10/2/2016

G.R.No.144322

RepublicofthePhilippines
SupremeCourt
Manila

THIRDDIVISION

METROPOLITANBANKandG.R.NO.144322
TRUSTCOMPANY,INC.,
Petitioner,
Present:

YNARESSANTIAGO,J.,
(Chairperson)
versusAUSTRIAMARTINEZ,
CALLEJO,SR.,and
CHICONAZARIO,JJ.

NATIONALWAGESAND
PRODUCTIVITYCOMMISSION
andREGIONALTRIPARTITE
WAGESANDPRODUCTIVITY
BOARDREGIONII,Promulgated:
Respondents.February6,2007
xx

DECISION

AUSTRIAMARTINEZ,J.:

BeforetheCourtisaPetitionforReviewonCertiorariunderRule45oftheRevisedRulesof
[1]
CourtseekingthereversaloftheDecision oftheCourtofAppeals(CA)datedJuly19,2000
in CAG.R. SP No. 42240 which denied the petition for certiorari and prohibition of
MetropolitanBankandTrustCompany,Inc.(petitioner).

Theproceduralantecedentsandfactualbackgroundofthecaseareasfollows:

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On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II,
Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727),
[2]
otherwise known as the Wage Rationalization Act, issued Wage Order No. R0203 (Wage
Order),asfollows:

Section 1. Upon effectivity of this Wage Order, all employees/workers in the private
sector throughout Region II, regardless of the status of employment are granted an acrossthe
[3]
boardincreaseofP15.00daily.

The Wage Order was published in a newspaper of general circulation on December 2,

[5]
[6]
[4]
1995 and took effect on January 1, 1996. Its Implementing Rules were approved on
[7]
February14,1996. PerSection13oftheWageOrder,anypartyaggrievedbytheWageOrder
mayfileanappealwiththeNationalWagesandProductivityCommission(NWPC)throughthe
RTWPBwithin10calendardaysfromthepublicationoftheWageOrder.
In a letterinquiry to the NWPC dated May 7, 1996, the Bankers Council for Personnel
Management(BCPM),onbehalfofitsmemberbanks,requestedforarulingontheeligibilityof
establishmentswithheadofficesoutsideRegionIItoseekexemptionfromthecoverageofthe
WageOrdersinceitsmemberbanksarealreadypayingmorethantheprevailingminimumwage
[8]
rateintheNationalCapitalRegion(NCR),whichistheirprincipalplaceofbusiness.

In a letterreply dated July 16, 1996, the NWPC stated that the memberbanks of BCPM are
covered by the Wage Order and do not fall under the exemptible categories listed under the
[9]
WageOrder.

InaletterinquirytotheNWPCdatedJuly23,1996,petitionersoughtforinterpretationofthe
[10]
applicabilityofsaidWageOrder.
TheNWPCreferredpetitionersinquirytotheRTWPB.

InaletterreplydatedAugust12,1996,theRTWPBclarifiedthattheWageOrdercovers
all private establishments situated in Region II, regardless of the voluntary adoption by said
establishmentsofthewageordersestablishedinMetroManilaandirrespectiveoftheamounts
[11]
alreadypaidbythepetitioner.

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OnOctober15,1996,thepetitionerfiledaPetitionforCertiorariandProhibitionwiththeCA
seeking nullification of the Wage Order on grounds that the RTWPB acted without authority
whenitissuedthequestionedWageOrderthatevenassumingthattheRTWPBwasvestedwith
theauthoritytoprescribeanincrease,itexceededitsauthoritywhenitdidsowithoutanyceiling
orqualificationthattheimplementationoftheWageOrderwillcausethepetitioner,andother
[12]
similarlysituatedemployers,toincurhugefinanciallossesandsufferlaborunrest.

OnMarch24,1997,theOfficeoftheSolicitorGeneral(OSG)filedaManifestationand
Motion in lieu of Comment affirming the petitioners claim that the RTWPB acted beyond its
authorityinissuingtheWageOrderprescribinganacrosstheboardincreasetoallworkersand
employees in Region II, effectively granting additional or other benefits not contemplated by
[13]
R.A.No.6727.

InviewoftheOSGsmanifestation,theCAdirectedrespondentsNWPCandRTWPBto
[14]
filetheircomment.

OnSeptember22,1997,respondentsfiledtheirCommentprayingthatthepetitionshould
be dismissed outright for petitioners procedural lapses that certiorari and prohibition are
unavailingsincepetitionerfailedtoavailoftheremedyofappealprescribedbytheWageOrder
that the Wage Order has long been in effect and that the issuance of the Wage Order was
[15]
performedintheexerciseofapurelyadministrativefunction.

