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Central Textile Mills applied for an exemption from a wage order increase due to financial losses. The Wages Commission denied the exemption, finding only a 22.41% capital impairment based on paid-up capital, below the 25% threshold. The Supreme Court ruled paid-up capital was not the proper basis, as the company's proposed capital increase was not yet approved. Using authorized capital stock of P128M instead, losses impaired capital by nearly 50%, qualifying for exemption. The petition was granted.
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Central Textile Mills, Inc. v. National Wages and Productivity Commission Copy
Central Textile Mills applied for an exemption from a wage order increase due to financial losses. The Wages Commission denied the exemption, finding only a 22.41% capital impairment based on paid-up capital, below the 25% threshold. The Supreme Court ruled paid-up capital was not the proper basis, as the company's proposed capital increase was not yet approved. Using authorized capital stock of P128M instead, losses impaired capital by nearly 50%, qualifying for exemption. The petition was granted.
Central Textile Mills applied for an exemption from a wage order increase due to financial losses. The Wages Commission denied the exemption, finding only a 22.41% capital impairment based on paid-up capital, below the 25% threshold. The Supreme Court ruled paid-up capital was not the proper basis, as the company's proposed capital increase was not yet approved. Using authorized capital stock of P128M instead, losses impaired capital by nearly 50%, qualifying for exemption. The petition was granted.
WAGES AND PRODUCTIVITY COMMISSION NOTES: [G.R. No. 104102, August 7, 1996] TOPIC: CORPORATE POWERS PONENTE: ROMERO, J. FACTS: On December 29, 1990, respondent Regional Tripartite Wages and Productivity Board-NCR (the Board) issued a WAGE ORDER which mandated a P12.00 increase in the minimum daily wage of all employees and workers in the private sector in the NCR, but exempted from its application distressed employers whose capital has been impaired by at least 25% in the preceding year. The Guidelines on Exemption From Compliance With the Prescribed Wage/Cost of Living Allowance Increase Granted by the Regional Tripartite Wage and Productivity Boards, issued on February 25, 1991, defined capital as the paid-up capital at the end of the last full accounting period (in case of corporations). Under said guidelines, (a)n applicant firm may be granted exemption from payment of the prescribed increase in wage/cost-of-living allowance for a period not to exceed one (1) year from effectivity of the Order x x x when accumulated losses at the end of the period under review have been impaired by at least 25 percent the paid-up capital at the end of the last full accounting period preceding the application. Petitioner Central Textile Mills filed an application for exemption from compliance with the subject wage order due to financial losses. The Boards Vice p-Chairman, Ernesto Gorospe, disapproved of petitioners application for exemption after concluding form the documents submitted that petitioner sustained an impairment of only 22.41%. Petitioners motion for reconsideration was likewise dismissed by the Board, which opined that petitioners total paidup capital of P305,767, 900.00 should be the basis for determining the capital impairment of petitioner, instead of the authorized capital stock of P128M which petitioner insists should be the basis of computation. . The Board also noted that petitioner did not file with the SEC its board resolution approving an increase in petitioners authorized capital stock. Neither did petitioner file any petition to amend its AOI brought about by such increase in its capitalization. Petitioner argues that its authorized capital stock, not its unauthorized paid-up capital, should be used in determining its capital impairment. Citing two SEC Opinions which interpreted Sec 38 of the Corporation Code, it claims that the capital stock of a corporation stand(s) increased or decreased only from and after approval and the issuance of the certificate of filing of increase of capital stock. ISSUE(S): Whether petitioners authorized capital stock should be the basis for determining its capital impairment. HELD: YES. Petition for review GRANTED. RATIO: The guidelines on exemption specifically refer to paid-up capital, not authorized capital stock, as the basis of capital impairment for exception from the subject wage order. The records reveal, however, that petitioner included in its total paid-up capital payments on advance subscriptions, although the proposed increase in its capitalization had not yet been approved by, let alone presented for the approval of, the SEC. These payments cannot as yet be deemed part of petitioners paid-up capital, technically speaking, because its capital stock has not yet been legally increased. Thus, it's authorized capital stock in the year when exemption from the subject wage order was sought stood at P128M, which was impaired by losses of nearly 50%. Since the subject wage order exempts from its coverage employers whose capital has been impaired by at least 25%, and petitioner suffered losses of nearly 50%, petitioner qualifies for the exemption and its application for the same should be approved. CASE LAW/ DOCTRINE: DISSENTING/CONCURRING OPINION(S):
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