EMPLOYERS CONFEDERATION OF THE PHIPPINES v NATIONAL WAGES & PRODUCTIVITY COMMISSION

Sarmiento, J.
G.R. No. 96169. – Sept. 24, 1991
FACTS
● RA 6727 or the “Wage Rationalization Act” placed RTWPBs in charge of prescribing minimum wage rates for all
workers in the various regions
 It also assigned to the NWPC the function of reviewing the wage levels determined by RTWPBs
● Oct. 15, 1990: The RTWPB of the NCR issued Wage Order No. NCR-01, which increased the minimum wage by
P17.00 daily in the NCR
● Oct. 23, 1990: The Board issued Wage Order No. NCR-01-A, which amended the earlier Order
 It provided that workers in the private sector in the NCR already receiving wages above the minimum
wage rates up to P125.00/day shall also receive an increase of P17.00/day
 ECOP appealed to the NWPC
● Nov. 6, 1990: NWPC dismissed ECOP’s appeal
● Before the Court, through various pleadings, ECOP assailed the Board’s grant of an “across-the-board” wage
increase to workers already being paid more than the existing minimum wage rates
 Alleged the ff:
o Wage Order No. NCR-01-A was issued in excess of the Board’s authority as RA 6727 only empowers
it to prescribe “minimum wages”, not to determine “salary ceilings”
o RA 6727 is intended to promote CBAs as the primary mode of setting wages, thus, the Board cannot
preempt CBAs by establishing ceilings
 Prayed for the nullification of Wage Order No. NCR-01-A and the reinstatement of Wage Order No. NCR-
01
● OSG’s Arguments
 Prescribing an across-the board hike did not grant additional or other benefits to workers already
receiving more than the minimum wage rate
o It only fixed the minimum wage rates according to the “salary-ceiling method”
 RA 6727 is meant to correct “wage distortions”, and the “salary-ceiling method” of determining wages is
meant precisely to rectify salary distortions
● ECOP’s Counterarguments
 Wage-fixing is a legislative function, and RA 6727 dleegated to the Regional Boards no more than the
power to grant minimum wage adjustments
 In the absence of clear statutory authority, the Boards can do no more than adjust “floor wages”
ISSUES/HELD/RATIO:
1. W/N Wage Order No. NCR-01-A is null and void for decreeing an across-the-board hike – NO
● The NWPC notes that the determination of wages has generally involved two methods:
1) Floor Wage Method: fixing the determinate amount that would be added to the prevailing statutory
minimum wage
2) Salary-Ceiling Method: wage adjustment is applied to employees receiving a certain denominated salary
ceiling
● The floor wage method was adopted in the earlier wage orders, while salary-ceiling was used in RA 6640 and
6727
 The shift from the first method to the second method was brought about by labor disputes arising from
wage distortions, which is a consequence of the implementation of wage orders
 Legislators found that the grievance procedure for resolving wage distortions was ineffective
● NWPC also notes that the trend toward using the salary-ceiling method has reduced disputes arising from wage
distortions
● RA 6727 was intended to rationalize wages by:
a) Providing for full-time boards to police wages round-the-clock
b) Giving the Boards enough power to achieve the rationalization of wages
o Congress gave the Boards leeway to be creative in resolving the problem on wages without knocking
on the legislature’s door at every turn
1
 ● Thus, the Court held that if RA 6727 intended the Boards to set floor wages only, there would be no need for a
Board at all
 It would only need an accountant to keep track of the latest consumer price index, or in the alternative,
Congress would just prescribe the minimum wage itself should the need arise
 Instead, what the law contemplates is a “thinking” group bound by statutory standards, such as the criteria
for minimum wage fixing in Art. 124 of the Labor Code:
o (a) The demand for living wages; 

o (b) Wage adjustment vis-a-vis the consumer price index; 

o (c) The cost of living and changes or increases therein; 

o (d) The needs of workers and their families; 

o (e) The need to induce industries to invest in the countryside; 

o (f) Improvements in standards of living; 

o (g) The prevailing wage levels; 

o (h) Fair return of the capital invested and capacity to pay of employers; 

o (i) Effects of employment generation and family income; and 

o (j) The equitable distribution of income and wealth along the 
 imperatives of economic and
social development." 

● The Congress may delegate the power to fix rates to the Regional Boards, provided that it leaves sufficient standards
to guide it  The criteria in Art. 124 LC is sufficient to serve this purpose
● Contrary to ECOP’s claim, the Court does not believe that RA 6727 intended to deregulate the relation between
labor and capital
 The Constitution calls upon the State to protect the rights of workers and promote their welfare
● Minimum wage means more than the setting of floor wage, it is the effort of the State to:
 Promote productivity improvement and gain-sharing measures
 Ensure a decent standard of living for the workers
 Guarantee the rights of labor to its just share in the fruits of production
 Enhance employment generation in the countryside through industry dispersal
 Alow business and industry reasonable returns on investment, expansion and growth
 Affirm labor as a primary social economic force
● Whether the salary-ceiling method can serve the purpose of RA 6727 in future cases is a speculative question
 At the moment, the Court finds it to be reasonable policy

DISPOSITIVE PORTION
WHEREFORE, premises considered, the petition is DENIED. No pronouncement as to costs.