CHAPTER X

MINIMUM WAGE, PROHIBITIONS REGARDING

WAGES,
WAGE FIXING AND WAGE DISTORTIONS.

1. Minimum Wage
A. Concept of Minimum Wage
A.A. Del Rancho vs. Ilagan January 2, 1968
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-23542

January 2, 1968

JUANA T. VDA. DE RACHO, plaintiff-appellee,

vs.
MUNICIPALITY OF ILAGAN, defendant-appellant.
Teodulo E. Mirasol for defendant-appellant.
No appearance for plaintiff-appellee.
BENGZON, J.P., J.:
Plaintiff Juana T. Vda. de Racho and the decedent, Manuel Racho, were spouses and had five minor
children. On July 1, 1954 the decedent was appointed as market cleaner in the Municipality of
Ilagan, Isabela, at the rate of P660.00 per annum (P55.00 monthly) which amount he received up
to June 30, 1958. On July 1, 1958, decedent's salary was increased to P720.00 per annum (P60.00
monthly) by virtue of a promotional appointment extended to him by the Municipal Mayor. He
received this amount until January 6, 1960 when he tendered his resignation effective July 7, 1960.
Decedent was then paid the money value of his accumulated leaves from January 7, 1960 to May
23, 1960 at the rate of P60.00 a month.
On October 5, 1960, decedent died intestate at Ilagan. Plaintiff then filed on December 9, 1960 a
claim for salary differentials with the Regional Office of the Department of Labor which dropped
the case later for lack of jurisdiction.
Based on the foregoing facts, the Court of First Instance of Isabela, in an action brought on
December 5, 1961, by plaintiff, in her own behalf and as guardian ad litem of her minor children,
ruled that defendant Municipality of Ilagan must pay P1,766.00 to plaintiff representing the wage
differentials and adjusted terminal leave of the decedent from December 9, 1957 1 to May 23,
1960, based on the monthly wage rate of P120.00 pursuant to the Minimum Wage Law.
Defendant municipality immediately appealed the case to Us on the sole submission that its
shortage and lack of available funds and expected revenue validly exempted it from complying
with the Minimum Wage Law.

The appeal must be dismissed. We have already answered the question posed in Rivera vs.
Colago, L-12323, February 24, 1961, wherein We ruled that lack of funds of a municipality does not
excuse it from paying the statutory minimum wages to its employees, which, after all, is a
mandatory statutory obligation of the municipality. To uphold such defense of lack of available
funds would render the Minimum Wage Law futile and defeat its purpose. This also disposes of the
implication appellant is trying to make that its duty to pay minimum wages is not a statutory
obligation which would command preference in the municipal budget and appropriation ordinance.
2

Moreover, We cannot sanction appellant's proposition that it would eventually and gradually
implement the Minimum Wage Law, "if and when its revenues can afford." The law insofar as it
affects government employees took effect in 1952. 3 It should have been implemented or at
least steps to implement it should have been taken right then. To excuse the defendant
municipality now would be to permit it to benefit from its non-feasance. It would also make the
effectivity of the law dependent upon the will and initiative of said municipality without statutory
sanction. Defendant's remedy, therefore, is not to seek an excuse from implementing the law but,
as the lower court suggested, to upgrade and improve its tax collection machinery with a view
towards realizing more revenues. Or, it could for the present forego all non-essential expenditures.
WHEREFORE, the appealed judgment is, as it is hereby affirmed. No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando,
JJ., concur.

A.b. Manila Fashions vs. NLRC, November 13, 1996

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 117878 November 13, 1996
MANILA FASHIONS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG MANGGAGAWA
NG MANILA FASHIONS, INC., respondents.

BELLOSILLO, J.:
On 15 March 1993 respondent Nagkakaisang Manggagawa ng Manila Fashions, Inc., through its
president, respondent Nonito Zamora, filed a complaint before the Labor Arbiter on behalf of its
one hundred and fifty (150) members who were regular employees of petitioner Manila Fashions,
Inc. The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A
mandating a P12- increase in wages effective 8 January 1991. As a result, complainants' basic pay,
13th month pay, service incentive leave pay, legal holiday pay, night shift differential and
overtime pay were all underpaid.

