Richard1959

Very sorry about your situation.
Did you not see the requirements on the application form?

The application for FLR was not compliant without the English Language Test pass certificate.

The next step is solely your individual choice.
You can appeal against the decision
or
You wife returns to Phils, takes the test and re-applies spouse visa

You could also contact your local MP to help whichever route you wish to take as he may be able to help in some way. Nothing to be lost anyway.

Please be informed that there is a very tight time limit for submitting any appeal.
It is 28 days from the date you received your notice of refusal. If you do not submit within this time limit it might not be accepted and you will likely have lost your right to any appeal altogether

Also your wife only has a limited window to leave UK as her visa is now expired.
I think (but not sure) she must leave within 28 days also

The UKBA webpage for appeals is here:-
http://www.ukvisas.gov.uk/en/howtoap...s/inf19appeals

You really need legal advice on this from an OISC registered Immigration Advisor or a solicitor specialising in Immigration.
To consult an immigration advisor The Office of the Immigration Services Commissioner (OISC) is here:-

http://www.oisc.gov.uk/

Good Luck Richard
Would be good to know what you decide and how you get on.