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FRANCISCO V NLRC

Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated
as accountant and corporate secretary and was assigned to handle all the accounting needs
of the company. She was also designated as Liason Officer to the City of Manila to secure
permits for the operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle
recruitment of all employees and perform management administration functions. In 2001, she
was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500
per month which was until September. She asked for her salary but was informed that she
was no longer connected to the company. She did not anymore report to work since she was
not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter.

The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the
decision while CA reversed it.

Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine
the existence of an employer-employee relation. Generally, courts have relied on the so-
called right of control test where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to be used in reaching
such end. In addition to the standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls, can help in
determining the existence of an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.

In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence
of an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.

Thus, the determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as: (1) the extent to which the
services performed are an integral part of the employer’s business; (2) the extent of the
worker’s investment in equipment and facilities; (3) the nature and degree of control exercised
by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the success of the claimed independent enterprise; (6)
the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment
in that line of business. The proper standard of economic dependence is whether the worker
is dependent on the alleged employer for his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latter’s line of
business.

There can be no other conclusion that petitioner is an employee of respondent Kasei


Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite period of engagement.
Respondent Corporation hired and engaged petitioner for compensation, with the power to
dismiss her for cause. More importantly, Respondent Corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.

TONGKO V MANULIFE

Manufacturers Life Insurance, Co. is a domestic corporation engaged in life insurance


business. De Dios was its President and Chief Executive Officer. Petitioner Tongko started
his relationship with Manulife in 1977 by virtue of a Career Agent's Agreement.

Pertinent provisions of the agreement state that:

It is understood and agreed that the Agent is an independent contractor and nothing
contained herein shall be construed or interpreted as creating an employer-employee
relationship between the Company and the Agent.

a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and
other products offered by the Company, and collect, in exchange for provisional receipts
issued by the Agent, money due or to become due to the Company in respect of applications
or policies obtained by or through the Agent or from policyholders allotted by the Company to
the Agent for servicing, subject to subsequent confirmation of receipt of payment by the
Company as evidenced by an Official Receipt issued by the Company directly to the
policyholder.

b) The Company may terminate this Agreement for any breach or violation of any of the
provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days
from the time of the discovery of the breach. No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to terminate this Agreement by the Company shall be
construed for any previous failure to exercise its right under any provision of this Agreement.

c) Either of the parties hereto may likewise terminate his Agreement at any time without
cause, by giving to the other party fifteen (15) days notice in writing.

Sometime in 2001, De Dios addressed a letter to Tongko, then one of the Metro North
Managers, regarding meetings wherein De Dios found Tongko's views and comments to be
unaligned with the directions the company was taking. De Dios also expressed his concern
regarding the Metro North Managers' interpretation of the company's goals. He maintains that
Tongko's allegations are unfounded. Some allegations state that some Managers are
unhappy with their earnings, that they're earning less than what they deserve and that these
are the reasons why Tonko's division is unable to meet agency development objectives.
However, not a single Manager came forth to confirm these allegations. Finally, De Dios
related his worries about Tongko's inability to push for company development and growth.

De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents
Contract. Tongko filed a complaint with the NLRC against Manulife for illegal dismissal,
alleging that he had an employer-employee relationship with De Dios instead of a revocable
agency by pointing out that the latter exercised control over him through directives regarding
how to manage his area of responsibility and setting objectives for him relating to the
business. Tongko also claimed that his dismissal was without basis and he was not afforded
due process. The NLRC ruled that there was an employer-employee relationship as
evidenced by De Dios's letter which contained the manner and means by which Tongko
should do his work. The NLRC ruled in favor of Tongko, affirming the existence of the
employer-employee relationship.

The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for
determining control and found the elements in this case to be lacking, basing its decision on
the same facts used by the NLRC. It found that Manulife did not exert control over Tongko,
there was no employer-employee relationship and thus the NLRC did not have jurisdiction
over the case.

The Supreme Court reversed the ruling of the Court of Appeals and ruled in favor of Tongko.
However, the Supreme Court issued another Resolution dated June 29, 2010, reversing its
decision. Tongko filed a motion for reconsideration, which is now the subject of the instant
case.

ISSUE: Did the Supreme Court err in issuing the June 29, 2010 resolution, reversing its
earlier decision that an employer-employee relationship existed?
HELD: The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control
over the performance of the task of one providing service both with respect to the means and
manner, and the results of the service is the primary element in determining whether an
employment relationship exists. The Supreme Court ruled petitioners Motion against his favor
since he failed to show that the control Manulife exercised over him was the control required
to exist in an employer-employee relationship; Manulifes control fell short of this norm and
carried only the characteristic of the relationship between an insurance company and its
agents, as defined by the Insurance Code and by the law of agency under the Civil Code.