Petitioner countered that the failure to comply with the pertinent Wage Order was brought about
by the tremendous losses suffered by it which were aggravated when the workers staged a strike
on account of the non-adjustment of their basic pay. To forestall continuous suspension/closure of
business operations, which petitioner did for three (3) months, the strikers sent a notice that they
were willing to condone the implementation of the increase. The condonation was distinctly stated
in Sec. 3, Art. VIII, of the Collective Bargaining Agreement (CBA) dated 4 February 1992, which was
voluntarily entered into by the parties and represents a reasonable settlement
Sec. 3. The Union realizes the company's closeness to insolvency and, as such,
sympathizes with the company's financial condition. Therefore, the Union has
agreed, as it hereby agrees, to condone the implementation of Wage Order No. NCR02 and 02-A.
The complainants admitted the existence of the aforementioned provision in the CBA; however
they denied the validity thereof inasmuch as it was not reached after due consultation with the
members.
The Labor Arbiter sustained the claim that the subject provision of the CBA was void but based its
conclusion on a different ground
. . . While it is true that both union officers/members and (petitioner) signed the
agreement, however, the same is not enforceable since said agreement is null and
void, it being contrary to law. It is only the Tripartite Wage Productivity Board of (the)
Department of Labor and Employment (DOLE) that could approve exemption (of) an
establishment from coverage of (a) Wage Order . . . 1
Thus on 30 June 1993 petitioner was adjudged liable to each of the complainants for
underpayment of salary, 13th month pay, vacation leave pay and legal holiday pay in the
total amount of P900,012.00. All other claims were dismissed for lack of merit. 2
Both parties were unsatisfied with the decision, prompting them to seek relief from respondent
National Labor Relations Commission (NLRC). The basis of petitioner's appeal was that the ruling
was not in accordance with the facts and the law. On the part of the private respondents, they
assailed the computation of the award erroneous.
Respondent NLRC was not persuaded by petitioner. On the other hand, the appeal of private
respondents was no longer considered as it was filed beyond the reglementary period. Thus on 31
May 1994 the disputed decision was affirmed. 3
Was the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec.
3, Art. VIII, of the CBA valid?
Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by
this Court applying the rule that if the agreement was voluntarily entered into and represents a
reasonable settlement it is binding on the parties and may not be disowned simply because of a
change of mind. 4 Granting the CBA provision is indeed void, petitioner offers the alternative
argument that the computation of the award was erroneous and arbitrary.

We sustain the decision of the Labor Arbiter as affirmed by respondent NLRC that the condonation
appearing in Sec. 3, Art. VIII, of the CBA did not exempt petitioner from compliance with Wage
Order No. NCR-02 and 02-A..
A Collective Bargaining Agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit, including mandatory provisions for grievances and arbitration
machineries. 5 As in all other contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided they are not contrary to law,
morals, good customs, public order or public policy. 6 Section 3, Art. VIII, of the CBA is a void
provision because by agreeing to condone the implementation of the Wage Order the parties
thereby contravened its mandate on wage increase of P12.00 effective 8 January 1991. Also, as
stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could
approve exemption of an establishment from coverage of a Wage Order.
If petitioner is a financially distressed company then it should have applied for a wage exemption
so that it could meet its labor costs without endangering its viability or its very existence upon
which both management and labor depend for a living. 7 The Office of the Solicitor General
emphasizes the point that parties to a CBA may not by themselves, set a wage lower than the
minimum wage. To do so would render nugatory the purpose of a wage exemption, not to mention
the possibility that employees may be unwittingly put in a position to accept a lower wage. 8
The cases that petitioner relies on are simply inapplicable because, unlike the present case which
involves a stipulation in the CBA in contravention of law, they are concerned with compromise
settlements as a means to end labor disputes recognized by Art. 227 of the Labor Code and
considered not against public policy by doctrinal rules established by this Court. 9
As regards the alternative argument of petitioner that the computation of the award was
erroneous and arbitrary, it must be rejected outright as it was apparently never brought to the
attention of respondent NLRC. Consequently, it cannot be raised for the first time before this Court
since that would be offensive to the basic rule of fair play, justice and due process. 10 Moreover,
the original end exclusive jurisdiction of this Court to review a decision of respondent NLRC in a
petition for certiorari under Rule 65 does not normally include an inquiry into the correctness of its
evaluation of the evidence but confined merely to issues of jurisdiction or grave abuse of
discretion. 11
WHEREFORE, the petition is DISMISSED. The order of respondent National Labor Relations
Commission which affirmed the decision of the Labor Arbiter awarding the total amount of
P900,012.00 to the complainants is likewise AFFIRMED.
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.

