. Petitioner prayed that those obstructing the implementation of the
decision be declared in contempt, especially the president of Bagong Pilipino
Philippine Apparel Workers' Union (BPPAWU) and private respondent PAI for
circumventing the final decision of this Court by offering members of petitioner
the amount of P500 each as full payment of their claims in the instant case.
The respondent NLRC, in its Comment on petitioner's "Urgent Manifestation
and Motion" explained that it could not issue a writ of execution because the
actual or exact amounts of the various awards due the members of the
petitioner union could not be determined. For that matter, even with the
submission of the "Report of Examiner" prepared by the Research and
Information Division of the NLRC, it was not possible for the NLRC to issue a
writ of execution in full satisfaction of the judgment of this Court because said
"Report of Examiner" did not include the computation of the amounts due for
the months of May, June, November and December 1978, and January and
February 1980 as the pertinent records covering those periods were not
available at the time of the preparation of the Report. Adding confusion was
the fact that even before the submission of the "Report of Examiner," private
respondent PAI had already made payments in satisfaction of this Court's
decision to some of the members of the petitioner union. Moreover, after the
submission of the Reports, and notwithstanding its exception to the findings
therein, private respondent PAI continued to make payments to the other
members of the union. Respondent PAI offered the payment to petitioner's
counsel but the latter refused to accept the payment because the amount
offered left some 88 members of the petitioner unpaid. Petitioner's counsel
was willing to accept the money only as partial payment, but not as full
payment as PAI wanted it to be.
On October 27, 1983, this Court issued an order requiring private respondent
PAI to comply fully with this Court's decision of July 31, 1981; to pay the
members of the petitioner the amount of P695,413.17, with 10% thereof to be
deducted as attorney's fees payable to the Menzon Law Office; to make
available, within ten (10) days from notice thereof, to public respondent its
payrolls corresponding to the unpaid periods, for the latter to prepare
immediately a computation within thirty (30.1 days from receipt of such
payrolls; and, thereafter, to pay members of petitioner the remaining
backwages within ten (1 0) days from receipt of such computation. In that
same order of October 27, 1983, the BPPAWU, Atty. Luis D. Flores and
respondent Philippine Apparel, Inc. were adjudged guilty of contempt and
were ordered to pay one thousand pesos (Pl,000) each within ten (10) days
from notice thereof.
The Court justified its ruling as follows:
 ...The judgment in this case has already become final and ordered to pay TEN THOUSAND (P10,000.00) PESOS each within ten (10)
executory and as such the prevailing party as a matter of right is days from notice thereof. This resolution is immediately executory.
entitled to a writ of execution. What seems to be the problem in this
case is that execution of the judgment cannot be had at the earliest
SO ORDERED.
possible time, since a computation of the amount due the members
of petitioner must first be undertaken. The Report of the Examiner
indicating the amount due them was submitted only after one and
a half years, so that in the meantime, negotiations on how the
judgment may be executed were made. It is the posture of the
Paterno D. Menzon Law Office that the judgment cannot be
negotiated, hence any act to subvert it is contemptuous.

