SALARY-CEILING METHOD EMPLOYERS CONFEDERATION OF THE PHILIPPINES, petitioner, vs.

NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES, respondents. J. SARMIENTO; September 24, 1991 FACTS On October 15, 1990, the Regional Board of NCR issued Wage Order No. NCR-01, increasing the minimum wage by P17 daily. The Trade Union Congress of the Philippines (TUCP) and Personnel Management Association of the Philippines (PMAP) moved for reconsideration. Petitioner Employers Confederation of the Philippines (ECOP) opposed. Board then issued Wage Order No. NCR-01-A, amending the wage order by stating that all workers and employees in the private sector already receiving wages above the statutory minimum wage rates up to P125 per day shall also receive the P17 daily increase. Petitioner ECOP appealed to respondent National Wages and Productivity Commission (NWPC). NWPC: Appeal dismissed for lack of merit. Motion for reconsideration denied. Hence, this petition. ISSUE: Whether or not respondent NWPC committed grave abuse of discretion. NO. REASONING: Petitioner says Wage Order No. NCR-01-A is an excess of authority as under RA 6727, the boards may only prescribe minimum wages, not determine salary ceilings. RA 6727 is meant to promote collective bargaining as the primary mode of settling wages, so boards cannot preempt CBAs by establishing ceilings Boards may only adjust floor wages Solicitor-General (for NWPC) comments The across-the-board hike did not grant additional or other benefits to workers and employees, but rather fixed minimum wages according to the salary-ceiling method RA 6727 is to correct wage distortions and the salary-ceiling method does just that Court rules The Court is inclined to agree with the Government. The NWPC noted that the determination of wages involved 2 methods: the floor-wage method and the salary-ceiling method. Floor-wage method- involves the fixing of a determinate amount that would be added to the prevailing statutory minimum wage -adopted in earlier wage orders Salary-ceiling method- wage adjustment is applied to employees receiving a certain denominated salary ceiling -used in RAs 6640 and 6727 as well as 11 COLA issuances

The shift is due to the labor disputes arising from wage distortions. RA 6727 was intended to rationalize wages. This is done by: 1. providing full-time boards to police wages round-the-clock 2. giving the boards enough power to achieve this objective SO, if RA 6727 only intended boards to set floor wages only, the Act would not need a board but only an accountant to keep track of the latest consumer price index or have Congress do it when the need arises. The Board did not perform an unlawful act of legislation. Congress may delegate he power to fix rates, provided that it leaves sufficient standards. RA 6727 gave statutory standards for fixing the minimum wage. ART. 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." The wage order was not acted in excess of boards authority. The law gave reasonable limitations to the delegated power of the board. ECOP is of the mistaken impression that RA 6727 leaves labor and management alone to decide wages. The Court does not believe RA 6727 is meant to deregulate the relation between labor and capital for several reasons: 1. The Constitution calls upon the State to protect labor 2. The Constitution calls upon the State to intervene when the common goal so demands I regulating property and property relations 3. The Charter urges Congress to diffuse the wealth of the nation and regulate the use of property 4. The Charter recognizes the just share of labor in the fruits of production 5. Under the LC, the State shall regulate the relations between labor and management 6. Under RA 6727, the State is interested in seeing that workers receive fair and equitable wages 7. The Constitution is primarily a document of Social Justice and has not fully embraced the concept of laissez-faire Court cannot give an Act a meaning that will conflict with these basic principles. The concept of minimum wage is more than setting of a floor wage to upgrade

existing wages as ECOP believes. Minimum wages underlies the rationales of RA 6727 and the Constitution. The salary-cap method serves the purposes of RA 6727. Whether or not it is a permanent policy of the Board s a question we may only speculate. At the moment, it is a reasonable policy. Dispositive: Petition denied.