G.R. No.

131247 January 25, 1999

PRUBANKERS ASSOCIATION, petitioner,
vs.
PRUDENTIAL BANK & TRUST COMPANY, respondent.

PANGANIBAN, J.:

Wage distortion presupposes an increase in the compensation of the lower ranks in an office
hierarchy wirhout a corresponding raise for higher-tiered employees in the same region of the
country, resulting in the elimination or the severe diminution of the distinction between the two
groups. Such distortion does not arise when a wage order gives employees in one branch of a bank
higher compensation than that given to their counterparts in other regions occupying the same pay
scale, who are not covered by said wage order. In short, the implementation of wage orders in one
region but not in others does not in itself necessarily result in wage distortion.

The Case

Before us is a Petition for Review on Certiorari, challenging the November 6, 1997 Decision   of the
1

Court of Appeals in CA-GR SP No. 42525. The dispositive portion of the challenged Decision reads:

WHEREFORE, the petition is GRANTED. The assailed decision of the Voluntary

Arbitration Committee dated June 18, 1996 is hereby REVERSED and SET ASIDE
for having been issued with grave abuse of discretion tantamount to lack of or excess
of jurisdiction, and a new judgment is rendered finding that no wage distortion
resulted from the petitioner's separate and regional implementation of Wage Order
No. VII-03 at its Cebu, Mabolo and P. del Rosario.

The June 18, 1996 Decision of the Voluntary Arbitration Commitee,   which the Court of Appeals
2

reversed and set aside, disposed as follows:

WHEREFORE, it is hereby ruled that the Bank's separate and regional

implementation of Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario
branches created a wage distortion in the Bank nationwide which should be resolved
in accordance with Art. 124 of the Labor Code.  3

The Facts

The facts of the case are summarized by the Court of Appeals thus:

On November 18, 1993, the Regional Tripartite Wages and Productivity Board of
Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living
Allowance (COLA) to workers in the private sector who ha[d] rendered service for at
least three (3) months before its effectivity, and for the same period [t]hereafter, in
 the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in
the cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50)
in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS
(P10.00) for all other areas in the Bicol Region.

Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity
Board of Region VII issued Wage Order No. RB VII-03, which directed the integration
of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay
of all workers. It also established an increase in the minimum wage rates for all
workers and and employees in the private sector as follows: by Ten Pesos (P10.00)
in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the
municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla,
Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon and Tagbilaran.

The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch,
the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00
per month COLA into the basic pay of its rank-and-file employees at its Cebu,
Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB
VII-03.

On June 7, 1994, respondent Prubankers Association wrote the petitioner requesting

that the Labor Management Committee be immediately convened to discuss and
resolve the alleged wage distortion created in the salary structure upon the
implementation of the said wage orders. Respondent Association then demanded in
the Labor Management Committee meetings that the petitioner extend the
application of the wage orders to its employees outside Regions V and VII, claiming
that the regional implementation of the said orders created a wage distortion in the
wage rates of petitioner's employees nationwide. As the grievance could not be
settled in the said meetings, the parties agreed to submit the matter to voluntary
arbitration. The Arbitration Committee formed for that purpose was composed of the
following: public respondent Froilan M. Bacungan as Chairman, with Attys. Domingo
T. Anonuevo and Emerico O. de Guzman as members. The issue presented before
the Committee was whether or not the bank's separate and regional implementation
of Wage Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu,
Mabolo and P. del Rosario branches, created a wage distortion in the bank
nationwide.

The Arbitration Committee on June 18, 1996 rendered questioned decision.  4

Ruling of the Court of Appeals

In ruling that there was no wage distortion, the Court of Appeals held that the variance in the salary
rates of employees in different regions of the country was justified by RA 6727. It noted that "the
underlying considerations in issuing the wage orders are diverse, based on the distinctive situations
and needs existing in each region. Hence, there is no basis to apply the salary increases imposed by
Wage Order No. VII-03 to employees outside of Region VII." Furthermore, the Court of Appeals
ruled that "the distinctions between each employee group in the region are maintained, as all
employees were granted an increase in minimum wage rate.  5

The Issues

In its Memorandum, petitioner raises the following issues:  6

Whether or not the Court of Appeals departed from the usual course of judicial
procedure when it disregarded the factual findings of the Voluntary Arbitration
Committee as to the existence of wage distortion.

