Nasipit V NLRC Scra

8/24/2016 SUPREM E COURT REPORTS ANNOTATED VOLUM E 289
VOL.289,APRIL27,1998 667
NasipitLumberCompany,Inc.vs.NationalWagesand
ProductivityCommission
G.R.No.113097.April27,1998.*
NASIPIT LUMBER COMPANY, INC., and PHILIPPINE

WALLBOARDCORPORATION,petitioners,vs.
NATIONAL WAGES AND PRODUCTIVITY
COMMISSION,WESTERNAGUSANWORKERSUNION
(WAWUULGWP LOCAL 101), TUNGAO LUMBER
WORKERSUNION(TULWUULGWPLOCAL102)and
UNITEDWORKERSUNION(UWUULGWPLOCAL103),
respondents.
Constitutional Law; Administrative Law; The three great

branches and the various administrative agencies of the
governmentcanexerciseonlythosepowersconferreduponthemby
the Constitution and the law.The three great branches and the
variousadministrativeagenciesofthegovernmentcanexerciseonlythose
powersconferreduponthembytheConstitutionandthelaw.Itisthrough
theapplicationofthisbasicconstitutionalprinciplethattheCourtresolves
theinstantcase.
LaborLaw;WageOrders;ItistheNationalWagesand
Productivity Commission (NWPC), not the Regional
TripartiteWagesandProductivityBoards(RTWPB),which
hasthepowertoprescribetherulesandguidelinesforthe
determinationofminimumwageandproductivitymeasures.
The foregoing clearly grants the NWPC, not the RTWPB, the
powertoprescribetherulesandguidelinesforthedetermination
of minimum wage and productivity measures. While the RTWPB
hasthepowertoissuewageordersunderArticle122(b)oftheLabor
Code, suchorders aresubject totheguidelinesprescribedby the
NWPC.OneoftheseguidelinesistheRuleson
________________
* FIRSTDIVISION.
http://central.com.ph/sfsreader/session/00000156ba479abde3a1f147003600fb002c009e/t/?o=False 1/20
668
668 SUPREMECOURTREPORTSANNOTATED
MinimumWageFixing,whichwasissuedonJune4,1990.RuleIV,
Section 2 thereof, allows the RTWPB to issue wage orders
exempting enterprises from the coverage of the prescribed
minimum wages.However,the NWPC hasthe powernotonlyto
prescribe guidelines to govern wage orders, but also to issue
exemptionstherefrom,asthesaidruleprovidesthat[w]henevera
wage order provides for exemption, applications thereto shall be
filed with the appropriate Board which shall process the same,
subjecttoguidelinesissuedbytheCommission. Inshort,the
NWPClaysdowntheguidelineswhichtheRTWPBimplements.
Same; Same; Where the NWPC never assented to a Guideline

issuedbytheRTWPB,thesaidguidelineisinoperativeandcannot
be used by the latter in deciding or acting on an employers
application for exemption.Significantly, the NWPC authorized the
RTWPBtoissueexemptionsfromwageorders,butsubjecttoitsreview
andapproval.SincetheNWPCneverassentedtoGuidelineNo.3ofthe
RTWPB,thesaidguidelineisinoperativeandcannotbeusedbythelatter
indecidingoractingonpetitionersapplicationforexemption.Moreover,
RuleVIII,Section1oftheNWPCsRulesofProcedureonMinimumWage
FixingissuedonJune4,1990whichwaspriortotheeffectivityofRTWPB
Guideline No. 3requires that an application for exemption from wage
orders should be processed by the RTWPB, subject specifically to the
guidelinesissuedbytheNWPC.
Same; Same; Administrative Law; It is a hornbook doctrine

thattheissuanceofanadministrativeruleorregulationmustbein
harmony with the enabling law; A statutory grant of powers
should not be extended by implication beyond what may be
necessaryfortheirjustandreasonableexecutionofficialpowers
cannotbemerelyassumedbyadministrativeofficers,norcanthey
be created by the courts in the exercise of their judicial
functions.ToallowRTWPBGuidelineNo.3totakeeffectwithoutthe
approvaloftheNWPCistoarrogateuntoRTWPBapowervestedinthe
NWPC byArticle121oftheLaborCode,asamendedbyRA6727.The
Court will not countenance this naked usurpation of authority. It is a
hornbookdoctrinethattheissuanceofanadministrativeruleorregulation
mustbein
harmonywiththeenablinglaw.Ifadiscrepancyoccursbetween
thebasiclawandanimplementingruleorregulation,itisthe
former that prevails. This is so because the law cannot be
broadened by a mere administrative issuance. It is axiomatic
that [a]n administrative agency cannot amend an act of
Congress.Article122(e)ofthe
669
VOL.289,APRIL27,1998 669
Labor Code cannot be construed to enable the RTWPB to decide

