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JOY BROTHERS v. NATIONAL WAGES

FACTS:

Petitioner corporation applied for exemption from Wage Order No. NCR-03, which provided for a wage increase for private sector workers in the National Capital Region. The application was based on the ground that the corporation was a distressed establishment. The Regional Tripartite Wages and Productivity Board denied the application, finding that the corporation had accumulated profits. Petitioner's motion for reconsideration was also denied. On appeal to the National Wages and Productivity Commission, petitioner was again denied relief, with the Commission affirming the earlier decision. Petitioner filed a petition for certiorari, insisting on the exemption as a distressed establishment. Petitioner contended that the interim period should be from January 1, 1993, to December 31, 1993. The Board and Commission held that the interim period ended on September 30, 1993. The Commission held that petitioner did not commit grave abuse of discretion in issuing the decision.

ISSUES:

  1. Whether the petitioner corporation falls within the exemption for distressed establishments under Wage Order No. NCR-03.

  2. Whether the cut-off date for the interim period in determining the financial condition of the petitioner is September 30, 1993 or December 15, 1993.

RULING:

  1. The Supreme Court dismissed the petition and upheld the decision of the National Wages and Productivity Commission. The Court held that the cut-off date for the interim period is September 30, 1993, and not December 15 or December 31, 1993. The Court also ruled that the Commission did not commit grave abuse of discretion in denying the exemption for the petitioner corporation, as the financial statements submitted only showed that petitioner incurred a profit amounting to P38,381.80. Hence, the petitioner did not satisfy the criteria for exemption as a distressed establishment under Wage Order No. NCR-03.

PRINCIPLES:

  • The exemption provisions for distressed establishments under Wage Order No. NCR-03 require that accumulated losses impair the paid-up capital or total invested capital of the corporation by at least 25% (Section 5, NWPC Guidelines No. 01, Series of 1992).

  • Exemption from compliance with the wage increase may be granted to distressed establishments with impaired paid-up capital by at least 25% or which registers capital deficiency or negative net worth (Section 8, paragraph A, Rules Implementing Wage Order No. NCR-03).

  • The interim period for determining the financial condition of the corporation is the period immediately preceding the effectivity of the wage order, which in this case is until September 30, 1993.