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VOL. 289, APRIL 27, 1998

667

Nasipit Lumber Company, Inc. vs. National Wages and

Productivity Commission
*

G.R. No. 113097. April 27, 1998.

NASIPIT LUMBER COMPANY, INC., and PHILIPPINE

WALLBOARD
CORPORATION,
petitioners,
vs.
NATIONAL
WAGES
AND
PRODUCTIVITY
COMMISSION, WESTERN AGUSAN WORKERS UNION
(WAWUULGWP LOCAL 101), TUNGAO LUMBER
WORKERS UNION (TULWUULGWP LOCAL 102) and
UNITED WORKERS UNION (UWUULGWP LOCAL 103),
respondents.
Constitutional Law; Administrative Law; The three great
branches and the various administrative agencies of the
government can exercise only those powers conferred upon them by
the Constitution and the law.The three great branches and the
various administrative agencies of the government can exercise
only those powers conferred upon them by the Constitution and
the law. It is through the application of this basic constitutional
principle that the Court resolves the instant case.
Labor Law; Wage Orders; It is the National Wages and
Productivity Commission (NWPC), not the Regional Tripartite
Wages and Productivity Boards (RTWPB), which has the power to
prescribe the rules and guidelines for the determination of
minimum wage and productivity measures.The foregoing clearly
grants the NWPC, not the RTWPB, the power to prescribe the
rules and guidelines for the determination of minimum wage and
productivity measures. While the RTWPB has the power to issue
wage orders under Article 122(b) of the Labor Code, such orders
are subject to the guidelines prescribed by the NWPC. One of
these guidelines is the Rules on
________________
*

FIRST DIVISION.

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668

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Minimum Wage Fixing, which was issued on June 4, 1990. Rule

IV, Section 2 thereof, allows the RTWPB to issue wage orders
exempting enterprises from the coverage of the prescribed
minimum wages. However, the NWPC has the power not only to
prescribe guidelines to govern wage orders, but also to issue
exemptions therefrom, as the said rule provides that [w]henever
a wage order provides for exemption, applications thereto shall be
filed with the appropriate Board which shall process the same,
subject to guidelines issued by the Commission. In short, the
NWPC lays down the guidelines which the RTWPB implements.
Same; Same; Where the NWPC never assented to a Guideline
issued by the RTWPB, the said guideline is inoperative and cannot
be used by the latter in deciding or acting on an employers
application for exemption.Significantly, the NWPC authorized
the RTWPB to issue exemptions from wage orders, but subject to
its review and approval. Since the NWPC never assented to
Guideline No. 3 of the RTWPB, the said guideline is inoperative
and cannot be used by the latter in deciding or acting on
petitioners application for exemption. Moreover, Rule VIII,
Section 1 of the NWPCs Rules of Procedure on Minimum Wage
Fixing issued on June 4, 1990which was prior to the effectivity of
RTWPB Guideline No. 3requires that an application for
exemption from wage orders should be processed by the RTWPB,
subject specifically to the guidelines issued by the NWPC.
Same; Same; Administrative Law; It is a hornbook doctrine
that the issuance of an administrative rule or regulation must be
in harmony with the enabling law; A statutory grant of powers
should not be extended by implication beyond what may be
necessary for their just and reasonable executionofficial powers
cannot be merely assumed by administrative officers, nor can they
be created by the courts in the exercise of their judicial
functions.To allow RTWPB Guideline No. 3 to take effect
without the approval of the NWPC is to arrogate unto RTWPB a
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 doctrine that the
issuance of an administrative rule or regulation must be in
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harmony with the enabling law. If a discrepancy occurs between

the basic law and an implementing rule or regulation, it is the
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.
Article 122 (e) of the
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Nasipit Lumber Company, Inc. vs. National Wages and

