G.R. No. 51009. June 10, 1992
LUZON POLYMERS CORPORATION, PETITIONER, VS. HON. PRESIDENTIAL EXECUTIVE ASSISTANT JACOBO C. CLAVE, HON. MINISTER OF LABOR BLAS OPLE AND LUZON POLYMERS LABOR UNION (FFW), RESPOND…
ROMERO, J.:
This special civil action of certiorari questions the
administrative grant of an emergency allowance of fifty pesos to the employees
of a corporation with a capital stock of one million pesos.
The emergency allowance of employees in the private sector has
its origin in Presidential Decree No. 390, granting said allowance to
government employees. On March 6, 1974,
subsequent to the promulgation of P.D. No. 390, then President Marcos issued
Letter of Instructions No. 174 to implement the policy enunciated in said
decree in the private sector. He
directed the Secretary of Labor “to take such measures as may be
necessary to ensure orderly and effective response by employers in the private
sector.” A pertinent provision of said LOI reads:
“3. Determination of Amount
of Allowances. – In
the spirit of Presidential Decree No. 390 granting allowances to government
employees receiving less than P600.00 monthly, employers are urged to give top
priority to their lowest paid workers without prejudice, however, to extending
similar assistance to higher grades of their personnel.
For purposes of construing the minimum guidelines for the private
sector, the following scales are recommended:
For large-scale and medium-scale enterprises
capitalized at P1 million to P4 million or more, P50.00 or higher;
For small-scale enterprises capitalized
at P100,000 to P1 million,
P30 or higher;
For enterprises lower than these categories, P15 or higher.”
(Underscoring supplied.)
To explain the meaning and scope of application of LOI No. 174,
on March 11, 1974, the Department of Labor issued an Interpretative Bulletin, a relevant section of which states:
“SEC. 5. Determination
of Amount of Allowances. – In determining the amount of allowances that
should be given by employers to meet the recommended minimum standards, the LOI
has classified employers into three general categories. As an implementation policy, the Department
of Labor shall consider as sufficient compliance with the scales of allowances
recommended by the LOI if the following monthly allowances are given by
employers:
(a) P50.00 or higher where the authorized capital
stock of the
corporation, or the
total assets in the case at other undertakings, exceeds P1 million;
(b) P30.00 or higher where the authorized
capital stock of the corporation, or the
total assets in the case of other
undertakings, is not less than P100,000.00
but not more than P1 million; and
(c) P15.00 or higher
where the authorized capital stock or total assets, as the case may be, is less
than P100,000.00.” (Underscoring supplied.)
On July 31, 1974,
the President issued P.D. No. 525 making mandatory the payment of emergency
allowance under LOI No. 174. Pertinent
sections thereof provide:
“SECTION 1. Effective 1 August 1974, all employers who
have not paid their employees emergency allowance in accordance with Letter of
Instructions No. 174 shall pay their employees who are receiving less than
P600.00 a month emergency allowance of P50.00 a month if
their capitalization is more than 1 million
pesos, P30.00 if their capitalization is
more than 100 thousand pesos but does
not exceed 1 million pesos, and P15.00 if
their capitalization is 100 thousand pesos or less; Provided, that this Decree
shall not apply to any severely distressed industry or branch thereof, or
enterprise therein, as defined by the Department of Labor in accordance with
established standards and methods of determining the same.” (Underscoring
supplied.)
x x x x x x x x x
“SECTION 3. The
Department of Labor and the National Labor Relations Commission shall not
entertain any complaints under this Decree against employers who have complied
with Letter of Instructions No. 174 and filed the necessary reports with the
Department of Labor.”
For the guidance of those concerned, on August 5, 1974 then
Secretary of Labor Blas F. Ople promulgated the Rules and Regulations
Implementing P.D. No. 525 with the following provisions:
“Section 7. Amount
of Allowances. – Every
covered employer shall give to each of his employees who is receiving less than
P600.00 a month not less than the following monthly allowances:
(a) P50.00 where
the authorized capital stock or total
assets, whichever is applicable and higher,
is P1 million or more;
(b) P30.00 where
the authorized capital stock or total
assets, whichever is applicable and higher,
is at least P100,000.00 but less
than P1 million; and
(c) P15.00 where the
authorized capital stock or total assets, whichever is applicable and higher,
is less than P100,000.00.
Nothing herein shall prevent employers from granting allowances to
their employees who will receive more than P600.00 a month, including the
allowances. An employer, however, may
grant his employees an allowance which, if added to their monthly salary, will
not yield to them more than P600.00 a month.” (Underscoring supplied.)
“Section 8. Compliance
Under LOI No. 174. – The Department of Labor and any of its entities, including the
National Labor Relations Commission and its regional units, shall not entertain
complaints against employers who have fully complied with Letter of
Instructions No. 174.
