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 interpretation of 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
hand, administrative interpretation of the law is at best merely advisory, for it 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.
IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against
appellant. So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon and
De Leon, JJ., concur.

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.
Makasiar, C.J., Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova, De la Fuente, Cuevas,
Alampay and Patajo, JJ., concur.
Teehankee, J., in the result.
Aquino, J., took no part.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner, 
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA
AND AMERICA, respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office and Sycip,
Salazar, Feliciano & Hernandez Law Office for respondents.

MAKASIAR, J.: ñé+.£ªwph!1

This is a petition for certiorari to set aside the order dated November 10, 1979, 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"
(respondent-appellant), the dispositive portion of which reads as follows:  têñ.£îhqwâ£

xxx xxx xxx

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. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of
holiday pay before the then Department of Labor, National Labor Relations Commission, Regional
Office No. IV in Manila. Conciliation having failed, and upon the request of both parties, the case
was certified for arbitration on July 7, 1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled
case, granting petitioner's complaint for payment of holiday pay. Pertinent portions of the decision
read: têñ.£îhqwâ£

xxx xxx xxx

The records disclosed that employees of respondent bank were not paid their wages
on unworked regular holidays as mandated by the Code, particularly Article 208, to
wit:  têñ.£îhqwâ£

Art. 208. 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 10 workers.
(b) The term "holiday" as used in this chapter, shall 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
FIRST DIVISION
[G.R. No. L-50320 : July 31, 1981.]
PHILIPPINE APPAREL WORKERS UNION, Petitioners, vs. THE NATIONAL LABOR
RELATIONS COMMISSION and PHILIPPINE APPAREL, INC., Respondents.
 
DECISION
 
MAKASIAR, J.:
 
Petition for Certiorari to review the decision dated September 1, 1978 of respondent
Commission which sustained the position of respondent employer and dismissed the case
for lack of merit.
It appears from the records that the petitioner, in anticipation of the expiration of their
1973-1976 collective bargaining agreement on July 31,1976, and as an initial step for its
renewal, submitted to the respondent company a set of bargaining proposals dated June 2,
1976. Negotiations were held thereafter between the parties; but because of an impasse,
the complainant  (petitioner herein) filed on September 15, 1976 a complaint with the
cranad

Department of Labor praying that the parties therein be assisted in concluding a collective
agreement. Notwithstanding the complaint, the parties nevertheless continued their
negotiations.
On September 3, 1977, the private respondent and petitioner concluded and signed a
collective bargaining agreement which, among other things, provided for a 3-stage wage
increase for all rank and file employees. The terms of the agreement on wage increase,
which were retroactive to April 1, 1977, follow:
“(a) Effective April 1, 1977, EIGHTY CENTAVOS [P0.80] will be added to the basic
daily wages of all said employees.
“(b) Effective April 1, 1978, FIFTY CENTAVOS [P0.50] will be added to the basic daily
wages of all said employees.
“(c) Effective April 1, 1979, FIFTY CENTAVOS [P0.50] will be added to the basic daily
wages of all said employees.”
Meanwhile, on April 21, 1977, P.D. 1123 was enacted to take effect on May 1, 1977
providing for an increase by P60.00 in the living allowance ordained by P.D. 525. This
increase was implemented effective May 1, 1977 by the respondent company, as shown by
Memorandum No. 6-77 of the respondent company’s General Manager to all employees
dated April 23, 1977  (p. 12, rec.).
cranad

The controversy arose when the petitioner union sought the implementation of the
negotiated wage increase of P0.80 as provided for in the collective bargaining agreement.
The respondent company alleges that it has opted to consider the P0.80 daily wage
increase  (roughly P22 per month) as partial compliance with the requirements of said
cranad

decree, so that it is obliged to pay only the balance of P38 per month. In effect, the
payment of the additional P60 covers both the requirements of the decree and the
negotiated wage increase of P0.80 daily. Respondent company asserts that since there was
already a meeting of the minds between the parties as early as April 2, 1977 about the
wage increases which were made retroactive to April 1, 1977, it fell well within the
exemption provided for in the Rules Implementing P.D. 1123, as follows:
“Section 1. Coverage. — These rules shall apply to all employers except the
following:
xxx
“(k) Those that have granted in addition to the allowance under P.D. 525, at least
P60.00 monthly wage increase on or after January 1, 1977, provided that those who
paid less than this amount shall pay the difference.”
On the other hand, petitioner maintains that the living allowance under P.D.
1123  (originally P.D. 525) is distinct and separate from the negotiated wage increase of
cranad