B. Applicability and Exemptions

2. Prohibitions regarding Wages

A. Non-Diminution Rule under Article 100 of the Labor

Code
A.a. National Sugar Refineries Corporation vs. NLRC,
March 24, 1993
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 101761. March 24, 1993.
NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.
Jose Mario C. Bunag for petitioner.
The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.
Zoilo V. de la Cruz for private respondent.
DECISION
REGALADO, J p:
The main issue presented for resolution in this original petition for certiorari is whether supervisory
employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as
officers or members of the managerial staff under Article 82, Book III of the same Code, and hence
are not entitled to overtime rest day and holiday pay.
Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned
and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo
and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation
No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas
Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar
Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant,
Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations
Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor,
Community Development Officer, Employment and Training Supervisor, Assistant Safety and
Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head
of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool
Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees,
from rank-and-file to department heads. The JE Program was designed to rationalized the duties
and functions of all positions, reestablish levels of responsibility, and recognize both wage and
operational structures. Jobs were ranked according to effort, responsibility, training and working
conditions and relative worth of the job. As a result, all positions were re-evaluated, and all
employees including the members of respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of
respondent union were treated in the same manner as rank-and file employees. As such, they
used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93
and 94 of the Labor Code as amended. With the implementation of the JE Program, the following
adjustments were made: (1) the members of respondent union were re-classified under levels S-5
to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there
was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with
the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the
highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment
adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there
was a grant of P100.00 allowance for rest day/holiday work.
On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was
organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own
unions, as the bargaining representative of all the supervisory employees at the NASUREFCO
Batangas Sugar Refinery.
Two years after the implementation of the JE Program, specifically on June 20, 1990, the members
of herein respondent union filed a complainant with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.
On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as
follows:
"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby
directed to
1. pay the individual members of complainant union the usual overtime pay, rest day pay and
holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on
June 11, 1988; and
2. pay the individual members of complainant union the difference in money value between the
P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to
have received from June 1, 1988.
All other claims are hereby dismissed for lack of merit.
SO ORDERED."
In finding for the members therein respondent union, the labor ruled that the along span of time
during which the benefits were being paid to the supervisors has accused the payment thereof to
ripen into contractual obligation; at the complainants cannot be estopped from questioning the
validity of the new compensation package despite the fact that they have been receiving the
benefits therefrom, considering that respondent union was formed only a year after the
implementation of the Job Evaluation Program, hence there was no way for the individual
supervisors to express their collective response thereto prior to the formation of the union; and the
comparative computations presented by the private respondent union showed that the P100.00
special allowance given NASUREFCO fell short of what the supervisors ought to receive had the
overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore,
amounted to a diminution of benefits.
On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National
Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that
the members of respondent union are not managerial employees, as defined under Article 212 (m)
of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay.
Respondent NLRC declared that these supervisory employees are merely exercising

recommendatory powers subject to the evaluation, review and final action by their department
heads; their responsibilities do not require the exercise of discretion and independent judgment;
they do not participate in the formulation of management policies nor in the hiring or firing of
employees; and their main function is to carry out the ready policies and plans of the corporation.
3 Reconsideration of said decision was denied in a resolution of public respondent dated August
30, 1991. 4
Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent
commission committed a grave abuse of discretion in refusing to recognized the fact that the
members of respondent union are members of the managerial staff who are not entitled to
overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving
the benefits due to rank-and-file employees together with those due to supervisors under the JE
Program.
We find creditable merit in the petition and that the extraordinary writ of certiorari shall
accordingly issue.
The primordial issue to be resolved herein is whether the members of respondent union are
entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of
necessity be ascertained first whether or not the union members, as supervisory employees, are
to be considered as officers or members of the managerial staff who are exempt from the
coverage of Article 82 of the Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as defined
employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which
reads:
"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign
or discipline employees. Supervisory employees are those who, in the interest of the employer
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of those above definitions are considered rank-and-file employees of this Book."
Respondent NLRC, in holding that the union members are entitled to overtime, rest day and
holiday pay, and in ruling that the latter are not managerial employees, adopted the definition
stated in the aforequoted statutory provision.
Petitioner, however, avers that for purposes of determining whether or not the members of
respondent union are entitled to overtime, rest day and holiday pay, said employees should be
considered as "officers or members of the managerial staff" as defined under Article 82, Book III of
the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book
III of the Rules to Implement the Labor Code, to wit:
"Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in Appropriate regulations.
"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff." (Emphasis supplied.)
xxx xxx xxx

'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they
qualify for exemption under the condition set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status
of other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies
of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof;
or (ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under general supervision special assignments
and tasks; and
(4) Who do not devote more 20 percent of their hours worked in a work-week to activities which
are not directly and closely related to the performance of the work described in paragraphs (1),
(2), and above."
It is the submission of petitioner that while the members of respondent union, as supervisors, may
not be occupying managerial positions, they are clearly officers or members of the managerial
staff because they meet all the conditions prescribed by law and, hence, they are not entitled to
overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only
to the provisions on Labor Relations, while the right of said employees to the questioned benefits
should be considered in the light of the meaning of a managerial employee and of the officers or
members of the managerial staff, as contemplated under Article 82 of the Code and Section 2,
Rule I Book III of the implementing rules. In other words, for purposes of forming and joining
unions, certification elections, collective bargaining, and so forth, the union members are
supervisory employees. In terms of working conditions and rest periods and entitlement to the
questioned benefits, however, they are officers or members of the managerial staff, hence they
are not entitled thereto.
While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management also has its own rights which, as such, are entitled to respect and enforcement
in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court
has inclined more often than not toward the worker and upheld his cause in his conflicts with the
employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for
the deserving, to be dispensed in the light of the established facts and the applicable law and
doctrine. 5