OnJuly19,2000,theCArendereditsDecisiondenyingthepetition.Theappellatecourt
heldthatawritofprohibitioncannolongerbeissuedsinceimplementationoftheWageOrder
hadlongbecomefaitaccompli,theWageOrderhavingtakeneffectonJanuary1,1996andits
implementingrulesapprovedonFebruary14,1996thatawritofcertiorariisimpropersince
the Wage Order was issued in the exercise of a purely administrative function, not judicial or
quasijudicial that the letterquery did not present justiciable controversies ripe for
considerationbytherespondentsintheexerciseoftheirwagefixingfunction,sincenoappeal
fromtheWageOrderwasfiledthatpetitionerneverbroughtbeforethesaidbodiesanyformal
and definite challenge to the Wage Order and it cannot pass off the letterqueries as actual
applicationsforreliefthatevenifpetitionersprocedurallapseisdisregarded,aregionalwage
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order prescribing a wage increase acrosstheboard applies to banks adopting a unified wage
system and a disparity in wages between employees holding similar positions in different
[16]
regionsisnotwagedistortion.

Hence,thepresentpetitionanchoredonthefollowinggrounds:

4.1THECOURTOFAPPEALSERREDINREFUSINGTODECLAREWAGEORDERNO.
R0203NULLANDVOIDANDOFNOLEGALEFFECT.

4.1.1 THE BOARD, IN ISSUING WAGE ORDER NO. R0203, EXCEEDED

THEAUTHORITYDELEGATEDTOITBYCONGRESS.

4.1.2 WAGE ORDER NO. R0203 IS AN UNREASONABLE INTRUSION

INTOTHEPROPERTYRIGHTSOFPETITIONER.

4.1.3 WAGE ORDER NO. R0203 UNDERMINES THE VERY ESSENCE OF

COLLECTIVEBARGAINING.

4.1.4 WAGE ORDER NO. R0203 FAILS TO TAKE INTO ACCOUNT THE
VERYRATIONALEFORAUNIFIEDWAGESTRUCTURE.

4.2 PETITIONERS RECOURSE TO A WRIT OF CERTIORARI AND PROHIBITION WAS

[17]

PROPER.

[18]
[19]
FollowingthesubmissionoftheComment
andReply
thereto,theCourtgavedue
[20]
course to the petition and required both parties to submit their respective memoranda.
In
[21]
compliancetherewith,petitionerandrespondentssubmittedtheirrespectivememoranda.

Petitionerposestwoissuesforresolution,towit:(1)whetherWageOrderNo.R0203is
voidandofnolegaleffectand(2)whetherpetitionersrecoursetoapetitionforcertiorariand
prohibitionwiththeCAwasproper.

Anentthefirstissue,petitionermaintainsthattheRTWPB,inissuingsaidWageOrder,
exceededtheauthoritydelegatedtoitunderR.A.No.6727,whichislimitedtodeterminingand
fixing the minimum wage rate within their respective territorial jurisdiction and with respect
onlytoemployeeswhodonotearntheprescribedminimumwageratethattheRTWPBisnot
authorized to grant a general acrosstheboard wage increase for nonminimum wage earners
that Employers Confederation of the Philippines v. National Wages and Productivity
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[22]
Commission
(hereafterreferredtoasECOP) is not authority to rule that respondents have
been empowered to fix wages other than the minimum wage since said case dealt with an
acrosstheboard increase with a salary ceiling, where the wage adjustment is applied to
employees receiving a certain denominated salary ceiling that the Wage Order is an
unreasonableintrusionintoitspropertyrightsthattheWageOrderunderminestheessenceof
collectivebargainingthattheWageOrderfailstotakeintoaccounttherationaleforaunified
wagestructure.

As to the second issue, petitioner submits that ultra vires acts of administrative agencies are
correctible by way of a writ of certiorari and prohibition that even assuming that it did not
observetheproperremedialprocedureinchallengingtheWageOrder,theremedyofcertiorari
andprohibitionremainsavailabletoitbywayofanexception,ongroundsofjusticeandequity
that its failure to observe procedural rules could not have validated the manner by which the
disputedWageOrderwasissued.

Respondentscounterthatthepresentpetitionisfatallydefectivefrominceptionsincenoappeal
from the Wage Order was filed by petitioner that the letterquery to the NWPC did not
constitutetheappealcontemplatedbylawthatthevalidityoftheWageOrderwasneverraised
before the respondents that the implementation of the Wage Order had long become fait
accompliforprohibitiontoprosper.Respondentsinsistthat,evenifpetitionersprocedurallapses
aredisregarded,theWageOrderwasissuedpursuanttothemandateofR.A.No.6727andin
[23]
accordancewiththeCourtspronouncementsintheECOPcase
thattheWageOrderisnot
an intrusion on property rights since it was issued after the required public hearings that the
WageOrderdoesnotunderminebutinfactrecognizestherighttocollectivebargainingthatthe
WageOrderdidnotresultinwagedistortion.