applicationsforexemptiononthebasisofitsownguidelineswhich
were not reviewed and approved by the NWPC, for the simple
reasonthatastatutorygrantofpowersshouldnotbeextendedby
implication beyond what may be necessary for their just and
reasonable execution. Official powers cannot be merely
assumedbyadministrativeofficers,norcantheybecreated
bythecourtsintheexerciseoftheirjudicialfunctions.
Same; Same; Statutory Construction; Basic is the rule in

statutoryconstruction thatalldoubtsinthe implementationand
theinterpretationoftheprovisionsoftheLaborCode,aswellasits
implementingrulesandregulations,must beresolvedin favorof
labor.TheCourtwishestostressthatthelawdoesnot automatically
grantexemptiontoallestablishmentsbelongingtoanindustrywhichis
deemeddistressed.Hence,RX01,Section3
(4), must not be construed to automatically include all
establishmentsbelongingtoadistressedindustry.Thefactthatthe
wording of a wage order may contain some ambiguity would not
helppetitioners.Basicistheruleinstatutoryconstructionthatall
doubts in the implementation and the interpretation of the
provisionsoftheLaborCode,aswellasitsimplementingrulesand
regulations, must be resolved in favor of labor. By exempting all
establishmentsbelongingtoadistressedindustry,GuidelineNo.3
surreptitiouslyandirregularlytakesawaythemandatedincrease
intheminimumwageawardedtotheaffectedworkers.Insoacting,
the RTWPB proceeded against the declared policy of the State,
enshrinedintheenablingact,torationalizethefixingofminimum
wagesand to promoteproductivity improvement and gainsharing
measurestoensureadecentstandardoflivingfortheworkersand
theirfamilies;toguaranteetherightsoflabortoitsjustsharein
thefruitsofproduction;xxx.Thus,GuidelineNo.3isvoidnot
onlybecauseitlacksNWPC
approval and contains an arbitrarily inserted exemption, but

also because it is inconsistent with the avowed State policies
protectiveoflabor.
Same; Administrative Law; Certiorari; Absent any

grave abuse of discretion, NWPCs actions will not be
subject to judicial review.To justify the exemption of a
distressedestablishmentfromeffectsofwageorders,theNWPC
requirestheapplicant,ifastockcorporationlikepetitioners,to
provethatitsaccumulatedlossesimpaireditspaidupcapitalby
atleast25percentinthelastfullaccounting
670
periodprecedingtheapplicationortheeffectivityoftheorder.In
the case at bar, it is undisputed that during the relevant
accounting period, NALCO, ALCO and PWC sustained capital
impairments of 1.89, 28.72, and 5.03 percent, respectively.
Clearly,itwasonlyALCOwhichmettheexemptionstandard.
Hence,theNWPCdidnotcommitgraveabuseofdiscretionin
approvingtheapplicationonlyofALCOandindenyingthoseof
petitioners. Indeed, the NWPC acted within the ambit of its
administrative prerogative when it set guidelines for the
exemptionofadistressedestablishment.Absentanygraveabuse
of discretion, NWPCs actions will not be subject to judicial
review. Accordingly, we deem the appealed Decisions to be
consistentwithlaw.
SPECIALCIVILACTIONintheSupremeCourt.
Certiorari.
ThefactsarestatedintheopinionoftheCourt.
FroilanM.Bacungan&Associatesforpetitioners.
LopeA.BunolforWesternAgusanWorkersUnion
TUCP.
PANGANIBAN,J.:
The Labor Code, as amended by RA 6727 (the Wage

Rationalization Act), grants the National Wages and
Productivity Commission (NWPC) the power to prescribe
rulesandguidelinesforthedeterminationofappropriate
wagesinthecountry.Hence,guidelinesissuedbythe
RegionalTripartiteWagesandProductivityBoards
(RTWPB)withouttheapprovalofor,worse,contraryto
thosepromulgatedbytheNWPCareineffectual,voidand
cannotbethesourceofrightsandprivileges.
TheCase
ThisistheprincipleusedbytheCourtinresolvingthis
petitionforcertiorariunderRule65oftheRulesofCourt
as
671
VOL.289,APRIL27,1998 671
sailingthe2Decision1datedMarch8,1993,promulgatedby
theNWPC whichdisposedasfollows:
WHEREFORE,premisesconsidered,theDecisionappealedfromis
hereby MODIFIED. The application for exemption of Anakan
LumberCompanyisherebyGRANTEDforaperiodofone(1)year
retroactive to the date subject Wage Orders took effect until
November 21, 1991. The applications for exemption of Nasipit
LumberCompanyandPhilippineWallboardCorporationarehereby
DENIEDforlackofmerit,andassuch,theyareherebyorderedto
paytheircoveredworkersthewageincreasesundersubjectWage
OrdersretroactivetothedateofeffectivityofsaidWageOrdersplus
interestofonepercent(1%)permonth.
SOORDERED.
Petitioners also challenge the NWPCs Decision3 dated