This is one such case where we are inclined to tip the scales of justice in favor of the employer.
The question whether a given employee is exempt from the benefits of the law is a factual one
dependent on the circumstances of the particular case, In determining whether an employee is
within the terms of the statutes, the criterion is the character of the work performed, rather than
the title of the employee's position. 6
Consequently, while generally this Court is not supposed to review the factual findings of
respondent commission, substantial justice and the peculiar circumstances obtaining herein
mandate a deviation from the rule.
A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily
show that these supervisory employees are under the direct supervision of their respective
department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling communicating and in making decisions in attaining the company's
set goals and objectives. These supervisory employees are likewise responsible for the effective
and efficient operation of their respective departments. More specifically, their duties and
functions include, among others, the following operations whereby the employee:
1) assists the department superintendent in the following:
a) planning of systems and procedures relative to department activities;
b) organizing and scheduling of work activities of the department, which includes employee
shifting scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;
d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;
2) observes, follows and implements company policies at all times and recommends disciplinary
action on erring subordinates;
3) trains and guides subordinates on how to assume responsibilities and become more productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends necessary
action for their development/advancement;
5) represents the superintendent or the department when appointed and authorized by the
former;
6) coordinates and communicates with other inter and intra department supervisors when
necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of service
and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by
all NASUREFCO employees, recommends revisions or modifications to said rules when deemed
necessary, and initiates and prepares reports for any observed abnormality within the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.
From the foregoing, it is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial staff, as
defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1)
their primary duty consists of the performance of work directly related to management policies of
their employer; (2) they customarily and regularly exercise discretion and independent judgment;
(3) they regularly and directly assist the managerial employee whose primary duty consist of the
management of a department of the establishment in which they are employed (4) they execute,
under general supervision, work along specialized or technical lines requiring special training,
experience, or knowledge; (5) they execute, under general supervision, special assignments and
tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities
which are not directly and clearly related to the performance of their work hereinbefore described.
Under the facts obtaining in this case, we are constrained to agree with petitioner that the union
members should be considered as officers and members of the managerial staff and are,
therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest
day and holiday.
The distinction made by respondent NLRC on the basis of whether or not the union members are
managerial employees, to determine the latter's entitlement to the questioned benefits, is
misplaced and inappropriate. It is admitted that these union members are supervisory employees
and this is one instance where the nomenclatures or titles of their jobs conform with the nature of
their functions. Hence, to distinguish them from a managerial employee, as defined either under
Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually
involved here seeks a determination of whether or not these supervisory employees ought to be
considered as officers or members of the managerial staff. The distinction, therefore, should have
been made along that line and its corresponding conceptual criteria.
II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the
questioned benefits to the union members has ripened into a contractual obligation.
A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to
the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were
treated in the same manner as rank-and-file employees, and their basic pay was nearly on the
same level as those of the latter, aside from the fact that their specific functions and duties then
as supervisors had not been properly defined and delineated from those of the rank-and-file. Such
fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed
with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it
lucidly explained:
"But, complainants no longer occupy the same positions they held before the JE Program. Those
positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file
were classified correctly and continue to receive overtime, holiday and restday pay. As to them,
the practice subsists.
"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties
re-defined and in most cases their organizational positions re-designated to confirm their superior

rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same
positions." 9
It bears mention that this positional submission was never refuted nor controverted by respondent
union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can
be safely concluded therefrom that the members of respondent union were paid the questioned
benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE
Program, they could not be categorically classified as members or officers of the managerial staff
considering that they were then treated merely on the same level as rank-and-file. Consequently,
the payment thereof could not be construed as constitutive of voluntary employer practice, which
cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have
been practiced over a long period of time, and must be shown to have been consistent and
deliberate. 10
The test or rationale of this rule on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowingly fully well that said employees are not
covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to
sufficiently establish that petitioner has been motivated or is wont to give these benefits out of
pure generosity.
B. It remains undisputed that the implementation of the JE Program, the members of private
respondent union were re-classified under levels S-5 S-8 which were considered under the program
as managerial staff purposes of compensation and benefits, that they occupied re-evaluated
positions, and that their basic pay was increased by an average of 50% of their basic salary prior
to the JE Program. In other words, after the JE Program there was an ascent in position, rank and
salary. This in essence is a promotion which is defined as the advancement from one position to
another with an increase in duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary. 12
Quintessentially, with the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their positions. Entitlement to the benefits
provided for by law requires prior compliance with the conditions set forth therein. With the
promotion of the members of respondent union, they occupied positions which no longer met the
requirements imposed by law. Their assumption of these positions removed them from the
coverage of the law, ergo, their exemption therefrom.
As correctly pointed out by petitioner, if the union members really wanted to continue receiving
the benefits which attach to their former positions, there was nothing to prevent them from
refusing to accept their promotions and their corresponding benefits. As the sating goes by, they
cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter
of law and fairness, get the best of both worlds at the expense of NASUREFCO.
Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of
management, provided it is done in good faith. In the case at bar, private respondent union has
miserably failed to convince this Court that the petitioner acted implementing the JE Program.
There is no showing that the JE Program was intended to circumvent the law and deprive the
members of respondent union of the benefits they used to receive.
Not so long ago, on this particular score, we had the occasion to hold that:
". . . it is the prerogative of the management to regulate, according to its discretion and judgment,
all aspects of employment. This flows from the established rule that labor law does not authorize
the substitution of the judgment of the employer in the conduct of its business. Such management
prerogative may be availed of without fear of any liability so long as it is exercised in good faith for
the advancement of the employer's interest and not for the purpose of defeating on circumventing

the rights of employees under special laws or valid agreement and are not exercised in a
malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13
WHEREFORE, the impugned decision and resolution of respondent National Labor Relations
Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby
ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion,
and the basic complaint of private respondent union is DISMISSED.
Narvasa, C . J ., Padilla, Nocon and Campos, Jr., JJ., concur.

A.b. Globe Mackay Cable vs. NLRC, June 29, 1988

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 74156 June 29, 1988
GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS SANTIAGO,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES UNION and EDA
CONCEPCION, respondents.
Castillo, Laman, Tan & Pantaleon for petitioners.
Edwin D. Dellaban for private respondents.
MELENCIO-HERRERA, J.:
A special civil action for certiorari with a prayer for a Temporary Restraining Order to enjoin
respondents from enforcing the Decision of 10 March 1986 of the National Labor Relations
Commission (NLRC), in NCR Case No. 1-168-85 entitled "FFW-Globe Mackay Employees Union, et
al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive portion of which reads:
WHEREFORE, premises considered, the appealed Decision is as it is hereby SET
ASIDE and another one issued:
1. Declaring respondents-appellees (petitioners herein) guilty of illegal deductions of
cost-of-living allowance;
2. Ordering respondents-appellees to pay complainants-appellants their back
allowances reckoned from the time of illegal deduction; and
3. Ordering respondents-appellees from further illegally deducting the allowances of
complainants-appellants.

SO ORDERED.
Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while Commissioner
Cleto T. Villaltuya dissented and voted to affirm in toto the Labor Arbiter's Decision.
On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from enforcing
the assailed Decision. On 2 September 1987, we gave due course to the petition and required the
submittal of memoranda, by the parties, which has been complied with.
The facts follow:
Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance of
non-agricultural workers in the private sector. Petitioner corporation complied with the said Wage
Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in
computing said COLA, Petitioner Corporation multiplied the P 3.00 daily COLA by 22 days, which is
the number of working days in the company.
Respondent Union disagreed with the computation of the monthly COLA claiming that the daily
COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The union
alleged furthermore that prior to the effectivity of Wage Order No. 6, Petitioner Corporation had
been computing and paying the monthly COLA on the basis of thirty (30) days per month and that
this constituted an employer practice, which should not be unilaterally withdrawn.
After several grievance proceedings proved futile, the Union filed a complaint against Petitioner
Corporation, its President, F. White, and Vice-President, J. Santiago, for illegal deduction,
underpayment, unpaid allowances, and violation of Wage Order No. 6. Petitioners White and
Santiago were sought to be held personally liable for the money claims thus demanded.
Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that
since the individual petitioners acted in their corporate capacity they should not have been
impleaded; and that the monthly COLA should be computed on the basis of twenty two (22) days,
since the evidence showed that there are only 22 paid days in a month for monthly-paid
employees in the company. His reasoning, inter alia, was as follows:
To compel the respondent company to use 30 days in a month to compute the
allowance and retain 22 days for vacation and sick leave, overtime pay and other
benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it
must be used for the computation of all benefits, not just the allowance. But this is
not fair to complainants, not to mention that it will contravene the provision of the
parties' CBA.
On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner
Corporation was guilty of illegal deductions, upon the following considerations: (1) that the P3.00
daily COLA under Wage Order No. 6 should be paid and computed on the basis of thirty (30) days
instead of twenty-two (22) days since workers paid on a monthly basis are entitled to COLA on
Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by
Petitioner Corporation's monthly-paid employees before the CBA executed between the parties in
1982 constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3)
that petitioners White and Santiago were properly impleaded as respondents in the case below.

Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC.
We are constrained to reverse the reversal.
Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:
Section 5. Allowance for Unworked Days.
All covered employees shall be entitled to their daily living allowance during the
days that they are paid their basic wage, even if unworked. (Emphasis supplied)
The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In
other words, the payment of COLA is mandated only for the days that the employees are paid their
basic wage, even if said days are unworked. So that, on the days that employees are not paid their
basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Faculty
Union vs. University of Pangasinan, L-63122, February 20, 1984, 127 SCRA 691):
... it is evident that the intention of the law is to grant ECOLA upon the payment of
basic wages. Hence, we have the principle of 'No Pay, No ECOLA.
Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are
deemed paid their basic wages for all those days and they should be entitled to their COLA on
those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the
circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner
Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5)
days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement
read:
Art. XV(a)Eight net working hours shall constitute the regular work day for five
days.
Art. XV(b)Forty net hours of work, 5 working days, shall constitute the regular
work week.
Art. XVI, Sec. 1(b)All overtime worked in excess of eight net hours daily or in
excess of 5 days weekly shall be computed on hourly basis at the rate of time and
one half.
The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for
purposes of computing overtime pay, the monthly wage is divided by the number of actual work
days in a month and then, by eight (8) working hours. If a monthly-paid employee renders
overtime work, he is paid his basic salary rate plus one-half thereof. For example, after examining
the specimen payroll of employee Jesus L. Santos, the Labor Arbiter found:
the employee Jesus L. Santos, who worked on Saturday and Sunday was paid base
pay plus 50% premium. This is over and above his monthly basic pay as supported
by the fact that base pay was paid. If the 6th and 7th days of the week are deemed
paid even if unworked and included in the monthly salary, Santos should not have
been paid his base pay for Saturday and Sunday but should have received only the
50% overtime premium.

Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that
in computing the vacation and sick leaves of the employees, Petitioner Corporation consistently
used twenty-two (22) days.
Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work
week, it will have to be held that the COLA should be computed on the basis of twenty two (22)
days, which is the period during which the monthly-paid employees of Petitioner Corporation
receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be the
subject of future re-negotiation.
2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982
and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be
construed as constitutive of voluntary employer practice, which cannot now be unilaterally
withdrawn by petitioner. To be considered as such, it should have been practiced over a long
period of time, and must be shown to have been consistent and deliberate. Adequate proof is
wanting in this respect. The test of long practice has been enunciated thus:
... Respondent Company agreed to continue giving holiday pay knowing fully well
that said employees are not covered by the law requiring payment of holiday pay.'
(Oceanic Pharmacal Employees Union [FFW] vs. Inciong, L-50568, November 7,
1979, 94 SCRA 270). (Emphasis ours)
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the
implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4
were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly
equivalent was laid down, thus:
Section 3. Application of Section 2-xxx xxx xxx
(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634, 1678
and 1713:
xxx xxx xxx
(3) For workers who do not work and are not considered paid on Saturdays and
Sundays:
P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P 253.70 (Emphasis ours)
As the Labor Arbiter had analyzed said formula:
Under the aforecited formula/guideline, issued for the first time, when applied to a
company like respondent which observes a 5-day work week (or where 2 days in a
week, not necessarily Saturday and Sunday, are not considered paid), the monthly
equivalent of a daily allowance is arrived at by multiplying the daily allowance by
262 divided by 12. This formula results in the equivalent of 21.8 days in a month.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous
application of the law. Payment may be said to have been made by reason of a mistake in the
construction or application of a "doubtful or difficult question of law." (Article 2155, 1 in relation to
Article 2154 2 of the Civil Code). Since it is a past error that is being corrected, no vested right may
be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code 3 may be
said to have resulted by virtue of the correction.
With the conclusions thus reached, there is no further need to discuss the liability of the officers of
Petitioner Corporation.
WHEREFORE, certiorari is granted, the Decision of the National Labor Relations Commission, dated
10 March 1986, is SET ASIDE, and the Decision of the Labor Arbiter, dated 9 May 1985, is hereby
REINSTATED. The Temporary Restraining Order heretofore issued is hereby made permanent.
SO ORDERED.
Yap, C.J., Paras, and Sarmiento, JJ., concur.
Padilla, J., took no part.

B. Non-interference in disposal of wages under Article 112

of the Labor Code
C. Unauthorized wage deductions under Article 113 of the
Labor Code
D. Unauthorized deposits for loss or damages under Articles
114 and 115 of the Labor Code
D.a. Five J Taxi, etc vs. NLRC, August 22, 1994
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 111474 August 22, 1994
FIVE J TAXI and/or JUAN S. ARMAMENTO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN and GILBERTO SABSALON,
respondents.
Edgardo G. Fernandez for petitioners.