We agree, The attempts of the BPPAWU and its counsel and Republic of the Philippines
respondent company to render the decision of this Court SUPREME COURT
meaningless by paying the backwages of the affected employees Manila
in a lesser amount clearly manifest a willful disregard on their part,
of the authority of this Court as the final arbiter of cases brought to
it. The series of acts by the BPPAWU from the outset, where they SECOND DIVISION
caused the 'Kapahintulutan' to be circulated and signed by workers
declaring as invalid any acts of petitioner union and its counsel to G.R. No. L-52415 October 23, 1984
the time they campaigned for the workers to receive the amount of
P300.00 or P500.00 but with the concomitant obligation to release
the company from any further liability showed disrespect for the INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION
administration of justice. (IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and
The BPPAWU and its counsel cannot pretend that they are just INSULAR BANK OF ASIA AND AMERICA, respondents.
being more protective to the employees when they encouraged
them to receive the amount of P300.00 or P500.00. They know too
well that said amount is much less than that to be received by the Sisenando R. Villaluz, Jr. for petitioner.
employees after computing all the backwages if the decision is
executed. It would have been laudable had not the company Abdulmaid Kiram Muin colloborating counsel for petitioner.
pressed the workers to sign the quitclaims and release of which the
BPPAWU cannot pretend to be unaware, for the payment could be
taken as initial compliance with the judgment with the balance to The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law
be paid by the company when the final computation of the Office and Sycip, Salazar, Feliciano & Hernandez Law Office for
backwages has been finished and submitted by the Research and respondents.
Information Division of the National Labor Relations Commission.
Indeed, their questionable acts do not sit well with a desire to MAKASIAR, J.:ñé+.£ªwph!1
implement the decision of this Court. If the BPPAWU is really after
the welfare of the employees, they will not leave any stone
unturned to get the best for them by giving effect to the decision of This is a petition for certiorari to set aside the order dated November 10, 1979,
this Court. of respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC case
No. RB-IV-1561-76 entitled "Insular Bank of Asia and America Employees'
Union (complainant-appellee), vs. Insular Bank of Asia and America"
In our decision, we have ordered the company to pay the (respondent-appellant), the dispositive portion of which reads as
negotiated wage increase of P0.80 daily effective April 1, 1977. As follows: têñ.£îhqwâ£
per petitioner's; computation, as may be gleaned from the urgent
motion for issuance of a restraining order dated March 11, 1982,
on backwages alone, not counting adjustments in overtime pay and xxx xxx xxx
other benefits, each employee is entitled to receive at the very least
of Pl,248.00 (P0.80 x 26 working days x 12 months x 5 years from
ALL THE FOREGOING CONSIDERED, let the appealed
1977 to 1982) [p. 281, recli If we shall include the backwages
Resolution en banc of the National Labor Relations Commission
corresponding from January, 1983 to the present, the same will
dated 20 June 1978 be, as it is hereby, set aside and a new
definitely be higher than Pl,248.00. Clearly, the offer by the
judgment. promulgated dismissing the instant case for lack of merit
company, supported by the BPPAWU to pay the employees in the
(p. 109 rec.).
amount of P300.00 or P500.00 as full and final payment is unjust
to them, especially if We shall consider that some employees did
not have the alternative but to accept the payment because they The antecedent facts culled from the records are as follows:
were in a tight financial condition. Such move cannot he sanctioned
by this Court, for otherwise giving effect to the award of backwages
On June 20, 1975, petitioner filed a complaint against the respondent bank
would be left to the whim of the losing company taking advantage
for the payment of holiday pay before the then Department of Labor, National
of the rationale behind the decision in Mercury Drug Co. v. CIR (L-
Labor Relations Commission, Regional Office No. IV in Manila. Conciliation
23357, promulgated April 30, 1974, 56 SCRA 695), the quitclaims
having failed, and upon the request of both parties, the case was certified for
and releases signed by the employees are considered null and
arbitration on July 7, 1975 (p. 18, NLRC rec.
void. The employees are therefore still entitled to the difference
between what is due them and the amount they received. Another
important consideration is that if We countenance such act, the On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in
sanctity of the contract validly entered into by the parties which as the above-entitled case, granting petitioner's complaint for payment of holiday
in this case was interpreted by this Court, will be violated. Rollo, pay. Pertinent portions of the decision read: têñ.£îhqwâ£
pp. 382-384)
xxx xxx xxx
In their obvious attempts to derail the implementation of this Court's decision
which had long become final and executory as far back as over six years ago
The records disclosed that employees of respondent bank were not
on October 21, 1981, private respondents endlessly belabored this Court's
paid their wages on unworked regular holidays as mandated by the
ruling finding them guilty of contempt. Enough is enough. If there is anything
Code, particularly Article 208, to wit: têñ.£îhqwâ£
that needs to be done in this case, it is the fun and complete implementation
of this Court's final and executory decision.
Art. 208. Right to holiday pay.
PREMISES CONSIDERED, We hereby enjoin the respondent NLRC to fully
implement this Court's Resolution dated October 27,1983, with these (a) Every worker shall be paid his regular daily wage
modifications: (a) To pay members of the petitioner the partial backwages in during regular holidays, except in retail and service
the amount of P695,413.17 plus legal interest computed from the time the establishments regularly employing less than 10
decision became final (October 21, 1981) until fully paid, with 10% thereof to workers.
be deducted as attorney's fees payable to the Menzon Law Office, less the
amount that respondent company may have paid to some members of the
petitioner union; and (b) The BPPAWU Atty. Luis D. Flores and respondent (b) The term "holiday" as used in this chapter, shall
Philippine Apparel, Inc. are hereby adjudged guilty of contempt and are include: New Year's Day, Maundy Thursday, Good
Friday, the ninth of April the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the
 twenty-fifth and the thirtieth of December and the day
designated by law for holding a general election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate of pay
of the bank employees was computed in the past with the
unworked regular holidays as excluded for purposes of determining
the deductible amount for absences incurred Thus, if the employer
uses the factor 303 days as a divisor in determining the daily rate
of monthly paid employee, this gives rise to a presumption that the
monthly rate does not include payments for unworked regular
holidays. The use of the factor 303 indicates the number of ordinary
working days in a year (which normally has 365 calendar days),
excluding the 52 Sundays and the 10 regular holidays. The use of
251 as a factor (365 calendar days less 52 Saturdays, 52 Sundays,
and 10 regular holidays) gives rise likewise to the same
presumption that the unworked Saturdays, Sundays and regular
holidays are unpaid. This being the case, it is not amiss to state
with certainty that the instant claim for wages on regular unworked
holidays is found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for all
regular h(olidays since November 1, 1974 (pp. 97-99, rec.,
underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied
with the order of Arbiter Ricarte T. Soriano by paying their holiday pay up to
and including January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated
amending, among others, the provisions of the Labor Code on the right to
holiday pay to read as follows: têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his
regular daily wages during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers;
(b) The employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to
twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day,