November 17, 1993 which denied their motion for
reconsideration.
TheRTWPBsAugust1,1991Decision,whichthe
NWPCmodified,disposedasfollows:
WHEREFORE, all foregoing premises considered, the instant

petitionforexemptionfromcompliancewithWageOrderNos.
RX01 and RX01A is hereby approved under and by virtue of
criteria No. 2, Section 3 of RTWPB Guidelines No. 3 on
Exemption,datedNovember26,1990,foraperiodofonlyone(1)
year,retroactivetothedatesaidWageOrdertookeffectupto
November21,1991.
4
SOORDERED.
_______________
1 Rollo,pp.3238.
2 Signed by then Labor SecretaryMa.Nieves R.Confesor,chairman;
Secretary Cielito F. Habito, vice chairman; and Cedric R. Bagtas,
(representing labor), Vicente S. Bate (also representing labor), and
CarmelitaM.Pineda,members.Thetwoothermembersrepresentingthe
employersector,FranciscoR.FloroandEduardoT.Rondain,dissented.
3Rollo,pp.3944.
4Ibid.,p.44.
672
TheFacts
TheundisputedfactsarenarratedbytheNWPCasfollows:
On October 20, 1990, the Region X [Tripartite Wages and

Productivity]BoardissuedWageOrderNo.RX01whichprovides
asfollows:
Section 1. Upon the effectivity of this Wage Order, the increase in

minimumwageratesapplicabletoworkersandemployeesintheprivate
sectorinNorthernMindanao(RegionX)shallbeasfollows:
a. TheprovincesofAgusandelNorte,Bukidnon,MisamisOriental,
andtheCitiesofButuan,Gingoog,andCagayandeOro
P13.00/day
b. TheprovincesofAgusandelSur,SurigaodelNorteandMisamis
Occidental, and the Cities of Surigao, Oroquieta, Ozamis and
TangubP11.00/day
c. TheprovinceofCamiguinP9.00/day
Subsequently,asupplementaryWageOrderNo.RX01Awas
issued by the Board on November 6, 1990 which provides as
follows:
Section 1. Upon the effectivity of the original Wage Order RX01, all
workersandemployeesintheprivatesectorinRegionXalreadyreceiving
wagesabovethestatutoryminimumwageratesuptoonehundredand
twentypesos(P120.00)perdayshallalsoreceiveanincreaseofP13,P11,
P9perday,asprovidedforunderWageOrderNo.RX01;
Applicants/appelleesNasipitLumberCompany,Inc.(NALCO),
PhilippineWallboardCorporation(PWC),andAnakanLumber
Company(ALCO),claimingtobeseparateanddistinctfromeach
otherbutforexpediencyandpracticalpurposes,jointlyfiledan
applicationforexemptionfromtheabovementionedWageOrders
asdistressedestablishmentsunderGuidelinesNo.3,issuedby
the herein Board on November 26, 1990, specifically Sec. 3(2)
thereofwhich,amongothers,provides:
A. For purposes of this Guidelines the following criteria to determine

whethertheapplicantfirmisactuallydistressedshallbeused.
xxx xxx xx
673
VOL.289,APRIL27,1998 673
2. Establishmentbelongingtodistressedindustryanestablishmentthatis
engagedinanindustrythatisdistressedduetoconditionsbeyondits
controlasmaybedeterminedbytheBoardinconsultationwithDTIand
NWPC.(Italicssupplied)
xxx xxx xxx
Applicants/appelleesaverthattheyareengagedinloggingand
integrated wood processing industry but are distressed due to
conditions beyond their control, to wit: 1) Depressed economic
conditionsduetoworldwiderecession;2)Peaceandorderand
other emergencyrelated problems causing disruption and
suspension of normal logging operations; 3) Imposition of
environmentalfeefortimberproductioninadditiontoregular
forest charges; 4) Logging moratorium in Bukidnon; 5) A
reductionintheannualallowablevolumeofcutlogsofNALCO
&ALCOby59%;6)Highlyinsufficientrawmaterialsupply;7)
Extraordinaryincreasesinthecostoffuel,oil,spareparts,and
maintenance; 8) Excessive labor cost/production ratio that is
moreorless47%;and9)Lumberexportban.
Ontheotherhand,oppositor/appellantUnionsjointlyopposed
theapplicationforexemptiononthegroundthatsaidcompanies
arenotdistressedestablishmentssincetheircapitalizationhas
5
notbeenimpairedby25%.
Citing liquidity problems and business decline in the