Where an employer has not granted to his employees the full minimum
monthly allowance provided in LOI No. 174, such employer shall, within two (2)
months from the effective date of these regulations, grant at least the
difference between the applicable monthly allowance provided in the Decree and
that actually paid the employees, retroactive to 1 August 1974.”
Under this statutory backdrop, petitioner, a corporation with an
authorized capital stock of P1 million and total assets of P2,656,793.45 as of
December 31, 1974, was named a respondent in a complaint for underpayment of
emergency allowance filed before Regional Office No. 4 of the Department of
Labor in 1976 by the Luzon Polymers Labor Union (FFW) on behalf of 185 of its
members.[1]
Alleging that since February 1974, regular employees of petitioner corporation
who were members of the union had been receiving P1.15 daily or P30.00 monthly
emergency allowance, complainant-union contended that its members were entitled
to P50.00 monthly emergency allowance inasmuch as their employer’s total
assets were over and above P1 million.
For its part, petitioner corporation claimed that since it had
fully complied with LOI No. 174, it had not underpaid its employees. Moreover, citing Sec. 3 of P.D. No. 525, it
questioned the jurisdiction of the Department of Labor to entertain and hear
the complaint.
Noting that petitioner corporation had total assets of more than
one million in 1973 and 1974 or P1,920,529.04 and P2,676,793.45, respectively,
Officer-in-Charge and Assistant Secretary Vicente Leogardo, Jr. ruled that
petitioner had not fully complied with LOl No. 174 and therefore it could not
validly invoke Sec. 8 of the Rules and Regulations Implementing P.D. No.
525. Citing the decision of the Office
of the President in “Kalinisan Workers Association (FFW) v. Kalinisan
Incorporated”[2]
which held that “capitalization” means the “authorized capital
stock or total assets, whichever is applicable or higher” which meaning
was reflected in the Rules and Regulations Implementing P.D. No. 525, the
Assistant Secretary’s order of May 23, 1977 accordingly directed the petitioner
corporation to pay its complainant-employees the deficiency of the emergency
allowance equivalent to P20 a month from the start of their employment but not
earlier than August 1, 1974.
Petitioner appealed to Secretary Ople but the latter dismissed
the appeal for lack of merit in the order of February 21, 1978 and directed
petitioner “to pay the difference of P20.00 as awarded in the appealed
order.”[3]
Hence, petitioner elevated the case to the Office of the President which,
through Presidential Executive Assistant Jacobo C. Clave, likewise dismissed
the appeal in an undated decision.[4]
Having failed to obtain administrative relief, petitioner filed
the instant petition for certiorari praying that Sec. 7 of the Rules and
Regulations Implementing P.D. No. 525 be declared null and void “insofar
as it increases the liability of employers capitalized at P1 million from
P30.00 a month to P50.00 a month” and that the decision of Presidential
Assistant Clave be reversed. Petitioner further prayed that execution of the questioned decision be
stayed pending the resolution of the instant petition.[5]
Granting this last prayer, on August 8, 1979 the Court issued a temporary
restraining order enjoining the public respondents from executing the questioned
decision.[6]
Petitioner contends herein that: (a) in issuing the Rules and Regulations Implementing P.D. No. 525,
particularly paragraph 7 thereof, the then Secretary of Labor exceeded his
rule-making power inasmuch as said paragraph substantially altered and
contradicted the provisions of P.D. No. 525; (b) the Secretary of Labor’s order
of February 21, 1978 requiring petitioner to
pay the deficiency of the emergency
allowance it had paid its employees, is contrary to Sec. 3 of P.D. No. 525
providing that the Department of Labor shall not entertain any complaint under said decree against employers who
have complied with LOI No. 174;
and (c) the decision of Presidential Executive Assistant Clave is contrary to
law as it upholds the illegal exercise of law-making powers by the Secretary of
Labor.
At the outset, it should be clarified that P.D. No. 525 had been
superseded by other decrees, notably P.D. Nos. 1123, 1614, 1634 and 1678.[7]
This fact, however, is not a deterrent to the resolution of the instant petition
in view of the apparent confusing provisions of the issuances and rules and
regulations involved.
To start with, paragraph 3 of LOI No. 174 mandates the grant of
P50 a month emergency allowance for employees of “enterprises capitalized
at P1 million to P4 million or more” and P30 for employees of
“enterprises capitalized at P100,000 to P1 million.” While the
determinative factor for the amount of emergency allowance is simply the
capitalization[8]
of the employer concerned, the problem lies in the fact that the same provision
of LOI No. 174 categorizes an enterprise capitalized at P1 million as under
both the P50 and the P30 brackets of emergency allowance.