II

Whether or not the Court of Appeals committed grave error in law when it ruled that
wage distortion exists only within a region and not nationwide.

III

Whether or not the Court of Appeals erred in implying that the term "establishment"
as used in Article 125 of the Labor Code refers to the regional branches of the bank
and not to the bank as a whole.

The main issue is whether or not a wage distortion resulted from respondent's implementation of the
aforecited Wage Orders. As a preliminary matter, we shall also take up the question of forum-
shopping.

The Court's Ruling

The petition is devoid of merit. 

7

Preliminary Issue: Forum-Shopping

Respondent asks for the dismissal of the petition because petitioner allegedly engaged in forum-
shopping. It maintains that petitioner failed to comply with Section 2 of Rule 42 of the Rules of Court,
which requires that parties must certify under oath that they have not commenced any other action
involving the same issues in the Supreme Court, the Court of Appeals, or different divisions thereof,
or any other tribunal or agency; if there is such other action or proceeding, they must state the status
of the same; and if they should thereafter learn that a similar action or proceeding has been filed or
is pending before the said courts, they should promptly inform the aforesaid courts or any other
tribunal or agency within five days therefrom. Specifically, petitioner accuses respondent of failing to
inform this Court of the pendency of NCMB-NCR-RVA-O4-012-97 entitled "In Re: Voluntary
Arbitration between Prudential Bank and Prubankers Association" (hereafter referred to as
"voluntary arbitration case"), an action involving issues allegedly similar to those raised in the
present controversy.
In its Reply, petitioner effectively admits that the voluntary arbitration case was already pending
when it filed the present petition. However, it claims no violation of the rule against forum-shopping,
because there is no identity of causes of action and issues between the two cases.

We sustain the respondent. The rule on forum-shopping was first included in Section 17 of the
Interim Rules and Guidelines issued by this Court on January 11, 1983, which imposed a sanction in
this wise: "A violation of the rule shall constitute contempt of court and shall be a cause for the
summary dismissal of both petitions, without prejudice to the taking of appropriate action against the
counsel or party concerned." Thereafter, the Court restated the rule in Revised Circular No. 28-91
and Administrative Circular No. 04-94. Ultimately, the rule was embodied in the 1997 amendments
to the Rules of Court.

As explained by this Court in First Philippine International Bank v. Court of Appeals,   forum-
8

shopping exists where the elements of litis pendentia are present, and where a final judgment in one
case will amount to res judicata in the other. Thus, there is forum-shopping when, between an action
pending before this Court and another one, there exist: "a) identity of parties, or at least such parties
as represent the same interests in both actions, b) identity of rights asserted and relief prayed for,
the relief being founded on the same facts, and c) the identity of the two preceding particulars is
such that any judgement rendered in the other action, will, regardless of which party is successful
amount to res judicata in the action under consideration; said requisites also constitutive of the
requisites for auter action pendant or lis pendens."   Another case elucidates the consequence of
9

forum-shopping: "[W]here a litigant sues the same party against whom another action or actions for
the alleged violation of the same right and the enforcement of the same relief is/are still pending, the
defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would
constitute res judicata and thus would cause the dismissal of the rest."  10

The voluntary arbitration case involved the issue of whether the adoption by the Bank of regionalized
hiring rates was valid and binding. On the other hand, the issue now on hand revolves around the
existence of a wage distortion arising from the Bank's separate and regional implementation of the
two Wage Orders in the affected branches. A closer look would show that, indeed, the requisites of
forum-shopping are present.

First, there is identity of parties. Both cases are between the Bank and the Association acting on
behalf of all its members. Second, although the respective issues and reliefs prayed for in the two
cases are stated differently, both actions boil down to one single issue: the validity of the Bank's
regionalization of its wage structure based on RA 6727. Even if the voluntary arbitration case calls
for striking, down the Bank's regionalized hiring scheme while the instant petition calls for the
correction of the alleged wage distortion caused by the regional implementation of Wage Order No.
VII-03, the ultimate relief prayed for in both cases is the maintenance of the Bank's national wage
structure. Hence, the final disposition of one would constitute res judicata in the other. Thus, forum-
shopping is deemed to exist and, on this basis, the summary dismissal of both actions is indeed
warranted.

Nonetheless, we deem it appropriate to pass upon the main issue on its merit in view of its
importance.
 Main Issue: Wage Distortion

The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by
Republic Act No. 6727, which reads:

Art. 124. Standards/Criteria for Minimum Wage Fixing — . . .