woodprocessing industry, the RTWPB approved the
applicantsjointapplicationforexemptioninthiswise:
1.TheBoardconsideredtheargumentspresentedby
petitionersandtheoppositors.TheBoardlikewise
took note of the financial condition of petitioner
firms.Oneoftheaffiliates,AnakanLumber
Company,isconfirmedtobesufferingfromcapital
impairmentby:14.80%in1988,71.35%in1989and
100%in1990.Ontheotherhand,NALCOhada
capitalimpairmentof6.41%,13.53%and17.04%in
1988,1989and1990,respectively,whilePWChad
nocapitalimpairmentfrom1988to1990.However,
theBoardalsotooknoteofthefactthatpetitioners
areclaimingforexemption,notonthestrengthof
capitalimpairment,butonthebasisofbelongingto
adistressedindustryanestablishmentthatis
engagedinanindus
_______________
5 Ibid.,pp.3234.
674
trythatisdistressedduetoconditionsbeyonditscontrolas
maybedeterminedbytheBoardinconsultationwithDTI
andNWPC.
2. InquiriesmadebytheBoardfromtheBOIandthe
DTI confirm that all petitionerfirms are
encountering liquidity problems and extreme
difficultyservicingtheirloanobligations.
3. A perusal of the Provincial Trade and Industry
Development Plan for Agusan del Norte and
ButuanCitywherepetitionersareoperatingtheir
business,confirmstheexistenceofaslumpinthe
woodprocessing industry due to the growing
scarcityof[a]largevolumeofrawmaterialstofeed
thevariousplywoodandlumbermillsinthearea.A
lot of firms have closed and shifted to other
ventures, the report continued, although the
competitiveonesarestillinoperation.
4. The Board took note of the fact that most of the
circumstances responsible for the financial straits
of petitioners are largely external, over which
petitionershaveverylittlecontrol.TheBoardfeels
that as an alternative to closing up their
business[es] which could bring untold detriment
anddislocationto[their]4,000workersandtheir
families,petitionersshouldbeextendedassistance
andencouragementtocontinueoperatingsothat
jobs could thereby be preserved during these
difficult times. One such way is for the Board to
grantthematemporaryreprievefromcompliance
withthemandatedwageincreasespecificallyW.O.
RX01andRX01Aonly.6
Dissatisfied with the RTWPBs Decision, the private

respondents lodged an appeal with the NWPC, which
affirmedALCOsapplicationbutreversedtheapplications
of herein petitioners, NALCO and PWC. The NWPC
reasoned:
TheGuidelineNo.3datedNovember26,1990,issuedbythe
herein Board cannot be used as valid basis for granting
applicants/appellees application for exemption since it did not
passtheapprovalofthisCommission.
UndertheRulesofProcedureonMinimumWageFixingdated
June4,1990,issuedbythisCommissionpursuanttoRepublicAct
6727,particularlySection1ofRuleVIIIthereofprovidesthat:
_______________
6 RTWPBDecision,pp.78;rollo,pp.6566.
675
VOL.289,APRIL27,1998 675
Section 1. Application For Exemption.Whenever a wage order

provides for exemption, applications thereto shall be filed with the
appropriateBoardwhichshallprocessthesame, subjecttoguidelines
issuedbytheCommission.(Italicssupplied)
Clearly, it is the Commission that is empowered to set [the]

criteriaonexemptionfromcompliancewithwageorders.While
theBoardsmayissuesupplementaryguidelinesonexemption,
thesameshould first pass the Commissionfor the purposeof
determining its conformity to the latters general policies and
guidelines relative thereto. In fact, under the Guidelines on
Exemptionfrom CompliancewiththePrescribedWage/Costof
LivingAllowanceIncreasesGrantedbytheRegionalTripartite
WagesandProductivityBoardsdatedFebruary25,1991,issued
bytheCommission,thereisaprovisionthat(T)heBoardmay
issuesupplementaryguidelines for exemptionxx x subject to
review/approvalbytheCommission.(Section11).Inthecaseat
bar,aftertheCommissionSecretariatmadesomecommentson
saidGuidelineNo.3,thesamewasneversubmittedagainfor
[the] Commissions approval either justifying its original
provisionsorincorporatingthecommentsmadethereon.Until
andunlesssaidGuidelinesNo.3isapprovedbytheCommission,
ithasnooperativeforceandeffect.
Theapplicableguidelinesonexemptionthereforeisthatone
issued by the Commission dated February 25, 1991, the
pertinentportionofwhichreads:
Section3.CRITERIAFOREXEMPTION
xxx xxx xxx
2.DistressedEmployers/Establishment:
a.In thecaseofastockcorporation,partnership,singleproprietorship
ornonstock,nonprofitorganizationengagedinbusinessactivityor
chargingfeesforitsservices.
Whenaccumulatedlossesat Totalinvestedcapital
endoftheperiodunderreview atthebeginningofthe
haveimpairedbyatleast25 lastfullaccounting
percentthe: periodprecedingthe
appli
Paidupcapitalattheendof
thelastfullaccountingperiod
precedingtheapplication,in
thecaseofcorporations;
676
cation,inthecaseofpartnershipandsingle
proprietorships(Italicssupplied)
A perusal of the financial documents on record showsthat for the year