P0.80 daily [pp. 6 & 96, rec.]. In fact, it adds, when the CBA was signed by the parties on
September 3, 1977, the respondent company was fully aware of the effectivity of P.D. 1123
and had already been paying the increased allowance provided therein [p. 94, rec.]. Hence,
the respondent company acted in bad faith when it refused to pay the negotiated wage
increase in violation of the collective bargaining agreement and the respondent company is
guilty of unfair labor practice, pursuant to the following provisions of the Labor Code:
“Article 248. Unfair Labor Practices of Employers. — It shall be unfair labor practice
for an employer:
xxx
“(J) To violate a collective bargaining agreement.”
On February 13, 1978, the petitioner filed a complaint dated February 10, 1978 for unfair
labor practice and violation of the CBA against the respondent company [pp. 13-16, rec.].
On May 30, 1978, an Order [p. 18, rec.] was issued by Labor Arbiter Conrado B. Maglaya,
the dispositive portion of which reads as follows:
“WHEREFORE, premises considered, and by authority of Article 263 of the Labor
Code as amended, let this case be, as it is hereby, DISMISSED and the same is
referred to the parties or disputants for them to resolve their disputes, grievances or
matters arising from the implementation, application or interpretation of their
Collective Bargaining Agreement in accordance with the Machinery established in the
CBA.”
From this order, both parties appealed to the respondent Commission.
Petitioner filed its appeal on June 28, 1978 [pp. 31-34, rec.] assailing the order of Labor
Arbiter Maglaya as contrary to law and the evidence adduced during the hearing, which
constitutes grave abuse of discretion amounting to lack of jurisdiction. It avers that the
matter had already been taken up on grievance but the respondent company refused to
implement the P0.80 wage increase under the CBA, and that it further refuses to submit to
voluntary arbitration. Hence, it prays for the setting aside of the Labor Arbiter’s Order and
for the parties to submit to voluntary arbitration as provided for in their CBA and the
provisions of the Labor Code.
On the other hand, respondent company filed on July 5, 1978 a partial appeal [pp. 19-27,
rec.], accepting the dismissal of the complaint but assailing that portion of the Labor
Arbiter’s Order declaring the subject matter as grievable and therefore threshable under the
parties’ CBA. Its prayer was for affirmance of the dismissal, reversal of the referral to the
parties for threshing out under their CBA, and for a declaration that it has not committed an
unfair labor practice nor violated the CBA.
On September 1, 1978, the respondent Commission  (Second Division) promulgated its
cranad

decision, setting aside the order appealed from and entering a new one dismissing the case
for obvious lack of merit. The dismissal is predicated on the opinion [p. 45, rec.] of the
Undersecretary of Labor when he said:
xxx
“If as you said, management and labor had agreed on April 2, 1977 to grant an
amount of P27.00  (roughly) per month to its employees retroactive to April 1, 1977,
cranad

