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[G.R. No. 104102. August 7, 1996]

CENTRAL TEXTILE MILLS, INC., petitioner, vs. NATIONAL WAGES AN !RO"CTI#IT$ COMMISSION, REGIONALTRI!ARTITE WAGES AN !RO"CTI#IT$ %OAR & NATIONAL CA!ITAL REGION, '() "NITE CMC TEXTILEWOR*ERS "NION, respondents.

E C I S I O N

ROMERO, J .+

On December 20, 1990, respondent Regional Tripartite Wages and Productivity Board !ational "apital Region #t$e Board% issued

Wage Order !o& !"R02 #WO !o& !"R02%, '$ic$ too( e))ect on *anuary 9, 1991& +aid 'age order mandated a P12&00 increase in t$e

minimum daily 'age o) all employees and 'or(ers in t$e private sector in t$e !"R, but eempted )rom its application distressed

employers '$ose capital $as been impaired by at least t'enty)ive percent #2-.% in t$e preceding year&

T$e /uidelines on emption )rom "ompliance Wit$ t$e Prescribed Wage"ost o) iving 3llo'ance 4ncrease /ranted by t$e

Regional Tripartite Wage and Productivity Boards, issued on 5ebruary 2-, 1991, de)ined capital as t$e paidup capital at t$e end o) t$e

last )ull accounting period #in case o) corporations%& 6nder said guidelines, #a%n applicant )irm may be granted eemption )rom payment

o) t$e prescribed increase in 'agecosto)living allo'ance )or a period not to eceed one #1% year )rom e))ectivity o) t$e Order

'$en accumulated losses at t$e end o) t$e period under revie' $ave impaired by at least 2- percent t$e paidup capital at t$e end o) 

t$e last )ull accounting period preceding t$e application&

By virtue o) t$ese provisions, petitioner )iled on 3pril 11, 1991 its application )or eemption )rom compliance 'it$ WO !o& !"R02

due to )inancial losses&

4n an order dated October 22, 1991, t$e Boards 7ice"$airman, rnesto /orospe, disapproved petitioners application )or eemption

a)ter concluding )rom t$e documents submitted t$at petitioner sustained an impairment o) only 22&81.&

On 5ebruary 8, 1992, petitioners motion )or reconsideration 'as dismissed by t$e Board )or lac( o) merit& T$e Board, ecept )or 

7ice"$airman /orospe '$o too( no part in resolving t$e said motion )or reconsideration, opined t$at according to t$e audited )inancial

statements submitted by petitioner to t$em, to t$e +ecurities and c$ange "ommission and to t$e Bureau o) 4nternal Revenue,

petitioner $ad a total paidup capital o) P0-,:;:,900&00 as o) December 1, 1990, '$ic$ amount s$ould be t$e basis )or determining

t$e capital impairment o) petitioner, instead o) t$e aut$ori<ed capital stoc( o) P12=,000,000&00 '$ic$ it insists s$ould be t$e basis o) 

computation&

T$e Board also noted t$at petitioner did not )ile 'it$ t$e +" t$e 3ugust 1-, 1990 resolution o) its Board o) Directors, concurred in

by its stoc($olders representing at least t'ot$irds o) its outstanding capital stoc(, approving an increase in petitioners aut$ori<ed

capital stoc( )rom P12=,000,000&00 to P;80,000,000&00& !eit$er did it )ile any petition to amend its 3rticles o) 4ncorporation broug$t

about by suc$ increase in its capitali<ation&

Petitioner maintains in t$e instant action t$at its aut$ori<ed capital stoc(, not its unaut$ori<ed paidup capital, s$ould be used in

arriving at its capital impairment )or 1990& "iting t'o +" Opinions dated 3ugust 10, 19:1, and *uly 2=, 19:=, interpreting +ection = o) 

t$e "orporation "ode, it claims t$at t$e capital stoc( o) a corporation stand#s% increased or decreased only )rom and a)ter approval and

t$e issuance o) t$e certi)icate o) )iling o) increase o) capital stoc(&

We agree&

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T$e guidelines on eemption speci)ically re)er to paidup capital, not aut$ori<ed capital stoc(, as t$e basis o) capital impairment )or 

eemption )rom WO& !o& !"R02& T$e records reveal, $o'ever, t$at petitioner included in its total paidup capital payments on

advance subscriptions, alt$oug$ t$e proposed increase in its capitali<ation $ad not yet been approved by, let alone presented )or t$e

approval o), t$e +"& 3s observed by t$e Board in its order o) 5ebruary 8, 1992, t$e a)orementioned #r%esolution #o) 3ugust 1-, 1990%