As used herein, a wage distortion shall mean a situation where an increase in

prescribed wage results in the elimination of severe contraction of intentional
quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of
differentiation.

Elaborating on this statutory definition, this Court ruled: "Wage distortion presupposes a
classification of positions and ranking of these positions at various levels. One visualizes a hierarchy
of positions with corresponding ranks basically in terms of wages and other emoluments. Where a
significant change occurs at the lowest level of positions in terms of basic wage without a
corresponding change in the other level in the hierarchy of positions, negating as a result thereof the
distinction between one level of position from the next higher level, and resulting in a parity between
the lowest level and the next higher level or rank, between new entrants and old hires, there exists a
wage distortion. . . . . The concept of a wage distortion assumes an existing grouping or
classification of employees which establishes distinctions among such employees on some relevant
or legitimate basis. This classification is reflected in a differing wage rate for each of the existing
classes of employees"  11

Wage distortion involves four elements:

1. An existing hierarchy of positions with corresponding salary rates

2. A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one

3. The elimination of the distinction between the two levels

4. The existence of the distortion in the same region of the country

In the present case, it is clear that no wage distortion resulted when respondent implemented
the subject Wage Orders in the covered branches. In the said branches, there was an increase in
the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, lengh of
service and other logical bases of differentiation was preserved. In other words, the quantitative
difference in compensation between different pay classes remained the same in all branches in the
affected region. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example,
was not eliminated as a result of the implementation of the two Wage Orders in the said region.
Hence, it cannot be said that there was a wage distortion.
Petitioner argues that a wage distortion exists, because the implementation of the two Wage Orders
has resulted in the discrepancy in the compensation of employees of similar pay classification
in different regions. Hence, petitioner maintains that, as a result of the two Wage Orders, the
employees in the affected regions have higher compensation than their counterparts of the same
level in other regions. Several tables are presented by petitioner to illustrate that the employees in
the regions covered by the Wage Orders are receiving more than their counterparts in the same pay
scale in other regions.

The Court is not persuaded. A wage parity between employees in different rungs, is not at issue
here, but a wage disparity between employees in the same rung but located in different regions of
the country.

Contrary to petitioner's postulation, a disparity in wages between employees holding similar positions
but in different regions does not constitute wage distortion as contemplated by law. As previously
enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other
emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a
wage distortion arises when a wage order engenders wage parity between employees
in different rungs of the organizational ladder of the same establishment. It bears emphasis that
wage distortion involves a parity in the salary rates of different pay classes which, as a result,
eliminates the distinction between the different ranks in the same region.

Different Regional Wages

Mandated by RA 6727

Petitioner's claim of wage distortion must also be denied for one other reason. The difference in
wages between employees in the same pay scale in different regions is not the mischief sought to
be banished by the law. In fact, Republic Act No. 6727 (the Wage Rationalization Act), recognizes
"existing regional disparities in the cost of living." Section 2 of said law provides:

Sec 2. It is hereby declared the policy of the State to rationalize the fixing of minimum
wages and to promote productivity-improvement and gain-sharing measures to
ensure a decent standard of living for the workers and their families; to guarantee the
rights of labor to its just share in the fruits of production; to enhance employment
generation in the countryside through industry dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth.

The State shall promote collective bargaining as the primary mode of settling wages
and other terms and conditions of employment; and whenever necessary, the
minimum wage rates shall be adjusted in a fair and equitable manner, considering
existing regional disparities in the cost of living and other socio-economic factors and
the national economic and social development plans.

RA 6727 also amended Article 124 of the Labor Code, thus:

 Art. 124. Standards/Criteria for Minimum Wage Fixing. — The regional minimum
wages to be established by the Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards of living necessary for the
health, efficiency and general well-being of the employees within the frame work of
the national economic and social development program. In the determination of such
regional minimum wages, the Regional Board shall, among other relevant factors,
consider the following:

a. The demand for living wages;

b. Wage adjustment vis-a-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of employers;

I. Effects on employment generation and family income; and

II. The equitable distribution of income and wealth along the imperatives of social and
economic development.

From the above-quoted rationale of the law, as well as the criteria enumerated, a disparity in
wages between employees with similar positions in different regions is necessarily expected.
In insisting that the employees of the same pay class in different regions should receive the same
compensation, petitioner has apparently misunderstood both the meaning of wage distortion and the
intent of the law to regionalize wage rates.