then the exemption is squarely in point, notwithstanding that the CBA was signed in
May or June. This must be so for reason that on April 7, 1977, there was already the
meeting of the minds of the parties and for legal purposes, the contract was already
perfected as of said date.”
Said the respondent Commission:
“We fully subscribe to this view. It needs no further elaboration to demonstrate that
by the facts and the terms of the law, the respondent has to pay each of the
employees concerned a total of P60.00 monthly for it to satisfy payment of both the
wage increase and the allowance.
“In resume, we find the refusal of the respondent to submit to voluntary arbitration
to be validly grounded and, therefore, not constitutive of unfair labor practice. We
further find to be untenable the complainant’s claim for full payment of both the
P0.80 daily wage increase under the CBA and the P60 allowance under P.D. 1123”
[pp. 45-46, rec.].
Petitioner than filed its motion for reconsideration but the NLRC en banc dismissed the same
in its resolution of February 8, 1979 [pp. 48-54, rec.], pursuant to Section 7, Rule II of the
Rules and Regulations Implementing P.D. No. 1391, which became effective on September
15, 1978 and provides thus —
“Sec. 7. Decisions of the Commissions. There shall henceforth be no appeal from
such decisions to the Minister of Labor except as provided in P.D. 1367 and its
implementing rules concerning appeals to the Prime Minister, and the decisions of
the Commission en banc or any of its Decisions shall be final and executory.”
Hence, the instant petition.
Petitioner maintains that private respondent violated the CBA and committed an ULP when it
refused to pay the negotiated wage increase of P0.80 daily effective April 1, 1977, to the
employees within the bargaining unit. Private respondents, however, contend that there was
no violation of the CBA and that its application of the negotiated wage increase as partial
compliance with P.D. 1123 is well within the provisions of the latter.
A perusal of the CBA shows that it was made and entered into on the 3rd day of September,
1977 by and between the parties herein  (pl. see p. 1 of Annex “B” at p. 7 of NLRC rec.)
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although the first year of its increase was retroactive to April 1, 1977. At the time it was
perfected and signed by the parties, P.D. 1123 was already in force and effect. A sample
pay advice [p. 11 — insert, rec.] and the Memorandum No. 6-77 dated April 23, 1977 [p.
12, rec.] signed by the General Manager of respondent company show that the said P.D.
was implemented by respondent company on May 1, 1977.
On the other hand, there is nothing in the records to indicate that the negotiated wage
increases were granted or paid before May, 1977. Hence, it cannot be said that the
respondent Company falls within the exceptions provided for in paragraph (k) of the rules
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implementing P.D. 1123. At the time the said P.D. took effect, there was neither a perfected
contract nor an actual payment of the said increase. There was therefore no grant of said
increases as yet, despite the contrary opinion expressed in the letter of Undersecretary of
Labor Amado G. Inciong.
The said letter dated May 13, 1977 [p. 33, NLRC rec.] of Undersecretary Inciong is based on
a wrong premise and misrepresentation on the part of respondent company. It was alleged
in the letter of respondent company that the wage increases were “agreed upon by the
company and the bargaining union on April 2, 1977 in recognition of the imperative need for
employees to cope up with inflation brought about by, among others, another increase in oil
price” [p. 31, NLRC rec.]. It was not, however stated that at the time the said letter was
written, negotiations were still being held “on other unresolved economic and non-economic
bargaining items and it was only on September 3, 1977 when they reached agreement
thereon” [pl. see p. 7 of private respondent’s Memorandum, p. 107, rec.].
There was therefore no binding contract between the parties before September 3, 1977. For
“if any essential item is left open for future consideration, there is no binding contract, and
an agreement to reach an agreement imposes no obligation on the parties thereto” [17 Am.
Jur., 2d 362].
Such being the case, and without actual payment of the agreed P0.80 wage increase, there
could have been no “grant” of wage increases within the contemplation of paragraph K,
Section 1 of the Rules Implementing P.D. 1123 to place the respondent company within the
purview of the exemption provided for in the said rules.
Consequently, its refusal to implement the P0.80 wage increase for the first year of the CBA
constitutes a violation thereof and makes the respondent company guilty of unfair labor
practice.
The respondent company is also guilty of bad faith when it signed the CBA on September 3,
1977 without in any way letting the petitioner union know that it was going to apply part of
the allowances being paid under P.D. 1123 to the wage increases provided for in the CBA.
Between the time of the implementation of P.D. 1123 on May 1, 1977 and the signing of the
CBA on September 3, 1977, nothing was said between the parties about the wage increase
despite the fact that negotiations were still going on between the parties. The exchange of
letters between the respondent company and Labor Undersecretary Inciong appears to have
been concealed from the union. According to the respondent Commission, “the wage
increase  (however) was not immediately implemented because Mr. Alfred Flug who was to
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bring home funds was still in the United States” [p. 40, rec.]. It was only upon arrival from
the U.S.A. on January 19, 1978 of Robert Flug, son of said Alfred Flug, that the union had
an inkling that the company will not pay the negotiated wage increase. At this point the CBA
was already perfected and signed by the parties, so that its terms and stipulations have the
force of law between them.
A collective bargaining agreement is the law between the parties  (Kapisanan ng mga
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Manggagawa sa La Suerte-FOITAF vs. Noriel, 77 SCRA 414). In the construction or