The Court shall first dispose of the procedural matter relating to the propriety of
petitioners recourse to the CA before proceeding with the substantive issue involving the
validityoftheWageOrder.

Certiorari as a special civil action is available only if the following essential requisites
concur:(1)itmustbedirectedagainstatribunal,board,orofficerexercisingjudicialorquasi
judicial functions (2) the tribunal, board, or officer must have acted without or in excess of
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jurisdictionorwithgraveabuseofdiscretionamountinglackorexcessofjurisdictionand(3)
[24]
thereisnoappealnoranyplain,speedy,andadequateremedyintheordinarycourseoflaw.

Ontheotherhand,prohibitionasaspecialcivilactionisavailableonlyifthefollowing
essentialrequisitesconcur:(1)itmustbedirectedagainstatribunal,corporation,board,officer,
or person exercising functions, judicial, quasijudicial, or ministerial (2) the tribunal,
corporation, board or person has acted without or in excess of its jurisdiction, or with grave
abuseofdiscretionamountinglackorexcessofjurisdictionand(3)thereisnoappealorany
[25]
otherplain,speedy,andadequateremedyintheordinarycourseoflaw.

A respondent is said to be exercising judicial function where he has the power to

determine what the law is and what the legal rights of the parties are, and then undertakes to
[26]
determine these questions and adjudicate upon the rights of the parties.
Quasijudicial
functionisatermwhichappliestotheaction,discretion,etc.,ofpublicadministrativeofficers
orbodies,whoarerequiredtoinvestigatefactsorascertaintheexistenceoffacts,holdhearings,
anddrawconclusionsfromthemasabasisfortheirofficialactionandtoexercisediscretionofa
[27]
judicial nature.
Ministerial function is one which an officer or tribunal performs in the
contextofagivensetoffacts,inaprescribedmannerandwithoutregardtotheexerciseofhis
[28]
ownjudgmentupontheproprietyorimproprietyoftheactdone.

IntheissuanceoftheassailedWageOrder,respondentRTWPBdidnotactinanyjudicial,
quasijudicial capacity, or ministerial capacity. It was in the nature of subordinate legislation,
promulgatedbyitintheexerciseofdelegatedpowerunderR.A.No.6727.Itwasissuedinthe
exercise of quasilegislative power. Quasilegislative or rulemaking power is exercised by
administrativeagenciesthroughthepromulgationofrulesandregulationswithintheconfinesof
the granting statute and the doctrine of nondelegation of certain powers flowing from the
[29]
separationofthegreatbranchesofthegovernment.

Moreover, the rule on the special civil actions of certiorari and prohibition equally
mandate that these extraordinary remedies are available only when there is no appeal or any
otherplain,speedy,andadequateremedyintheordinarycourseoflaw.Aremedyisconsidered
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plain,speedyandadequateifitwillpromptlyrelievethepetitionerfromtheinjuriouseffectsof
[30]
thejudgmentorrule,orderorresolutionofthelowercourtoragency.

Section13oftheassailedWageOrderexplicitlyprovidesthatanypartyaggrievedbythe
WageOrdermayfileanappealwiththeNWPCthroughtheRTWPBwithin10daysfromthe
[31]
publication of the wage order.
The Wage Order was published in a newspaper of general
[32]
circulationonDecember2,1995.

In this case, petitioner did not avail of the remedy provided by law. No appeal to the
NWPCwasfiledbythepetitionerwithin10calendardaysfrompublicationoftheWageOrder
on December 2, 1995. Petitioner was silent until seven months later, when it filed a letter
inquiryonJuly24,1996withtheNWPCseekingaclarificationontheapplicationoftheWage
Order.Evidently,theletterinquiryisnotanappeal.

It must also be noted that the NWPC only referred petitioners letterinquiry to the
RTWPB.PetitionerdidnotappealtheletterreplydatedAugust12,1996oftheRTWPBtothe
NWPC. No direct action was taken by the NWPC on the issuance or implementation of the
WageOrder.PetitionerfailedtoinvokethepoweroftheNWPCtoreviewregionalwagelevels
setbytheRTWPBtodetermineiftheseareinaccordancewithprescribedguidelines.Thus,not
only was it improper to implead the NWPC as partyrespondent in the petition before the CA
andthisCourt,butalsopetitionerfailedtoavailoftheprimaryjurisdictionoftheNWPCunder
Article121oftheLaborCode,towit:

ART. 121. Powers and Functions of the Commission. The Commission shall have the
followingpowersandfunctions:

xxxx

(d) To review regional wage levels set by the Regional Tripartite Wages and Productivity
Boards to determine if these are in accordance with prescribed guidelines and national
developmentplans

xxxx

(f)To review plans and programs of the Regional Tripartite Wages and Productivity Boards to
determinewhethertheseareconsistentwithnationaldevelopmentplans

(g)ToexercisetechnicalandadministrativesupervisionovertheRegionalTripartiteWagesand
ProductivityBoards
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xxxx
(Emphasissupplied)

Under the doctrine of primary jurisdiction, courts cannot and will not resolve a
controversyinvolvingaquestionwhichiswithinthejurisdictionofanadministrativetribunal,
especiallywherethequestiondemandstheexerciseofsoundadministrativediscretionrequiring
the special knowledge, experience and services of the administrative tribunal to determine
[33]
technicalandintricatemattersoffact.

Nevertheless,theCourtwillproceedtoresolvethesubstantialissuesinthepresent
petitionpursuanttothewellacceptedprinciplethatacceptanceofapetitionforcertiorari
or prohibition as well as the grant of due course thereto is addressed to the sound
[34]
discretionofthecourt.
Itisawellentrenchedprinciplethatrulesofprocedurearenot
inflexible tools designed to hinder or delay, but to facilitate and promote the
administration of justice. Their strict and rigid application, which would result in
technicalitiesthattendtofrustrate,ratherthanpromotesubstantialjustice,mustalways
[35]
beeschewed.

AstorespondentssubmissionthattheimplementationoftheWageOrdercannolonger
berestrainedsinceithasbecomefaitaccompli,theWageOrderhavingtakeneffectonJanuary
1,1996anditsimplementingrulesapprovedonFebruary14,1996,sufficeittostatethatcourts
[36]
will decide a question otherwise moot if it is capable of repetition yet evading review.
Besides, a case becomes moot and academic only when there is no more actual controversy
between the parties or no useful purpose can be served in passing upon the merits. Such
circumstancesdonotobtaininthepresentcase.TheimplementationoftheWageOrderdoesnot
inanywayrenderthecasemootandacademic,sincetheissueofthevalidityofthewageorder
subsists even after its implementation and which has to be determined and passed upon to
resolvepetitionersrightsandconsequentobligationstherein.

[37]
ItisworthytoquotetheCourtspronouncementsinTanv.CommissiononElections,
thus:

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ForthisHonorableCourttoyieldtotherespondentsurgingthat,astherehasbeenfaitaccompli,
then this Honorable Court should passively accept and accede to the prevailing situation is an
unacceptable suggestion. Dismissal of the instant petition, as respondents so propose is a
proposition fraught with mischief. Respondents submission will create a dangerous precedent.
ShouldthisHonorableCourtdeclinenowtoperformitsdutyofinterpretingandindicatingwhat
thelawisandshouldbe,thismighttemptagainthosewhostrutaboutinthecorridorsofpowerto
recklessly and with ulterior motives commit illegal acts, either brazenly or stealthily, confident
that this Honorable Court will abstain from entertaining future challenges to their acts if they

[38]

managetobringaboutafaitaccompli.

Having disposed of this procedural issue, the Court now comes to the substance of the
petition.

R.A.No.6727declareditapolicyoftheStatetorationalizethefixingofminimumwages
and to promote productivityimprovement and gainsharing measures to ensure a decent
standardoflivingfortheworkersandtheirfamiliestoguaranteetherightsoflabortoitsjust
shareinthefruitsofproductiontoenhanceemploymentgenerationinthecountrysidethrough
industrial dispersal and to allow business and industry reasonable returns on investment,
[39]
expansionandgrowth.

[40]
[41]
Inlinewithitsdeclaredpolicy,R.A.No.6727
createdtheNWPC,
vestedwiththe
powertoprescriberulesandguidelinesforthedeterminationofappropriateminimumwageand
[42]
productivity measures at the regional, provincial or industry levels
and authorized the
RTWPB to determine and fix the minimum wage rates applicable in their respective
regions,provinces,orindustriesthereinandissuethecorrespondingwageorders, subject
[43]
totheguidelinesissuedbytheNWPC.
Pursuant to its wage fixing authority, the RTWPB
[44]
mayissuewageorderswhichsetthedailyminimumwagerates,
basedonthestandardsor
[45]
criteriasetbyArticle124
oftheLaborCode.

[46]
InECOP,
the Court declared that there are two ways of fixing the minimum wage:
the floorwage method and the salaryceiling method. The floorwage method involves the
fixingofadeterminateamounttobeaddedtotheprevailingstatutoryminimumwagerates.On
the other hand, in the salaryceiling method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers already
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being paid more than the existing minimum wage (up to a certain amount stated in the Wage
[47]
Order)arealsotobegivenawageincrease.

