Respondent Monomer Sugar Central Inc is a corporation organized and incorporated by virtue of an agreement executed between Asturias Sugar Central Inc (ASCI) and Monomer Trading Industries Inc (MTII) where MTII acquired the assets of ASCI and formed an entirely a new organization. MSCI then applied for exemption from the coverage of a Wage Order issued by the Board on the ground that it is a distressed employer to which petitioner union herein opposed. The Board denied MSCI’s application based on the finding that its paid-up capital was actually P64 million and not P5 million as claimed by MSCI and thus the established losses constitute an impairment of only 5.25% of its paid-up capital which cannot be said to be sufficient to meet the required 25% in order to qualify for the exemption. MSCI moved for reconsideration but was denied. On appeal, respondent NWPC ruled in favor of MSCI.
Whether or not the Board used the correct paid-up capital in determining the losses of MSCI to qualify for exemption.
To have a clear understanding of what paid-up capital is, however, a referral to Sections 12 and 13 of BP Blg. 68 or the Corporation Code would be very helpful. By express provision of Section 13, paid-up capital is that portion of the authorized capital stock which has been both subscribed and paid.
In the case under consideration, there is no dispute, and the Board even mentioned that MSCI was organized and incorporated with an authorized capital stock of P60 million, P20 million of which was subscribed. Of the P20 million subscribed capital stock, P5 million was paid-up. This fact is only too glaring for the Board to have been misled into believing that MSCI’S paid-up capital stock was P64 million plus and not P5 million.
Henceforth, the paid-up capital stock of MSCI for the period covered by the application for exemption still stood at P5 million. The losses, therefore, amounting to P3,400,738.00 for the period February 15, 1990 to August 31, 1990 impaired MSCI’s paid-up capital of P5 million by as much as 68%. Likewise, the losses incurred by MSCI for the interim period from September 1, 1990 to November 30, 1990, as found by the Commission, per MSCI’s quarterly income statements, amounting to P13,554,337.33 impaired the company’s paid-up capital of P5 million by a whopping 271.08%, more than enough to qualify MSCI as a distressed employer. Respondent Commission thus acted well within its jurisdiction in granting MSCI full exemption from Wage Order No. RO VI-01 as a distressed employer.