interpretation of such a contract, the primary purpose and guideline and indeed the very
foundation of all the rules for such construction or interpretation is the intention of the
parties (17 Am. Jur. 2d., 631).
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What was the intention of the parties relative to the wage increases? A cursory reading of
the CBA indicates that the benefits provided therein are not exclusive of other benefits, as
may be gleaned from the provisions of its Section 4, Article XIV [p. 42 of the CBA at p. 6,
NLRC rec.], which speaks of “any other benefits or privileges which are not expressly
provided in this Agreement, even if now accorded or hereafter accorded to the employees
and workers, shall be deemed purely acts of grace . .”
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Likewise, in the accompanying Memorandum of Understanding [pp. 82-83, NLRC rec.] dated
September 3, 1977, the parties have agreed as follows:
“1. As long as it does not contravene the law and its implementing rules and
regulations the COMPANY agrees to effect a uniform and indiscriminate wage
increase in the salaries of its employees within the bargaining unit represented by
the UNION regardless of their position and pay rates, in the event that the
government shall direct another increase(s) in the statutory minimum wage fixed
under P.D 928 within the period of three years from the signing of this instrument.
The uniform increase contemplated in this instrument will be equivalent to the
amount of the statutory wage increase or adjustment.”
The bases of the dissent of Madame Justice Herrera are that:
I. The P0.80 per day increase was already granted as early as April 2, 1977 when the
company agreed to give wage increases to its employees effective April 1, 1977.
Hence, such grant should be credited against the emergency cost of living
allowance  (ECOLA) provided for by P.D. 1123.
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 II. The Department’s  (Labor) view on the matter of exemptions from P.D. 1123
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should be given weight since it was not interpreting or construing a statute but
explaining the extent of its own rule.
III. It is inequitable that an employer who has granted increases in pay to his
employees on a given day is further ordered to give additional increases one, two or
three days thereafter.
IV. Social justice requires that the broader requirements of a stable economy should
be taken into account in resolving conflicts between labor and management.
I
There is no controversy that the first year’s wage increase under the CBA was supposed to
retroact to April 1, 1977. There is likewise no question that had the company paid the
eighty centavos daily increase in April 1977, the conclusion would have been unquestionable
that such negotiated wage increase (NWI) should be credited against the emergency cost of
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living allowance  (ECOLA) under P.D. 1123. cranad

The question arose because, first, there was no such payment either before or after the
effectivity of P.D. 1123 on May 1, 1977; and second, because there was no binding contract
to speak of on May 1, 1977.
It is conceded that the word “grant” in its broader sense may include “to agree or assent to;
to allow to be fulfilled; to accord; to bestow or confer; and is synonymous with ‘concede’
which means to agree on the idea of bestowal or acknowledgment especially of a right or
privilege”  (Woods vs. Reilly, 211 S.W. 2d 591, 597). Such being the case, the “grant”
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could be said to have been made at the time of the agreement, although there may not
have been payment as yet.
But the question is, when was the inception or actual birth of the agreement? The company
contends that it was on April 2, 1977, whereas the Union alleges that it was only on
September 3, 1977, the date of the CBA.
Paragraph 1 of the CBA reads:
“This agreement, made and entered into this 3rd day of September 1977 . .”   cra    chanroblesvirtualawlibrary (p. 7,
NLRC rec.).
On the other hand, there is nothing in the record to indicate that the P0.80 wage increase
was indeed agreed upon on April 2, 1977. Aside from the self-serving statements of the
company in its various communications  (pp. 121, 125 and 128, rec.) and pleadings  (pp. 73
cranad cranad

and 102, rec.), the only other reference to said date is found on the second paragraph of
page 1 of the Memorandum of Understanding dated September 3, 1977  (p. 82, NLRC rec.) cranad