R E SO L U T I O N
REGALADO, J.:
Petitioners Five J Taxi and/or Juan S. Armamento filed this special civil action for certiorari to annul
the decision 1 of respondent National Labor Relations Commission (NLRC) ordering petitioners to
pay private respondents Domingo Maldigan and Gilberto Sabsalon their accumulated deposits and
car wash payments, plus interest thereon at the legal rate from the date of promulgation of
judgment to the date of actual payment, and 10% of the total amount as and for attorney's fees.
We have given due course to this petition for, while to the cynical the de minimis amounts
involved should not impose upon the valuable time of this Court, we find therein a need to clarify
some issues the resolution of which are important to small wage earners such as taxicab drivers.
As we have heretofore repeatedly demonstrated, this Court does not exist only for the rich or the
powerful, with their reputed monumental cases of national impact. It is also the Court of the poor
or the underprivileged, with the actual quotidian problems that beset their individual lives.
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi
drivers 2 and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from
the daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned taxi,
they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to
answer for any deficiency in their "boundary," for every actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already
failed to report for work for unknown reasons. Later, petitioners learned that he was working for
"Mine of Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on
September 6, 1983, he was held up by his armed passenger who took all his money and thereafter
stabbed him. He was hospitalized and after his discharge, he went to his home province to
recuperate.
In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms
and conditions as when he was first employed, but his working schedule was made on an
"alternative basis," that is, he drove only every other day. However, on several occasions, he failed
to report for work during his schedule.
On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for the previous day.
Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated
requests of petitioners for him to report for work, he adamantly refused. Afterwards it was
revealed that he was driving a taxi for "Bulaklak Company."
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash
deposits for 2 years, but herein petitioners told him that not a single centavo was left of his
deposits as these were not even enough to cover the amount spent for the repairs of the taxi he
was driving. This was allegedly the practice adopted by petitioners to recoup the expenses
incurred in the repair of their taxicab units. When Maldigan insisted on the refund of his deposit,
petitioners terminated his services. Sabsalon, on his part, claimed that his termination from
employment was effected when he refused to pay for the washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office of
the National Labor Relations Commission charging petitioners with illegal dismissal and illegal

deductions. That complaint was dismissed, the labor arbiter holding that it took private
respondents two years to file the same and such unreasonable delay was not consistent with the
natural reaction of a person who claimed to be unjustly treated, hence the filing of the case could
be interpreted as a mere afterthought.
Respondent NLRC concurred in said findings, with the observation that private respondents failed
to controvert the evidence showing that Maldigan was employed by "Mine of Gold" Taxi Company
from February 10, 1987 to December 10, 1990; that Sabsalon abandoned his taxicab on
September 1, 1990; and that they voluntarily left their jobs for similar employment with other taxi
operators. It, accordingly, affirmed the ruling of the labor arbiter that private respondents' services
were not illegally terminated. It, however, modified the decision of the labor arbiter by ordering
petitioners to pay private respondents the awards stated at the beginning of this resolution.
Petitioners' motion for reconsideration having been denied by the NLRC, this petition is now before
us imputing grave abuse of discretion on the part of said public respondent.
This Court has repeatedly declared that the factual findings of quasi-judicial agencies like the
NLRC, which have acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect but, at times, finality if such findings are supported by
substantial evidence. 3 Where, however, such conclusions are not supported by the evidence, they
must be struck down for being whimsical and capricious and, therefore, arrived at with grave
abuse of discretion. 4
Respondent NLRC held that the P15.00 daily deposits made by respondents to defray any shortage
in their "boundary" is covered by the general prohibition in Article 114 of the Labor Code against
requiring employees to make deposits, and that there is no showing that the Secretary of Labor
has recognized the same as a "practice" in the taxi industry. Consequently, the deposits made
were illegal and the respondents must be refunded therefor.
Article 114 of the Labor Code provides as follows:
Art. 114. Deposits for loss or damage. No employer shall require his worker to
make deposits from which deductions shall be made for the reimbursement of loss
of or damage to tools, materials, or equipment supplied by the employer, except
when the employer is engaged in such trades, occupations or business where the
practice of making deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and regulations.
It can be deduced therefrom that the said article provides the rule on deposits for loss or damage
to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or
permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his
"boundary." Also, when private respondents stopped working for petitioners, the alleged purpose
for which petitioners required such unauthorized deposits no longer existed. In other case, any
balance due to private respondents after proper accounting must be returned to them with legal
interest.
However, the unrebutted evidence with regard to the claim of Sabsalon is as follows:
YEAR DEPOSITS SHORTAGES VALES

1987 P 1,403.00 P 567.00 P 1,000.00

1988 720.00 760.00 200.00
1989 686.00 130.00 1,500.00
1990 605.00 570.00
1991 165.00 2,300.00