Maundy Thursday, Good Friday, the ninth of April, the first of May,
the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth and the thirtieth of December, and the day designated
by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code,
the Department of Labor (now Ministry of Labor) promulgated the rules and
regulations for the implementation of holidays with pay. The controversial
section thereof reads: têñ.£îhqwâ£
Sec. 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" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary
of Labor (now Minister) interpreting the above-quoted rule, pertinent portions
of which read: têñ.£îhqwâ£
xxx xxx xxx
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 P.D. 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 P240, 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. ..."
(emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule
implementing Article 94 of the Labor Code and by Policy Instruction No. 9,
stopped the payment of holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce
the arbiter's decision of August 25, 1975, whereby the respondent bank was
ordered to pay its employees their daily wage for the unworked regular
holidays.
On September 10, 1975, respondent bank filed an opposition to the motion
for a writ of execution alleging, among others, that: (a) its refusal to pay the
corresponding unworked holiday pay in accordance with the award of Labor
Arbiter Ricarte T. Soriano dated August 25, 1975, is based on and justified
by Policy Instruction No. 9 which interpreted the rules implementing P. D. 850;
and (b) that the said award is already repealed by P.D. 850 which took effect
on December 16, 1975, and by said Policy Instruction No. 9 of the Department
of Labor, considering that its monthly paid employees are not receiving less
than P240.00 and their monthly pay is uniform from January to December,
and that no deductions are made from the monthly salaries of its employees
on account of holidays in months where they occur (pp. 64-65, NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a
writ of execution, issued an order enjoining the respondent bank to continue
paying its employees their regular holiday pay on the following grounds: (a)
that the judgment is already final and the findings which is found in the body
of the decision as well as the dispositive portion thereof is res judicata or is
the law of the case between the parties; and (b) that since the decision had
been partially implemented by the respondent bank, appeal from the said
decision is no longer available (pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the above-cited
order of Labor Arbiter Soriano to the National Labor Relations Commission,
reiterating therein its contentions averred in its opposition to the motion for
writ of execution. Respondent bank further alleged for the first time that the
questioned order is not supported by evidence insofar as it finds that
respondent bank discontinued payment of holiday pay beginning January,
1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its
resolution en banc dismissing respondent bank's appeal, the dispositive
portion of which reads as follows: têñ.£îhqwâ£
In view of the foregoing, we hereby resolve to dismiss, as we
hereby dismiss, respondent's appeal; to set aside Labor Arbiter
Ricarte T. Soriano's order of 18 October 1976 and, as prayed for
by complainant, to order the issuance of the proper writ of
execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February
9, 1979 or almost eight. (8) months after it was promulgated, while copies
were served on the respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the Minister
of Labor a motion for reconsideration/appeal with urgent prayer to stay
execution, alleging therein the following: (a) that there is prima facie evidence
of grave abuse of discretion, amounting to lack of jurisdiction on the part of
the National Labor Relations Commission, in dismissing the respondent's
appeal on pure technicalities without passing upon the merits of the appeal
and (b) that the resolution appealed from is contrary to the law and
jurisprudence (pp. 260-274, NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent bank's
appeal and alleged the following grounds: (a) that the office of the Minister of
Labor has no jurisdiction to entertain the instant appeal pursuant to the
provisions of P. D. 1391; (b) that the labor arbiter's decision being final,
executory and unappealable, execution is a matter of right for the petitioner;
and (c) that the decision of the labor arbiter dated August 25, 1975 is
supported by the law and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for execution pending
appeal, praying that a writ of execution be issued by the National Labor
Relations Commission pending appeal of the case with the Office of the
Minister of Labor. Respondent bank filed its opposition thereto on August 8,
1979.
On August 13, 1979, the National Labor Relations Commission issued an
order which states: têñ.£îhqwâ£
The Chief, Research and Information Division of this Commission
is hereby directed to designate a Socio-Economic Analyst to
compute the holiday pay of the employees of the Insular Bank of
Asia and America from April 1976 to the present, in accordance
with the Decision of the Labor Arbiter dated August 25, 1975" (p.
80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy
Minister Amado G. Inciong, issued an order, the dispositive portion of which
states: têñ.£îhqwâ£
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations Commission
dated 20 June 1978 be, as it is hereby, set aside and a new
judgment promulgated dismissing the instant case for lack of merit
(p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G.
Inciong with abuse of discretion amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter
awarding payment of regular holiday pay can still be set aside on appeal by
the Deputy Minister of Labor even though it has already become final and had
been partially executed, the finality of which was affirmed by the National
Labor Relations Commission sitting en banc, on the basis of an Implementing
Rule and Policy Instruction promulgated by the Ministry of Labor long after
the said decision had become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of
the implementing rules and Policy Instruction No. 9 issued by the then
Secretary of Labor are null and void since in the guise of clarifying the Labor
Code's provisions on holiday pay, they in effect amended them by enlarging
the scope of their exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers. ...
The coverage and scope of exclusion of the Labor Code's holiday pay
provisions is spelled out under Article 82 thereof which reads: têñ.£îhqwâ£
Art. 82. Coverage. — The provision of this Title shall apply to
employees in all establishments and undertakings, whether for
profit or not, but not to government employees, managerial
employees, field personnel members of the family of the employer
who are dependent on him for support domestic helpers, persons
in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate
regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are
not excluded from the benefits of holiday pay. However, the implementing
rules on holiday pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting, under Rule IV,
Book Ill of the implementing rules, Section 2, which provides that: "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. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and
Policy Instruction No. 9 were issued to clarify the policy in the implementation
of the ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays
are deemed paid insofar as monthly paid employees are concerned if (a) they
are receiving not less than the statutory minimum wage, (b) their monthly pay
is uniform from January to December, and (c) no deduction is made from their
monthly salary on account of holidays in months where they occur. As
explained in Policy Instruction No, 9, 'The ten (10) paid legal holidays law, to
start with, is intended to benefit principally daily paid employees. In 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' " (pp. 340-341, rec.).
This contention is untenable.
It is elementary in the rules of statutory construction that when the language
of the law is clear and unequivocal the law must be taken to mean exactly
what it says. In the case at bar, the provisions of the Labor Code on the
entitlement to the benefits of holiday pay are clear and explicit - it provides for
both the coverage of and exclusion from the benefits. In Policy Instruction No.