1990,whichisthelastfullaccountingperiodprecedingtheapplicationsfor
exemption, appellees NALCO, ALCO, and PWC incurred a capital
impairmentof1.89%,28.72%,and5.03%,respectively.Accordingly,based
onthecriteriasetforthaboveintheNWPCGuidelinesonExemption,only
theapplicationforexemptionofALCOshouldbeapprovedinviewofits
capitalimpairmentof28.72%.
We are not unmindful of the fact that during the Board hearing
conducted, both labor and management manifested their desire for a
uniformdecisiontoapplytoallthree(3)firms.However,wecannotgrant
thesameforwantoflegalbasisconsideringthatwearerequiredbythe
rulestodecideonthebasisofthemeritof 7applicationbyanestablishment
havingalegalpersonalityofitsown.
In denying petitioners motion for reconsideration, public

respondentexplained:
The fact that applicant companies relied in good faith upon

Guideline No. 3 issued by the Board a quo, the same is not
sufficient reason that they should be assessed based on the
criteriaofsaidGuidelinesconsideringthatitdoesnotconformto
thepoliciesandguidelinesrelativetowageexemptionissuedby
thisCommissionpursuanttoRepublicAct6727.Consequently,
ithasnoforceandeffect.Assuch,saidGuidelinesNo.3cannot
thereforebeasourceofarightnomatterifonehasreliedonit
ingoodfaith.Inlikemannerthattheworkers,whoaresimilarly
affected,cannotbeboundthereof.
Moreover,evenassumingthatGuidelinesNo.3conformsto
theproceduralrequirement,still,thesamecannotbegiveneffect
insofarasitgrantsexemptionbyindustryconsideringthatthe
subjectWageOrdermentionedonlydistressedestablishments
as one of those to be exempted thereof. It did not mention
exemption by industries. Wellsettled is the rule that an
implementing guidelines [sic] cannot expand nor limit the
provisionof[the]lawitseeksto
_______________
7NWPCDecisiondatedMarch8,1993,pp.46;rollo,pp.3537.
677
VOL.289,APRIL27,1998 677
implement. Otherwise, it shall be considered ultra vires. And,

contrary to applicant companies claim, this Commission does
notapproverulesimplementingtheWageOrdersissuedbythe
RegionalTripartiteWagesandProductivityBoards.Perforce,it
cannot be said that this Commission has approved the Rules
8
ImplementingWageOrderNo[s].RX01andRX01A.
Hence,thisrecourse.9
TheIssue
Petitionersraisethissolitaryissue:
With all due respect, Public Respondent National Wages and

Productivity Commission committed grave abuse of discretion
amountingtolackoforinexcessofjurisdictioninrulingthat
RTWPBXGuidelineNo.3hasnooperativeforceandeffect,
amongothers,andconsequently,denyingforlackofmeritthe
application for exemption of petitioners Nasipit Lumber
Company, Inc.andPhilippineWallboardCorporationfromthe
coverageofWageOrdersNos.RX01andRX01A.
Inthemain,theissueboilsdowntoaquestionofpower.Is
aguidelineissuedbyanRTWPBwithouttheapprovalof
or, worse, contrary to the guidelines promulgated by the
NWPCvalid?
TheCourtsRuling
The petition is unmeritorious. The answer to the above

questionisinthenegative.
_______________
8 AssailedDecisiondenyingthemotionforreconsideration,pp.45;
rollo,pp.4243.
9 ThecasewasdeemedsubmittedforresolutiononMay9,1996upon
receiptbythisCourtofprivaterespondentsMemorandumdatedApril22,
1996.
678
SUPREMECOURTREPORTSANNOTATED 678
SoleIssue:ApprovalofNWPCRequired
Petitioners contend that the NWPC gravely abused its