It must be understood that varying in each region of the country are controlling factors such as the
cost of living; supply and demand of basic goods, services and necessities; and the purchasing
power of the peso. Other considerations underscore the necessity of the law. Wages in some areas
may be increased in order to prevent migration to the National Capital Region and, hence, to
decongest the metropolis. Therefore, what the petitioner herein bewails is precisely what the law
provides in order to achieve its purpose.

Petitioner claims that it "does not insist that the Regional Wage Boards created pursuant to RA 6727
do not have the authority to issue wage orders based on the distinctive situations and needs existing
in each region. So also, . . . it does not insist that the [B]ank should not implement regional wage
orders. Neither does it seek to penalize the Bank for following Wage Order VII-03. . . . What it simply
argues is that it is wrong for the Bank to peremptorily abandon a national wage structure and replace
the same with a regionalized structure in violation of the principle of equal pay for equal work. And, it
is wrong to say that its act of abandoning its national wage structure is mandated by law."

As already discussed above, we cannot sustain this argument. Petitioner contradicts itself in not
objecting, on the one hand, to the right of the regional wage boards to impose a regionalized wage
scheme; while insisting, on the other hand, on a national wage structure for the whole Bank. To
reiterate, a uniform national wage structure is antithetical to the purpose of RA 6727.
The objective of the law also explains the wage disparity in the example cited by petitioner: Armae
Librero, though only in Pay Class 4 in Mabolo, was, as a result of the Wage Order, receiving more
than Bella Cristobal, who was already in Pay Class 5 in Subic.   RA 6727 recognizes that there are
12

different needs for the different situations in different regions of the country. The fact that a person is
receiving more in one region does not necessarily mean that he or she is better off than a person
receiving less in another region. We must consider, among others, such factors as cost of living,
fulfillment of national economic goals, and standard of living. In any event, this Court, in its
decisions, merely enforces the law. It has no power to pass upon its wisdom or propriety.

Equal Pay for Equal Work

Petitioner also avers that the implementation of the Wage Order in only one region violates the
equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we stress that
RA 6727 mandates that wages in every region must be set by the particular wage board of that
region, based on the prevailing situation therein. Necessarily, the wages in different regions will not
be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that in
Region 13, because the socioeconomic conditions in the two regions are different.

Meaning of "Establishment"

Petitioner further contends that the Court of Appeals erred in interpreting the meaning of
"establishment" in relation to wage distortion. It quotes the RA 6727 Implementing Rules, specifically
Section 13 thereof which speaks of "workers working in branches or agencies of establishments in or
outside the National Capital Region." Petitioner infers from this that the regional offices of the Bank
do not themselves constitute, but are simply branches of, the establishment which is the whole bank.
In effect, petitioner argues that wage distortion covers the pay scales even of employees in different
regions, and not only those of employees in the same region or branch. We disagree.

Sec. 13 provides that the "minimum wage rates of workers working in branches or agencies of
establishments in or outside the National Capital Region shall be those applicable in the place
where they are sanctioned" The last part of the sentence was omitted by petitioner in its argument.
Given the entire phrase, it is clear that the statutory provision does not support petitioner's view that
"establishment" includes all branches and offices in different regions.

Further negating petitioner's theory is NWPC Guideline No. 1 (S. 1992) entitled "Revised Guidelines
on Exemption From Compliance With the Prescribed Wage/Cost of Living Allowance Increases
Granted by the Regional Tripartite Wages and Productivity Board," which states that "establishment"
"refers to an economic unit which engages in one or predominantly one kind of economic activity
with a single fixed location."

Management Practice

Petitioner also insists that the Bank has adopted a uniform wage policy, which has attained the
status of an established management practice; thus, it is estopped from implementing a wage order
for a specific region only. We are not persuaded. Said nationwide uniform wage policy of the Bank
had been adopted prior to the enactment of RA 6727. After the passage of said law, the Bank was
mandated to regionalize its wage structure. Although the Bank implemented Wage Order Nos. NCR-
01 and NCR-02 nationwide instead of regionally even after the effectivity of RA 6727, the Bank at
the time was still uncertain about how to follow the new law. In any event, that single instance cannot
be constitutive of "management practice."

WHEREFORE, the petition is DENIED and the assailed Decision is AFFIRMED. Costs against
petitioner.
1âwphi1.nêt

SO ORDERED.