$as not been )iled by t$e corporation 'it$ t$e +", nor 'as a petition to amend its 3rticles o) 4ncorporation by reason o) t$e increase in

its capitali<ation )iled by t$e same&

4t is undisputed t$at petitioner incurred a net loss o) P

;=,=88,222&89 in 1990, and its aut$ori<ed capital stoc( as o) t$at time stood

atP12=,000,000&00&>1? On 3ugust 1-, 1990, a Board resolution increasing t$e capital stoc( o) t$e corporation 'as a))irmed by t$e

re@uisite number o) stoc($olders& 3lt$oug$ no petition to t$at e))ect 'as ever submitted to t$e +" )or its approval, petitioner already

started receiving subscriptions and payments on t$e proposed increase, '$ic$ it allegedly $eld conditionally, t$at is, pending approval

o) t$e same by t$e +"& 4n its Aemorandum, $o'ever, petitioner admitted, 'it$out giving any reason t$ere)or, t$at it indeed received

subscriptions and payments to t$e said proposed increase in capital stoc(, even in t$e absence o) +" approval o) t$e increase as

re@uired by t$e "orporation "ode&>2? T$us, by t$e end o) 1990, t$e corporation $ad a subscribed capital stoc( o) P8=2,:8=,900&00 and,

a)ter deductingP1:;,9=1,000&00 in subscriptions receivables, a total paidup capital o) P0-,:;:,900&00&>? P1::,:;:,900&00 o) t$is sum

constituted t$e unaut$ori<ed increase in its subscribed capital stoc(, '$ic$ are actually payments on )uture issues o) s$ares&

T$ese payments cannot as yet be deemed part o) petitioners paidup capital, tec$nically spea(ing, because its capital stoc( $as not

yet been legally increased& T$us, its aut$ori<ed capital stoc( in t$e year '$en eemption )rom WO !o& !"R02 'as soug$t stood at

P12=,000,000&00, '$ic$ 'as impaired by losses o) nearly -0.& +uc$ payments constitute deposits on )uture subscriptions, money

'$ic$ t$e corporation 'ill $old in trust )or t$e subscribers until it )iles a petition to increase its capitali<ation and a certi)icate o) )iling o) 

increase o) capital stoc( is approved and issued by t$e +"&>8? 3s a trust )und, t$is money is still 'it$dra'able by any o) t$e subscribers

at any time be)ore t$e issuance o) t$e corresponding s$ares o) stoc(, unless t$ere is a presubscription agreement to t$e contrary,

'$ic$ apparently is not present in t$e instant case& "onse@uently, i) a certi)icate o) increase $as not yet been issued by t$e +", t$e

subscribers to t$e unaut$ori<ed issuance are not to be deemed as stoc($olders possessed o) suc$ legal rig$ts as t$e rig$ts to vote and

dividends&>-?

T$e "ourt observes t$at t$e subect 'age order eempts )rom its coverage employers '$ose capital $as been impaired by at least

2-. because i) impairment is less t$an t$is percentage, t$e employer can still absorb t$e 'age increase& 4n t$e case at $and,

petitioners capital $eld ans'erable )or t$e additional 'ages 'ould include )unds it only $olds in trust, '$ic$ to reiterate may not be

deemed par o) its paidup capital, t$e losses o) '$ic$ s$all be t$e basis o) t$e 2-. re)erred to above& To include suc$ )unds in t$e paid

up capital 'ould be preudicial to t$e corporation as an employer considering t$at t$e records clearly s$o' t$at it is entitled to

eemption, even as t$e anomaly 'as broug$t about by an auditing error&

 3not$er issue, raised late in t$e proceedings by respondents, is t$e alleged none$austion o) administrative remedies by

petitioner& T$ey claim t$at t$e @uestioned order o) t$e Board s$ould $ave )irst been appealed to t$e !ational Wages and Productivity

"ommission #t$e "ommission%, as provided )or under +ection 9 o) t$e Revised /uidelines on emption 5rom "ompliance Wit$ t$e

Prescribed Wage"ost o) iving 3llo'ance 4ncreases /ranted by t$e Regional Tripartite Wages and Productivity Boards&

Petitioner eplained t$at at t$e time it )iled t$e instant petition )or certiorari  on Aarc$ ;, 1992, t$e procedure governing applications

)or eemption )rom compliance 'it$ 'age orders 'as t$e original guidelines, '$ic$ too( e))ect on 5ebruary 2-, 1991& 6nder +ection ;

o) said guidelines, t$e denial by t$e Board o) a re@uest )or reconsideration s$all be )inal and immediately eecutory& 3ppeal to t$e

"ommission as an optional remedy>;? 'as only made available a)ter t$e issuance o) t$e revised guidelines on +eptember 2-,

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1992& Cence, petitioner cannot be )aulted )or not $aving )irst appealed t$e @uestioned orders& 4t must be added t$at since no order,

resolution or decision o) t$e "ommission is being assailed in t$is petition, it s$ould be dropped as party respondent, as prayed )or in its

mani)estation and motion dated *une 22, 1992& >:?

4n order to avoid any similar controversy, petitioner is reminded to adopt a more systematic and precise accounting procedure

(eeping in mind t$e various principles and nuances surrounding corporate practice&

WERE-ORE, t$e petition is $ereby /R3!TD& T$e assailed orders o) t$e Regional Tripartite Wages and Productivity Board

!ational "apital Region, dated October 22, 1991 and 5ebruary 8, 1992, are 3!!6D and +T 3+4D& +aid Board is also $ereby

mandated to issue anot$er order granting t$e application o) petitioner "entral Tetile Aills, 4nc& )or eemption )rom Wage Order !o&

!"R02 )or t$e year ending December 1, 1990& !o pronouncement as to cost&

SO ORERE.

Regalado (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur .