31.) METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP vs.

NLRC

Facts:
On 25 May 1989, the MBTC entered into a collective bargaining agreement with the
MBTCEU, granting a monthly P900 wage increase effective 01 January 1989, P600 wage increase
01 January 1990, and P200 wage increase effective 01 January 1991. Only regular employees as
of 01 January 1989 were given the increase to the exclusion of probationary employees.

On 01 January 1989, Republic Act 6727 took effect which provides that:

Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of
all workers and employees in the private sector, whether agricultural or non-
agricultural, shall be increased by twenty-five pesos (P25) per day, . . .: Provided,
That those already receiving above the minimum wage rates up to one hundred
pesos (P100.00) shall also receive an increase of twenty-five pesos (P25.00) per day

The bank gave the P25 increase per day, or P750 a month, to its probationary employees and
to those who had been promoted to regular or permanent status before 01 July 1989 but whose
daily rate was P100 and below. The bank refused to give the same increase to its regular
employees who were receiving more than P100 per day and recipients of the P900 CBA increase.

Contending that the bank's implementation of Republic Act 6727 resulted in the
categorization of the employees into (a) the probationary employees as of 30 June 1989 and
regular employees receiving P100 or less a day who had been promoted to permanent or regular
status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose pay was over
P100 a day, and that, between the two groups, there emerged a substantially reduced salary gap,
the MBTCEU sought from the bank the correction of the alleged distortion in pay.

Issue:
Whether or not a wage distortion exists as a consequence of the grant of a wage increase
to certain employees?

Ruling:

Yes. Wage distortion, under the Rules Implementing Republic Act 6727, is defined, thus:

Wage Distortion means a situation where an increase in prescribed wage rates

results in the elimination or severe contradiction 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.
 The "intentional quantitative differences" in wage among employees of the bank has been
set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been
arrived at through the collective bargaining process to which the parties are thereby concluded.

In keeping then with the intendment of the law and the agreement of the parties
themselves, along with the often repeated rule that all doubts in the interpretation and
implementation of labor laws should be resolved in favor of labor, the court approximated an
acceptable quantitative difference between and among the CBA agreed work levels.

Giving the employees an increase of P750 may not be conducive to the policy of
encouraging "employers to grant wage and allowance increases to their employees higher than
the minimum rates of increases prescribed by statute or administrative regulation," particularly
in this case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance.

32.) ILAW AT BUKLOD NG MANGGAGAWA (IBM) VS. NLRC

Facts:

The union Ilaw at Buklod Ng Manggagawa (IBM) demanded to San Miguel Corp. for
correction of the significant distortion in the workers' wages. However, the union claimed that
the demand was ignored.

The Union's position set out in the petition was that the workers' refuse "to work beyond
eight (8) hours everyday as a legitimate means of compelling SMC to correct the distortion in
their wages brought about by the implementation of the R.A. 6640 and R.A. 6727 to newly-hired
employees.

Work schedule which had been observed by daily-paid workers for the past five (5) years
are as follows: 10 hours for the first shift and 10 to14 hours for the second shift, from Mondays
to Fridays and on Saturdays, 8 hours for both shifts - a work schedule which, SMC says, the
workers had welcomed, and encouraged" because the automatic overtime built into the
schedule gave them a steady source of extra-income, and pursuant to which it the SMC planned
its production targets and budgets.
This abandonment of the long-standing schedule of work and the reversion to the eight-
hour shift apparently caused substantial losses to SMC.

Issue:
Whether or not wage distortion case is a strikeable issue.

Ruling:

No. The legislative intent that solution of the problem of wage distortions shall be sought
by voluntary negotiation or abitration, and not by strikes, lockouts, or other concerted activities
of the employees or management, is made clear in the rules implementing RA 6727 issued by the
Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the
Act. Section 16, Chapter I of these implementing rules, after reiterating the policy that wage
distortions be first settled voluntarily by the parties and eventually by compulsory arbitration,
declares that, "Any issue involving wage distortion shall not be a ground for a strike/lockout."

The Union was thus prohibited to declare and hold a strike or otherwise engage in non-
peaceful concerted activities for the settlement of its controversy with SMC in respect of wage
distortions, or for that matter; any other issue involving or relating to wages, hours of work,
conditions of employment and/or employer-employee relations.

The partial strike or concerted refusal by the Union members to follow the five-year-old
work schedule which they had therefore been observing, resorted to as a means of coercing
correction of "wage distortions," was therefore forbidden by law and contract and, on this
account, illegal.