To illustrate: under the floor wage method, it would have been sufficient if the Wage
OrdersimplysetP15.00astheamounttobeaddedtotheprevailingstatutoryminimumwage
rates,whileinthesalaryceilingmethod,itwouldhavebeensufficientiftheWageOrderstatesa
specificsalary,suchasP250.00,andonlythoseearningbelowitshallbeentitledtothesalary
increase.

Inthepresentcase,theRTWPBdidnotdetermineorfixtheminimumwageratebythe
floorwagemethodorthesalaryceilingmethodinissuingtheWageOrder.TheRTWPBdidnot
setawagelevelnorarangetowhichawageadjustmentorincreaseshallbeadded.Instead,it
grantedanacrosstheboardwageincreaseofP15.00toallemployeesandworkersofRegion2.
Indoingso,theRTWPBexceededitsauthoritybyextendingthecoverageoftheWageOrderto
wage earners receiving more than the prevailing minimum wage rate, without a denominated
salaryceiling.AscorrectlypointedoutbytheOSG,theWageOrdergrantedadditionalbenefits
notcontemplatedbyR.A.No.6727.

In no uncertain terms must it be stressed that the function of promulgating rules and
regulationsmaybelegitimatelyexercisedonlyforthepurposeofcarryingouttheprovisionsof
alaw.Thepowerofadministrativeagenciesisconfinedtoimplementingthelaworputtingit
intoeffect.Corollarytothisguidelineisthatadministrativeregulationcannotextendthelawand
[48]
amendalegislativeenactment.
Itisaxiomaticthattheclearletterofthelawiscontrolling
[49]
andcannotbeamendedbyamereadministrativeruleissuedforitsimplementation.
Indeed,
administrativeorexecutiveacts,orders,andregulationsshallbevalidonlywhentheyarenot
[50]
contrarytothelawsortheConstitution.

Wherethelegislaturehasdelegatedtoanexecutiveoradministrativeofficersandboards
authority to promulgate rules to carry out an express legislative purpose, the rules of
administrative officers and boards, which have the effect of extending, or which conflict with
the authoritygranting statute, do not represent a valid exercise of the rulemaking power but
[51]
constituteanattemptbyanadministrativebodytolegislate.
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Ithasbeensaidthatwhentheapplicationofanadministrativeissuancemodifiesexisting
laws or exceeds the intended scope, as in this case, the issuance becomes void, not only for
[52]
beingultravires,butalsoforbeingunreasonable.

Thus,theCourtfindsthatSection1,WageOrderNo.R0203isvoidinsofarasitgrantsa
wage increase to employees earning more than the minimum wage rate and pursuant to the
[53]
separabilityclause
oftheWageOrder,Section1isdeclaredvalidwithrespecttoemployees
earningtheprevailingminimumwagerate.

PriortothepassageoftheWageOrder,thedailyminimumwageratesinRegionIIwas
setatP104.00fortheProvinceofIsabela,P103.00fortheProvinceofCagayan,P101.00forthe
[54]
Province of Nueva Vizcaya, and P100.00 for the Provinces of Quirino and Batanes.
Only
employees earning the abovestated minimum wage rates are entitled to the P15.00 mandated
increaseundertheWageOrder.

AlthoughtheconcomitanteffectofthenullityoftheWageOrdertothoseemployeeswho
have received the mandated increase was not put in issue, this Court shall make a definite
pronouncement thereon to finally put this case to rest. As ruled by the Court in Latchme
[55]
Motoomull v. Dela Paz,
the Court will always strive to settle the entire controversy in a
[56]
singleproceedingleavingnorootorbranchtobeartheseedsoffuturelitigation.

Applying by analogy, the Courts recent pronouncement in Philippine PortsAuthority v.

[57]
CommissiononAudit,
thus:

Inregardtotherefundofthe disallowed benefits, this Courtholds that petitioners need

notrefundthebenefitsreceivedbythembasedonourrulingsinBlaquerav.Alcala,DeJesusv.
Commission on Audit and Kapisanan ng mga Manggagawa sa Government Service Insurance
System(KMG)v.CommissiononAudit.
In Blaquera, the petitioners, who were officials and employees of several government
departmentsandagencies,werepaidincentivebenefitspursuanttoEONo.292andtheOmnibus
RulesImplementingBookVofEONo.292.OnJanuary3,1993,thenPresidentFidelV.Ramos
issuedAdministrativeOrder(AO)No.29authorizingthegrantofproductivityincentivebenefits
for the year 1992 in the maximum amount of P1,000. Section 4 of AO No. 29 directed all
departments,officesandagencieswhichauthorizedpaymentofCY1992ProductivityIncentive
BonusinexcessofP1,000toimmediatelycausetherefundoftheexcess.Respondentheadsof
thedepartmentsoragenciesofthegovernmentconcernedcausedthedeductionfrompetitioners
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salariesorallowancesoftheamountsneededtocovertheoverpayments.Petitionersthereinfiled
apetitionforcertiorariandprohibitionbeforethisCourttoprevent
respondentsthereinfrommakingfurtherdeductionsfromtheirsalariesorallowances.TheCourt
ruledagainsttherefund,thus:

Considering,however,thatallthepartieshereactedingoodfaith,we
cannotcountenancetherefundofsubjectincentivebenefitsfortheyear1992,
which amounts the petitioners have already received. Indeed, no indicia of
bad faith can be detected under the attendant facts and circumstances. The
officials and chiefs of offices concerned disbursed such incentive benefits in
the honest belief that the amounts given were due to the recipients and the
latter accepted the same with gratitude, confident that they richly deserve
suchbenefits.

ThesaidrulinginBlaquerawasappliedinDeJesus.

In De Jesus, COA disallowed the payment of allowances and bonuses consisting of

representation and transportation allowance, rice allowance, productivity incentive bonus,
anniversarybonus,yearendbonusandcashgiftstomembersoftheinterimBoardofDirectorsof
theCatbaloganWaterDistrict.ThisCourtaffirmedthedisallowancebecausepetitionerstherein
were not entitled to other compensation except for payment of per diem under PD No. 198.
However, the Court ruled against the refund of the allowances and bonuses received by
petitioners,thus:

This ruling in Blaquera applies to the instant case. Petitioners here

receivedtheadditionalallowancesandbonusesingoodfaithunderthehonest
beliefthatLWUABoardResolutionNo.313authorizedsuchpayment.Atthe
time petitioners received the additional allowances and bonuses, the Court
hadnotyetdecidedBaybayWaterDistrict.Petitionershadnoknowledgethat
suchpaymentwaswithoutlegalbasis.Thus, being in good faith, petitioners
neednotrefundtheallowancesandbonusestheyreceivedbutdisallowedby
theCOA.

Further,inKMG,thisCourtappliedtherulinginBlaqueraandDeJesus in holding that

theSocialInsuranceGroup(SIG)personneloftheGovernmentServiceInsuranceSystemneed
not refund the hazard pay received by them although said benefit was correctly disallowed by
COA.TheCourtruled:

TheCourthoweverfindsthattheDOHandGSISofficialsconcerned
whograntedhazardpayunderR.A.No.7305totheSIGpersonnelactedin
goodfaith,inthehonestbeliefthattherewaslegalbasisforsuchgrant.The
SIG personnel in turn accepted the hazard pay benefits likewise believing
that they were entitled to such benefit. At that time, neither the concerned
DOHandGSISofficialsnortheSIGpersonnelknewthatthegrantofhazard
paytothelatterisnotsanctionedbylaw.Thus, following the rulings of the
Court in De Jesus v. Commission on Audit, and Blaquera v. Alcala, the SIG
personnelwhopreviouslyreceivedhazardpayunderR.A.No.7305neednot
refundsuchbenefits.

Inthesamevein,therulingsinBlaquera,DeJesusandKMGapplytothiscase.Petitioners
received the hazard duty pay and birthday cash gift in good faith since the benefits were
authorizedbyPPASpecialOrderNo.40797issuedpursuanttoPPAMemorandumCircularNo.
3495 implementing DBM National Compensation Circular No. 76, series of 1995, and PPA
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MemorandumCircularNo.2297,respectively.Petitionersatthattimehadnoknowledgethatthe
paymentofsaidbenefitslackedlegalbasis.Beingingoodfaith,petitionersneednotrefundthe

[58]

benefitstheyreceived.

(Emphasissupplied)

employees,otherthanminimumwageearners,whoreceivedthewageincreasemandatedbythe
WageOrderneednotrefundthewageincreasereceivedbythemsincetheyreceivedthewage
increase in good faith, in the honest belief that they are entitled to such wage increase and
withoutanyknowledgethattherewasnolegalbasisforthesame.

Consideringtheforegoing,theCourtneednotdelveontheotherargumentsraisedbythe
parties.

WHEREFORE,thepetitionisPARTIALLYGRANTED.TheDecisionoftheCourtof
Appeals dated July 19, 2000 in CAG.R. SP No. 42240 is MODIFIED. Section 1 of Wage
Order No. R0203 issued on October 17, 1995 by the Regional Tripartite Wages and
Productivity Board for Region II, Tuguegarao, Cagayan is declared VALID insofar as the
mandatedincreaseappliestoemployeesearningtheprevailingminimumwagerateatthetime
of the passage of the Wage Order and VOID with respect to its application to employees
receivingmorethantheprevailingminimumwagerateatthetimeofthepassageoftheWage
Order.