Romero, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

THIRD DIVISION

[G.R. NO. 140689. February 17, 2004]

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE

UNIONS, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and
BANKARD, INC., Respondents.

DECISION

CARPIO MORALES, J.:

The present Petition for Review on Certiorari under Rule 45 of the Rules of Court raises
the issue of whether the unilateral adoption by an employer of an upgraded salary scale
that increased the hiring rates of new employees without increasing the salary rates of
old employees resulted in wage distortion within the contemplation of Article 124 of the
Labor Code.

Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II,
Level III, Level IV, and Level V. On May 28, 1993, its Board of Directors approved a
New Salary Scale, made retroactive to April 1, 1993, for the purpose of making its
hiring rate competitive in the industrys labor market. The New Salary Scale increased
the hiring rates of new employees, to wit: Levels I and V by one thousand pesos
(P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly,
the salaries of employees who fell below the new minimum rates were also adjusted to
reach such rates under their levels.

Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly
certified exclusive bargaining agent of the regular rank and file employees of Bankard,
to press for the increase in the salary of its old, regular employees.
Bankard took the position, however, that there was no obligation on the part of the
management to grant to all its employees the same increase in an across-the-board
manner.

As the continued request of petitioner for increase in the wages and salaries of
Bankards regular employees remained unheeded, it filed a Notice of Strike on August
26, 1993 on the ground of discrimination and other acts of Unfair Labor Practice (ULP).

A director of the National Conciliation and Mediation Board treated the Notice of
Strike as a Preventive Mediation Case based on a finding that the issues therein
were not strikeable.

Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to
bargain, discrimination, and other acts of ULP - union busting. The strike was averted,
however, when the dispute was certified by the Secretary of Labor and Employment for
compulsory arbitration.

The Second Division of the NLRC, by Order of May 31, 1995, finding no wage distortion,
dismissed the case for lack of merit.

Petitioners motion for reconsideration of the dismissal of the case was, by Resolution of
July 28, 1995, denied.

Petitioner thereupon filed a petition for certiorari before this Court, docketed as G.R.

121970. In accordance with its ruling in St. Martin Funeral Homes v. NLRC,1 the petition
was referred to the Court of Appeals which, by October 28, 1999, denied the same for
lack of merit.

Hence, the present petition which faults the appellate court as follows: chanroblesvirtua1awlibrary

(1) It misapprehended the basic issues when it concluded that under Bankards new
wage structure, the old salary gaps between the different classification or level of
employees were still reflected by the adjusted salary rates2 ; andcralawlibrary

(2) It erred in concluding that wage distortion does not appear to exist, which
conclusion is manifestly contrary to law and jurisprudence.3

Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending,
among others, Article 124 of the Labor Code) on June 9, 1989, the term wage distortion
was explicitly defined as:
chanroblesvirtua1awlibrary

... a situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate
the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation.4

Prubankers Association v. Prudential Bank and Trust Company 5 laid down the four
elements of wage distortion, to wit: (1.) An existing hierarchy of positions with
corresponding salary rates; (2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of a higher one; (3) The
elimination of the distinction between the two levels; and (4) The existence of the
distortion in the same region of the country.

Normally, a company has a wage structure or method of determining the wages of its
employees. In a problem dealing with wage distortion, the basic assumption is that
there exists a grouping or classification of employees that establishes distinctions
among them on some relevant or legitimate bases.6

Involved in the classification of employees are various factors such as the degrees of
responsibility, the skills and knowledge required, the complexity of the job, or other
logical basis of differentiation. The differing wage rate for each of the existing classes of
employees reflects this classification.

Petitioner maintains that for purposes of wage distortion, the classification is not one
based on levels or ranks but on two groups of employees, the newly hired and the old,
in each and every level, and not between and among the different levels or ranks in the
salary structure.