9, the then Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday pay. This is a
flagrant violation of the mandatory directive of Article 4 of the Labor Code,
which states that "All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall
be resolved in favor of labor." Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute which would have
the most beneficial effect that its language permits (Orlosky vs. Haskell, 155
A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory
authority granted by Article 5 of the Labor Code authorizing him to promulgate
the necessary implementing rules and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday
pay law, as expressed by the Secretary of Labor in the case of Chartered
Bank Employees Association v. The Chartered Bank (NLRC Case No. RB-
1789-75, March 24, 1976), is to correct the disadvantages inherent in the
daily compensation system of employment — holiday pay is primarily
intended to benefit the daily paid workers whose employment and income are
circumscribed by the principle of "no work, no pay." This argument may sound
meritorious; but, until the provisions of the Labor Code on holiday pay is
amended by another law, monthly paid employees are definitely included in
the benefits of regular holiday pay. As earlier stated, the presumption is
always in favor of law, negatively put, the Labor Code is always strictly
construed against management.
While it is true that the contemporaneous construction placed upon a statute
by executive officers whose duty is to enforce it should be given great weight
by the courts, still if such construction is so erroneous, as in the instant case,
the same must be declared as null and void. It is the role of the Judiciary to
refine and, when necessary, correct constitutional (and/or statutory)
interpretation, in the context of the interactions of the three branches of the
government, almost always in situations where some agency of the State has
engaged in action that stems ultimately from some legitimate area of
governmental power (The Supreme Court in Modern Role, C. B. Swisher
1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor
Relations Commission (106 SCRA 444, July 31, 1981) where the Secretary
of Labor enlarged the scope of exemption from the coverage of a Presidential
Decree granting increase in emergency allowance, this Court ruled
that: têñ.£îhqwâ£
... the Secretary of Labor has exceeded his authority when he
included paragraph (k) in Section 1 of the Rules implementing P.
D. 1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory
authority granted to the Secretary of Labor, and the same is
therefore void, as ruled by this Court in a long line of cases . . .
.. têñ.£îhqwâ£
The recognition of the power of administrative officials to
promulgate rules in the administration of the statute,
necessarily limited to what is provided for in the
legislative enactment, may be found in the early case of
United States vs. Barrios decided in 1908. Then came in
a 1914 decision, United States vs. Tupasi Molina (29
Phil. 119) delineation of the scope of such competence.
Thus: "Of course the regulations adopted under
legislative authority by a particular department must be
in harmony with the provisions of the law, and for the sole
purpose of carrying into effect its general provisions. By
such regulations, of course, the law itself cannot be
extended. So long, however, as the regulations relate
solely to carrying into effect the provisions of the law,
they are valid." In 1936, in People vs. Santos, this Court
expressed its disapproval of an administrative order that
would amount to an excess of the regulatory power
vested in an administrative official We reaffirmed such a
doctrine in a 1951 decision, where we again made clear
that where an administrative order betrays inconsistency
or repugnancy to the provisions of the Act, 'the mandate
 of the Act must prevail and must be followed. Justice
Barrera, speaking for the Court in Victorias Milling inc.
vs. Social Security Commission, citing Parker as well as
Davis did tersely sum up the matter thus: "A rule is
binding on the Courts so long as the procedure fixed for
its promulgation is followed and its scope is within the
statutory authority granted by the legislature, even if the
courts are not in agreement with the policy stated therein
or its innate wisdom. ... On the other hand, administrative
interpretation of the law is at best merely advisory, for it
is the courts that finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the
authority of the President, in whom all executive power
resides, to take care that the laws be faithfully executed.
No lesser administrative executive office or agency then
can, contrary to the express language of the Constitution
assert for itself a more extensive prerogative.
Necessarily, it is bound to observe the constitutional
mandate. There must be strict compliance with the
legislative enactment. Its terms must be followed the
statute requires adherence to, not departure from its
provisions. No deviation is allowable. In the terse
language of the present Chief Justice, an administrative
agency "cannot amend an act of Congress."
Respondents can be sustained, therefore, only if it could
be shown that the rules and regulations promulgated by
them were in accordance with what the Veterans Bill of
Rights provides" (Phil. Apparel Workers Union vs.
National Labor Relations Commission, supra, 463, 464,
citing Teozon vs. Members of the Board of
Administrators, PVA 33 SCRA 585; see also Santos vs.
Hon. Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of
Internal Revenue, 100 Phil. 295; Sy Man vs. Jacinto &
Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese
and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire
& Cable Workers Union (TUPAS) vs. The National Labor Relations
Commission and American Wire & Cable Co., Inc., G.R. No. 53337,
promulgated on June 29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement
the Labor Code and Policy instruction No. 9 issued by the then Secretary of
Labor must be declared null and void. Accordingly, public respondent Deputy
Minister of Labor Amado G. Inciong had no basis at all to deny the members
of petitioner union their regular holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated
August 25, 1975, had already become final, and was, in fact, partially
executed by the respondent bank.
However, public respondent maintains that on the authority of De Luna vs.
Kayanan, 61 SCRA 49, November 13, 1974, he can annul the final decision
of Labor Arbiter Soriano since the ensuing promulgation of the integrated
implementing rules of the Labor Code pursuant to P.D. 850 on February 16,
1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the
then Secretary of Labor are facts and circumstances that transpired
subsequent to the promulgation of the decision of the labor arbiter, which
renders the execution of the said decision impossible and unjust on the part
of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the
public respondent is not a labor case wherein the express mandate of the
Constitution on the protection to labor is applied. Thus Article 4 of the Labor
Code provides that, "All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall
be resolved in favor of labor and Article 1702 of the Civil Code provides that,
" In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently unjust
to deprive the members of petitioner union of their vested right acquired by
virtue of a final judgment on the basis of a labor statute promulgated following
the acquisition of the "right".
On the question of whether or not a law or statute can annul or modify a
judicial order issued prior to its promulgation, this Court, through Associate
Justice Claro M. Recto, said: têñ.£îhqwâ£
xxx xxx xxx
We are decidedly of the opinion that they did not. Said order, being
unappealable, became final on the date of its issuance and the
parties who acquired rights thereunder cannot be deprived thereof
by a constitutional provision enacted or promulgated subsequent
thereto. Neither the Constitution nor the statutes, except penal laws
favorable to the accused, have retroactive effect in the sense of
annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First Instance of
Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court
said: "... when a court renders a decision or promulgates a resolution or order
on the basis of and in accordance with a certain law or rule then in force, the
subsequent amendment or even repeal of said law or rule may not affect the
final decision, order, or resolution already promulgated, in the sense of