Nocosts.

SOORDERED.

MA.ALICIAAUSTRIAMARTINEZ
AssociateJustice

WECONCUR:

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

ROMEOJ.CALLEJO,SR.MINITAV.CHICONAZARIO
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AssociateJusticeAssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethe
casewasassignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
attestation,itisherebycertifiedthattheconclusionsintheaboveDecisionhadbeenreachedin
consultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice

[1]
Penned by Associate Justice Godardo A. Jacinto (now retired) and concurred in by Associate Justices RodrigoV. Cosico and
RemediosSalazarFernandoCArollo,pp.102123.
[2]
Entitled An Act to Rationalize Wage Policy Determination by Establishing the Mechanism and Proper Standards Therefor,
AmendingforthePurposeArticle99of,andIncorporatingArticles120,121,122,123,124,126and127intoPresidential
DecreeNo.442,asamended,OtherwiseKnownastheLaborCodeofthePhilippines,FixingNewWageRates,Providing
WageIncentivesforIndustrialDispersaltotheCountryside,andforOtherPurposes.EffectiveJuly1,1989.
[3]
CArollo,p.31(dorsalside).
[4]
Id.at8.
[5]
Section18,WageOrderNo.R0203CArollo,id.at34(dorsalside).
[6]
Id.at35.
[7]
Id.at40.
[8]
Id.at41.
[9]
Id.at42.
[10]
Id.at44.
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[11]
Id.at47.
[12]
Id.at2.
[13]
Id.at68.
[14]
Id.at87.
[15]
Id.at88.
[16]
Id.at102.
[17]
Rollo,pp.2021.
[18]
Id.at166.
[19]
Id.at211.
[20]
Id.at220.
[21]
Id.at231and266.
[22]
G.R.No.96169,September24,1991,201SCRA759.
[23]
Id.
[24]
REVISEDRULESOFCOURT,Rule65,Sec.1.
[25]
REVISEDRULESOFCOURT,Rule65,Sec.2.
[26]
1FLORENZD.REGALADO,REMEDIALLAWCOMPENDIUM706(1999)citingRupertov.Torres,L8785,February25,
1957,andMunicipalCouncilofLemeryv.ProvincialBoardofBatangas,56Phil.260,268(1931).
[27]
Bautistav.CommissiononElections,460Phil.459,476(2003)UnitedResidentsofDominicanHill,Inc.v.Commissiononthe
SettlementofLandProblems,G.R.No.135945,March7,2001,353SCRA782,797MidlandInsuranceCorporationv.
IntermediateAppellateCourt,227Phil.413,418(1986)SeealsoVillarosav.CommissiononElections,377Phil.497,506
507(1999).
[28]
DeGuzman,Jr.v.Mendoza,A.M.No.P031693,March17,2005,453SCRA565,571Sismaetv.Sabas,A.M.No.P031680,
May27,2004,429SCRA241,247248PhilippineBankofCommunicationsv.Torio,348Phil.74,84(1998).
[29]
Abella,Jr.v.CivilServiceCommission, G.R. No. 152574, November 17, 2004, 442 SCRA 507, 530 Bellosillo, J., Separate
Opinion,CommissionerofInternalRevenuev.CourtofAppeals,329Phil.987,1017(1996).
[30]
Montes v. Court of Appeals, G.R. No. 143797, May 4, 2006, 489 SCRA 432, 441 Longino v. General, G.R. No.
147956,February16,2005,451SCRA423,437NationalIrrigationAdministrationv.CourtofAppeals,376Phil.362,372
(1999).
[31]
Section13,WageOrderNo.R0203CArollo,p.34.SeealsoLABORCODE,Art.123.
[32]
Supranote4.
[33]
Villaflorv.CourtofAppeals,345Phil.524,559(1997).
[34]
Tan v. Bausch & Lomb, Inc., G.R. No. 148420, December 15, 2005, 478 SCRA 115, 120 Floren Hotel v. National Labor
RelationsCommission,G.R.No.155264,May6,2005,458SCRA128,141.
[35]
Jaworskiv.PhilippineAmusementandGamingCorp.,G.R.No.144463,January14,2004,419SCRA317,323324Serranov.
GalantMaritimeServices,Inc.,455Phil.992,999(2003).
[36]
Pimentel,Jr.v.Ermita,G.R.No.164978,October13,2005,472SCRA587,593Longinov.General,supranote30Sanlakasv.
ExecutiveSecretary,G.R.No.159085,February3,2004,421SCRA656,664Tolentinov.CommissiononElections,G.R.
No.148334,January21,2004,420SCRA438,451.
[37]
226Phil.624(1986).
[38]
Id.at637638ReiteratedinCityofPasigv.CommissiononElections,372Phil.864,871(1999).
[39]
REPUBLICACTNO.6727(1989),Sec.2.
[40]
REPUBLICACTNO.6727incorporatedArticles120,121,122,123,124,126and127intotheLABORCODE.
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[41]