which, however, does not mention anything about the 80-centavo increase effective April 1,
1977. In fact, the said paragraph speaks of the company’s commitment to effect uniform
and indiscriminate wage increases among its employees within the bargaining unit
represented by the union in the event that the government shall, within a period of
three (3) years from execution hereof, direct additional increases in the statutory minimum
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wage fixed under P.D. 928. In other words, what was agreed upon on April 2, 1977, was a
conditional increase contingent upon the government’s increasing of the statutory minimum
wage then prevailing. Is it not possible that the company’s decision to give the P0.80 daily
increase effective April 1, 1977 was influenced by the knowledge that it could be absorbed
by the additional ECOLA provided for by P.D. 1123, and that such decision was definitely
made after receipt of the letter dated July 15, 1977 of then Undersecretary Inciong  (p. 130, cranad

rec.)?
In any case, the company admits that after April 1977 there were “negotiations on other
unresolved economic and non-economic bargaining items and it was only on September 3,
1977 when they reached agreement thereon.”  (p. 107, rec.).  chanroblesvirtualawlibrary

This brings us to no other conclusion that the agreement was born only on September 3,
1977:
“Mere preliminary negotiations as to the terms of an agreement do not constitute a
contract. A complete contract is effected generally only by an agreement as to all the
terms which the parties intend to introduce into the contract, and where such is the
intention of the parties, by the execution of a formal written instrument embodying
those terms”  (17 C.J.S. 390).
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“Where preliminary negotiations are consummated by a written contract, or an oral

agreement is evidenced by a subsequent agreed memorandum in writing, the writing
supersedes all previous understandings and the intent of the parties must be
ascertained therefrom . .”  (17 C.J.S. 750).  cra    chanroblesvirtualawlibrary

In the light of the foregoing, there was therefore no “grant” of the wage increase as of May
1, 1977 to enable the company to avail of the exemption under P.D. 1123.
II
It is also conceded that the Department of Labor had the right to construe the word “grant”
as used in its rules implementing P.D. 1123, and its explanation regarding the exemptions
to P.D. 1123 should be given weight. However, when it is based on misrepresentations as to
the existence of an agreement between the parties, the same cannot be applied. At any
rate, the opinion of then Undersecretary Inciong about the matter is based on the wrong
premise that there was already an agreement  (“If as you said management and labor cranad

agreed on April 2, 1977 . .”, p. 33, NLRC rec.). There is no such agreement perfected on
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April 2, 1977.
There is no distinction between interpretation and explaining the extent and scope of the
law; because where one explains the intent and scope of a statute, he is interpreting it.
The construction or explanation of then Undersecretary Inciong is not only wrong as it was
purely based on a misapprehension of facts, but also unlawful because it goes beyond the
scope of the law as hereinafter demonstrated.
III
The CBA entered into between the parties on September 3, 1977 created certain obligations
between the parties which they are bound to keep without being “ordered” to do so. The
principle of equity need not even come in, for “unless fraud, mistake or the like is set up, a
court will not disturb contract rights as evidenced by a writing which purports to express the
intention or will of the parties . .”  (27 Am. Jur. 594).  cra   chanroblesvirtualawlibrary

A cursory reading of the CBA dated September 3, 1977 reveals the following intentions of
the parties:
a. That the wage increases thereunder should be staggered for a 3-year period
retroactive to April 1, 1977  (see page 2 of Private Respondent’s Memorandum, p cranad