Public respondent National Labor Relations Commission (NLRC) refutes petitioners

position, however. It, through the Office of the Solicitor General, essays in its Comment
of April 12, 2000 as follows:chanroblesvirtua1awlibrary

To determine the existence of wage distortion, the historical classification of

the employees prior to the wage increase must be established. Likewise, it
must be shown that as between the different classification of employees, there
exists a historical gap or difference.

xxx

The classification preferred by petitioner is belied by the wage structure of private

respondent as shown in the new salary scale it adopted on May 28, 1993, retroactive to
April 1, 1993, which provides, thus:

Hiring Minimum Maximum

Level From To From To From To
I 3,100 4,100 3,200 4,200 7,200 9,250
II 3,200 4,100 3,300 4,200 7,500 9,500
 III 3,300 4,200 3,400 4,300 8,000 10,000
IV 3,500 4,400 3,600 4,500 8,500 10,500
V 3,700 4,700 3,800 4,800 9,000 11,000

Thus the employees of private respondent have been historically classified into

levels, i.e. I to V, and not on the basis of their length of service. Put
differently, the entry of new employees to the company ipso facto place[s] them under
any of the levels mentioned in the new salary scale which private respondent adopted
retroactive [to] April 1, 1993. Petitioner cannot make a contrary classification of private
respondents employees without encroaching upon recognized management prerogative
of formulating a wage structure, in this case, one based on level  .7 (Emphasis and
underscoring supplied) cralawlibrary

The issue of whether wage distortion exists being a question of fact that is within the
jurisdiction of quasi-judicial tribunals,8 and it being a basic rule that findings of facts of
quasi-judicial agencies, like the NLRC, are generally accorded not only respect but at
times even finality if they are supported by substantial evidence, as are the
findings in the case at bar, they must be respected. For these agencies have acquired
expertise, their jurisdiction being confined to specific matters.9

It is thus clear that there is no hierarchy of positions between the newly hired and
regular employees of Bankard, hence, the first element of wage distortion provided
in Prubankers  is wanting.

While seniority may be a factor in determining the wages of employees, it cannot be

made the sole basis in cases where the nature of their work differs.

Moreover, for purposes of determining the existence of wage distortion, employees

cannot create their own independent classification and use it as a basis to demand an
across-the-board increase in salary.

As National Federation of Labor v. NLRC, et  al.10 teaches, the formulation of a wage

structure through the classification of employees is a matter of management judgment
and discretion.

[W]hether or not a new additional scheme of classification of employees for

compensation purposes should be established by the Company (and the legitimacy or
viability of the bases of distinction there embodied) is properly a matter of
management judgment and discretion, and ultimately, perhaps, a subject
matter for bargaining negotiations between employer and employees. It is
assuredly something that falls outside the concept of wage distortion.11 (Emphasis and
underscoring supplied) cralawlibrary
As did the Court of Appeals, this Court finds that the third element provided
in Prubankers  is also wanting. For, as the appellate court explained: chanroblesvirtua1awlibrary

In trying to prove wage distortion, petitioner union presented a list of five (5)
employees allegedly affected by the said increase:

Pay of Old/ Pay of Newly Difference

Regular Employees Hired Employees
A. Prior to April 1, 1993
Level I P4,518.75 P3,100 P1,418.75

(Sammy Guce)
Level II P6,242.00 P3,200 P3,042.00

(Nazario Abello)
Level III P4,850.00 P3,300 P1,550.00

(Arthur Chavez)
Level IV P5,339.00 P3,500 P1,839.00

Melissa Cordero)
Level V P7,090.69 P3,700 P3,390.69

(Ma. Lourdes Dee)

B. Effective April 1, 1993
Level I P4,518.75 P4,100 P418.75

Sammy Guce)
Level II P6,242.00 P4,100 P2,142.00

(Nazario Abello)
Level III P4,850.00 P4,200 P650.00

(Arthur Chavez)
Level IV P5,330.00 P4,400 P939.00

(Melissa Cordero)
Level V P7,090.69 P4,700 P2,390.69

(Ma. Lourdes Dee)

Even assuming that there is a decrease in the wage gap between the pay of the old
employees and the newly hired employees, to Our mind said gap is not significant as
to obliterate or result in severe contraction of the intentional quantitative
differences in the salary rates between the employee group. As already stated, the
classification under the wage structure is based on the rankof an employee, not on
seniority. For this reason, ,wage distortion does not appear to exist.12 (Emphasis
and underscoring supplied) cralawlibrary

Apart from the findings of fact of the NLRC and the Court of Appeals that some of the
elements of wage distortion are absent, petitioner cannot legally obligate Bankard to
correct the alleged wage distortion as the increase in the wages and salaries of the
newly-hired was not due to a prescribed law or wage order.