This grey area, however, was clarified by the Interpretative
Bulletin on LOI No. 174 issued by the Department of Labor. Sec. 5 thereof which is quoted above states
that an employer has to pay the fifty-peso allowance “where the authorized
capital stock of the corporation, or the total assets in the case of other
undertakings, exceeds P1 million” or thirty pesos “where the
authorized capital stock of the corporation, or the total assets in the case of
other undertakings, is not less than P100,000 but not more than P1
million.” Clearly then, the petitioner falls under the bracket of employers
required to give a thirty-peso monthly emergency allowance under LOI No. 174 in
view of the undisputed fact that it is a “domestic corporation duly
organized and existing under Philippine laws” with an authorized capital
stock of one million pesos.[9]
While said administrative interpretation of LOI No. 174 is at
best merely advisory for it is only the courts which have the power to
determine what LOI No. 174 really means,[10] it
is significant to note that said Sec. 5 of the Interpretative Bulletin was
adopted in P.D. No. 525. As
aforequoted, Sec. 1 of said decree states that an emergency allowance of thirty
pesos shall be given to employees of corporations with a capitalization of
“more than 100 thousand pesos but does not exceed 1 million pesos.”
What seems to have muddled the matter are the provisions of Sec.
7 of the Rules and Regulations Implementing P.D. No. 525. Under that section, petitioner appears to
have been covered by the fifty-peso bracket for it states that a monthly
emergency allowance of fifty pesos is required “where the authorized
capital stock or total assets, whichever is applicable and higher, is P1 million or more.” It should be
observed that this provision not only injects a new determinative factor, i.e.,
the total assets of the employer, but also provides a choice for the determinative
factor: whichever is higher between the
employer’s authorized capital stock and its total assets.
An examination of the issuances of the Department of Labor,
however, reveals that said option is more apparent than real. In its Interpretative Bulletin
aforementioned, the Department uses as a basis for granting the emergency
allowance the “authorized capital stock, or the total assets in the case
of other undertakings.” The phrase “authorized capital stock”
clearly refers to employers which are incorporated by law and therefore have authorized
capital stocks to speak of. Total
assets as a determinative factor should only refer to “other
undertakings.” The same Interpretative Bulletin gives a clue as to what
“other undertakings” mean. Section 2 thereof states:
“Section 2. Employers
Covered. – The LOI appeals (sic)
to all employers in the private sector. Included within the scope of its application are commercial, industrial,
and agricultural establishments and enterprises, as well as all undertakings,
institutions and organizations which are not
operated or established for profit or
gain, such as schools and other institutions
of learning, hospitals, and charitable and
religious organizations.
Excluded from the application of the LOI are employers of
house-helpers and persons in the personal service of another in relation to
such workers.” (Underscoring supplied) (Rollo, p. 25).
Considering the provisions of this section and in view of the
rule of ejusdem generis, the word “undertakings” in
Sec. 5 of the Interpretative Bulletin should refer only to non-profit
institutions. Therefore, in
categorizing said institutions for the purpose of determining the amount of emergency
allowance for their employees, their “total assets” is the
criterion. The petitioner herein, not
being a non-profit enterprise, the determinative factor in gauging the amount
of emergency allowance to be granted to its employees is its authorized capital
stock.
Sec. 2 of the Interpretative Bulletin is reflected in the
Department of Labor’s Rules and Regulations Implementing P.D. No. 525, Sec. 1
provides:
“Section 1. Employers
Covered. The Decree shall apply
to all commercial, industrial, and agricultural establishments and enterprises,
as well as to all undertakings, institutions and organizations which are not
primarily organized for profit or gain, except to those specifically exempted
under Section 3 of these regulations.” (Rollo, p. 32).
Thus, the same interpretation should
necessarily be attached to the phrase “total assets” in Sec. 7 of the
Rules and Regulations Implementing P.D. No. 525: it should refer only to employers which are not incorporated by
law and which are strictly non-profit “undertakings.” Corollarily, however,
“total assets” may be the measure for determining the amount of
emergency allowance for enterprises such as single proprietorships and
partnerships which are not backed up by capital stocks.
Sec. 7 of the Rules and Regulations, therefore, introduced a
matter which is not germane to the provisions of P.D. No. 525 by considering
total assets as a criterion. Moreover,
it further complicated the law by the addition of the phrase “whichever is
applicable and higher.” In practice, the exercise of the option expressed
in such phrase may lead to absurd situations. As demonstrated in this case, that which is higher, meaning
petitioner’s total assets, may not also be applicable because petitioner is not
an “undertaking” within the purview of the Interpretative Bulletin
and the Rules and Regulations Implementing P.D. No. 525.