In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements
of control specific to an insurance agency, which do not amount to the elements of control
that characterize an employment relationship governed by the Labor Code.The Insurance
Code provides definite parameters in the way an agent negotiates for the sale of the
companys insurance products, his collection activities and his delivery of the insurance
contract or policy. They do not reach the level of control into the means and manner of doing
an assigned task that invariably characterizes an employment relationship as defined by labor
law.

To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of
dictating the means and methods to be employed in attaining the result. Tested by this norm,
Manulifes instructions regarding the objectives and sales targets, in connection with the
training and engagement of other agents, are among the directives that the principal may
impose on the agent to achieve the assigned tasks.They are targeted results that Manulife
wishes to attain through its agents. Manulifes codes of conduct, likewise, do not necessarily
intrude into the insurance agents means and manner of conducting their sales. Codes of
conduct are norms or standards of behavior rather than employer directives into how specific
tasks are to be done.

In sum, the Supreme Court found absolutely no evidence of labor law control. DENIED.

MATLING V COROS
Ricardo Coros, the Vice President for Finance and Administration of Matling Industrial was
dismissed. On August 10, 2000, he filed a complaint for illegal suspension and illegal
dismissal against Matling in the NLRC. Matling moved to dismiss the complaint on the ground
of lack of jurisdiction. They allege that since Coros is a member of Matling’s Board of
Directors and a corporate office, the issue is an intra-corporate controversy. As such,
jurisdiction lies with the Securities and Exchange Commission (SEC).
Coros, in opposing the motion filed by Matling, alleged that his status as a member of
the Board was doubtful since he was not formally elected and he did not own a single share
of stock. Even assuming that he had been a Director of Matling, he had been removed as the
Vice President for Finance and Administration, not as a Director, a fact that the notice of his
termination dated April 10, 2000 showed.

Labor Arbiter (LA) ruled in favor of Matling. On appeal, the NLRC reversed the decision
of the LA and ruled that the case is cognizable by the LA. Matling appealed to the CA through
a petition for certiorari which the CA dismissed as well.

ISSUE: Whether or not Coros was a corporate officer of Matling

RULING: Petition DENIED.

As a rule, the illegal dismissal of an officer or other employee of a private employer is


properly cognizable by the LA Where the complaint for illegal dismissal concerns a corporate
officer, however, the controversy falls under the jurisdiction of the Securities and Exchange
Commission (SEC), because the controversy arises out of intra-corporate or partnership
relations.

The petitioners argue that the power to create corporate offices and to appoint the
individuals to assume the offices was delegated by Matling’s Board of Directors to its
President through By-Law No. V, as amended; and that any office the President created, like
the position of the respondent, was as valid and effective a creation as that made by the
Board of Directors.

The respondent counters that Matling’s By-Laws did not list his position as Vice
President for Finance and Administration as one of the corporate offices; that Matling’s By-
Law No. III listed only four corporate officers, namely: President, Executive Vice President,
Secretary, and Treasurer; 18 that the corporate offices contemplated in the phrase "and such
other officers as may be provided for in the by-laws" found in Section 25 of the Corporation
Code should be clearly and expressly stated in the By-Laws.

We agree with respondent. Conformably with Section 25, a position must be expressly
mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation
of an office pursuant to or under a By-Law enabling provision is not enough to make a
position a corporate office.

An "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an employee occupies no office and generally is
employed not by the action of the directors or stockholders but by the managing officer of the
corporation who also determines the compensation to be paid to such employee. In this case,
respondent was appointed vice president for nationwide expansion by Malonzo, petitioner’s
general manager, not by the board of directors of petitioner. It was also Malonzo who
determined the compensation package of respondent. Thus, respondent was an employee,
not a "corporate officer."
Moreover, the Board of Directors of Matling could not validly delegate the power to
create a corporate office to the President, in light of Section 25 of the Corporation Code
requiring the Board of Directors itself to elect the corporate officers. Verily, the power to elect
the corporate officers was a discretionary power that the law exclusively vested in the Board
of Directors, and could not be delegated to subordinate officers or agents.22 The office of
Vice President for Finance and Administration created by Matling’s President pursuant to By
Law No. V was an ordinary, not a corporate, office.

To emphasize, the power to create new offices and the power to appoint the officers to
occupy them vested by By-Law No. V merely allowed Matling’s President to create non-
corporate offices to be occupied by ordinary employees of Matling. Such powers were
incidental to the President’s duties as the executive head of Matling to assist him in the daily
operations of the business.

FRANCISCO V NLRC

Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated
as accountant and corporate secretary and was assigned to handle all the accounting needs
of the company. She was also designated as Liason Officer to the City of Manila to secure
permits for the operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle
recruitment of all employees and perform management administration functions. In 2001, she
was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500
per month which was until September. She asked for her salary but was informed that she
was no longer connected to the company. She did not anymore report to work since she was
not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter.