The wordings of Article 124 are clear. If it was the intention of the legislators to cover
all kinds of wage adjustments, then the language of the law should have been broad,
not restrictive as it is currently phrased: chanroblesvirtua1awlibrary

Article 124. Standards/Criteria for Minimum Wage Fixing.

xxx

Where the application of any prescribed wage increase by virtue of a law or

Wage Order issued by any Regional Board results in distortions of the wage
structure within an establishment, the employer and the union shall negotiate to
correct the distortions. Any dispute arising from the wage distortions shall be resolved
through the grievance procedure under their collective bargaining agreement and, if it
remains unresolved, through voluntary arbitration.

x x x (Italics and emphasis supplied)

Article 124 is entitled Standards/Criteria for Minimum Wage Fixing. It is found

in CHAPTER V on WAGE STUDIES, WAGE AGREEMENTS AND WAGE
DETERMINATION which principally deals with the fixing of minimum wage. Article 124
should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the
distinctions embodied in the wage structure based on skills, length of service, or other
logical bases of differentiation will be preserved.

If the compulsory mandate under Article 124 to correct wage distortion is applied
to voluntary and unilateral increases by the employer in fixing hiring rates which is
inherently a business judgment prerogative, then the hands of the employer would be
completely tied even in cases where an increase in wages of a particular group is
justified due to a re-evaluation of the high productivity of a particular group, or as in
the present case, the need to increase the competitiveness of Bankards hiring rate. An
employer would be discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees for a similar
increase, especially if the financial conditions of the business cannot address an across-
the-board increase.
Petitioner cites Metro Transit Organization, Inc. v. NLRC13 to support its claim that the
obligation to rectify wage distortion is not confined to wage distortion resulting from
government decreed law or wage order.

Reliance on Metro Transit  is however misplaced, as the obligation therein to rectify the
wage distortion was not by virtue of Article 124 of the Labor Code, but on account of a
then existing company practice that whenever rank-and-file employees were paid a
statutorily mandated salary increase, supervisory employees were, as a matter
of practice, also paid the same amount plus an added premium. Thus this Court held in
said case:chanroblesvirtua1awlibrary

We conclude that the supervisory employees, who then (i.e., on April 17, 1989) had,
unlike the rank-and-file employees, no CBA governing the terms and conditions of their
employment, had the right to rely on the company practice of unilaterally correcting
the wage distortion effects of a salary increase given to the rank-and-file employees, by
giving the supervisory employees a corresponding salary increase plus a
premium.. .. 14 (Emphasis supplied) cralawlibrary

Wage distortion is a factual and economic condition that may be brought about by

different causes. In Metro Transit, the reduction or elimination of the normal differential
between the wage rates of rank-and-file and those of supervisory employees was due
to the granting to the former of wage increase which was, however, denied to the latter
group of employees.

The mere factual existence of wage distortion does not, however, ipso facto  result to an
obligation to rectify it, absent a law or other source of obligation which requires its
rectification.

Unlike in Metro Transit  then where there existed a company practice, no such
management practice is herein alleged to obligate Bankard to provide an across-the-
board increase to all its regular employees.

Bankards right to increase its hiring rate, to establish minimum salaries for specific
jobs, and to adjust the rates of employees affected thereby is embodied under Section
2, Article V (Salary and Cost of Living Allowance) of the parties Collective Bargaining
Agreement (CBA), to wit: chanroblesvirtua1awlibrary

Section 2. Any salary increase granted under this Article shall be without prejudice to
the right of the Company to establish such minimum salaries as it  may hereafter find
appropriate for specific jobs, and to adjust the rates of the employees thereby affected
to such minimum salaries thus established.15 (Italics and underscoring supplied)

This CBA provision, which is based on legitimate business-judgment prerogatives of the

employer, is a valid and legally enforceable source of rights between the parties.
In fine, absent any indication that the voluntary increase of salary rates by an employer
was done arbitrarily and illegally for the purpose of circumventing the laws or was
devoid of any legitimate purpose other than to discriminate against the regular
employees, this Court will not step in to interfere with this management prerogative.
Employees are of course not precluded from negotiating with its employer and lobby for
wage increases through appropriate channels, such as through a CBA.

This Court, time and again, has shown concern and compassion to the plight of workers
in adherence to the Constitutional provisions on social justice and has always upheld
the right of workers to press for better terms and conditions of employment. It does not
mean, however, that every dispute should be decided in favor of labor, for employers
correspondingly have rights under the law which need to be respected.

WHEREFORE, the present petition is hereby DENIED.

SO ORDERED.