G.R. No. 150326, March 12, 2014
THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) AND THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)– NCR, Petitioners, v. THE ALLIANCE OF PROGRESSIVE LABOR (APL) AND THE TUNAY NA NAGKAKAISANG MANGGAGAWA SA ROYAL (TNMR–APL),Respondents.
D E C I S I O N
Section 2. The adjustment in this Order does not cover the following:Feeling aggrieved by their non–coverage by the wage adjustment, the Alliance of Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR–07. They contended that neither the NWPC nor the RTWPB–NCR had the authority to expand the non–coverage and exemptible categories under the wage order; hence, the assailed sections of the wage order should be voided. The appeal was docketed as NWPC Case No. W.O.– 99–001.
A. [W]orkers in the following sectors which were granted corresponding wage increases on January 1, 1999 as prescribed by Wage Order No. NCR–06:B. Workers in small establishments employing less that ten (10) workers.
a.1. Agriculture workers –Plantation P12.00 –Non–plantation P18.50 a.2. Cottage/handicraft industry P16.00 a.3. Private hospitals with bed capacity of 100 or less P12.00 a.4. Retail/Service establishments –Employing 11–15 workers P12.00 –Employing not more than 10 workers P19.00
x x x x
Section 9. Upon application with and as determined by the Board, based on documentation and other requirements in accordance with applicable rules and regulations issued by the Commission, the following may be exempt from the applicability of this Order:
1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;
2. Exporters including indirect exporters with at least 50% export sales and with forward contracts with their foreign buyers/principals entered into on or twelve (12) months before the date of publication of this Order may be exempt during the lifetime of said contract but not to exceed twelve (12) months from the effectivity of this Order.
WHEREFORE, the petition is GRANTED and the Decisions of the respondent Commission dated February 28, 2000 and July 17, 2000 are hereby SET ASIDE.The NWPC and RTWPB–NCR moved to reconsider the decision, but the CA denied their motion in the resolution promulgated on September 11, 2001,12 ruling that notwithstanding the pronouncement in Nasipit Lumber Company, Inc. v. National Wages and Productivity Commission13 to the effect that the NWPC had the power not only to prescribe guidelines to govern wage orders but also to issue exemptions therefrom, Section 2(A) and Section 9(2) of Wage Order No. NCR–07 were invalid due to lack of approval by the NWPC.
Sections 2A and 9(2) of the Wage Order No. NCR–07 are hereby declared NULL and VOID.
Restated, the issues are: (a) whether or not the RTWPB–NCR had the authority to provide additional exemptions from the minimum wage adjustments embodied in Wage Order No. NCR–07; and (b) whether or not Wage Order No. NCR–07 complied with the requirements set by NWPC Guidelines No. 01, Series of 1996.
SECTION 3 OF REPUBLIC ACT NO. 6727 MAY BE CONSTRUED TO AUTHORIZE THE NWPC AND RTWPB TO PROVIDE FOR ADDITIONAL EXEMPTIONS IN THE MINIMUM WAGE ADJUSTMENTS SUCH AS IN WAGE ORDER NO. NCR–07.
THE APPROVAL GIVEN BY THE NWPC WHICH WAS CONTAINED IN ITS DECISIONS DATED FEBRUARY 28, 2000 AND JULY 17, 2000 COMPLIES WITH THE REQUIREMENT OF REVIEW/APPROVAL REQUIRED UNDER SECTION 2 OF THE REVISED GUIDELINES ON EXEMPTIONS FROM WAGE ORDER.14
SECTION 1. APPLICATION FOR EXEMPTION.The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the exemption from compliance with the wage increases prescribed by the RTWPBs. Section 2 of the Guidelines No. 01 reads:
Whenever a wage order provides for exemption, applications for exemption shall be filed with the appropriate Board which shall process these applications, subject to the guidelines issued by the Commission.
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTSUnder the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the authority to include in the wage orders establishments that belonged to, or to exclude from the four enumerated exemptible categories. If the exempted category was one of the listed ones, the RTWPB issuing the wage order must see to it that the requisites stated in Section 3 and Section 4 of the NWPC Guidelines No. 01, Series of 1996 were complied with before granting fully or partially the application of an establishment seeking to avail of the exemption, to wit:
Exemption of establishments from compliance with the wage increases and cost of living allowances prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary difficulties due to losses maintain the financial viability of their businesses and continued employment of their workers; (2) encourage the establishment of new businesses and the creation of more jobs, particularly in areas outside the National Capital Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail and service sector, that have a limited capacity to pay.