revoking or rendering it void and of no effect." Thus, the amendatory rule
(Rule IV, Book III of the Rules to Implement the Labor Code) cannot be given
retroactive effect as to modify final judgments. Not even a law can validly
annul final decisions (In re: Cunanan, et al., Ibid).
Furthermore, the facts of the case relied upon by the public respondent are
not analogous to that of the case at bar. The case of De Luna speaks of final
and executory judgment, while iii the instant case, the final judgment is
partially executed. just as the court is ousted of its jurisdiction to annul or
modify a judgment the moment it becomes final, the court also loses its
jurisdiction to annul or modify a writ of execution upon its service or execution;
for, otherwise, we will have a situation wherein a final and executed judgment
can still be annulled or modified by the court upon mere motion of a panty
This would certainly result in endless litigations thereby rendering inutile the
rule of law.
Respondent bank counters with the argument that its partial compliance was
involuntary because it did so under pain of levy and execution of its assets
(p. 138, rec.). WE find no merit in this argument. Respondent bank clearly
manifested its voluntariness in complying with the decision of the labor arbiter
by not appealing to the National Labor Relations Commission as provided for
under the Labor Code under Article 223. A party who waives his right to
appeal is deemed to have accepted the judgment, adverse or not, as correct,
especially if such party readily acquiesced in the judgment by starting to
execute said judgment even before a writ of execution was issued, as in this
case. Under these circumstances, to permit a party to appeal from the said
partially executed final judgment would make a mockery of the doctrine of
finality of judgments long enshrined in this jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides that "... execution
shall issue as a matter of right upon the expiration of the period to appeal ...
or if no appeal has been duly perfected." This rule applies to decisions or
orders of labor arbiters who are exercising quasi-judicial functions since "...
the rule of execution of judgments under the rules should govern all kinds of
execution of judgment, unless it is otherwise provided in other laws" Sagucio
vs. Bulos 5 SCRA 803) and Article 223 of the Labor Code provides that "...
decisions, awards, or orders of the Labor Arbiter or compulsory arbitrators
are final and executory unless appealed to the Commission by any or both of
the parties within ten (10) days from receipt of such awards, orders, or
decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period deprives the
courts of jurisdiction to alter the final judgment and the judgment becomes
final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2
PHILAJUR 436, 440, January 31, 1978; see also Soliven vs. WCC, 77 SCRA
621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297;
Vitug vs. Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423,
October 31, 1961, where the lower court modified a final order, this Court
ruled thus: têñ.£îhqwâ£
xxx xxx xxx
The lower court was thus aware of the fact that it was thereby
altering or modifying its order of January 8, 1959. Regardless of
the excellence of the motive for acting as it did, we are constrained
to hold however, that the lower court had no authorities to make
said alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take the
action complained of cannot offset the dem ands of public policy
and public interest — which are also responsive to the tenets of
equity — requiring that an issues passed upon in decisions or final
orders that have become executory, be deemed conclusively
 disposed of and definitely closed for, otherwise, there would be no
end to litigations, thus setting at naught the main role of courts of
justice, which is to assist in the enforcement of the rule of law and
the maintenance of peace and order, by settling justiciable
controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30,
1982, this Court said: têñ.£îhqwâ£
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically
stated that the rule is absolute that after a judgment becomes final
by the expiration of the period provided by the rules within which it
so becomes, no further amendment or correction can be made by
the court except for clerical errors or mistakes. And such final
judgment is conclusive not only as to every matter which was
offered and received to sustain or defeat the claim or demand but
as to any other admissible matter which must have been offered
for that purpose (L-7044, 96 Phil. 526). In the earlier case of
Contreras and Ginco vs. Felix and China Banking Corp., Inc. (44
O.G. 4306), it was stated that the rule must be adhered to
regardless of any possible injustice in a particular case for (W)e
have to subordinate the equity of a particular situation to the over-
mastering need of certainty and immutability of judicial
pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G. Inciong divested
the members of the petitioner union of their rights acquired by virtue of a final
judgment is tantamount to a deprivation of property without due process of
law Public respondent completely ignored the rights of the petitioner union's
members in dismissing their complaint since he knew for a fact that the
judgment of the labor arbiter had long become final and was even partially
executed by the respondent bank.
A final judgment vests in the prevailing party a right recognized and protected
by law under the due process clause of the Constitution (China Ins. & Surety
Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a
vested interest which it is right and equitable that the government should
recognize and protect, and of which the individual could no. be deprived
arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
lt is by this guiding principle that the due process clause is interpreted. Thus,
in the pithy language of then Justice, later Chief Justice, Concepcion "... acts
of Congress, as well as those of the Executive, can deny due process only
under pain of nullity, and judicial proceedings suffering from the same flaw
are subject to the same sanction, any statutory provision to the contrary
notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118,
emphasis supplied), And "(I)t has been likewise established that a violation
of a constitutional right divested the court of jurisdiction; and as a
consequence its judgment is null and void and confers no rights" (Phil.
Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc., 51
SCRA 211, June 5, 1973).
Tested by and pitted against this broad concept of the constitutional
guarantee of due process, the action of public respondent Amado G. Inciong
is a clear example of deprivation of property without due process of law and
constituted grave abuse of discretion, amounting to lack or excess of
jurisdiction in issuing the order dated November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF
PUBLIC RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR
ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY
REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND
AMERICA
SO ORDERED.1
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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.
GUTIERREZ, JR., J.:
This is a petition for certiorari seeking to annul the decision of the respondent
Secretary, now Minister of Labor which denied the petitioner's claim for
holiday pay and its claim for premium and overtime pay differentials. The
petitioner claims that the respondent Minister of Labor acted contrary to law
and jurisprudence and with grave abuse of discretion in promulgating Sec. 2,
Rule IV, Book III of the Integrated Rules and in issuing Policy Instruction No.
9, both referring to holidays with pay.
On May 20, 1975, the Chartered Bank Employees Association, in
representation of its monthly paid employees/members, instituted a complaint
with the Regional Office No. IV, Department of Labor, now Ministry of Labor
and Employment (MOLE) against private respondent Chartered Bank, for the
payment of ten (10) unworked legal holidays, as well as for premium and
overtime differentials for worked legal holidays from November 1, 1974.
The memorandum for the respondents summarizes the admitted and/or
undisputed facts as follows:
l. The work force of respondent bank consists of 149 regular
employees, all of whom are paid by the month;
2. Under their existing collective bargaining agreement, (Art. VII
thereof) said monthly paid employees are paid for overtime work