102, rec.); and

 b. That such wage increases are exclusive of any statutory increase in the minimum
wage, obliging the company to effect a uniform and indiscriminate wage increase
equivalent to the increase or adjustment in the minimum wage that may be decreed
within a period of three years from the signing of the instrument on September 3,
1977 (see par. 1 of the Memorandum of Understanding, p. 83, NLRC rec.).
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The staggered wage increase will not be achieved if the same were to be absorbed by the
P60-increase in the ECOLA. For a computation of NWI under the CBA will approximately
amount to the following:
First year — P0.80 daily or approximately P22/mo.
Second year — .50 daily or approximately 13.75/mo.
Third year — .50 daily or approximately 13.75/mo.
Monthly total for 3 years P49.50
Thus, it will be seen that because the resultant total in the monthly-wage increase over the
3-year period under the CBA is less than P60.00, the same will always be covered by the
ECOLA, and there will be no occasion for a staggered increase during the period other than
what the law may provide — which is not the intention of the parties.
It is submitted that had the parties intended that to be the end, they should have
incorporated the same in their CBA or in their Memorandum of Understanding.
It is also apparent that the crediting of the NWI in the ECOLA was an afterthought on the
part of the company. If not, then the company was in bad faith when it did not mention its
plan to credit the NWI to the ECOLA during the negotiations prior to the signing of the CBA
on September 3, 1977, as soon as it received the opinion of then Undersecretary Inciong in
his letter of July 13, 1977  (p. 130, rec.).
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IV
It is submitted that the principle of social justice will be better served by upholding the
protection-to-labor policy guaranteed by the Constitution.
The Honorable Chief Justice Enrique M. Fernando, in explaining the concept of social justice,
wrote:
“What is thus stressed is that a fundamental principle as social justice, identified as it
is with the broad scope of the police power, has an even more basic role to play in
aiding those whose lives are spent in toil, with destitution an ever-present threat, to
attain a certain degree of economic well-being. Precisely, through the social justice
coupled with the protection to labor provisions, the government is enabled to pursue
an active and militant policy to give reality and substance to the proclaimed
aspiration of a better life and more decent living conditions for all. It is in that spirit
that in 1969, in Del Rosario vs. Delos Santos  (L-20586, March 21, 1969, 22 SCRA
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1196), reference was made to what the social justice concept signifies in the realistic
language of the late President Magsaysay: ‘He who has less in life should have more
in law.’ After tracing the course of decisions which spoke uniformly to the effect that
the tenancy legislation, now on the statute books, is not vitiated by constitutional
infirmity, the Del Rosario opinion made clear why it is easily understandable ‘from
the enactment of the Constitution with its avowed concern for those who have less in
life, [that] the constitutionality of such legislation has been repeatedly upheld.’ What
is sought to be accomplished by the above fundamental principle is to assure ‘the
 effectiveness of the community’s effort to assist the economically underprivileged.
For under existing conditions, without succor and support, they might not, unaided,
be able to secure justice for themselves”  (Fernando, Enrique M., Constitution of
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the Philippines, pp. 80-81 [1974]).

More than elusive justice, survival is the daily problem of the worker and his family. The
employer is not faced with such a problem. More often than not, the employer dissipates
part of his income or profit in pleasures of the flesh and gambling aside from luxuries,
fabulous parties and conspicuous consumption.
The stability of the economy does not depend on the employer alone, but on government
economic policies concerning productivity in all areas and not only in the clothing or textile
industries. There is not even an intimation that the company is losing. It is the living wage
of the workers which is the basis of a stable economy. If the company cannot pay a living
wage, it has no business operating at the expense of the lives of its workers from the very
start.
The preservation of the lives of the citizens is a basic duty of the State, more vital than the
preservation of the profits of the corporation. When the State is engaged in a life-and-death
struggle, like war or rebellion, it is the citizen worker who fights in defense of the State and
for the preservation of the existence of corporations and businesses within its territorial
confines. When the life of the State is threatened from within and without, it is the citizen,
not the corporation or business enterprise, that mans the weapons of war and march into
battle.
To invoke the nebulous term “stable economy” to justify rejection of the claims of the
workers as against the assets of the employer, is to regard human life as more expendable
than corporate capital. There is nothing in the Constitution that expressly guarantees the
viability of business enterprises much less assuring them of profits.
V
Moreover, it must be pointed out that the Secretary of Labor has exceeded his authority
when he included paragraph  (k) in Section 1 of the Rules Implementing P.D. 1123.
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Section 1 of said decree spells out the scope of its benefits, as follows:
“Section 1. In the Private Sector. — In the private sector, an across-the-board
increase of sixty pesos  (P60.00) in emergency allowance as provided in P.D. 525
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shall be paid by all employers to their employees effective 1 May 1977. Accordingly,
the monthly emergency allowance under P.D. 525 is hereby amended as follows:
“a) For workers being paid P50.00 P110
“b) For workers being paid P30.00 90
“c) For workers being paid P15.00 75.”
To implement P.D. 1123, the then Secretary of Labor was authorized in Section 4 of
the same decree to issue appropriate rules and regulations. Such authority is quoted
hereunder:
“Sec. 4. The Secretary of Labor and the Commissioner of the Budget shall issue
appropriate rules and regulations to implement this Decree for their respective
sectors. Under such rules and regulations, distressed employers whether public or
 private may be exempted while in such condition in the interest of development and
employment.”
By virtue of such rule-making authority, the Secretary of Labor issued on May 1, 1977 a set
of rules which exempts not only distressed employers  (see paragraph 1, Section 1 as well
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as Sections 6, 7, 8 and 9 of said rules) but also “those who have granted in addition to the
allowance under P.D. 525, at least P60.00 monthly wage increase on or after January 1,
1977, provided that those who paid less than this amount shall pay the difference  (see cranad

