G.R. No. 179918 - Shell Philippines Exploration B.V. vs. Jalos

On June 9, 1989, Republic Act No. 6727 was enacted to rationalize wages throughout the Philippines, creating both the National Wages and Productivity Commission (NWPC) and the Regional Tripartite Wages and Productivity Boards (RTWPBs).
The enabling provisions under the Labor Code (Articles 121 and 122, as amended by RA No. 6727) granted the NWPC the power to formulate wage policies, while the RTWPBs were empowered to determine and fix minimum wage rates regionally and to process applications for exemptions from the prescribed wage rates.

The RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999, which imposed a wage increase of P25.50 per day, setting the minimum wage for all private sector workers in the National Capital Region (NCR) at P223.50 per day.
Specific provisions within the wage order, notably Section 2 and Section 9, provided exemptions:

Section 2(A) exempted certain worker sectors (e.g., agricultural workers, cottage/handicraft industry workers, employees of small establishments, etc.) from the wage adjustment.
Section 9(2) allowed for exemptions based on applications, such as for distressed establishments and exporters under stipulated requirements.

The Alliance of Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR-APL) contended that their sectors were wrongfully exempted and that the NWPC and RTWPB-NCR lacked authority to expand the non-coverage and exemption categories beyond the express intent of the enabling law.
In response, APL and TNMR-APL filed an appeal with the NWPC, challenging Sections 2(A) and 9(2) of Wage Order No. NCR-07, which was docketed as NWPC Case No. W.O.-99-001.

The NWPC, in its decisions dated February 28, 2000 and July 17, 2000, upheld the validity of the disputed sections, stressing:

The legitimacy of the RTWPB’s power, as an adjunct to its wage-fixing function under the Labor Code and reinforced by NWPC Guidelines No. 01, Series of 1996.
The sound and justifiable rationale provided by the RTWPB-NCR in exempting certain sectors, especially in light of the prevailing economic challenges (e.g., the lingering effects of the Asian economic turmoil and high unemployment rates).

In contrast, the Court of Appeals (CA) reversed these NWPC decisions on June 15, 2001, ruling that:

The statutory grant of power to the NWPC and RTWPB did not include the authority to provide additional exemptions beyond those explicitly provided for by law.
Administrative rules or regulations must strictly conform to their enabling law, declaring Sections 2(A) and 9(2) null and void due to the absence of NWPC approval as required.

The NWPC and RTWPB-NCR appealed the CA decision through a petition for review on certiorari, contending that proper statutory and administrative authority had been exercised in the issuance and review of Wage Order No. NCR-07.
The petition raised questions on whether the RTWPB-NCR had the authority to grant additional exemptions and if the process complied with the NWPC’s own guidelines and procedures.

Whether or not the RTWPB-NCR possessed the authority, pursuant to Section 3 of Republic Act No. 6727 and the corresponding NWPC Guidelines, to provide additional exemptions from the minimum wage adjustments as embodied in Wage Order No. NCR-07.
Whether the approval and review carried out by the NWPC, as evidenced by its decisions dated February 28, 2000 and July 17, 2000, complied with the requirements set forth in the NWPC Guidelines on exemptions from wage orders.