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Labor Code cannot be construed to enable the RTWPB to decide

applications for exemption on the basis of its own guidelines
which were not reviewed and approved by the NWPC, for the
simple reason that a statutory grant of powers should not be
extended by implication beyond what may be necessary for their
just and reasonable execution. Official powers cannot be merely
assumed by administrative officers, nor can they be created by the
courts in the exercise of their judicial functions.
Same; Same; Statutory Construction; Basic is the rule in
statutory construction that all doubts in the implementation and
the interpretation of the provisions of the Labor Code, as well as its
implementing rules and regulations, must be resolved in favor of
labor.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 distressed industry. The fact that
the wording of a wage order may contain some ambiguity would
not help petitioners. Basic is the rule in statutory construction
that all doubts in the implementation and the interpretation of
the provisions of the Labor Code, as well as its implementing
rules and regulations, must be resolved in favor of labor. By
exempting all establishments belonging to a distressed industry,
Guideline No. 3 surreptitiously and irregularly takes away the
mandated increase in the minimum wage awarded to the affected
workers. In so acting, the RTWPB proceeded against the declared
policy of the State, enshrined in the enabling act, to rationalize
the fixing of minimum wages and to promote productivity
improvement and gainsharing measures to ensure a decent
standard of living for the workers and their families; to guarantee
the rights of labor to its just share in the fruits of production; x x
x. Thus, Guideline No. 3 is void not only because it lacks NWPC
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approval and contains an arbitrarily inserted exemption, but also

because it is inconsistent with the avowed State policies
protective of labor.
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 distressed establishment
from effects of wage orders, the NWPC requires the applicant, if a
stock corporation like petitioners, to prove that its accumulated
losses impaired its paidup capital by at least 25 percent in the
last full accounting
670

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Productivity Commission

period preceding the application or the effectivity of the order. 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, it was only ALCO which met the exemption standard.
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 guidelines for the
exemption of a distressed establishment. Absent any grave abuse
of discretion, NWPCs actions will not be subject to judicial
review. Accordingly, we deem the appealed Decisions to be
consistent with law.

SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.
The facts are stated in the opinion of the Court.
Froilan M. Bacungan & Associates for petitioners.
Lope A. Bunol for Western Agusan Workers Union
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
rules and guidelines for the determination of appropriate
wages in the country. Hence, guidelines issued by the
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Regional Tripartite Wages and Productivity Boards

(RTWPB) without the approval of or, worse, contrary to
those promulgated by the NWPC are ineffectual, void and
cannot be the source of rights and privileges.
The Case
This is the principle used by the Court in resolving this
petition for certiorari under Rule 65 of the Rules of Court
as
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Nasipit Lumber Company, Inc. vs. National Wages and

Productivity Commission
1

sailing the2Decision dated March 8, 1993, promulgated by

the NWPC which disposed as follows:
WHEREFORE, premises considered, the Decision appealed from
is hereby MODIFIED. The application for exemption of Anakan
Lumber Company is hereby GRANTED for a period of one (1) year
retroactive to the date subject Wage Orders took effect until
November 21, 1991. The applications for exemption of Nasipit
Lumber Company and Philippine Wallboard Corporation are
hereby DENIED for lack of merit, and as such, they are hereby
ordered to pay their covered workers the wage increases under
subject Wage Orders retroactive to the date of effectivity of said
Wage Orders plus interest of one percent (1%) per month.
SO ORDERED.
3

Petitioners also challenge the NWPCs Decision dated

November 17, 1993 which denied their motion for
reconsideration.
The RTWPBs August 1, 1991 Decision, which the
NWPC modified, disposed as follows:
WHEREFORE, all foregoing premises considered, the instant
petition for exemption from compliance with Wage Order Nos.
RX01 and RX01A is hereby approved under and by virtue of
criteria No. 2, Section 3 of RTWPB Guidelines No. 3 on
Exemption, dated November 26, 1990, for a period of only one (1)
year, retroactive to the date said Wage Order took effect up to
November 21, 1991.
4
SO ORDERED.
_______________
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1

Rollo, pp. 3238.