Pursuant to the above, the following categories of establishments may be exempted upon application with and as determined by the Board, in accordance with applicable criteria on exemption as provided in this Guidelines; provided further that such categories are expressly specified in the Order.1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers
4. Establishments adversely affected by natural calamities
Exemptible categories outside of the abovementioned list may be allowed only if they are in accord with the rationale for exemption reflected in the first paragraph of this section. The concerned Regional Board shall submit strong and justifiable reason/s for the inclusion of such categories which shall be subject to review/approval by the Commission.
SECTION 3. CRITERIA FOR EXEMPTIONOn the other hand, if the exemption was outside of the four exemptible categories, like here, the exemptible category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and justifiable reason or reasons for the inclusion of such category. It is the compliance with the second requisite that is at issue here.
The following criteria shall be used to determine whether the applicant–establishment is qualified for exemption:
A. Distressed Establishments
1. For Stock Corporations/Cooperatives
2. For Single Proprietorships/Partnerships
- When deficit as of the last full accounting period or interim period, if any, immediately preceding the effectivity of the Order amounts to 20% or more of the paid–up capital for the same period; or
- When an establishment registers capital deficiency i.e., negative stockholders' equity as of the last full accounting period or interim period, if any, immediately preceding the effectivity of the Order.
3. For Non–stock Non–profit Organizations
- Single proprietorships/partnerships operating for at least two (2) years may be granted exemption:
a.1. When the net accumulated losses for the last two (2) full accounting periods and interim period, if any, preceding the effectivity of the Order amounts to 20% or more of the total invested capital at the beginning of the period under review; or a.2. When an establishment registers capital deficiency i.e., negative net worth as of the last full accounting period or interim period, if any, immediately preceding the effectivity of the Order.
- Single proprietorships/partnerships operating for less than two (2) years may be granted exemption when the net accumulated losses for the period immediately preceding the effectivity of the Order amounts to 20% or more of the total invested capital at the beginning of the period under review.
4. For Banks and Quasi–banks
- Non–stock Non–profit organizations operating for at least two (2) years may be granted exemption:
a.1. When the net accumulated losses for the last two (2) full accounting periods and interim period, if any, immediately preceding the effectivity of the Order amounts to 20% or more of the fund balance/members' contribution at the beginning of the period under review; or a.2. When an establishment registers capital deficiency i.e.,negative fund balance/members' contribution as of the last full accounting period or interim period, if any, immediately preceding the effectivity of the Order.
- Non–stock non–profit organizations operating for less than two (2) years may be granted exemption when the net accumulated losses for the period immediately preceding the effectivity of the Order amounts to 20% or more of the fund balance/members' contribution at the beginning of the period under review.
B. New Business Enterprises
- Under receivership/liquidation
Exemption may be granted to a bank or quasi–bank under receivership or liquidation when there is a certification from the Bangko Sentral ng Pilipinas that it is under receivership or liquidation as provided in Section 30 of RA 7653, otherwise known as the New Central Bank Act.
- Under controllership/conservatorship
A bank or quasi–bank under controllership/conservatorship may apply for exemption as a distressed establishment under Section 3 A of this Guideline.
Exemption may be granted to New Business Enterprises established outside the National Capital Region (NCR) and Export Processing Zones within two (2) years from effectivity of the Order, classified under any of the following:
C. Retail/Service Establishments Regularly Employing Not More Than Ten (10) Workers
- Agricultural establishments whether plantation or non–plantation.
- Establishments with total assets after financing of five million pesos (P5, 000,000.00) and below.
Exemption may be granted to a retail/service establishment when:
D. Establishments Adversely Affected by Natural Calamities
- It is engaged in the retail sale of goods and/or services to end users for personal or household use; and
- It is regularly employing not more than ten (10) workers regardless of status, except the owner/s, for at least six (6) months in any calendar year.
SECTION 4. DOCUMENTS REQUIRED
- The establishment must be located in an area declared by a competent authority as under a state of calamity.
