Which should prevail when conflicts arise between an administrative regulation and a statute?

      TOPIC:

1. Which should prevail in case of conflict between a statute and an administrative regulation?
2. What does basic salary mean?

Boie-Takeda Chemicals, Inc. vs. De la Serna

FACTS:

Petitioner Boie-Takeda Chemicals, Inc. was allegedly found by the Department of Labor and Employment to have committed an underpayment of the 13th month pay given to its medical representative employees. 

DOLE cited Section 5(a) of the Revised Guidelines on the Implementation of PD 851 or the 13th Month Pay Law, as promulgated by then Labor Secretary Franklin Drilon. Under Section 5(a) of the Revised Guidelines, the "commission shall be included in the computation of the 13th month pay".

Petitioner argued that the computation of the 13th month pay which is 1/12 of the basic salary should be based solely on the basic salary not including the commission and other benefits.  

ISSUE:

Whether or not the DOLE Revised Guidelines on the Implementation of the 13th Month Pay Law should prevail over P.D. 851. 

RULING: 

No, the DOLE Revised Guidelines on the Implementation of the 13th Month Pay Law do not prevail over P.D. 851.

Under the rules on statutory construction, an administrative agency cannot amend an act of Congress. Hence, implementing rules cannot add to or detract from the provisions of the law it is designed to implement.

In this case, the second paragraph of Section 5(a) of the DOLE Revised Guidelines on the Implementation of the 13th Month Pay Law unduly added the concept of "basic salary" as defined in P.D. 851 when it included the commission as part of the basic salary for purposes of computation of the 13th month pay. 

Therefore, the computation for the 13th month pay as provided in the Revised Guidelines is not valid. 

  

STATUTORY CONSTRUCTION DISCUSSION

1. Are the Revised Guidelines promulgated by then Labor Secretary Drilon still the prevailing regulation?

No, the most recent regulation is the Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by then Labor Secretary Blas Ople. Under this Supplementary Rules, overtime pay, earnings, and other remunerations are excluded as part of the basic salary and in the computation of the 13th month pay.

2. What does the "other remunerations" mean in the Supplementary Rules? 

The catch-all exclusionary phrase 'all allowances and monetary benefits which are not considered or integrated as part of the basic salary' also shows the intention to strip basic salary of any additions which may be in the form of allowances or 'fringe' benefits.

"The all-embracing phrase 'earnings and other remunerations' which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pays for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay.

3. What is the fundamental rule in reconciling conflicts between an administrative regulation and a statute? 

It is a fundamental rule that implementing rules cannot add to or detract from the provisions of the law it is designed to implement. Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law they are intended to carry into effect. They cannot widen its scope. An administrative agency cannot amend an act of Congress.

Full text here.