Signed by then Labor Secretary Ma. Nieves R. Confesor, chairman;

Secretary Cielito F. Habito, vice chairman; and Cedric R. Bagtas,

(representing labor), Vicente S. Bate (also representing labor), and
Carmelita M. Pineda, members. The two other members representing the
employer sector, Francisco R. Floro and Eduardo T. Rondain, dissented.
3

Rollo, pp. 3944.

Ibid., p. 44.
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Nasipit Lumber Company, Inc. vs. National Wages and

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The Facts
The undisputed facts are narrated by the NWPC as follows:
On October 20, 1990, the Region X [Tripartite Wages and
Productivity] Board issued Wage Order No. RX01 which provides
as follows:
Section 1. Upon the effectivity of this Wage Order, the increase in
minimum wage rates applicable to workers and employees in the private
sector in Northern Mindanao (Region X) shall be as follows:
a. The provinces of Agusan del Norte, Bukidnon, Misamis Oriental,
and the Cities of Butuan, Gingoog, and Cagayan de Oro
P13.00/day
b. The provinces of Agusan del Sur, Surigao del Norte and Misamis
Occidental, and the Cities of Surigao, Oroquieta, Ozamis and
TangubP11.00/day
c. The province of Camiguin P9.00/day

Subsequently, a supplementary Wage Order No. RX01A was

issued by the Board on November 6, 1990 which provides as
follows:
Section 1. Upon the effectivity of the original Wage Order RX01, all
workers and employees in the private sector in Region X already
receiving wages above the statutory minimum wage rates up to one
hundred and twenty pesos (P120.00) per day shall also receive an
increase of P13, P11, P9 per day, as provided for under Wage Order No.
RX01;

Applicants/appellees Nasipit Lumber Company, Inc. (NALCO),

Philippine Wallboard Corporation (PWC), and Anakan Lumber
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Company (ALCO), claiming to be separate and distinct from each

other but for expediency and practical purposes, jointly filed an
application for exemption from the abovementioned Wage Orders
as distressed establishments under Guidelines No. 3, issued by
the herein Board on November 26, 1990, specifically Sec. 3(2)
thereof which, among others, provides:
A. For purposes of this Guidelines the following criteria to determine
whether the applicantfirm is actually distressed shall be used.
x x x x x x x x
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2. Establishment belonging to distressed industryan establishment that
is engaged in an industry that is distressed due to conditions beyond its
control as may be determined by the Board in consultation with DTI and
NWPC. (Italics supplied)
x x x x x x x x x

Applicants/appellees aver that they are engaged in logging and

integrated wood processing industry but are distressed due to
conditions beyond their control, to wit: 1) Depressed economic
conditions due to worldwide recession; 2) Peace and order and
other emergencyrelated problems causing disruption and
suspension of normal logging operations; 3) Imposition of
environmental fee for timber production in addition to regular
forest charges; 4) Logging moratorium in Bukidnon; 5) A
reduction in the annual allowable volume of cut logs of NALCO &
ALCO by 59%; 6) Highly insufficient raw material supply; 7)
Extraordinary increases in the cost of fuel, oil, spare parts, and
maintenance; 8) Excessive labor cost/production ratio that is more
or less 47%; and 9) Lumber export ban.
On the other hand, oppositor/appellant Unions jointly opposed
the application for exemption on the ground that said companies
are not distressed establishments since their capitalization has
5
not been impaired by 25%.