Consequently, Sec. 7 of the said Rules has not conformed with the
standards that P.D. No. 525 prescribes.[11]
Having been based on an erroneous decision of the Office of the President, it
is further rendered obnoxious by the principle that an administrative agency
like the Department of Labor cannot amend the law it seeks to implement.[12]
We need not concern ourselves unduly with regard to petitioner’s
contention that the complaint for underpayment of emergency allowance is
barred by Sec. 3 of P.D. 525. Suffice
it to say that Sec. 7 of the Rules is not the proper basis for taking
cognizance of the case. As alleged by
public respondents, Sec. 3 clearly states that compliance should be with LOI
No. 174 and not with the implementing rules which were subsequently issued by
the Department of Labor.
The issue of the sufficiency of the emergency allowance granted
by employers to its employees has been ventilated before this Court.[13]
In none of them, however, was the validity of Sec. 7 of the Rules and
Regulations Implementing P.D. No. 525 specifically put in issue as in the
instant case. While this Court has
always been guided by the principle that in labor cases, any doubt shall be
resolved in favor of the workers, we cannot close our eyes to the possible
abuse of the rule-making power on the part of the Secretary of Labor under the
guise of promoting social justice and affording protection to labor.
WHEREFORE, the instant petition for certiorari is GRANTED. Sec. 7 of the Rules and Regulations
Implementing P.D. No. 525 insofar as it is contradictory to the provisions of
said decree as herein discussed, is hereby declared NULL and VOID. The temporary restraining order issued by
this Court on August 8, 1979 is hereby made PERMANENT. No costs.
SO ORDERED.
Gutierrez, Jr., (Chairman), Feliciano, Bidin, and Davide, Jr., JJ., concur.
[1]
Case No. R04-9-9217-76; Rollo, p. 38.
[2]
BLR – S – S – 133.
[3]
Rollo, p. 50.
[4]
Ibid, p. 51.
[5]
Ibid, p. 22.
[6]
Ibid, p. 58-A2.
[7]P.D.
No. 1123 dated April 21, 1977 mandated an across-the?board
increase of P60 in the emergency allowance provided for in P.D. No. 525 for
employees in the private sector. P.D.
No. 1614 dated March 14, 1979 provided for minimum wage
increases and granted emergency cost-of-living allowance of sixty pesos to
non-agricultural workers receiving not more than P1,000; forty pesos for
plantation agricultural workers receiving not more than P1,000, and P20 to
non-plantation agricultural workers. P.D. No.
1634 dated August 21, 1979 provided for a monthly
additional mandatory emergency living
allowance of P60 effective September 1,
1979 and another P30 a month effective January 1, 1980 to all employees
in the private sector receiving wage or salary of not more than P1,500 P.D.
No. 1678 dated February 20, 1980 granted an additional mandatory
living allowance of P2.00 a day for
non-agricultural workers
receiving not more than P1,500 monthly wage or
salary and P1.50 a day for agricultural workers. (See: Tiangco v. Leogardo, Jr., G.R. No. 57636, May
16, 1983, 122 SCRA 267.)
[8]
This term should be understood in its legal signification, meaning that which
represents the total amount of the various securities issued by a
corporation. It may include bonds,
debentures, preferred and common stock and surplus (Black’s Law Dictionary,
5th ed., 190).
[9]
Petition, p. 2; Rollo, p.
10.
[10]
The Chartered Bank Employees
Association v. Ople, L-44717, August 28, 1985, 138 SCRA 273 citing
Insular Bank of Asia & America Employees’ Union (IBAAEU) v. Inciong,
G.R. No. 52415, October 23, 1984, 132 SCRA 663; Philippine Apparel Workers
Union v. National Labor Relations Commission, 50320, July 31,1981, 106
SCRA 444 citing Teozon v. Members of the Board of Administrators, PVA,
L-25619, June 30, 1970, 33 SCRA 585; Victories Milling Co., Inc. v.
Social Security Commission, 114 Phil. 555 (1962); Santos v. Hon.
Estenzo, et al., 109 Phil. 419 (1960); Hilado v. Collector of Internal
Revenue, 100 Phil. 288, 295 (1956); Sy Man v. Jacinto & Fabros, 93 Phil.
1093 (1953), and Olsen & Co., Inc. v. Aldanese and Trinidad, 43
Phil. 259 (1922).
[11]
Director of Forestry v. Muñoz, L-25459,
June 28, 1968, 23 SCRA 1184; People v.
Exconde, 101 Phil. 1125 (1957), and Rubi v. Provincial Board of Mindoro,
39 Phil. 660 (1919).
[12]
Manuel v. General Auditing Office, L-28952, December 29, 1971, 42 SCRA
660 at 666; Teoxon v. Members of the Board of Administrators, PVA, supra, at p. 589.
[13]
Liberty Flour Mills Employees v.
Liberty Flour Mills, Inc., G.R. Nos. 58768-70,
December 29, 1989, 180 SCRA 668; Tiangco v. Leogardo, Jr., supra.