IBAAEU v. Inciong [GR L52415, 23 October 1984]
Second Division, Makasiar (p): 3 concur, 2 concur in result, 1 took no part


Facts: On 20 June 1975, the Union filed a complaint against the bank for the payment of holiday pay before the then Department of Labor, National Labor Relations Commission, Regional Office IV in Manila. Conciliation having failed, and upon the request of both parties, the case was certified for arbitration on 7 July 1975. On 25 August 1975, Labor Arbiter Ricarte T. Soriano rendered a decision, granting petitioner’s complaint for payment of holiday pay.  The bank did not appeal from the said decision, but rather complied with the order of the arbiter by paying their holiday pay up to and including January 1976.
On 16 December 1975, PD 850 was promulgated amending, among others, the provisions of the Labor Code on the right to holiday pay (Article 94). Accordingly, on 16 February 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 (Section 2 is controversial). On 23 April 1976, Policy Instruction 9 was issued by the then Secretary of Labor (now Minister) interpreting the implementing rule. The bank, by reason of the ruling laid down by the rule implementing Article 94 of the Labor Code and by Policy Instruction 9, stopped the payment of holiday pay to all its employees.
On 30 August 1976, petitioner filed a motion for a writ of execution to enforce the arbiter’s decision of 25 August 1975, whereby the bank was ordered to pay its employees their daily wage for the unworked regular holidays. On 10 September 1975, the bank filed an opposition to the motion for a writ of execution. On 18 October 1976, the Labor Arbite, instead of issuing a writ of execution, issued an order enjoining the bank to continue paying its employees their regular holiday pay. On 17 November 1976, the bank appealed from the order of  the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC promulgated its resolution en banc dismissing the bank’s appeal, and ordering the issuance of the proper writ of execution. Copies of the above resolution were served on the petitioner only on 9 February 1979 or almost 8 months after it was promulgated, while copies were served on the bank on 13 February 1979.
On 21 February 1979, the bank filed with the Office of the Minister of Labor a motion for reconsideration/appeal with urgent prayer to stay execution. On 19 March 1979, petitioner filed its opposition to the bank’s appeal. On 30 July 1979, petitioner filed a second motion for execution pending appeal, praying that a writ of execution be issued by the NLRC pending appeal of the case with the Office of the Minister of Labor. The bank filed its opposition thereto on 8 August 1979. On 13 August 1979, the NLRC issued an order directing the Chief of Research and Information of the Commission to compute the holiday pay of the IBAA employees from April 1976 to the present in accordance with the Labor Arbiter dated 25 August 1975. On 10 November 1979, the Office of the Minister of Labor, through Deputy Minister Amado G. Inciong, issued an order setting aside the resolution en banc of the NLRC dated 20 June 1978, and dismissing the case for lack of merit. Hence, the petition for certiorari charging Inciong with abuse of discretion amounting to lack or excess of jurisdiction.
The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor, and reinstated the 25 August 1975 decision of the Labor Arbiter Ricarte T. Soriano.

  1. Section 2, Rule IV, Book III of implementing rules, and Policy Instruction 9 null and void
    Section 2, Rule IV, Book III of the implementing rules and Policy Instruction 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. Article 94 and 82 of the Labor Code did not exclude the monthly paid employees from benefits of holiday pay; the implementing rules however excluded them by providing 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.
  2. When language is clear and equivocal, the law must be taken to mean what it says
    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.
  3. Presumption always in favor of law, strictly construed against management; Doubt construed in favor of labor
    The contention that the intent and spirit of the holiday pay law was 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,” through meritorious, would not lie. 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. The presumption is always in favor of law, negatively put, the Labor Code is always strictly construed against management. 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.
  4. Executive construction given great weight (rule binding upon the Court) except when erroneous, null and void; Administrative interpretation are advisory, court determines meaning of the law
    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 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. 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. 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. 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 what the law means.
  5. Limitation on subordinate follows that of the principal
    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. An administrative agency ‘cannot amend an act of Congress.
  6. Labor statute promulgated after final judgment should not deprive vested right
    Statutes cannot annul or modify a judicial order issued prior to its promulgation. 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 obligation. In the case at bar. the decision of the Labor Arbiter dated 25 August 1975, had already become final, and was, in fact, partially executed by the bank. The intervening event where PD 850, the implementing rules and the Policy Instruction 9 were issued does not render the execution of the decision impossible and unjust on the part of the bank. Consequently and contrary to the Deputy Minister’s allegations, it is patently unjust to deprive the members of the 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”.
  7. Res judicata; Court ousted of jurisdiction when judgment becomes final, or annul or modify a writ of execution upon its service or execution
    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 party. This would certainly result in endless litigations thereby rendering inutile the rule of law. 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. Thus, the lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment and the judgment becomes final ipso jure. Section 1 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. 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 10 days from receipt of such awards, orders, or decisions.
  8. A party waiving right to appeal deemed to have accepted judgment
    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. 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.
  9. Vested right recognized by due process clause
    A final judgment vests in the prevailing party a right recognized and protected by law under the due process clause of the Constitution. 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 not be deprived arbitrarily without injustice. In the case at bar, the despotic manner by which divested the members of the union of their rights acquired by virtue of a final judgment is tantamount to a deprivation of property without due process of law. Inciong completely ignored the rights of the 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 bank. The action of 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.
  10. Violation of due process leads to nullity of act
    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. A violation of a constitutional right divests the court of jurisdiction; and as a consequence its judgment is null and void and confers no rights.