Citing liquidity problems and business decline in the

woodprocessing industry, the RTWPB approved the
applicants joint application for exemption in this wise:
1. The Board considered the arguments presented by
petitioners and the oppositors. The Board likewise
took note of the financial condition of petitioner
firms. One of the affiliates, Anakan Lumber
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Company, is confirmed to be suffering from capital

impairment by: 14.80% in 1988, 71.35% in 1989 and
100% in 1990. On the other hand, NALCO had a
capital impairment of 6.41%, 13.53% and 17.04% in
1988, 1989 and 1990, respectively, while PWC had
no capital impairment from 1988 to 1990. However,
the Board also took note of the fact that petitioners
are claiming for exemption, not on the strength of
capital impairment, but on the basis of belonging to
a distressed industryan establishment that is
engaged in an indus
_______________
5

Ibid., pp. 3234.

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try that is distressed due to conditions beyond its control as

may be determined by the Board in consultation with DTI
and NWPC.
2. Inquiries made by the Board from the BOI and the
DTI confirm that all petitionerfirms are
encountering liquidity problems and extreme
difficulty servicing their loan obligations.
3. A perusal of the Provincial Trade and Industry
Development Plan for Agusan del Norte and
Butuan City where petitioners are operating their
business, confirms the existence of a slump in the
woodprocessing industry due to the growing
scarcity of [a] large volume of raw materials to feed
the various plywood and lumber mills in the area. A
lot of firms have closed and shifted to other
ventures, the report continued, although the
competitive ones are still in operation.
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
petitioners have very little control. The Board feels
that as an alternative to closing up their
business[es] which could bring untold detriment
and dislocation to [their] 4,000 workers and their
families, petitioners should be extended assistance
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and encouragement to continue operatingso that

jobs could thereby be preserved during these
difficult times. One such way is for the Board to
grant them a temporary reprieve from compliance
with the mandated wage 6increase specifically W.O.
RX01 and RX01A only.
Dissatisfied with the RTWPBs Decision, the private
respondents lodged an appeal with the NWPC, which
affirmed ALCOs application but reversed the applications
of herein petitioners, NALCO and PWC. The NWPC
reasoned:
The Guideline No. 3 dated November 26, 1990, issued by the
herein Board cannot be used as valid basis for granting
applicants/appellees application for exemption since it did not
pass the approval of this Commission.
Under the Rules of Procedure on Minimum Wage Fixing dated
June 4, 1990, issued by this Commission pursuant to Republic Act
6727, particularly Section 1 of Rule VIII thereof provides that:
_______________
6

RTWPB Decision, pp. 78; rollo, pp. 6566.

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Nasipit Lumber Company, Inc. vs. National Wages and

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Section 1. Application For Exemption.Whenever a wage order provides
for exemption, applications thereto shall be filed with the appropriate
Board which shall process the same, subject to guidelines issued by the
Commission. (Italics supplied)

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

criteria on exemption from compliance with wage orders. While
the Boards may issue supplementary guidelines on exemption,
the same should first pass the Commission for the purpose of
determining its conformity to the latters general policies and
guidelines relative thereto. In fact, under the Guidelines on
Exemption from Compliance with the Prescribed Wage/Cost of
Living Allowance Increases Granted by the Regional Tripartite
Wages and Productivity Boards dated February 25, 1991, issued
by the Commission, there is a provision that (T)he Board may
issue supplementary guidelines for exemption x x x subject to
review/approval by the Commission. (Section 11). In the case at
bar, after the Commission Secretariat made some comments on
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said Guideline No. 3, the same was never submitted again for
[the] Commissions approval either justifying its original
provisions or incorporating the comments made thereon. Until
and unless said Guidelines No. 3 is approved by the Commission,
it has no operative force and effect.
The applicable guidelines on exemption therefore is that one
issued by the Commission dated February 25, 1991, the pertinent
portion of which reads:
Section 3. CRITERIA FOR EXEMPTION
x x x x x x x x x
2. Distressed Employers/Establishment:
a. In

the

case

of

stock

corporation,

partnership,

single

proprietorship or nonstock, nonprofit organization engaged in

business activity or charging fees for its services.
When accumulated losses at
end of the period under review
have impaired by at least 25
percent the:

Total invested capital

at the beginning of the
last full accounting
period preceding the
appli

Paidupcapital at the end of

the last full accounting period
preceding the application, in
the case of corporations;
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Nasipit Lumber Company, Inc. vs. National Wages and
Productivity Commission
cation, in the case of partnership and single
proprietorships (Italics supplied)

A perusal of the financial documents on record shows that for the year
1990, which is the last full accounting period preceding the applications
for exemption, appellees NALCO, ALCO, and PWC incurred a capital
impairment of 1.89%, 28.72%, and 5.03%, respectively. Accordingly,
based on the criteria set forth above in the NWPC Guidelines on
Exemption, only the application for exemption of ALCO should be
approved in view of its capital impairment of 28.72%.
We are not unmindful of the fact that during the Board hearing
conducted, both labor and management manifested their desire for a
uniform decision to apply to all three (3) firms. However, we cannot grant
the same for want of legal basis considering that we are required by the
rules to decide on the basis of the merit of application by an
7

establishment having a legal personality of its own.

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In denying petitioners motion for reconsideration, public

respondent explained:
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
criteria of said Guidelines considering that it does not conform to
the policies and guidelines relative to wage exemption issued by
this Commission pursuant to Republic Act 6727. Consequently, it
has no force and effect. As such, said Guidelines No. 3 cannot
therefore be a source of a right no matter if one has relied on it in
good faith. In like manner that the workers, who are similarly
affected, cannot be bound thereof.
Moreover, even assuming that Guidelines No. 3 conforms to the
procedural requirement, still, the same cannot be given effect
insofar as it grants exemption by industry considering that the
subject Wage Order mentioned only distressed establishments 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 provision of [the] law
it seeks to
_______________
7

NWPC Decision dated March 8, 1993, pp. 46; rollo, pp. 3537.

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Nasipit Lumber Company, Inc. vs. National Wages and

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

contrary to applicant companies claim, this Commission does not
approve rules implementing the Wage Orders issued by the
Regional Tripartite Wages and Productivity Boards. Perforce, it
cannot be said that this Commission has approved the Rules
8
Implementing Wage Order No[s]. RX01 and RX01A.
9

Hence, this recourse.

The Issue

Petitioners raise this solitary issue:

With all due respect, Public Respondent National Wages and
Productivity Commission committed grave abuse of discretion
amounting to lack of or in excess of jurisdiction in ruling that
RTWPBXGuideline No. 3 has no operative force and effect,
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among others, and consequently, denying for lack of merit the

application for exemption of petitioners Nasipit Lumber
Company, Inc. and Philippine Wallboard Corporation from the
coverage of Wage Orders Nos. RX01 and RX01A.

In the main, the issue boils down to a question of power. Is

a guideline issued by an RTWPB without the approval of
or, worse, contrary to the guidelines promulgated by the
NWPC valid?
The Courts Ruling
The petition is unmeritorious. The answer to the above
question is in the negative.
_______________
8

Assailed Decision denying the motion for reconsideration, pp. 45;

rollo, pp. 4243.

9

The case was deemed submitted for resolution on May 9, 1996 upon

receipt by this Court of private respondents Memorandum dated April 22,

1996.
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Nasipit Lumber Company, Inc. vs. National Wages and

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Sole Issue: Approval of NWPC Required

Petitioners contend that the NWPC gravely abused its
discretion in overturning the RTWPBs approval of their
application for exemption from Wage Orders RX01 and
RX01A. They argue that under Art. 122 (e) of the Labor
Code, the RTWPB has the power [t]o receive, process and
act on applications for exemption from prescribed10 wage
rates as may be provided by law or any wage order. They
also maintain that no law expressly requires the approval
of the NWPC for the effectivity of the RTWPBs Guideline
No. 3. Assuming arguendo that the approval of the NWPC
was legally necessary, petitioners should not be prejudiced
by their observance of the
guideline, pointing out that the
11
NWPCs own guidelines took effect only on March 18,
1991 long 12after Guideline No. 3 was issued on November
26, 1990. Lastly, they posit that the NWPC guidelines
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cannot be given retroactive effect as13 [they] will affect or