The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the
decision while CA reversed it.

Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine
the existence of an employer-employee relation. Generally, courts have relied on the so-
called right of control test where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to be used in reaching
such end. In addition to the standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls, can help in
determining the existence of an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence
of an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.

Thus, the determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as: (1) the extent to which the
services performed are an integral part of the employer’s business; (2) the extent of the
worker’s investment in equipment and facilities; (3) the nature and degree of control exercised
by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the success of the claimed independent enterprise; (6)
the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment
in that line of business. The proper standard of economic dependence is whether the worker
is dependent on the alleged employer for his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latter’s line of
business.

There can be no other conclusion that petitioner is an employee of respondent Kasei


Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite period of engagement.
Respondent Corporation hired and engaged petitioner for compensation, with the power to
dismiss her for cause. More importantly, Respondent Corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.

CLASSES OF EMPLOYEES

ZENAIDA PAZ V NORTHERN TOBACCO REDRYING CO., INC. (NTRCI)


NTRCI, a flue-curing and redrying of tobacco leaves business, employs approximately 100
employees with seasonal workers “tasked to sort, process, store and transport tobacco leaves
during the tobacco season of March to September.” NTRCI hired Paz sometime in 1974 as a
seasonal seasonal sorter, paid Php185 daily. NTRCI regularly re-hired her every tobacco
season since them. She signed a seasonal job contract at the start of her employment and a
pro-forma application letter prepared by the NTRCI in order to qualify for the next season.
On May 18, 2003, Paz was 63 years old when NTRCI informed her that she was considered
retired under the company policy. A year later, NTRCI told her she would receive Php12,000
as her retirement pay.
Paz and 2 other complainants, filed a Complaint for illegal dismissal against NTRCI. She
amended her complaint into complaint for payment of retirement benefits, damages, and
attorney’s fees as P12,000 seemed inadequate for her 29 years of service.
NTRCI countered that no Collective Bargaining Agreement (CBA) existed between NTRCI
and its workers. Thus, it computed the retirement pay of its seasonal workers based on Article
287 of the Labor Code.
ISSUE: WON Paz was illegally dismissed.
RULING: YES.
NTRCI failed to prove a valid company retirement policy, yet it required its workers to retire
after they had reached the age of 60. “Retirement is a result of a bilateral act of the parties, a
voluntary agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the former.” Artcile 287
allows for optional retirement at age of at least 60 years old.
Consequently, if “the intent to retire is not clearly established or if the retirement is involuntary,
it is to be treated as a discharge.” Paz never abandoned her argument of illegal dismissal
despite the amendment of her complaint. This implied lack intent to retire until she reached
the compulsory age of 65. Thus, she should be considered as illegally dismissed from May
18, 2003 until she reached the compulsory retirement age of 65 in 2005 and should be
entitled to full backwages for this period.
xxx
In our view, with these special circumstances, we can call upon the same “social and
compassionate justice” cited in several cases allowing financial assistance. These
circumstances indubitably merit equitable concessions, via the principle of “compassionate
justice” for the working class. Thus, we agree with the Court of Appeals to grant financial
assistance to private respondent.
WHEREFORE, the Court of Appeals Decision is AFFIRMED with MODIFICATION in that
respondent Northern Tobacco Redrying Co., Inc. is hereby ordered to pay petitioner Zenaida
Paz the following:

(1) P22,200.00 as full backwages;ChanRoblesVirtualawlibrary

(2) P30,000.00 as nominal damages for non-compliance with due


process;ChanRoblesVirtualawlibrary
(3) P12,487.50 as retirement pay;ChanRoblesVirtualawlibrary

(4) P60,356.25 as financial assistance; and

(5) P2,664.00 as legal interest for the award of full backwages, and legal interest of 6% per
annum for the award of retirement pay beginning 2005 until full satisfaction.

WAGES

TAN V LAGRAMA & CA

Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at
the theaters managed by Tan for more than 10years. Lagrama was dismissed for having
urinated in his working area. Lagrama filed a complaint for illegal dismissal and non payment
of benefits. Tan asserted that Lagrama was an independent contractor as he was paid in
piece-work basis

Issue: W/N Lagrama is an independent contractor or an employee of Tan.

Ruling: Lagrama is an employee, not an independent contractor.