paragraph k of said rules).

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 among which are:
1. Teozon vs. Members of the Board of Administrators, PVA (33 SCRA 585, 588-589): cranad

“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 cranad

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
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interpretation of the law is at best merely advisory, for it is the courts that finally
determine what 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”  (Emphasis supplied).
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2. Santos vs. Hon. Estenzo, et al.  (109 Phil. 419):

cranad
 “It is of elementary knowledge that an act of Congress cannot be amended by a rule
promulgated by the Worker’s Compensation Commission.”
3. Hilado vs. Collector of Internal Revenue  (100 Phil. 295): cranad

“It seems too clear for serious argument that an administrative officer cannot change
a law enacted by Congress. A regulation that is merely an interpretation of the
statute when once determined to have been erroneous becomes a nullity.”
4. Sy Man vs. Jacinto & Fabros  (93 Phil. 1093): cranad

“. . We also find and hold that the memorandum order of the Insular Collector of
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Customs of August 18, 1947, is void and of no effect, not only because it has not
been duly approved by the Department Head and fully published as required by
Section 551 of the Revised Administrative Code but also because it is inconsistent
with law . . “  (Emphasis supplied).
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5. Olsen & Co., Inc. vs. Aldenese and Trinidad  (43 Phil. 259): cranad

“The important question here involved is the construction of Sections 6, 7 and 11 of

Act No. 2613 of the Philippine Legislature, and Section 9 of the ‘Tobacco Inspection
Regulations,’ promulgated by Administrative Order No. 35. It must be conceded that
the authority of the Collector of Internal Revenue to make any rules and regulations
must be founded upon some legislature act, and that they must follow and be within
the scope and purview of the act.”
In the light of the foregoing, paragraph  (k) of the Rules Implementing P.D. 1123 must be
cranad

declared void. Consequently, the argument about crediting the NWI against the ECOLA has
no more leg to stand on and must perforce fall.
It is also obvious that the negotiated wage increases provided for in the CBA are intended to
be distinct and separate from any other benefit or privilege that may be forthcoming to the
workers.
The respondent company must perforce pay both the benefits under P.D. 1123 and the CBA.
Its refusal to pay the wage increase provided for in the latter constitutes a question that
should have been settled before a voluntary arbitrator.
Moreover, 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  (Insular Lumber Co. vs. CA, 80 SCRA cranad

28, citing Art. 1702, Civil Code of the Philippines).

Consequently, We find that the respondent Commission acted with grave abuse of discretion
when it dismissed petitioner’s case and upheld the private respondent’s posture in the
absence of substantial evidence in support thereof.
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.
SO ORDERED.
 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.  There were 1

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 Relations 3 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,"  thus rendering clear that it would on its own showing obtain only
6

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.  "is that every labor organization be given the opportunity in a free and
7

honest election to make good its claim that it should be the exclusive collective bargaining
representative."  Petitioner cannot complain. It was given that opportunity. It lost in a fair election. It
8

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."  That objective is best 10

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.   They were promulgated under the authority of
12

the then prevailing Industrial Peace Act.   That Legislation is no longer in force, having been
13

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.   That was not even attempted here. All
14

that petitioner did was to set forth in two separate paragraphs the applicable rule followed by
respondent Director  and the governing article.   It did not even bother to discuss why such rule was
15 16

