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 (WAWU-ULGWP LOCAL 101), TUNGAO LUMBER WORKERS UNION (TULWU-ULGWP LOCAL 102) and UNITED WORKERS UNION (UWU-ULGWP LOCAL 103), respondents.

FACTS

Petitioners Nasipit Lumber Company, Inc. (NALCO), Philippine Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO) jointly filed an application for exemption from Wage Order Nos. RX-01 and RX-01-A issued by the Regional Tripartite Wages and Productivity Board (RTWPB) for Region X. They claimed to be distressed establishments belonging to a distressed industry (logging and integrated wood processing) due to conditions beyond their control, citing worldwide recession, peace and order problems, logging moratorium, reduction in allowable cut, insufficient raw material, increased costs, and a lumber export ban. The RTWPB granted their application for a one-year exemption based on its own “Guidelines No. 3” dated November 26, 1990, specifically a criterion for an “establishment belonging to distressed industry.” The respondent Unions appealed to the National Wages and Productivity Commission (NWPC). The NWPC modified the RTWPB decision. It granted ALCO’s exemption because its capital impairment for 1990 was 28.72%, meeting the 25% threshold under the NWPC’s own Guidelines dated February 25, 1991. However, it denied the applications of NALCO and PWC because their capital impairments for 1990 were only 1.89% and 5.03%, respectively, failing to meet the 25% criterion. The NWPC ruled that the RTWPB’s Guidelines No. 3 was ineffectual as it lacked the required approval from the NWPC. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the RTWPB’s Guidelines No. 3, which provided a criterion for exemption for establishments belonging to a “distressed industry,” is valid and can be the basis for granting petitioners’ application for exemption from the wage orders.

RULING

No. The NWPC’s decision is affirmed. The Labor Code, as amended by Republic Act No. 6727 (Wage Rationalization Act), grants the NWPC the power to prescribe rules and guidelines for the determination of appropriate wages, including guidelines for exemption. The RTWPB’s “Guidelines No. 3” was issued without the approval of the NWPC and, in fact, contained a criterion (“distressed industry”) not found in the NWPC’s valid guidelines. Under the NWPC’s Rules of Procedure and its Guidelines, RTWPB may issue supplementary guidelines but these are subject to review and approval by the Commission. Since Guidelines No. 3 was never approved by the NWPC, it had no operative force and effect. The applicable and valid criteria were those issued by the NWPC on February 25, 1991, which for a distressed employer (like a stock corporation) required that accumulated losses have impaired its paid-up capital by at least 25%. Applying this valid criterion, only ALCO qualified for exemption. Petitioners NALCO and PWC did not meet the 25% capital impairment requirement and thus were correctly ordered to pay the wage increases retroactively with interest.