AM 07 9 454 RTC; (March, 2014) (Digest)
March 12, 2026GR 95393; (May, 1992) (Digest)
March 12, 2026G.R. No. L-23542 January 2, 1968
JUANA T. VDA. DE RACHO, plaintiff-appellee, vs. MUNICIPALITY OF ILAGAN, defendant-appellant.
FACTS
Plaintiff Juana T. Vda. de Racho, representing herself and as guardian ad litem for her five minor children, is the surviving spouse of Manuel Racho. Manuel Racho was employed by the Municipality of Ilagan, Isabela, as a market cleaner from July 1, 1954, at an annual salary of P660.00. On July 1, 1958, he received a promotional appointment increasing his salary to P720.00 per annum, which he received until his resignation effective July 7, 1960. He was paid the money value of his accumulated leaves from January 7, 1960, to May 23, 1960, at the rate of P60.00 a month. He died on October 5, 1960. Plaintiff filed a claim for salary differentials, arguing that the decedent should have been paid the minimum wage of P120.00 monthly under the Minimum Wage Law (Republic Act 602). The Court of First Instance of Isabela ruled in favor of the plaintiff, ordering the municipality to pay P1,766.00 representing wage differentials and adjusted terminal leave pay from December 9, 1957, to May 23, 1960. The municipality appealed, arguing that its shortage and lack of available funds exempted it from complying with the Minimum Wage Law.
ISSUE
Whether the Municipality of Ilagan’s alleged shortage and lack of available funds validly exempt it from the mandatory obligation to pay its employees the statutory minimum wage under Republic Act 602.
RULING
No. The Supreme Court affirmed the lower court’s decision, dismissing the appeal. The Court ruled that a municipality’s lack of funds is not a valid excuse for non-compliance with the Minimum Wage Law. Paying the statutory minimum wage is a mandatory statutory obligation of the municipality. Upholding the defense of lack of funds would render the law futile and defeat its purpose. The Court cited its prior ruling in Rivera vs. Colago (L-12323, February 24, 1961). The law, which took effect for government employees in 1952, should have been implemented immediately. The municipality cannot benefit from its own failure to comply. The Court suggested that the municipality’s remedy is to improve its tax collection or forego non-essential expenditures, not to seek exemption from the law.