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,"  a 1903 decision, Justice McDonough, as ponente, cited this excerpt from the leading
17

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."   There was a paraphrase by Justice Malcolm of such a pronouncement in Molina v.
18

Rafferty,"   a 1918 decision: "Courts will and should respect the contemporaneous construction
19

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."  Since then, such a doctrine
20

has been reiterated in numerous decisions .   As was emphasized by Chief Justice Castro, "the
21

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).
Barredo, Antonio, Aquino and Concepcion Jr., JJ., concur.
 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.  At this stage, the private respondents as the offended parties filed with
5

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.  In such complaint, the other petitioner, Crispin Abellana,
6

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. ..."  There was a motion for reconsideration which was denied. Hence this petition.
8

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."  Such an interpretation, as noted, ignores the de novo aspect of appealed cases from
9

city courts.  It does likewise, as mentioned, give rise to a constitutional question to the extent that it
10

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."  It admits of no doubt that an
11

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."  Unlike
12

petitioners, respondent Judge was duly mindful of such a norm. This Court has made clear that its
observance in appealed criminal cases is mandatory.  In a 1962 decision, People v.
13

Carreon, Justice Barrera, as ponente, could trace such a rule to a 1905 decision, Andres v.
14

Wolfe.  Another case cited by him is Crisostomo v. Director of Prisons, where Justice Malcolm
15 16

emphasized how deeply rooted in Anglo-American legal history is such a rule. In the latest case in
point, People v. Jamisola, this Court, through Justice Dizon, reiterated such a doctrine in these
17

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.'"  So it is in civil cases under Section 9 of Rule 40.  Again, there is a host of decisions
18 19

attesting to its observance.  It cannot be said then that there was an error committed by respondent
20

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."  That is a substantive
21

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.  It is a well-settled
22

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.  The commitment of this Court to such a
23

primordial objective has been manifested time and time again. 24

WHEREFORE, this petition for certiorari is dismissed.

Costs against petitioners.
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:   "It has been repeated time and time again that where
4

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,   this Court held. "Man-damus is the proper remedy if it could be
6

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.   The opinion continued in this wise:"According to former Chief Justice Moran,"
7

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."   So it has been since then.   The latest reported case, Province. of Pangasinan v.
8 9

Reparations Commission,   this court speaking through Justice Concepcion Jr., reiterated such a
10

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.

Barredo, Antonio, Concepcion, Jr., Santos and Abad Santos, JJ., concur.
Aquino, J., took no part.

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.

DECISION
HERMOSISIMA, JR., J.:

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 No. 26 registered in the
name of Anselmo Salvatierra under OCT O-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 attorneys 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 Bartolomes 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 in the said estate. Anselmo Salvatierra
represented his father Macario, who 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. No.
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
Leonila Salvatierra
(Exhs. B-1, and 2-B, p. 8, id.).
[2]

(Italics 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 Macarios 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 latters 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 Anselmos 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 Salvatierras title over
Lot No. 26 on May 20, 1980, said court held that appellants 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:
x x x 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: x x x 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.
Article 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, illustrates 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 then
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, x x x.
This provision should be read in conjunction with Article 1456 of the Civil Code, which
provides:
Article 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.
The law thereby creates the obligation of the trustee to reconvey the property and the title
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 Italics 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 Salvatierras 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.  The applicable provision of law in the case at bar is Article
[5]

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 is, before its partition, owned in common by such heirs,  and hence, the effect
[7]

of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
portion which may be allotted 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 fathers 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 the 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, Anselmos 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
respondent 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  of the same code, referred to by petitioners is not in point. This article must
[9]

be read in conjunction with Art. 1390  which refers to voidable contracts. This case at
[10]

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.  While resulting trust is one raised by
[11]

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.  It does not arise by agreement or intention but by operation of law.
[13]

[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. We have held in the case
[15]

of Armamento v. Central Bank  that an action for reconveyance of registered land

[16]

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,  especially, we went further by stating:
[17]

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 Courts approval on
said findings, on account of the intrinsic merit and cogency thereof no less than that
Courts superior status as a review tribunal.  No reversible errors can be attributed to
[18]

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.