Case Digest: Cagayan Sugar Milling Corporation v. Secretary of Labor, et. al G.R. No. 128399 January 15, 1998

Labor Law | Art. 123

Facts:

  • Cagayan Sugar Milling Company (CARSUMCO) challenges the Secretary of Labor's decision, supporting the Regional Director's order, which found CARSUMCO guilty of violating Regional Wage Order No. RO2-02.
  • On November 16, 1993, Regional Wage Order No. RO2-02 was issued specifying minimum wage rates in Region II, including a daily rate of P14.00 for Cagayan.
  • On January 6, 1995, Regional Wage Board issued Wage Order No. RO2-02-A, amending the previous order to mandate an across-the-board wage increase, retroactive to RO2-02's effective date.
  • Labor inspectors examine CARSUMCO's books to check compliance with RO2-02 and found that CARSUMCO did not implement an across-the-board increase in employees' salaries.
  • CARSUMCO argued that RO2-02 clearly indicated a statutory minimum wage increase, not an across-the-board raise.
  • Regional Director Ricardo S. Martinez, Sr.: Rules that CARSUMCO violated RO2-02 by not implementing the across-the-board increase, ordering CARSUMCO to pay a deficiency of P555,133.41 in employees' salaries.
  • Secretary of Labor: Dismisses CARSUMCO's appeal and upholds the Regional Director's order. 
  • CARSUMCO EMPLOYEES UNION moves for the execution of the Regional Director order. 
  • Regional Director Martinez, Sr. grants the motion and issues a writ of execution.
  • The DOLE regional sheriff serves a notice of garnishment on CARSUMCO's account with the Far East Bank and Trust Company. The sheriff seizes CARSUMCO's dump truck and schedules its public sale.
  • The Court issues a Temporary Restraining Order (TRO) enjoining respondents from enforcing the writ of execution but later amended, enjoining respondents from enforcing the Secretary of Labor's Decision and conducting further proceedings until further orders from the Court.
Issue:
WoN Wage Order RO2-02-A is null and void on the ground that it was passed without the required public consultation and newspaper publication. YES

Held:
Wage Order No. RO2-02, passed on November 16, 1993, provided for an increase in the statutory minimum wage rates for Region II. More than a year later, or on January 6, 1995, the Regional Board passed Wage order RO2-02-A amending the earlier wage order and providing instead for an across the board increase in wages of employees in Region II, retroactive to the date of effectivity of Wage Order RO2-02.

Petitioner assails the validity of Wage Order RO2-02-A on the ground that it was passed without the required public consultation and newspaper publication. Thus, petitioner claims that public respondent Labor Secretary Quisumbing abused his discretion in upholding the validity of said wage order.

The record shows that there was no prior public consultation or hearings and newspaper publication insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were not denied by public respondents in their comment. Public respondents’ position is that there was no need to comply with the legal requirements of consultation and newspaper publication as Wage Order No. RO2-02-A merely clarified the ambiguous provision of the original wage order.

To begin with, there was no ambiguity in the provision of Wage Order RO2-02 as it provided in clear and categorical terms for an increase in statutory minimum wage of workers in the region. Hence, the subsequent passage of RO2-02-A providing instead for an across the board increase in wages did not clarify the earlier Order but amended the same. In truth, it changed the essence of the original Order. 

In passing RO2-02-A without going through the process of public consultation and hearings, the Regional Board deprived petitioner and other employers of due process as they were not given the opportunity to ventilate their positions regarding the proposed wage increase. 

In wage-fixing, factors such as fair return of capital invested, the need to induce industries to invest in the countryside and the capacity of employers to pay are, among others, taken into consideration. Hence, our legislators provide for the creation of Regional Tripartite Boards composed of representatives from the government, the workers and the employers to determine the appropriate wage rates per region to ensure that all sides are heard.

For the same reason, Article 123 of the Labor Code also provides that in the performance of their wage-determining functions, the Regional Board shall conduct public hearings and consultations, giving notices to interested parties. Moreover, it mandates that the Wage Order shall take effect only after publication in a newspaper of general circulation in the region. It is a fundamental rule, borne out of a sense of fairness, that the public is first notified of a law or wage order before it can be held liable for violation thereof. In the case at bar, it is indisputable that there was no public consultation or hearing conducted prior to the passage of RO2-02-A. Neither was it published in a newspaper of general circulation as attested in the February 3, 1995 minutes of the meeting of the Regional Wage Board that the non-publication was by consensus of all the board members. Hence, RO2-02-A must be struck down for violation of Article 123 of the Labor Code.

Considering that RO2-02-A is invalid, the next issue to settle is whether petitioner could be held liable under the original wage order, RO2-02.

Public respondents insist that despite the wording of Wage Order RO2-02 providing for a statutory increase in minimum wage, the real intention of the Regional Board was to provide for an across the board increase. Hence, they urge that petitioner is liable for merely providing an increase in the statutory minimum wage rates of its employees.

The contention is absurd. Petitioner clearly complied with Wage Order RO2-02 which provided for an increase in Statutory minimum wage rates for employees in Region II. It is not just to expect petitioner to interpret Wage RO2-02 to mean that it granted an across the board increase as such interpretation is not sustained by its text. Indeed, the Regional Wage Board had to amend Wage Order RO2-02 to clarify this alleged intent.

In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and non-publication in a newspaper of general circulation, in violation of Article 123 of the Labor Code. We likewise find that public respondent Secretary of Labor committed grave abuse of discretion in upholding the findings of Regional Director Ricardo S. Martinez, Sr. that petitioner violated Wage Order RO2-02.

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