PRUBANKE`RS ASSOCIATION, petitioner, vs.

PRUDENTIAL BANK & TRUST COMPANY,

respondent
G.R. No. 131247
January 25, 1999
FACTS:
The Regional Tripartite Wages and Productivity Board (RTWPB) 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 had rendered service for at least three (3)
months before its effectivity, and for the same period thereafter. RTWPB Region VII
however followed suit but the COLA amounts in other cities nationwide were
different from that issued by RTWPN region V. This caused Prubankers Association
to write 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. As the
grievance could not be settled in the meetings, the parties agreed to submit the
matter to voluntary arbitration. Respondent brought the case to appeal and was
favored by CA, petitioner then sought the review by SC. It argued 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.
ISSUE:
WON two wage orders resulting in the discrepancy of employees compensation in
different regions also results to a wage distortion.
HELD:
No.
There is no wage distortion since the wage order implementation covers all the
branches of the bank. The hierarchy of positions was still preserved.
Also, petitioners 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. Republic Act No. 6727
(the Wage Rationalization Act), recognizes existing regional disparities in the cost
of living as provided in Section 2 of said law.
***Notes: The levels of different pay classes was not eliminated. The statutory
definition of wage distortion is found in Article 124 of the Labor Code, as amended
by Republic Act No. 6727, which reads: 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 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. 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 and (4) The
existence of the distortion in the same region of the country.
A disparity in wages between employees holding similar positions but in different
regions
does not constitute wage distortion as contemplated by law. As stated, 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.
Barayoga vs Asset Privatization Trust (2005)Case No. 5; Se
cured TransactionsG . R .
1 6 0 0 7 3 ;
4 7 3
S C R A
3 9 0 F r a n c i s
X a v i e r
S i n o n
ABUNDIO BARAYOGA and BISUDECO-PHILSUCOR CORFARM WORKERS UNION
(PACIWU CHAP-TPC),
Petitioners,vs.
ASSET PRIVATIZATION TRUST,
*
Respondent.
FACTS:
Petitioner Bisudeco-Philsucor Corfarm Workers Union is composed of workers of BicolandiaSugar
Development Corporation (BISUDECO), a sugar plantation mill located
in Camarines Sur.Respondent Asset Privatization Trust (APT), a public trust was created under
Proclamation No. 50,mandated to conserve, provisionally manage and dispose of nonperforming assets of the Philippine government identified for privatization or disposition. Thus,
pursuant to Proclamation No. 50, then President Corazon Aquino issued Administrative
Order No. 14, where the financial claim of the Ph ilip p in e Nation al Bank again s t
BI S U D EC O in th e form of a loan s ecu red by a ch attel, w as transferred to APT as a
trustee of the government.
Sometime later, Philippine Sugar Corporation(Philsucor)
took over the management of the sugar plantation and milling operations
. Meanwhile, because of BISUDECOs continued failure of to pay its outstanding loan with PNB, its mo
rtgaged properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder.
The union filed a labor case against BISUDECO-Phisucor for unfair labor practice
andillegal dismissal
when, the management, conditioned their re-hiring upon their resignation from the union but,
nonetheless employed the services of outsiders under the pakyaw system. Now, the APT's Board
of Trustees sold the plantation to Peafrancia Sugar Mill (Pensumil). The board, however, passed another
resolution authorizing the payment of separation benefits to BISUDECO's employees
in the event of the company's privatization.
Not in clu d ed in th e R es olu tion , th ou gh , w ere p etition er-un ion 'sm em bers w ho h ad
n ot b een recall ed to w ork .

Thus, petitioners impleaded respondents APT andP ens umil in the labor cas e, all res ponde
nts interpos ed the defens e of lack of emplo yer-e mplo ye e relationship.The Labor Arbiter
and the NLRC thereafter, ordered APT to pay herein complainants. It was ruled that while no
employer-employee relationship existed between members of the petitioner union and APT, at the time of
the employees' illegal dismissal, the assets of BISUDECO had been transferred to the national
government through APT. On appeal, the appellate court, under Rule 65 of the Rules of Court, held that
the APT liable for petitioners' claims for unfair labor practice because the petitioners' claims could not be
enforced against APT as mortgagee of the foreclosed properties of BISUDECO. Hence, under
Rule 45 of the Rules of Court, petitioner-union's members who were not recalled to work by
Philsucor, seek to hold APT liable for their monetary claims and allegedly illegal dismissal.
ISSUE:
Whether APT is liable for the claims of petitioners against their former employer.
HELD: NO.
Workers' claims for unpaid wages and monetary benefits cannot be paid outside of a
bankruptcy
or
judicial liquidation proceedings
against the employer. It is settled that the application of
Article 110 of the Labor Code
1
is contingent upon the institution of those proceedings, during which allcreditors are convened,
their claims ascertained and inventoried, and their preferences determined.
Assured thereby is an
orderly determination of the preference given to creditors' claims; and preserved in
harmony is the legal scheme of classification, concurrence and preference of credits in the Civil
Code, the Insolvency Law, and the Labor Code.
Responsibility for the liabilities of a mortgagor towards its employees cannot be transferred via an auction
sale to a purchaser who is also the mortgagee-creditor of the foreclosed assets and chattels. Clearly, the
mortgagee-creditor has no employer-employee relations with the mortgagors workers. The
mortgage constitutes a lien on the determinate properties of the employer-debtor, because it is a specially
preferred credit to which the workers monetary claims is deemed subordinate.