33.) MANILA MANDARIN EMPLOYEES UNION VS. NLRC

Facts:

The Manila Mandarin Employees Union, as exclusive bargaining agent of the rank-and-file
employees of the Manila Mandarin Hotel, Inc. filed with the NLRC Arbitration Branch a complaint
in its members behalf to compel the company to pay the salary differentials of the individual
employees concerned because of wage distortions in their salary structure allegedly created by
the upward revisions of the minimum wage pursuant to various Presidential Decrees and Wage
Orders, and the failure of MANDARIN to implement the corresponding increases in the basic
salary rate of newly-hired employees.

On January 15, 1987, the UNION filed its Position Paper amplifying the allegations of its
complaint and setting forth the legal bases of its demands against the company; and on March
25, 1987, it filed an Amended Complaint presenting an additional claim for payment of salary
differentials to the union members affected, allegedly resulting from underpayment of wages.

Issue:
Whether or not the hotel shall pay to the members of the Union the salary adjustments
by way of correcting the wage distortions in their respective salary structure even R.A 6727 took
effect only in June 1989?

Ruling:

No. The prevailing monthly salaries of the subject hotel employees appear to be and
above the minimum amounts required under the applicable Presidential Decrees and Wage
Orders. A comparative analysis of the wages of the Hotels employees vis a vis the minimum
wages fixed by law for the same period reveals that at no time during the said period was there
any underpayment of wages by the respondent Hotel.

Prior to the effectivity on June 9, 1989 of Republic Act No. 6727 which, among others,
amended Article 124 (Standards/Criteria for Minimum Wage Fixing) of the Labor Code, the
concept to wage distortion was relatively obscure.

It was only on June 9, 1989, upon the enactment of R.A. No. 6727 (Wage Rationalization
Act, amending, among others, Article 124 of the Labor Code), that the term wage distortion came
to be explicitly defined as:
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.

34.) PRUBANKERS ASSOCIATION VS. PRUDENTIAL BANK & TRUST COMPANY

Facts:

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 had rendered service for at least three (3) months before its
effectivity, and for the same period thereafter, in the following categories: P17.50 in the cities of
Naga and Legaspi; .P15.50 in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and
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 employees in the private
sector as follows: by P10.00 in the cities of Cebu, Mandaue and Lapulapu; 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, 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.

On June 7, 1994, 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.
 The association claimed that the regional implementation of the said orders created a
wage distortion in the wage rates of the association’s employees nationwide.

Issue:
Whether or not wage distortion existed in this case?

Ruling:

No. The Court ruled that 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.

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, length 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.

Also, 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.

The concept of 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.
 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.

35.) PRODUCERS BANK OF THE PHILIPPINES VS. NLRC

Facts:
A complaint was filed by Producers Bank Employees Association on 11 February 1988 with
the Arbitration Branch, NLRC, charging with diminution of benefits, non-compliance with Wage
Order No. 6 and non-payment of holiday pay. In addition, the Association prayed for damages.

From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus,
one month basic pay as 13th month pay and Christmas bonus. However, these bonuses were gone
when the bank put in the conservatorship.

The association contended that the mid-year and Christmas bonuses, by reason of their
having been given for thirteen consecutive years, have ripened into a vested right.

The bank asserted that it cannot be compelled to pay the alleged bonus differentials due
to its depressed financial condition.

According to the bank, it sustained losses in the millions of pesos. Moreover, the banks
points out that the collective bargaining agreement of the parties does not provide for the
payment of any mid-year or Christmas bonus.

A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer’s business and made possible the realization of
profits. It is an act of generosity granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits.

The granting of a bonus is a management prerogative, something given in addition to

what is ordinarily received by or strictly due the recipient. An employer cannot be forced to
distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize
the employer for his past generosity.

Issue:

Whether or not the employees are entitled for the payment of the monetary claims,
particularly the creditability provisions of Wage Order No. 6?
Ruling:

Yes. Although private respondent concedes that the grant of a bonus is discretionary on the
part of the employer, by reason of its long and regular concession, it may become part of the
employee’s regular compensation.
However, the creditability provision in Wage Order No. 6 is based on important public policy,
that is, the encouragement of employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or administrative
regulation. Thus, the court held in Apex Mining Company, Inc. v. NLRC that:

to obliterate the creditability provisions in the Wage Orders through

interpretation or otherwise, and to compel employers simply to add on legislated
increases in salaries or allowances without regard to what is already being paid,
would be to penalize employers who grant their workers more than the statutorily
prescribed minimum rates of increases. Clearly, this would be counter-productive
so far as securing the interest of labor is concerned. The creditability provisions in
the Wage Orders prevent the penalizing of employers who are industry leaders
and who do not wait for statutorily prescribed increases in salary or allowances
and pay their workers more than what the law or regulations require.