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09 IBAAEU v. Inciong

The Supreme Court ruled that Section 2 of Rule IV of the implementing rules and Policy Instruction No. 9 of the Secretary of Labor were invalid. These rules excluded monthly paid employees from receiving holiday pay, which amended the Labor Code by enlarging the scope of exclusion beyond what was spelled out in the Code. The Court found this was a violation of the Labor Code as the language was clear that monthly paid employees were not excluded from holiday pay benefits. Administrative agencies cannot amend acts of Congress through rules and regulations. All doubts in interpreting labor laws must be resolved in favor of labor.

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273 views2 pages

09 IBAAEU v. Inciong

The Supreme Court ruled that Section 2 of Rule IV of the implementing rules and Policy Instruction No. 9 of the Secretary of Labor were invalid. These rules excluded monthly paid employees from receiving holiday pay, which amended the Labor Code by enlarging the scope of exclusion beyond what was spelled out in the Code. The Court found this was a violation of the Labor Code as the language was clear that monthly paid employees were not excluded from holiday pay benefits. Administrative agencies cannot amend acts of Congress through rules and regulations. All doubts in interpreting labor laws must be resolved in favor of labor.

Uploaded by

Mikhel Beltran
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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09 Insular Bank of Asia and America AUTHOR: Garcia

Employees’ Union (IBAAEU) vs. NOTES:


Inciong I included here the cited codal provisions in the case. Pero basahin niyo parin Codal niyo
[G.R. No. L-52415 October 23, 1984] para sure 
TOPIC: Rule-making power, Art. 94 Right to holiday pay – (a) Every worker shall be paid his regular daily wages during
limitations regular holidays, except in retail and service establishments regularly employing less than
PONENTE: Makasiar, J 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; xxx
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.
CASE LAW/ DOCTRINE:
 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… 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.
 An administrative agency cannot amend an act of Congress
FACTS:
 IBAAEU filed a complaint against Insular Bank of Asia and America (Bank) for the payment of holiday pay before the
Department of Labor, NLRC, Regional Office No. IV in Manila.
 Labor Arbiter Soriano granted IBAAEU’s complaint for payment of holiday pay.
 The Bank did not appeal from the said decision. Instead, it complied with the order of Soriano.
 PD No. 850 was promulgated amending among others, the provisions of the Labor Code on the right to holiday pay.
 By authority of Art. 5 of the Labor Code, the Department of Labor promulgated the rules and regulations for the
implementation of holidays with pay.
o 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.
 Policy Instruction No.9 was issued by the Secretary of Labor.
o xxx
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.
 In light of this, the Bank stopped the payment of holiday pay to all its employees.
 IBAAEU filed a motion for writ of execution. The Bank filed an opposition to the motion for a writ of execution claiming among
others that its refusal is based on Policy Instruction no. 9. LA Soriano issued an order enjoining the respondent bank to
continue paying its employees their regular holiday pay. The Bank appealed to the NLRC.
 NLRC dismissed the appeal. The bank filed a motion for reconsideration/appeal with the Office of the Minister of Labor. The
Office of the Minister of Labor, through Deputy Minister Inciong issued an order setting aside the decision of NLRC.
ISSUE(S):
Whether or not Section 2, Rule IV, Book III of the implementing rules and Policy Instruction no. 9 are valid
HELD:
No.
RATIO:
 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. The coverage and scope of exclusion of the Labor Code’s holiday pay provisions is spelled out under Art.
82 of the Labor Code. 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 Secretary of Labor excludes monthly paid employees from the
said benefits by inserting, under Rule IV, Book II of the implementing rules, Section 2.
 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.
 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.
DISSENTING/CONCURRING OPINION(S):

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