LABORCODE,Art.120.
[42]
LABORCODE,Art.121.
[43]
LABORCODE,Art.122.
[44]
LABORCODE,Art.123.WageOrder.Wheneverconditionsintheregionsowarrant,theRegionalBoardshallinvestigateand
studyallpertinentfactsandbasedonthestandardsandcriteriahereinprescribed,shallproceedtodeterminewhethera
WageOrdershouldbeissued.AnysuchWageOrdershalltakeeffectafterfifteen(15)daysfromitscompletepublicationin
atleastone(1)newspaperofgeneralcirculationintheregion.(Emphasissupplied)
Intheperformanceofitswagedeterminingfunctions,theRegionalBoardshallconductpublichearings/consultations,givingnotices
toemployeesandemployersgroups,provincial,cityandmunicipalofficialsandotherinterestedparties.
AnypartyaggrievedbytheWageOrderissuedbytheRegionalBoardmayappealsuchordertotheCommission
withinten(10)calendardaysfromthepublicationofsuchorder.ItshallbemandatoryfortheCommissiontodecidesuch
appealwithinsixty(60)calendardaysfromthefilingthereof.
The filing of the appeal does not stay the order unless the person appealing such order shall file with the
Commission an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees
affectedbytheorderofthecorrespondingincrease,intheeventsuchorderisaffirmed.(Emphasissupplied)
[45]
LABORCODE,Art.124.Standards/CriteriaforMinimumWageFixing.Theregionalminimumwagestobeestablishedbythe
Regional Board shall be as nearly adequate as in economically feasible to maintain the minimum standards of living
necessaryforthehealth,efficiencyandgeneralwellbeingoftheemployeeswithintheframeworkofthenationaleconomic
andsocialdevelopmentprogram.Inthedeterminationofsuchregionalminimumwages,theRegionalBoardshall,among
otherrelevantfactors,considerthefollowing:
(a)Thedemandforlivingwages
(b)Wageadjustmentvisvistheconsumerpriceindex
(c)Thecostoflivingandchangesorincreasestherein
(d)Theneedsofworkersandtheirfamilies
(e)Theneedtoinduceindustriestoinvestinthecountryside
(f)Improvementsinstandardsofliving
(g)Theprevailingwagelevels
(h)Fairreturnofthecapitalinvestedandcapacitytopayofemployers
(i)Effectsonemploymentgenerationandfamilyincomeand
(j)Theequitabledistributionofincomeandwealthalongtheimperativesofeconomicandsocialdevelopment.
The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum
wagesineveryregion.Thesewagesshallincludewagesvaryingwithinindustries,provincesorlocalitiesifinthejudgment
oftheRegionalBoardconditionsmakesuchlocaldifferentiationproperandnecessarytoeffectuatethepurposeofthisTitle.
(Emphasissupplied)
[46]
Supranote22,at763.
[47]
NorkisFreeandIndependentWorkersUnionv.NorkisTradingCompany,Inc.,G.R.No.157098,June30,2005,462SCRA485,
494.
[48]
LandBankofthePhilippinesv.CourtofAppealsandDepartmentofAgrarianReformv.CourtofAppeals,319Phil.246,257
(1995).
[49]
MunicipalityofParaaquev.V.M.RealtyCorporation,354Phil.684,694695(1998).
[50]
ART.7,CIVILCODEOFTHEPHILIPPINES.
[51]
United BF Homeowners Association v. BF Homes, Inc., 369 Phil. 568, 580 (1999) People v. Maceren, G.R. No. L32166,
October18,1977,79SCRA450,462.
[52]
ExecutiveSecretaryv.SouthwingHeavyIndustries,Inc.,G.R.Nos.164171,164172and168741,February20,2006,482SCRA
673,699.

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[53]
Section16.Alllaws,orders,issuances,rulesandregulations,orpartsthereofinconsistentwiththeprovisionsofthisWageOrder
areherebyrepealed,amended,ormodifiedaccordingly.IfanyprovisionorpartofthisWageOrderortheapplication
thereof to any person or circumstance, is held invalid or unconstitutional, the remainder of this Wage Order or the
applicationofsuchprovisionorpartthereoftootherpersonsorcircumstancesshallnotbeaffectedthereby.(Emphasis
supplied).
[54]
CArollo,p.36.
[55]
G.R.No.45302,July24,1990,187SCRA743.
[56]
Id.at754.
[57]
G.R.No.159200,February16,2006,482SCRA490.
[58]
Id.at498500.

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