discretion in overturning the RTWPBs approval of their
applicationforexemptionfromWageOrdersRX01andRX
01A.TheyarguethatunderArt.122(e)oftheLaborCode,
theRTWPBhasthepower[t]oreceive,processandacton
applicationsforexemptionfromprescribedwageratesas
may be provided by law or any wage order. 10 They also
maintainthatnolawexpresslyrequirestheapprovalofthe
NWPCfortheeffectivityoftheRTWPBsGuidelineNo.3.
Assuming arguendo thattheapprovaloftheNWPCwas
legallynecessary,petitioners shouldnotbeprejudicedby
their observance of the guideline, pointing out that the
NWPCsownguidelines11 tookeffectonlyon March18,
1991longafterGuidelineNo.3wasissuedon November
26,1990.12Lastly,theypositthattheNWPCguidelines
cannotbegivenretroactiveeffectas[they]willaffector
changethepetitionersvestedrights.13
TheCourtisnotpersuaded.
PowertoPrescribeGuidelinesLodgedintheNWPC,Notin
theRTWPB
Thethreegreatbranchesandthevariousadministrative
agenciesofthegovernmentcanexerciseonlythosepowers
conferreduponthembytheConstitutionandthelaw.14Itis
throughtheapplicationofthisbasicconstitutional
principlethattheCourtresolvestheinstantcase.
RA6727(theWageRationalizationAct),amendingthe
LaborCode,createdboththeNWPCandtheRTWPBand
de
_______________
10 PetitionersMemorandum,pp.1415;rollo,pp.234235.
11 Rollo,pp.7980.
12 PetitionersMemorandum,p.21;rollo,p.241.
13 Ibid.,p.18;rollo,p.238.
14Azarconvs.Sandiganbayan,268SCRA747,760761,February26,
1997.
679
VOL.289,APRIL27,1998 679
finedtheirrespectivepowers.Article121oftheLaborCode
liststhepowersandfunctionsoftheNWPC,asfollows:
ART.121. PowersandFunctionsoftheCommission.The
Commissionshallhavethefollowingpowersandfunctions:
(a) Toactasthenationalconsultativeandadvisorybodyto
the President of the Philippine[s] and Congress on
mattersrelatingtowages,incomesandproductivity;
(b) Toformulatepoliciesandguidelinesonwages,incomes
andproductivityimprovementattheenterprise,industry
andnationallevels;
(c) Toprescriberulesandguidelinesforthedeterminationof
appropriateminimumwage andproductivitymeasuresat
theregional,provincialorindustrylevels;
(d) To review regional wage levels set by the Regional
TripartiteWagesandProductivityBoardstodetermineif
theseareinaccordancewithprescribedguidelines
andnationaldevelopmentplans;
(e) Toundertakestudies,researchesandsurveysnecessary
fortheattainmentofitsfunctionsandobjectives,andto
collect and compile data and periodically disseminate
informationonwagesandproductivityandotherrelated
information, including, but not limited to, employment,
costofliving,laborcosts,investmentsandreturns;
(f) ToreviewplansandprogramsoftheRegionalTripartite
Wages and Productivity Boards to determine whether
theseareconsistentwithnationaldevelopmentplans;
(g) Toexercisetechnicalandadministrativesupervisionover
theRegionalTripartiteWagesandProductivityBoards;
(h) Tocall,fromtimetotime,anationaltripartiteconference
ofrepresentativesofgovernment,workersandemployers
for the consideration of measures to promote wage
rationalizationandproductivity;and
(i) Toexercisesuchpowersandfunctionsasmaybe
necessarytoimplementthisAct.
xxx xxx xxx(Italicssupplied)
Article122oftheLaborCode,ontheotherhand,prescribes
thepowersoftheRTWPBthus:
680
Art.122.CreationofRegionalTripartiteWagesandProductivity
Boards.
xxx xxx xxx
TheRegionalBoardsshallhavethefollowingpowersand
functionsintheirrespectiveterritorialjurisdiction:
(a) To develop plans, programs and projects relative to

wages, income and productivity improvement for their
respectiveregions;
(b) To determine and fix minimum wage rates
applicableintheirregion,provincesorindustries
thereinandtoissuethecorrespondingwageorders,
subjecttoguidelinesissuedbytheCommission;
(c) Toundertakestudies,researches,andsurveysnecessary
for the attainment of their functions, objectives and
programs,andtocollectandcompiledataonwages,
incomes,productivityandotherrelatedinformationand
periodicallydisseminatethesame;
(d) TocoordinatewiththeotherRegionalBoardsasmaybe
necessarytoattainthepolicyandintentionofthisCode.
(e) Toreceive,processandactonapplicationsforexemption
fromprescribedwageratesasmaybeprovidedbylawor
anyWageOrder;and
(f) Toexercisesuchotherpowersandfunctionsasmaybe
necessarytocarryouttheirmandateunderthisCode.
(Italicssupplied)
TheforegoingclearlygrantstheNWPC,nottheRTWPB,
the power to prescribe the rules and guidelines for the
determination of minimum wage and productivity
measures.WhiletheRTWPBhasthepowertoissuewage
ordersunderArticle122(b)oftheLaborCode,suchorders
aresubjecttotheguidelinesprescribedbytheNWPC.One
of these guidelines is the Rules on Minimum Wage
Fixing, which was issued on June 4, 1990. 15 Rule IV,
Section2thereof,allowstheRTWPBtoissuewageorders
exemptingenterprisesfromthecoverageoftheprescribed
minimumwages.16However,theNWPChasthepowernot
onlytoprescribeguidelinestogov
_______________
15 Rollo,pp.6877.
16 Ibid.,p.73.
681
VOL.289,APRIL27,1998 681
ernwageorders,butalsotoissueexemptionstherefrom,as
the said rule provides that [w]henever a wage order
providesforexemption,applicationstheretoshallbefiled
withtheappropriateBoardwhichshallprocessthesame,
subjecttoguidelinesissuedbytheCommission. 17 In
short, the NWPC lays down the guidelines which the
RTWPBimplements.
Significantly,theNWPCauthorizedtheRTWPBtoissue
exemptionsfromwageorders,butsubjecttoitsreviewand
approval.18 Since theNWPC never assented to Guideline
No.3oftheRTWPB,thesaidguidelineisinoperativeand
cannot be used by the latter in deciding or acting on
petitionersapplicationforexemption.Moreover,RuleVIII,
Section1oftheNWPCsRulesofProcedureonMinimum
WageFixingissuedonJune4,1990whichwaspriorto
theeffectivityofRTWPBGuidelineNo.3requiresthatan
application for exemption from wage orders should be
processed by the RTWPB, subject specifically to the
guidelinesissuedbytheNWPC.
ToallowRTWPBGuidelineNo.3totakeeffectwithout
theapprovaloftheNWPCistoarrogateuntoRTWPBa
power vested in the NWPC by Article 121 of the Labor
Code, as amended by RA 6727. The Court will not
countenance this naked usurpation of authority. It is a
hornbook doctrinethat theissuance ofanadministrative
ruleorregulationmustbeinharmonywiththeenabling
law.Ifadiscrepancyoccursbetweenthebasiclawandan
implementing rule or regulation, it is the former that
prevails.19Thisissobecausethelawcannotbebroadened
byamereadministrativeissuance.
_______________
17 Section1,RuleVIII,NWPCsRuleonMinimumWageFixing.
Italicssupplied.
18 Section 11 of NWPCs original Guidelines on Exemption From
CompliancewiththePrescribedWage/CostofLivingAllowanceIncrease
GrantedbytheRTWPBsdatedFebruary25,1991;rollo,p.80.
19LandBankofthePhilippinesvs.CourtofAppeals, 249SCRA
149, 158, October 6, 1995, per Francisco, J.; citing Shell Philippines,
Inc.vs.CentralBankofthePhilippines,162SCRA628,June27,1988.
682
Itisaxiomaticthat[a]nadministrativeagencycannot
amendanactofCongress.20Article122(e)oftheLabor
CodecannotbeconstruedtoenabletheRTWPBtodecide
applicationsforexemptiononthebasisofitsown
guidelineswhichwerenotreviewedandapprovedbythe
NWPC,forthesimplereasonthatastatutorygrantof
powersshouldnotbeextendedbyimplicationbeyondwhat
maybenecessaryfortheirjustandreasonableexecution.
Officialpowerscannotbemerelyassumedbyadministrative
officers,norcantheybecreatedbythecourtsintheexercise
oftheirjudicialfunctions.21
Thereisnobasisforpetitionersclaimthattheirvested
rightswereprejudicedbytheNWPCsallegedretroactive
22 16/20
http://central.com.ph/sfsreader/session/00000156ba479abde3a1f147003600fb002c009e/t/?o=False
applicationofitsownruleswhichwereissuedonFebruary
25,1991andtookeffectonMarch18,1991. 23 Suchclaim
cannot stand because Guideline No. 3, as previously
discussedandascorrectlyconcludedbytheNWPC,24 was
not valid and,thus, cannot be a source ofa right; much
less,avestedone.
The Insertion in Guideline No. 3 of Distressed

