Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

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 1 of the 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. VII03 at its Cebu, Mabolo and P. del Rosario. The June 18, 1996 Decision of the Voluntary Arbitration Commitee, 2 which the Court of Appeals 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-andfile 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 I 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-O4012-97 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, 8 forum-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 forumshopping 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." 9 Another case elucidates the consequence of 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 gainsharing 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. b. c. d. e. f. g. The demand for living wages; Wage adjustment vis-a-vis the consumer price index; The cost of living and changes or increases therein; The needs of workers and their families; The need to induce industries to invest in the countryside; Improvements in standards of living; The prevailing wage levels;

h. Fair return of the capital invested and capacity to pay of employers; I. II. Effects on employment generation and family income; and 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. 12 RA 6727 recognizes that there are 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 NCR02 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.1wphi1.nt SO ORDERED. Romero, Vitug, Purisima and Gonzaga-Reyes, JJ., concur. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 140689

February 17, 2004

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner, vs. 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: (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; and (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: ... 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 Company5 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: 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 Level I II III IV V From 3,100 3,200 3,300 3,500 3,700 To 4,100 4,100 4,200 4,400 4,700

Minimum From 3,200 3,300 3,400 3,600 3,800 To 4,200 4,200 4,300 4,500 4,800

Maximum From 7,200 7,500 8,000 8,500 9,000 To 9,250 9,500 10,000 10,500 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) 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.lawphi1.nt 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) 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: In trying to prove wage distortion, petitioner union presented a list of five (5) employees allegedly affected by the said increase:

Pay of Old/ Regular Employees

Pay of Newly

Difference

Hired Employees

A. Prior to April 1, 1993 Level I Level II P4,518.75 (Sammy Guce) P6,242.00 (Nazario Abello) P4,850.00 (Arthur Chavez) P5,339.00 Melissa Cordero) P3,100 P3,200 P1,418.75 P3,042.00

Level III

P3,300

P1,550.00

Level IV

P3,500

P1,839.00

Level V

P7,090.69 P3,700 (Ma. Lourdes Dee)

P3,390.69

B. Effective April 1, 1993 Level I Level II P4,518.75 Sammy Guce) P6,242.00 (Nazario Abello) P4,850.00 (Arthur Chavez) P5,330.00 (Melissa Cordero) P4,100 P4,100 P418.75 P2,142.00

Level III

P4,200

P650.00

Level IV

P4,400

P939.00

Level V

P7,090.69 P4,700 (Ma. Lourdes Dee)

P2,390.69

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 rank of an employee, not on seniority. For this reason, ,wage distortion does not appear to exist.12 (Emphasis and underscoring supplied) 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: 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 acrossthe-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: 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) 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-theboard 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: 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. Vitug, (Chairman), Sandoval-Gutierrez, and Corona, JJ., concur.