- The natural calamities, such as earthquakes, lahar flow, typhoons, volcanic eruptions, fire, floods and similar occurrences, must have occurred within 6 months prior to the effectivity of the Wage Order.
- Losses suffered by the establishment as a result of the calamity that exceed the insurance coverage should amount to 20% or more of the stockholders' equity as of the last full accounting period in the case of corporations and cooperatives, total invested capital in the case of partnerships and single proprietorships and fund balance/members’ contribution in the case of non–stock non–profit organizations.
Only losses or damage to properties directly resulting from the calamity and not incurred as a result of normal business operations shall be considered.
- Where necessary, the Board or its duly–authorized representative shall conduct an ocular inspection of the establishment or engage the services of experts to validate the extent of damages suffered.
The following supporting documents shall be submitted together with the application:
For All Categories of Exemption
Proof of notice of filing of the application to the President of the union/contracting party if one is organized in the establishment, or if there is no union, a copy of a circular giving general notice of the filing of the application to all the workers in the establishment. The proof of notice, which may be translated in the vernacular, shall state that the workers' representative was furnished a copy of the application with all the supporting documents. The notice shall be posted in a conspicuous place in the establishment.
A. For Distressed Establishments
B. For New Business Enterprises
- For corporations, cooperatives, single proprietorships, partnerships, non–stock non–profit organizations.
- Audited financial statements (together with the Auditor’s opinion and the notes thereto) for the last two (2) full accounting periods preceding the effectivity of the Order filed with and stamped “received” by the appropriate government agency.
- Audited interim quarterly financial statements (together with the Auditor’s opinion and the notes thereto) for the period immediately preceding the effectivity of the Order.
- For Banks and Quasi–banks
- Certification from Bangko Sentral ng Pilipinas that it is under receivership/liquidation.
C. For Retail/Service Establishments Employing not more than Ten (10) Workers:
- Affidavit from employer regarding the following:
- Principal economic activity
- Date of registration with appropriate government agency
- Amount of total assets
- Certificate of registration from the appropriate government agency.
D. For Establishments Adversely Affected by Natural Calamities
- Affidavit from employer stating the following:
- It is a retail/service establishment.
- It is regularly employing not more than ten (10) workers for at least six months in any calendar year.
- Business Permit for the current year from the appropriate government agency.
- Affidavit from the General Manager or Chief Executive Officer of the establishment regarding the following:
- Date and type of calamity
- Amount of losses/damages suffered as a direct result of the calamity
- List of properties damaged/lost together with estimated valuation
- For properties that are not insured, a statement that the same are not covered by insurance.
- Copies of insurance policy contracts covering the properties damaged, if any.
- Adjuster’s report for insured properties.
- Audited financial statements for the last full accounting period preceding the effectivity of the Order stamped received by the appropriate government agency.
The Board may require the submission of other pertinent documents to support the application for exemption.
1An Act to Rationalize Wage Policy Determination by Establishing the Mechanism and Proper Standards Therefore, amending for the purpose Article 99 of, and Incorporating Articles 120, 121, 122, 123, 124, 126 and 127 into, Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines, Fixing New Wage Rates, Providing Wage Incentives for Industrial Dispersal to the Countryside, and for other purposes.
2Rollo, pp. 44–49; penned by Associate Justice Eubolo G. Verzola (retired/deceased), and concurred in by Associate Justice Marina L. Buzon (retired) and Associate Justice Bienvenido L. Reyes (now a Member of the Court).
3 Id. at 56–66.
4 Id. at 67–70.
5 Article 122(e) of the Labor Code, as amended.
6Rollo, pp. 52–55.
7 Id. at 56–66.
8 Section 10 of Wage Order No. NCR–07 states:
Section 10. All applications for exemption from compliance with this Order shall be filed within sixty (60) days from the date of the publication of the Rules Implementing this Order. The Board has the discretion to grant full or partial exemption but in no case shall it exceed one (1) year from the effectivity of this Order.
9Rollo, pp. 67–70.
10 Supra note 2.
11 Id. at. 44–49.
12 Id. at 50–51.
13 G.R. No. 113097, April 27, 1998, 289 SCRA 667.
14Rollo, p. 23.
15 Section 6 of Rule IV, Revised Rules of Procedure on Minimum Wage Fixing.
16 G.R. No. 96169, September 24, 1991, 201 SCRA 759, 764