as follows:
Section l. The basic work week for all employees excepting security
guards who by virtue of the nature of their work are required to be
at their posts for 365 days per year, shall be forty (40) hours based
on five (5) eight (8) hours days, Monday to Friday.
Section 2. Time and a quarter hourly rate shall be paid for
authorized work performed in excess of eight (8) hours from
Monday through Friday and for any hour of work performed on
Saturdays subject to Section 5 hereof.
Section 3. Time and a half hourly rate shall be paid for authorized
work performed on Sundays, legal and special holidays.
xxx xxx xxx
xxx xxx xxx
Section 5. The provisions of Section I above notwithstanding the
BANK may revert to the six (6) days work week, to include Saturday
for a four (4) hour day, in the event the Central Bank should require
commercial banks to open for business on Saturday.
3. In computing overtime pay and premium pay for work done
during regular holidays, the divisor used in arriving at the daily rate
of pay is 251 days although formerly the divisor used was 303 days
and this was when the respondent bank was still operating on a 6-
day work week basis. However, for purposes of computing
deductions corresponding to absences without pay the divisor used
is 365 days.
4. All regular monthly paid employees of respondent bank are
receiving salaries way beyond the statutory or minimum rates and
are among the highest paid employees in the banking industry.
5. The salaries of respondent bank's monthly paid employees
suffer no deduction for holidays occurring within the month.
On the bases of the foregoing facts, both the arbitrator and the National Labor
Relations Commission (NLRC) ruled in favor of the petitioners ordering the
respondent bank to pay its monthly paid employees, holiday pay for the ten
(10) legal holidays effective November 1, 1974 and to pay premium or
overtime pay differentials to all employees who rendered work during said
legal holidays. On appeal, the Minister of Labor set aside the decision of the
NLRC and dismissed the petitioner's claim for lack of merit basing its decision
on Section 2, Rule IV, Book Ill of the Integrated Rules and Policy Instruction
No. 9, which respectively provide:
Sec. 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.
POLICY INSTRUCTION NO. 9
TO: All Regional Directors
SUBJECT: PAID LEGAL HOLIDAYS
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 P240, 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.
These new interpretations must be uniformly and consistently
upheld.
This issuance shall take effect immediately.
The issues are presented in the form of the following assignments of errors:
First Error
Whether or not the Secretary of Labor erred and acted contrary to
law in promulgating Sec. 2, Rule IV, Book III of the Integrated Rules
and Policy Instruction No. 9.
Second Error
Whether or not the respondent Secretary of Labor abused his
discretion and acted contrary to law in applying Sec. 2, Rule IV of
the Integrated Rules and Policy Instruction No. 9 abovestated to
private respondent's monthly-paid employees.
Third Error
Whether or not the respondent Secretary of Labor, in not giving due
credence to the respondent bank's practice of paying its employees
base pay of 100% and premium pay of 50% for work done during
legal holidays, acted contrary to law and abused his discretion in
denying the claim of petitioners for unworked holidays and
premium and overtime pay differentials for worked holidays.
The petitioner contends that the respondent Minister of Labor gravely abused
his discretion in promulgating Section 2, Rule IV, Book III of the Integrated
Rules and Policy Instruction No. 9 as guidelines for the implementation of
Articles 82 and 94 of the Labor Code and in applying said guidelines to this
case. It maintains that while it is true that the respondent Minister has the
authority in the performance of his duty to promulgate rules and regulations
to implement, construe and clarify the Labor Code, such power is limited by
provisions of the statute sought to be implemented, construed or clarified.
According to the petitioner, the so-called "guidelines" promulgated by the
respondent Minister totally contravened and violated the Code by excluding
the employees/members of the petitioner from the benefits of the holiday pay,
when the Code itself did not provide for their expanding the Code's clear and
concise conclusion and notwithstanding the Code's clear and concise
phraseology defining those employees who are covered and those who are
excluded from the benefits of holiday pay.
On the other hand, the private respondent contends that the questioned
guidelines did not deprive the petitioner's members of the benefits of holiday
pay but merely classified those monthly paid employees whose monthly
salary already includes holiday pay and those whose do not, and that the
guidelines did not deprive the employees of holiday pay. It states that the
question to be clarified is whether or not the monthly salaries of the
petitioner's members already includes holiday pay. Thus, the guidelines were
promulgated to avoid confusion or misconstruction in the application of
Articles 82 and 94 of the Labor Code but not to violate them. Respondent
explains that the rationale behind the promulgation of the questioned
guidelines is to benefit the daily paid workers who, unlike monthly-paid
employees, suffer deductions in their salaries for not working on holidays.
Hence, the Holiday Pay Law was enacted precisely to countervail the
disparity between daily paid workers and monthly-paid employees.
The decision in Insular Bank of Asia and America Employees' Union
(IBAAEU) v. Inciong (132 SCRA 663) resolved a similar issue. Significantly,
the petitioner in that case was also a union of bank employees. We ruled that
Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No.
9, are contrary to the provisions of the Labor Code and, therefore, invalid This
Court stated:
It is elementary in the rules of statutory construction that when the
language of the law is clear and unequivocal the law must be taken
to mean exactly what it says. In the case at bar, the provisions of
the Labor Code on the entitlement to the benefits of holiday pay are
clear and explicit it provides for both the coverage of and exclusion
from the benefit. In Policy Instruction No. 9, the then Secretary of
Labor went as far as to categorically state that the benefit is
principally intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday pay. This
is flagrant violation of the mandatory directive of Article 4 of the
Labor Code, which states that 'All doubts in the implementation and
interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of
labor.' Moreover, it shall always be presumed that the legislature
intended to enact a valid and permanent statute which would have
the most beneficial effect that its language permits (Orlosky v.
Hasken, 155 A. 112)
Obviously, the Secretary (Minister) of Labor had exceeded his
statutory authority granted by Article 5 of the Labor Code
authorizing him to promulgate the necessary implementing rules
and regulations.
We further ruled:
While it is true that the contemporaneous construction placed upon
a statute by executive officers whose duty is to enforce it should be
given great weight by the courts, still if such construction is so
erroneous, as in the instant case, the same must be declared as
null and void. It is the role of the Judiciary to refine and, when
necessary correct constitutional (and/or statutory) interpretation, in
the context of the interactions of the three branches of the
government, almost always in situations where some agency of the
State has engaged in action that stems ultimately from some
legitimate area of governmental power (The Supreme Court in
Modern Role, C.B. Swisher 1958, p. 36).
xxx xxx xxx
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to
implement the Labor Code and Policy Instruction No. 9 issued by
the then Secretary of Labor must be declared null and void.
Accordinglyl public respondent Deputy Minister of Labor Amado G.
Inciong had no basis at all to deny the members of petitioner union
their regular holiday pay as directed by the Labor Code.
Since the private respondent premises its action on the invalidated rule and
policy instruction, it is clear that the employees belonging to the petitioner
association are entitled to the payment of ten (10) legal holidays under
Articles 82 and 94 of the Labor Code, aside from their monthly salary. They
are not among those excluded by law from the benefits of such holiday pay.