IndustryasaCriterionforExemptionVoid.
The Court wishes to stress that the law does not
automatically grant exemption to all establishments
belonging to an industry which is deemed distressed.
Hence, RX01, Section 3 (4), must not be construed to
automatically include all establishments belonging to a
distressedindustry. Thefact that the wording ofa wage
order may contain some ambiguity would not help
petitioners.Basicistheruleinstatutorycon
_______________
20 CebuOxygen&AcetyleneCo.,Inc.vs.Drilon, 176SCRA24,29,
August2,1989,perGancayco, J.; citing Manuelvs.GeneralAuditing

Office,42SCRA660,December29,1971.
21Gonzales,NeptaliA.,AdministrativeLaw;AText,p.46,1979ed.;
citing42AmJur.316318.(Emphasissupplied.)
22 Rollo,pp.7980.
23 Petition,p.22;rollo,p.23.
24 NWPCDecisiondatedNovember17,1993,p.4;rollo,p.42.
683
VOL.289,APRIL27,1998 683
struction that all doubts in the implementation and the

interpretationoftheprovisionsoftheLaborCode,aswell
as its implementing rules and regulations, must be
resolved in favor of labor. 25
By exempting all
establishments belonging to a distressed industry,
GuidelineNo.3surreptitiouslyandirregularlytakesaway
themandatedincreaseintheminimumwageawardedto
theaffectedworkers.Insoacting,theRTWPBproceeded
againstthedeclaredpolicyoftheState,enshrinedinthe
enablingact, to rationalize the fixing of minimum wages and to promote
productivityimprovement and gainsharing measures to ensure a decent standard
of living for the workers and their families; to guarantee the rights of labor
26
toitsjustshareinthefruitsofproduction;xxx.Thus,
Guideline No. 3 is void not only because it lacks NWPC
approval and contains an arbitrarily inserted exemption,
butalsobecauseitisinconsistentwiththeavowedState
policiesprotectiveoflabor.
NWPCDecisionNotArbitrary
Tojustifytheexemptionofadistressedestablishmentfrom
effectsofwageorders,theNWPCrequirestheapplicant,if
a stock corporation like petitioners, to prove that its
accumulatedlossesimpaireditspaidupcapitalbyatleast
25percentinthelastfullaccountingperiodprecedingthe
application27or
_______________
25 Article 4, Labor Code of the Philippines. See Chartered Bank