change the petitioners vested rights.
The Court is not persuaded.
Power to Prescribe Guidelines Lodged in the NWPC, Not in
the RTWPB
The three great branches and the various administrative
agencies of the government can exercise only those powers
14
conferred upon them by the Constitution and the law. It is
through the application of this basic constitutional
principle that the Court resolves the instant case.
RA 6727 (the Wage Rationalization Act), amending the
Labor Code, created both the NWPC and the RTWPB and
de
_______________
10

Petitioners Memorandum, pp. 1415; rollo, pp. 234235.

11

Rollo, pp. 7980.

12

Petitioners Memorandum, p. 21; rollo, p. 241.

13

Ibid., p. 18; rollo, p. 238.

14

Azarcon vs. Sandiganbayan, 268 SCRA 747, 760761, February 26,

1997.
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fined their respective powers. Article 121 of the Labor Code

lists the powers and functions of the NWPC, as follows:
ART. 121. Powers and Functions of the Commission.The
Commission shall have the following powers and functions:
(a) To act as the national consultative and advisory body to
the President of the Philippine[s] and Congress on matters
relating to wages, incomes and productivity;
(b) To formulate policies and guidelines on wages, incomes
and productivity improvement at the enterprise, industry
and national levels;
(c) To prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at
the regional, provincial or industry levels;
(d) To review regional wage levels set by the Regional
Tripartite Wages and Productivity Boards to determine if
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these are in accordance with prescribed guidelines and

national development plans;
(e) To undertake studies, researches and surveys necessary
for the attainment of its functions and objectives, and to
collect and compile data and periodically disseminate
information on wages and productivity and other related
information, including, but not limited to, employment,
costofliving, labor costs, investments and returns;
(f) To review plans and programs of the Regional Tripartite
Wages and Productivity Boards to determine whether
these are consistent with national development plans;
(g) To exercise technical and administrative supervision over
the Regional Tripartite Wages and Productivity Boards;
(h) To call, from time to time, a national tripartite conference
of representatives of government, workers and employers
for the consideration of measures to promote wage
rationalization and productivity; and
(i) To exercise such powers and functions as may be
necessary to implement this Act.
x x x x x x x x x (Italics supplied)

Article 122 of the Labor Code, on the other hand, prescribes

the powers of the RTWPB thus:
680

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Productivity Commission
Art. 122. Creation of Regional Tripartite Wages and Productivity
Boards.
x x x x x x x x x
The Regional Boards shall have the following powers and
functions in their respective territorial jurisdiction:
(a) To develop plans, programs and projects relative to wages,
income and productivity improvement for their respective
regions;
(b) To determine and fix minimum wage rates applicable in
their region, provinces or industries therein and to issue
the corresponding wage orders, subject to guidelines issued
by the Commission;
(c) To undertake studies, researches, and surveys necessary
for the attainment of their functions, objectives and
programs, and to collect and compile data on wages,

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incomes, productivity and other related information and

periodically disseminate the same;
(d) To coordinate with the other Regional Boards as may be
necessary to attain the policy and intention of this Code.
(e) To receive, process and act on applications for exemption
from prescribed wage rates as may be provided by law or
any Wage Order; and
(f) To exercise such other powers and functions as may be
necessary to carry out their mandate under this Code.
(Italics supplied)

The foregoing clearly grants the NWPC, not the RTWPB,

the power to prescribe the rules and guidelines for the
determination of minimum wage and productivity
measures. While the RTWPB has the power to issue wage
orders under Article 122(b) of the Labor Code, such orders
are subject to the guidelines prescribed by the NWPC. One
of these guidelines is the Rules on Minimum
Wage
15
Fixing, which was issued on June 4, 1990. Rule IV,
Section 2 thereof, allows the RTWPB to issue wage orders
exempting enterprises
from the coverage of the prescribed
16
minimum wages. However, the NWPC has the power not
only to prescribe guidelines to gov
_______________
15

Rollo, pp. 6877.