Presidential Decree No. 850 states who are excluded from the holiday
provisions of that law. It states:
 ART. 82. Coverage. The provision of this Title shall apply to
employees in all establishments and undertakings, whether for
profit or not, but not to government employees, managerial
employees, field personnel members of the family of the employer
who are dependent on him for support, domestic helpers, persons
in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate
regulations. (Emphasis supplied).
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.
It is argued that even without the presumption found in the rules and in the
policy instruction, the company practice indicates that the monthly salaries of
the employees are so computed as to include the holiday pay provided by
law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the
Chartered Bank, in computing overtime compensation for its employees,
employs a "divisor" of 251 days. The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten (10) legal holidays from the
total number of calendar days in a year. If the employees are already paid for
all non-working days, the divisor should be 365 and not 251.
The situation is muddled somewhat by the fact that, in computing the
employees' absences from work, the respondent bank uses 365 as divisor.
Any slight doubts, however, must be resolved in favor of the workers. This is
in keeping with the constitutional mandate of promoting social justice and
affording protection to labor (Sections 6 and 9, Article II, Constitution). The
Labor Code, as amended, itself provides:
ART. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved
in favor of labor.
Any remaining doubts which may arise from the conflicting or different
divisors used in the computation of overtime pay and employees' absences
are resolved by the manner in which work actually rendered on holidays is
paid. Thus, whenever monthly paid employees work on a holiday, they are
given an additional 100% base pay on top of a premium pay of 50%. If the
employees' monthly pay already includes their salaries for holidays, they
should be paid only premium pay but not both base pay and premium pay.
The contention of the respondent that 100% base pay and 50% premium pay
for work actually rendered on holidays is given in addition to monthly salaries
only because the collective bargaining agreement so provides is itself an
argument in favor of the petitioner stand. It shows that the Collective
Bargaining Agreement already contemplated a divisor of 251 days for holiday
pay computations before the questioned presumption in the Integrated Rules
and the Policy Instruction was formulated. There is furthermore a similarity
between overtime pay, which is computed on the basis of 251 working days
a year, and holiday pay, which should be similarly treated notwithstanding the
public respondents' issuances. In both cases overtime work and holiday work-
the employee works when he is supposed to be resting. In the absence of an
express provision of the CBA or the law to the contrary, the computation
should be similarly handled.
We are not unmindful of the fact that the respondent's employees are among
the highest paid in the industry. It is not the intent of this Court to impose any
undue burdens on an employer which is already doing its best for its
personnel. we have to resolve the labor dispute in the light of the parties' own
collective bargaining agreement and the benefits given by law to all workers.
When the law provides benefits for "employees in all establishments and
undertakings, whether for profit or not" and lists specifically the employees
not entitled to those benefits, the administrative agency implementing that law
cannot exclude certain employees from its coverage simply because they are
paid by the month or because they are already highly paid. The remedy lies
in a clear redrafting of the collective bargaining agreement with a statement
that monthly pay already includes holiday pay or an amendment of the law to
that effect but not an administrative rule or a policy instruction.
WHEREFORE, the September 7, 1976 order of the public respondent is
hereby REVERSED and SET ASIDE. The March 24, 1976 decision of the
National Labor Relations Commission which affirmed the October 30, 1975
resolution of the Labor Arbiter but deleted interest payments is
REINSTATED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16704 March 17, 1962
VICTORIAS MILLING COMPANY, INC., petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Ross, Selph and Carrascoso for petitioner-appellant.
Office of the Solicitor General and Ernesto T. Duran for respondent-
appellee.
BARRERA, J.:
On October 15, 1958, the Social Security Commission issued its Circular No.
22 of the following tenor: .
Effective November 1, 1958, all Employers in computing the
premiums due the System, will take into consideration and include
in the Employee's remuneration all bonuses and overtime pay, as
well as the cash value of other media of remuneration. All these will
comprise the Employee's remuneration or earnings, upon which
the 3-1/2% and 2-1/2% contributions will be based, up to a
maximum of P500 for any one month.
Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc.,
through counsel, wrote the Social Security Commission in effect protesting
against the circular as contradictory to a previous Circular No. 7, dated
October 7, 1957 expressly excluding overtime pay and bonus in the
computation of the employers' and employees' respective monthly premium
contributions, and submitting, "In order to assist your System in arriving at a
proper interpretationof the term 'compensation' for the purposes of" such
computation, their observations on Republic Act 1161 and its amendment and
on the general interpretation of the words "compensation", "remuneration"
and "wages". Counsel further questioned the validity of the circular for lack of
authority on the part of the Social Security Commission to promulgate it
without the approval of the President and for lack of publication in the Official
Gazette.
Overruling these objections, the Social Security Commission ruled that
Circular No. 22 is not a rule or regulation that needed the approval of the
President and publication in the Official Gazette to be effective, but a mere
administrative interpretation of the statute, a mere statement of general policy
or opinion as to how the law should be construed.
Not satisfied with this ruling, petitioner comes to this Court on appeal.
The single issue involved in this appeal is whether or not Circular No. 22 is a
rule or regulation, as contemplated in Section 4(a) of Republic Act 1161
empowering the Social Security Commission "to adopt, amend and repeal
subject to the approval of the President such rules and regulations as may be
necessary to carry out the provisions and purposes of this Act."
There can be no doubt that there is a distinction between an administrative
rule or regulation and an administrative interpretation of a law whose
enforcement is entrusted to an administrative body. When an administrative
agency promulgates rules and regulations, it "makes" a new law with the force
and effect of a valid law, while when it renders an opinion or gives a statement
of policy, it merely interprets a pre-existing law (Parker, Administrative Law,
p. 197; Davis, Administrative Law, p. 194). Rules and regulations when
promulgated in pursuance of the procedure or authority conferred upon the
administrative agency by law, partake of the nature of a statute, and
compliance therewith may be enforced by a penal sanction provided in the
law. This is so because statutes are usually couched in general terms, after
expressing the policy, purposes, objectives, remedies and sanctions intended
by the legislature. The details and the manner of carrying out the law are often
times left to the administrative agency entrusted with its enforcement. In this
sense, it has been said that rules and regulations are the product of a
delegated power to create new or additional legal provisions that have the
effect of law. (Davis, op. cit., p. 194.) .
A rule is binding on the courts so long as the procedure fixed for its
promulgation is followed and its scope is within the statutory authority granted
by the legislature, even if the courts are not in agreement with the policy
stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby
hand, administrative interpretation of the law is at best merely advisory, for it affirmed, with costs against appellant. So ordered.
is the courts that finally determine what the law means.