EmployeesAssociationvs.Ople, 138SCRA273,August28,1985and
InsularBankofAsiaandAmericaEmployeesUnion(IBAAEU)vs.
Inciong,132SCRA663,October23,1984.
262,RA6727.
27 3,par.2ofOriginalNWPCGuidelinesonExemptionFromCompliance
withthePrescribedWage/CostofLivingAllowanceIncreaseGrantedbythe
RTWPBs dated February 25, 1991. See Central Textile Mills, Inc. vs.
National Wages and Productivity Commission, 260 SCRA 368, 369,
August7,1996.SeealsoNationalWagesCouncil(nowabolishedpredecessor
oftheNWPC)PolicyGuidelineNo.8,Section5ascitedin
RadioCommunicationsofthe
684
the effectivity of the order.28 In the case at bar, it is

undisputed that during the relevant accounting period,
NALCO,ALCOandPWCsustainedcapitalimpairmentsof
1.89,28.72and5.03percent,respectively.29Clearly,itwas
onlyALCOwhichmettheexemptionstandard.Hence,the
NWPC did not commit grave abuse of discretion in
approving the application only of ALCO and in denying
those of petitioners. Indeed, the NWPC acted within the
ambit of its administrative prerogative when it set
guidelinesfortheexemptionofadistressedestablishment.
Absentanygraveabuseofdiscretion,NWPCsactionswill
notbesubjecttojudicialreview.30Accordingly,wedeemthe
appealedDecisionstobeconsistentwithlaw.
WHEREFORE,thepetitionisherebyDISMISSED.The
assailed Decisions are hereby AFFIRMED. Costs against
petitioners.
SOORDERED.
Davide, Jr. (Chairman), Bellosillo, Vitug

andQuisumbing,JJ.,concur.
Petitiondismissed.Judgmentaffirmed.
Notes.Wage Orders Nos. 3,4,5 and 6 and their

ImplementingRulesdidnotsetforthaclearandspecific
notion of wage distortion but only recognized that the
implementation of the Wage Orders could result in a
distortionofthewagestructure.(NationalFederationof
Laborvs.NationalLaborRelationsCommission, 234
SCRA311[1994])
________________
Phils.,Inc.(RCPI)vs.NationalWagesCouncil,207SCRA581,582
583,March26,1992.
28 3, par. 3a.1, Revised NWPC Guidelines on Exemption From
CompliancewiththePrescribedWage/CostofLivingAllowanceIncrease
GrantedbytheRTWPBsdatedSeptember15,1992.See JoyBrothers,
Inc. vs. National Wages and Productivity Commission, G.R. No.
122932,p.3,June17,1997.
29 NWPCDecisiondatedMarch8,1993,p.5;rollo,p.36.
30 SeePNOCEnergyDevelopmentCorp.vs.NLRC,201SCRA
487,494,September11,1991.
685
VOL.289,APRIL27,1998 685
Peoplevs.Bersabe
It is not just to expect an employer to interpret a Wage

Ordertomeanthatitgrantedanacrosstheboardincrease
where such interpretation is not sustained by its text.
(Cagayan Sugar Milling Company vs. Secretary of
LaborandEmployment,284SCRA150[1998])
o0o
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8/24/2016 SUPREM E COURT REPORTS ANNOTATED VOLUM E 289

NASIPIT LUMBER COMPANY, INC., and PHILIPPINE

Constitutional Law; Administrative Law; The three great

Same; Same; Where the NWPC never assented to a Guideline

Same; Same; Administrative Law; It is a hornbook doctrine

Labor Code cannot be construed to enable the RTWPB to decide

Same; Same; Statutory Construction; Basic is the rule in

approval and contains an arbitrarily inserted exemption, but

Same; Administrative Law; Certiorari; Absent any

The Labor Code, as amended by RA 6727 (the Wage

Petitioners also challenge the NWPCs Decision3 dated

WHEREFORE, all foregoing premises considered, the instant

On October 20, 1990, the Region X [Tripartite Wages and

Section 1. Upon the effectivity of this Wage Order, the increase in

A. For purposes of this Guidelines the following criteria to determine

Citing liquidity problems and business decline in the

Dissatisfied with the RTWPBs Decision, the private

Section 1. Application For Exemption.Whenever a wage order

Clearly, it is the Commission that is empowered to set [the]

A perusal of the financial documents on record showsthat for the year

In denying petitioners motion for reconsideration, public

The fact that applicant companies relied in good faith upon

implement. Otherwise, it shall be considered ultra vires. And,

With all due respect, Public Respondent National Wages and

The petition is unmeritorious. The answer to the above

Petitioners contend that the NWPC gravely abused its

(a) To develop plans, programs and projects relative to

The Insertion in Guideline No. 3 of Distressed

August2,1989,perGancayco, J.; citing Manuelvs.GeneralAuditing

struction that all doubts in the implementation and the

25 Article 4, Labor Code of the Philippines. See Chartered Bank

the effectivity of the order.28 In the case at bar, it is

Davide, Jr. (Chairman), Bellosillo, Vitug

Notes.Wage Orders Nos. 3,4,5 and 6 and their

It is not just to expect an employer to interpret a Wage

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