16

Ibid., p. 73.
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ern wage orders, but also to issue exemptions therefrom, as

the said rule provides that [w]henever a wage order
provides for exemption, applications thereto shall be filed
with the appropriate Board which shall process17the same,
subject to guidelines issued by the Commission. In short,
the NWPC lays down the guidelines which the RTWPB
implements.
Significantly, the NWPC authorized the RTWPB to issue
exemptions
from wage orders, but subject to its review and
18
approval. Since the NWPC never assented to Guideline
No. 3 of the RTWPB, the said guideline is inoperative and
cannot be used by the latter in deciding or acting on
petitioners application for exemption. Moreover, Rule VIII,
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Section 1 of the NWPCs Rules of Procedure on Minimum

Wage Fixing issued on June 4, 1990which was prior to
the effectivity of RTWPB Guideline No. 3requires that an
application for exemption from wage orders should be
processed by the RTWPB, subject specifically to the
guidelines issued by the NWPC.
To allow RTWPB Guideline No. 3 to take effect without
the approval of the NWPC is to arrogate unto RTWPB a
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 doctrine that the issuance of an administrative
rule or regulation must be in harmony with the enabling
law. If a discrepancy occurs between the basic law and an
implementing
rule or regulation, it is the former that
19
prevails. This is so because the law cannot be broadened
by a mere administrative issuance.
_______________
17

Section 1, Rule VIII, NWPCs Rule on Minimum Wage Fixing. Italics

supplied.
18

Section 11 of NWPCs original Guidelines on Exemption From

Compliance with the Prescribed Wage/Cost of Living Allowance Increase

Granted by the RTWPBs dated February 25, 1991; rollo, p. 80.
19

Land Bank of the Philippines vs. Court of Appeals, 249 SCRA 149,

158, October 6, 1995, per Francisco, J.; citing Shell Philippines, Inc. vs.
Central Bank of the Philippines, 162 SCRA 628, June 27, 1988.
682

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Nasipit Lumber Company, Inc. vs. National Wages and

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It is axiomatic that [a]n 20

administrative agency cannot
amend an act of Congress. Article 122 (e) of the Labor
Code cannot be construed to enable the RTWPB to decide
applications for exemption on the basis of its own
guidelines which were not reviewed and approved by the
NWPC, for the simple reason that a statutory grant of
powers should not be extended by implication beyond what
may be necessary for their just and reasonable execution.
Official powers cannot be merely assumed by administrative
officers, nor can they be created
by the courts in the exercise
21
of their judicial functions.
There is no basis for petitioners claim that their vested
rights were prejudiced by the NWPCs alleged retroactive
22

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application of its own rules which

were issued on

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22

application of its own rules which were issued on

23
February 25, 1991 and took effect on March 18, 1991.
Such claim cannot stand because Guideline No. 3, as
previously
discussed and as correctly concluded by the
24
NWPC, was not valid and, thus, cannot be a source of a
right; much less, a vested one.
The Insertion in Guideline No. 3 of Distressed Industry as
a Criterion for Exemption Void.
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
distressed industry. The fact that the wording of a wage
order may contain some ambiguity would not help
petitioners. Basic is the rule in statutory con
_______________
20

Cebu Oxygen & Acetylene Co., Inc. vs. Drilon, 176 SCRA 24, 29,

August 2, 1989, per Gancayco, J.; citing Manuel vs. General Auditing
Office, 42 SCRA 660, December 29, 1971.
21

Gonzales, Neptali A., Administrative Law; A Text, p. 46, 1979 ed.;

citing 42 Am Jur. 316318. (Emphasis supplied.)