Circular No. 22 in question was issued by the Social Security Commission, in

view of the amendment of the provisions of the Social Security Law defining
the term "compensation" contained in Section 8 (f) of Republic Act No. 1161
which, before its amendment, reads as follows: .

(f) Compensation — All remuneration for employment include the

cash value of any remuneration paid in any medium other than
cash except (1) that part of the remuneration in excess of P500
received during the month; (2) bonuses, allowances or overtime
pay; and (3) dismissal and all other payments which the employer
may make, although not legally required to do so.

Republic Act No. 1792 changed the definition of "compensation" to:

(f) Compensation — All remuneration for employment include the

cash value of any remuneration paid in any medium other than
cash except that part of the remuneration in excess of P500.00
received during the month.

It will thus be seen that whereas prior to the amendment, bonuses,

allowances, and overtime pay given in addition to the regular or base pay
were expressly excluded, or exempted from the definition of the term
"compensation", such exemption or exclusion was deleted by the amendatory
law. It thus became necessary for the Social Security Commission to interpret
the effect of such deletion or elimination. Circular No. 22 was, therefore,
issued to apprise those concerned of the interpretation or understanding of
the Commission, of the law as amended, which it was its duty to enforce. It
did not add any duty or detail that was not already in the law as amended. It
merely stated and circularized the opinion of the Commission as to how the
law should be construed. 1äwphï1.ñët

The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30,
1959) cited by appellant, does not support its contention that the circular in
question is a rule or regulation. What was there said was merely that a
regulation may be incorporated in the form of a circular. Such statement
simply meant that the substance and not the form of a regulation is decisive
in determining its nature. It does not lay down a general proposition of law
that any circular, regardless of its substance and even if it is only
interpretative, constitutes a rule or regulation which must be published in the
Official Gazette before it could take effect.

The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is
not applicable to the present case, because the penalty that may be incurred
by employers and employees if they refuse to pay the corresponding
premiums on bonus, overtime pay, etc. which the employer pays to his
employees, is not by reason of non-compliance with Circular No. 22, but for
violation of the specific legal provisions contained in Section 27(c) and (f) of
Republic Act No. 1161.

We find, therefore, that Circular No. 22 purports merely to advise employers-

members of the System of what, in the light of the amendment of the law,
they should include in determining the monthly compensation of their
employees upon which the social security contributions should be based, and
that such circular did not require presidential approval and publication in the
Official Gazette for its effectivity.

It hardly need be said that the Commission's interpretation of the amendment

embodied in its Circular No. 22, is correct. The express elimination among
the exemptions excluded in the old law, of all bonuses, allowances and
overtime pay in the determination of the "compensation" paid to employees
makes it imperative that such bonuses and overtime pay must now be
included in the employee's remuneration in pursuance of the amendatory law.
It is true that in previous cases, this Court has held that bonus is not
demandable because it is not part of the wage, salary, or compensation of
the employee. But the question in the instant case is not whether bonus is
demandable or not as part of compensation, but whether, after the employer
does, in fact, give or pay bonus to his employees, such bonuses shall be
considered compensation under the Social Security Act after they have been
received by the employees. While it is true that terms or words are to be
interpreted in accordance with their well-accepted meaning in law,
nevertheless, when such term or word is specifically defined in a particular
law, such interpretation must be adopted in enforcing that particular law, for
it can not be gainsaid that a particular phrase or term may have one meaning
for one purpose and another meaning for some other purpose. Such is the
case that is now before us. Republic Act 1161 specifically defined what
"compensation" should mean "For the purposes of this Act". Republic Act
1792 amended such definition by deleting same exemptions authorized in the
original Act. By virtue of this express substantial change in the phraseology
of the law, whatever prior executive or judicial construction may have been
given to the phrase in question should give way to the clear mandate of the
new law.