EMPLOYERS CONFEDERATION OF THE PHILIPPINES, PETITIONER VS. NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION CONGR…

Employers Confederation of the Philippines versus National Wages and Productivity Commission

The Case

This is a petition brought by the Employers Confederation of the Philippines, the national organization of employers, against the National Wages and Productivity Commission and the Regional Tripartite Wages and Productivity Board of the National Capital Region, joined by the Trade Union Congress of the Philippines. The employers ask the Supreme Court to strike down a regional wage order that granted a seventeen-peso daily increase not only to workers at the minimum wage but also to those already earning above it, up to one hundred twenty-five pesos a day. The case matters because it fixes the constitutional and statutory boundaries of the power of regional wage boards to set wages, and it settles whether an across-the-board or salary-ceiling increase is a legitimate exercise of delegated authority or an unconstitutional delegation of legislative power.

Procedural History

The Regional Tripartite Wages and Productivity Board of the National Capital Region issued Wage Order Number NCR-01 on October 15, 1990, raising the minimum wage by seventeen pesos daily. The Trade Union Congress of the Philippines and the Personnel Management Association of the Philippines each moved for reconsideration, and the Employers Confederation opposed. On October 23, 1990, the Board issued Wage Order Number NCR-01-A, amending the earlier order to extend the seventeen-peso increase to workers already receiving wages above the statutory minimum up to one hundred twenty-five pesos per day. The employers appealed to the National Wages and Productivity Commission, which dismissed the appeal for lack of merit on November 6, 1990, and denied reconsideration on November 14, 1990. The employers then came to the Supreme Court by petition, and the Court directed the Solicitor General to comment on behalf of the Government. The Court gave the petition due course and decided it without further ado.

Facts

Congress enacted Republic Act Number 6727, the Wage Rationalization Act, which the President approved on June 9, 1989. The law created Regional Tripartite Wages and Productivity Boards empowered to prescribe minimum wage rates for workers in the various regions, and a National Wages and Productivity Commission to review, among other functions, the wage levels determined by the boards.

On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order Number NCR-01, increasing the minimum wage in the region by seventeen pesos daily. The Trade Union Congress of the Philippines and the Personnel Management Association of the Philippines moved for reconsideration, while the Employers Confederation opposed. On October 23, 1990, the Board issued Wage Order Number NCR-01-A, which provided that all workers in the private sector in the National Capital Region already receiving wages above the statutory minimum up to one hundred twenty-five pesos per day shall also receive an increase of seventeen pesos per day.

The employers appealed to the National Wages and Productivity Commission, which dismissed the appeal for lack of merit on November 6, 1990, and denied reconsideration on November 14, 1990. The employers then filed this petition, arguing that the Board exceeded its authority by granting an across-the-board increase, that the boards may prescribe only minimum wages and not salary ceilings, and that the law intended collective bargaining as the primary mode of settling wages. The Solicitor General countered that the Board did not grant additional benefits but fixed minimum wages through the salary-ceiling method, which is meant to correct wage distortions.

Issues

• Whether or not the Regional Board exceeded its authority under Republic Act Number 6727 in issuing Wage Order Number NCR-01-A, which granted an across-the-board increase to workers already receiving more than the minimum wage.
• Whether or not Republic Act Number 6727 constitutes an undue delegation of legislative power to the regional wage boards.
• Whether or not the salary-ceiling method of wage fixing is a valid exercise of the boards' power to prescribe minimum wages.

Applicable Provisions

Article 124 of the Labor Code, as incorporated by Republic Act Number 6727, provides the standards for minimum wage fixing:

Article 124. Standards/Criteria for Minimum Wage Fixing. The regional minimum wages to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the framework of the national economic and social development program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following: (a) The demand for living wages; (b) Wage adjustment vis-a-vis the consumer price index; (c) The cost of living and changes or increases therein; (d) The needs of workers and their families; (e) The need to induce industries to invest in the countryside; (f) Improvements in standards of living; (g) The prevailing wage levels; (h) Fair return of the capital invested and capacity to pay of employers; (i) Effects of employment generation and family income; and (j) The equitable distribution of income and wealth along the imperatives of economic and social development.

These standards supply the sufficient standard that saves the delegation from constitutional infirmity.

Article 97 of the Labor Code defines wage:

Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor of board, lodging, or other facilities customarily furnished by the employer to the employee. Fair and reasonable value shall not include any profit to the employer or to any person affiliated with the employer.

This definition shows that wage is a broad concept, distinct from the narrower notion of a floor wage that the employers urge.

Ruling

On the first issue, the Court held that the Regional Board did not exceed its authority. The Court agreed with the Government that the determination of wages has generally involved two methods, the floor-wage method and the salary-ceiling method, and that the increasing trend is toward the salary-ceiling method, which has reduced disputes arising from wage distortions. The Court reasoned that Republic Act Number 6727 was intended to rationalize wages by providing full-time boards to police wages and by giving them enough powers to achieve that objective, and that Congress meant the boards to be creative in resolving the annual question of wages.

On the second issue, the Court held that there was no undue delegation. While wage-fixing, like rate-fixing, is an act of Congress, Congress may delegate the power to fix rates provided it leaves a sufficient standard. The Court found the standards in Article 124 sufficient, and it noted that had Congress created roving boards, a problem of undue delegation would have ensued, but the National Capital Region Board was not running riot.

On the third issue, the Court upheld the salary-ceiling method as a reasonable policy. It rejected the employers' claim that the law was meant to deregulate labor and capital relations, citing the constitutional mandates to protect workers, to intervene when the common goal so demands, to diffuse wealth, and to recognize labor's just share in the fruits of production. The Court also held that the concept of minimum wage means more than setting a floor, and it left open whether the salary-cap method would serve the law's purposes in future cases, reserving that question for another day.

Doctrine

First, wage-fixing is a legislative function, but Congress may delegate the power to fix rates to administrative boards provided it leaves a sufficient standard, and the standards in Article 124 of the Labor Code satisfy this requirement. Second, the power to prescribe minimum wages is not limited to setting a floor wage; the salary-ceiling method, which extends an increase to workers already earning above the minimum up to a defined ceiling, is a valid exercise of that power because it corrects wage distortions. Third, the State is not a passive observer in labor relations; the Constitution and Republic Act Number 6727 impose on the State the duty to protect workers and to ensure fair and equitable wages, so the law cannot be read as a deregulation of the relation between labor and capital.

Disposition

The petition was denied, and the wage order was upheld, with no pronouncement as to costs.

Remember This

The single line worth memorizing is that minimum wage fixing is not confined to a floor wage; the salary-ceiling method is a valid exercise of the boards' delegated power because Congress left sufficient standards in Article 124. Examiners use this case to test the completeness of the delegation of wage-fixing power and the distinction between the floor-wage and salary-ceiling methods.