22

Rollo, pp. 7980.

23

Petition, p. 22; rollo, p. 23.

24

NWPC Decision dated November 17, 1993, p. 4; rollo, p. 42.

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struction that all doubts in the implementation and the

interpretation of the provisions of the Labor Code, as well
as its implementing rules and25 regulations, must be
resolved in favor of labor.
By exempting all
establishments belonging to a distressed industry,
Guideline No. 3 surreptitiously and irregularly takes away
the mandated increase in the minimum wage awarded to
the affected workers. In so acting, the RTWPB proceeded
against the declared policy of the State, enshrined in the
enabling act, 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
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to its just share in the fruits of production;

x x x.

26

Thus,

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26

to its just share in the fruits of production; x x x. Thus,

Guideline No. 3 is void not only because it lacks NWPC
approval and contains an arbitrarily inserted exemption,
but also because it is inconsistent with the avowed State
policies protective of labor.
NWPC Decision Not Arbitrary
To justify the exemption of a distressed establishment from
effects of wage orders, the NWPC requires the applicant, if
a stock corporation like petitioners, to prove that its
accumulated losses impaired its paidup capital by at least
25 percent 27in the last full accounting period preceding the
application or
_______________
25

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

Employees Association vs. Ople, 138 SCRA 273, August 28, 1985 and
Insular Bank of Asia and America Employees Union (IBAAEU) vs.
Inciong, 132 SCRA 663, October 23, 1984.
26
27

2, RA 6727.
3, par. 2 of Original NWPC Guidelines on Exemption From

Compliance with the Prescribed Wage/Cost of Living Allowance Increase

Granted by the RTWPBs dated February 25, 1991. See Central Textile
Mills, Inc. vs. National Wages and Productivity Commission, 260 SCRA
368, 369, August 7, 1996. See also National Wages Council (now abolished
predecessor of the NWPC) Policy Guideline No. 8, Section 5 as cited in
Radio Communications of the
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28

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

undisputed that during the relevant accounting period,
NALCO, ALCO and PWC sustained capital29 impairments of
1.89, 28.72 and 5.03 percent, respectively. Clearly, it was
only ALCO which met the exemption standard. 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
guidelines for the exemption of a distressed establishment.
Absent any grave abuse of discretion,
NWPCs actions will
30
not be subject to judicial review. Accordingly, we deem the
appealed Decisions to be consistent with law.
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WHEREFORE, the petition is hereby DISMISSED. The

assailed Decisions are hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.
Davide, Jr. (Chairman), Bellosillo, Vitug and
Quisumbing, JJ., concur.
Petition dismissed. Judgment affirmed.
Notes.Wage Orders Nos. 3,4,5 and 6 and their
Implementing Rules did not set forth a clear and specific
notion of wage distortion but only recognized that the
implementation of the Wage Orders could result in a
distortion of the wage structure. (National Federation of
Labor vs. National Labor Relations Commission, 234 SCRA
311 [1994])
________________
Phils., Inc. (RCPI) vs. National Wages Council, 207 SCRA 581, 582583,
March 26, 1992.
28

3, par. 3a.1, Revised NWPC Guidelines on Exemption From

Compliance with the Prescribed Wage/Cost of Living Allowance Increase

Granted by the RTWPBs dated September 15, 1992. See Joy Brothers, Inc.
vs. National Wages and Productivity Commission, G.R. No. 122932, p. 3,
June 17, 1997.
29

NWPC Decision dated March 8, 1993, p. 5; rollo, p. 36.

30

See PNOCEnergy Development Corp. vs. NLRC, 201 SCRA 487, 494,

September 11, 1991.

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685

People vs. Bersabe

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

Order to mean that it granted an across the board increase
where such interpretation is not sustained by its text.
(Cagayan Sugar Milling Company vs. Secretary of Labor
and Employment, 284 SCRA 150 [1998])
o0o

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