Chartered Bank Employees Association v. Ople [GR L-44717, 28 August 1985]

En Banc, Gutierrez, Jr. (p): 10 concur, 1 concur in result, 1 took no part, 1 on leave

Facts: On 20 May 1975, the Chartered Bank Employees Association, in representation of its monthly paid employees/members, instituted a complaint with the Regional Office IV, Department of Labor, now Ministry of Labor and Employment (MOLE) against Chartered Bank, for the payment of 10 unworked legal holidays, as well as for premium and overtime differentials for worked legal holidays from 1 November 1974.

Both the arbitrator and the National Labor Relations Commission (NLRC) ruled in favor of the petitioners ordering the bank to pay its monthly paid employees the holiday pay and the 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 III of the Integrated Rules and Policy Instruction 9, claiming the rule that “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 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 0 paid legal holidays.”

The Supreme Court reversed and set aside Ople’s 7 September 1976 order, and reinstated with modification (deleting the interest payments) the  24 March 1976 decision of the NLRC affirming the 30 October 1975 resolution of the Labor Arbiter.

1. When the language is clear and unequivocal, the law must be taken to mean what is says
   When the language of the law is clear and unequivocal the law must be taken to mean exactly what it says. An administrative interpretation, which diminishes the benefits of labor more than what the statute delimits or withholds, is obviously ultra vires. 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 9, the 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.
2. Executive construction given weight by court except when erroneous, thereby being null and void
   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, 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. Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy Instruction was declared null and void in IBAAEU v. Inciong, and thus applies in the case at bar. 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 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 (See PD 800, Article 82)
3. Relevance of a divisor of 251 days in computation of overtime compensation as to intent
   In computing overtime compensation for its employees, the bank employs a “divisor” of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the 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.
4. All doubts construed resolved in favor of labor; Intent of legislature towards most beneficial effect
   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). Article 4 of the Labor Code, as amended, provides 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. 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.
5. Equity, proper remedy; CBA amendment over administrative rule or policy instruction
   It is not the intent of the Court to impose any undue burdens on an employer which is already doing its best for its personnel, as they are among the highest paid in the industry. However, the Court has 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.