NASIPIT LUMBER COMPANY INC., etc. v.
NATIONAL WAGES AND PRODUCTIVITY in 1988, 1989 and 1990; PWC had no capital impairment from 1988 to 1990. The Board
COMMISSION, WESTERN AGUSAN, TUNGAO LUMBER AND UNITER WORKERS
UNION
1998 |Panganiban.
DOCTRINE: 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 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.
On Oct. 20, 1990, Region X Tripartite Wages and Productivity Board issued
Wage Order RX-01 which increased the minimum wage rates to workers in the private
sector:
• Agusan del Norte, Bukidnon, Misamis Oriental, and the Cities of Butuan,
Gingoog, and Cagayan de Oro---P13.00/day
• Agusan del Sur, Surigao del Norte and Misamis Occidental, and the Cities of
Surigao, Oroquieta, Ozamis and Tangub----P11.00/day
• The province of Camiguin ---P9.00/day’
A supplementary Wage Order RX 01-A was issued that upon the effectivity of Wage
Order RX-01, all workers and employees in the private sector in Region X already
receiving wages above the statutory minimum wage rates up P120.00 per day shall
also receive an increase of P13, P11, P9 per day, as provided for under Wage Order No.
RX-01.
Nasipit Lumber Company Inc. (NALCO), Philippine Wallboard Corporation (PWC) and
Anakan Lumber Company (ALCO) asked for exemption, saying that they are “distressed
due to conditions beyond their control” (as per Guidelines No. 3 issued by the Board)
since a) depressed economic conditions due to worldwide recession, b) peace and
order problems, c) environmental fee for timber production + regular forest charges, d)
logging moratorium in Bukidnon, e) reduction of annual allowable volume of cut logs
by 59%, f) highly insufficient raw material supply, g) extraordinary increases in cost of
fuel, oil, spare parts and matinenance, h) excessive labor cost/production ratio that is
more or less 47% and 9) lumber export ban.
The Unions opposed this saying that the companies are not distressed establishments
since their capitalization has not been impaired by 25%
RTWB approved the application for exemption due to liquidty and business decline in
the wood processing industry. Anakan Lumber is suffering from capital impairment by:
14.80% in 1988, 71.35% in 1989 and 100% in 1990; NALCO 6.41%, 13.53% and 17.04%
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 an industry distressed
beyond its control as determined by the Board with DTI, BOI and NWPC. The Board feels
that instead of closing the businesses to the detriment of the around 4,000 workers
and their families, petitioners should be extended assistance and encouragement to
continue operating.
Respondents appealed to NWPC. NWPC affirmed ALCO’s application but not NALCO’s
and PWC’s since the Rules of Procedure on Minimum Wage Fixing dated June 4, 1990,
issued by NWPC pursuant to Republic Act 6727, Section 1 of Rule VIII says that
“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.”
The NWPC argues it has the power to set the criteria for exemption from compliance
with wage orders. The Boards can only issue supplementary guidelines, subject to
review by the NWPC. For 1990 it was found that NALCO, ALCO and PWC had capital
impairments of 1.89%, 28.72%, and 5.03%, respectively. Based on the NWPC Guidelines
on Exemption, only ALCO should be approved since exemption only applies for
accumulated losses at the end of the last full accounting period preceding the
application by at least 25%.
• Guideline No. 3 has no force and effect since it does not conform with the
Commission issued guidelines purusuant to RA 6727.
• Even if it did conform, it would still not be exempted since the Wage Order only
said “distressed establishments”, not “exemption by industries”. Implementing
guidelines cannot expand the law it seeks to implement.
• NWPC does not approve rules implementing Wage Orders by RTWPBs
Petitioners argue that under a) Art. 122 of the Labor Code, RTWPB “has the power to
receive, process, and act on applications for exemption from prescribed wage rates as
may be provided by law or any wage order”. b) In addition, there is no law expressly
requiring the approval of the NWPC for the effectivity of RTWPB guidelines. c)
Assuming arguendo, the NWPC guidelines only took effect only on March 18, 1991 long
after Guideline No. 3 was issued on November 26, 1990.” d) Lastly, they argue that the
NWPC Guidelines cannot be given retroactive effect as they will affect petitioners’
vested rights.
ISSUE: W/N NWPC commited gad in nullifying RTWPB-X-Guideline No. 3 (or W/N a
guideline issued by an RTWPB without the approval of or, worse, contrary to the
guidelines promulgated by the NWPC valid?)
HELD:
Arguments of Petitioners
Power to Prescribe Guidelines Lodged in NWPC, Not in RTWPB
Based on the logic that the three branches and administrative agencies of the
government can exercise only powers conferred by the Constittuion and the law, RA
6727 (Wage Rationalization Act) amended the Labor Code and created the NWPC with
its powers under Art. 121, and the RTWB under Art. 122 (PLEASE READ the articles its
so long to add here). The Labor Code clearly grants the NWPC the power to ‘prescribe
rules and guidelines’ for the determination of minimum wage and productivity
measures; the RTWPB has the power to issue wage orders, subject to the guidelines of
NWPC.
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.” or to protect labor.
NWPC Decision Not Arbitrary
NWPC requires applicants, if a stock corporation like petitioners, to prove that
the accumulated losses impaired is at least 25% in the last full accounting period
preceding the application or the effectivity of the order. Only ALCO met the exemption
standard who had 28.72%.
DISMISSED.
RSAT

One of the guidelines NWPC made is the ‘Rules on Minimum Wage Fixing’, issued on
June 4, 1990. Rule IV S2 allowed RTWPB to issue wage orders exempting enterprises
from the coverage of the prescribed minimum wages. However, the NWPC has the
power to issue wage orders AND issue exemptions. In short, the NWPC lays down the
guidelines which the RTWPB implements. The NWPC authorized RTWB to exemptions
from wage orders but subject to its review and approval. Thus, Guidelines No. 3 is
inoperative since it was not approved by NWPC. It would be an usurpation of authority
to allow Guideline No. 3. Hornbook doctrine that the issuance of an administrative rule
or regulation must be in harmony with the enabling law. An administrative agency
cannot amend an act of Congress. 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.”

There is no vested right violated by the retroactive application of its rules since
Guideline No. 3 is invalid.

The Insertion in Guideline No. 3 of “Distressed Industry” as a Criterion for Exemption is

Void

The law does not automatically grant exemption to all establishments

belonging to an industry deemed “distressed”. RX-01 Section 3 must not be construed
to automatically include all establishments belonging to a distressed industry. The
basic rule in statutory construction is 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. In exempting the industries, RTWB
violated the State policy “to rationalize the fixing of minimum wages and to promote
productivity-improvement and gain-sharing measures to ensure a decent standard of