Applying Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed his work as painter and
under the supervision and control of Tan.
1. Lagrama worked in a designated work area inside the theater of Tan for the use of which
petitioner prescribed rules, which rules included the observance of cleanliness and hygeine
and prohibition against urinating in the work area and any other place other than rest rooms
and
2. Tan's control over Lagrama's work extended not only the use of work area but also the result
of Lagrama;s work and the manner and means by which the work was to be accomplished
3. Lagrama is not an independent contractor because he did not enjoy independence and
freedom from the control and supervision of Tan and he was subjected to Tan's control over
the means and methods by which his work is to be performed and accomplished
B. Payment of Wages
1. Wages are defined as "remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer
to an employee under a written or unwritten contract of employment for work done or to be
done, or for services rendered or to be rendered."
2. Lagrama worked for Tan on a fixed piece work basis is of no moment. Payment by result is a
method of compensation and does not define the essence of the relation.
3. That Lagrama was not reported as an employee to the SSS is not conclusive, on the question
whether he was an employee, otherwise Tan would be rewarded for his failure or even
neglect to perform his obligation.
C. Power of Dismissal – by Tan stating that he had the right to fire Lagrama, Tan in effect
acknowledged Lagrama to be his employee
D. Power of Selection and Engagement of Employees – Tan engaged the services of
Lagrama without the intervention of third party
Compared to an employee, an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service on its own account
and under its own responsibility according to its own manner and method, free from the
control and direction of the principal in all matters connected with the performance of the work
except as to the results thereof.[8] Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his principal, an employee is
subject to the employer’s power to control the means and methods by which the employee’s
work is to be performed and accomplished.

WAGE FIXING

NATIONAL WAGES & PRODUCTIVITY COMMISSION ET AL., VS. THE ALLIANCE OF PROGRESSIVE
LABOR ET AL. GR NO. 150326, MARCH 12, 2014

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different
regions. Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727,
empowered the NWPC to formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels; to prescribe rules and guidelines for the
determination of appropriate minimum wage and productivity measures at the regional, provincial or
industry levels; and to review regional wage levels set by the RTWPBs to determine whether the
levels were in accordance with the prescribed guidelines and national development plans, among
others. On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic
Act No. 6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region,
provinces or industries therein; and to issue the corresponding wage orders, subject to the guidelines
issued by the NWPC. Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October 14,
1999 imposing an increase of P25.50/day on the wages of all private sector workers and employees in
the NCR and pegging the minimum wage rate in the NCR at P223.50/day.6 However, Section 2 and
Section 9 of Wage Order No. NCR–07 exempted certain sectors and industries from its coverage
Section 2. The adjustment in this Order does not cover the following: 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: 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 P 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. 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 NWPC upheld the
validity of Section 2(A) and Section 9(2) of Wage Order No. NCR–07. It observed that the RTWPB’s
power to determine exemptible categories was adjunct to its wage fixing function conferred by Article
122(e) of the Labor Code, as amended by Republic Act No. 6727; that such authority of the RTWPB
was also recognized in NWPC Guidelines No. 01, Series of 1996. The APL and TNMR assailed the
decisions of the NWPC on certiorari in the CA, contending that the power of the RTWPB–NCR to
determine exemptible categories was not an adjunct to its wage fixing function. CA favored the
respondents and granted the petition for certiorari. Hence, this appeal by petition for review on
certiorari by the NWPC and RTWPB–NCR.

Issue: Whether or not the RTWPB–NCR had the RTWPB–NCR had the authority to provide additional
exemptions from the minimum wage adjustments embodied in Wage Order No. NCR–07

Ruling: The NWPC promulgated NWPC Guidelines No. 001–95 (Revised Rules of Procedure on
Minimum Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of
minimum wage rates by region, province and industry. Section 1 of Rule VIII of NWPC Guidelines No.
001–95 recognized the power of the RTWPBs to issue exemptions from the application of the wage
orders subject to the guidelines issued by the NWPC (this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS 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.
The following categories of establishments may be exempted upon application with and as
determined by the Board:

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.

Under 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 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 NWPC, in arriving at its
decision, weighed the arguments of the parties and ruled that the RTWPB–NCR had substantial and
justifiable reasons in exempting the sectors and establishments enumerated in Section 2(A) and
Section 9(2) based on the public hearings and consultations, meetings, social–economic data and
informations gathered prior to the issuance of Wage Order No. NCR–07. The very fact that the validity
of the assailed sections of Wage Order No. NCR–07 had been already passed upon and upheld by the
NWPC meant that the NWPC had already given the wage order its necessary legal imprimatur.
Accordingly, the requisite approval or review was complied with. The RTWPBs are the thinking group
of men and women guided by statutory standards and bound by the rules and guidelines prescribed
by the NWPC. In the nature of their functions, the RTWPBs investigate and study all the pertinent
facts to ascertain the conditions in their respective regions. Hence, they are logically vested with the
competence to determine the applicable minimum wages to be imposed as well as the industries and
sectors to exempt from the coverage of their wage orders. Lastly, Wage Order No. NCR–07 is
presumed to be regularly issued in the absence of any strong showing of grave abuse of discretion on
the part of RTWPB–NCR. The presumption of validity is made stronger by the fact that its validity was
upheld by the NWPC upon review.