P 3,579.00 P 4,327.00 P 2,700.00
The foregoing accounting shows that from 1987-1991, Sabsalon was able to withdraw his deposits
through vales or he incurred shortages, such that he is even indebted to petitioners in the amount
of P3,448.00. With respect to Maldigan's deposits, nothing was mentioned questioning the same
even in the present petition. We accordingly agree with the recommendation of the Solicitor
General that since the evidence shows that he had not withdrawn the same, he should be
reimbursed the amount of his accumulated cash deposits. 5
On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent
the issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry,
after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same
clean condition when he took it out, and as claimed by the respondents (petitioners in the present
case), complainant(s) (private respondents herein) were made to shoulder the expenses for
washing, the amount doled out was paid directly to the person who washed the unit, thus we find
nothing illegal in this practice, much more (sic) to consider the amount paid by the driver as illegal
deduction in the context of the law." 6 (Words in parentheses added.)
Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments
they made. It will be noted that there was nothing to prevent private respondents from cleaning
the taxi units themselves, if they wanted to save their P20.00. Also, as the Solicitor General
correctly noted, car washing after a tour of duty is a practice in the taxi industry, and is, in fact,
dictated by fair play.
On the last issue of attorney's fees or service fees for private respondents' authorized
representative, Article 222 of the Labor Code, as amended by Section 3 of Presidential Decree No.
1691, states that non-lawyers may appear before the NLRC or any labor arbiter only (1) if they
represent themselves, or (2) if they represent their organization or the members thereof. While it
may be true that Guillermo H. Pulia was the authorized representative of private respondents, he
was a non-lawyer who did not fall in either of the foregoing categories. Hence, by clear mandate of
the law, he is not entitled to attorney's fees.
Furthermore, the statutory rule that an attorney shall be entitled to have and recover from his
client a reasonable compensation for his services 7 necessarily imports the existence of an
attorney-client relationship as a condition for the recovery of attorney's fees, and such relationship
cannot exist unless the client's representative is a lawyer. 8

WHEREFORE, the questioned judgment of respondent National Labor Relations Commission is

hereby MODIFIED by deleting the awards for reimbursement of car wash expenses and attorney's
fees and directing said public respondent to order and effect the computation and payment by
petitioners of the refund for private respondent Domingo Maldigan's deposits, plus legal interest
thereon from the date of finality of this resolution up to the date of actual payment thereof.
SO ORDERED.
Narvasa, C.J., Padilla, Puno and Mendoza, JJ., concur.

E. Prohibited Withholding of Wages and Kickbacks under

Article 116 of the Labor Code
F. Deduction to ensure employment under Article 117 of the
Labor Code
G. Retaliatory Measures under Article 118 of the Labor Code
3. Wage fixing
A. Wage Orders
B. Criteria for minimum wage fixing
C. Procedure for wage fixing
C.a. Cagayan Sugar Milling Co. vs. Secretary of Labor,
January 15, 1998
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 128399 January 15, 1998
CAGAYAN SUGAR MILLING COMPANY, petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ, SR., and CARSUMCO
EMPLOYEES UNION, respondents.
PUNO, J.:

In this petition for certiorari, petitioner CAGAYAN SUGAR MILLING COMPANY (CARSUMCO) impugns
the October 8, 1996 Decision of the Secretary of Labor, dismissing its appeal and upholding the
Order of Regional Director Ricardo S. Martinez, Sr. finding petitioner guilty of violating Regional
Wage Order No. RO2-02.
The facts: On November 16, 1993, Regional Wage Order No. RO2-02 1 was issued by the Regional
Tripartite Wage and Productivity Board, Regional Office No. II of the Department of Labor and
Employment (DOLE). It provided, inter alia, that:
Sec. 1. Upon effectivity of this Wage Order, the statutory minimum wage rates
applicable to workers and employees in the private sector in Region II shall be
increased as follows:
xxx xxx xxx
1.2 P 14.00 per day . . . Cagayan
xxx xxx xxx
On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office examined the
books of petitioner to determine its compliance with the wage order. They found that petitioner
violated the wage order as it did not implement an across the board increase in the salary of its
employees.
At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that it
complied with Wage Order No. RO2-02 as it paid the mandated increase in the minimum wage.
In an Order dated December 16, 1994, public respondent Regional Director Ricardo S. Martinez, Sr.
ruled that petitioner violated Wage Order RO2-02 by failing to implement an across the board
increase in the salary of its employees. He ordered petitioner to pay the deficiency in the salary of
its employees in the total amount of P555,133.41.
On January 6, 1995, petitioner appealed to public respondent Labor Secretary Leonardo A.
Quisumbing. On the same date, the Regional Wage Board issued Wage Order No. RO2-02-A,
amending the earlier wage order, thus:

Sec. 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon effectivity of
this Wage Order, the workers and employees in the private sector in Region 2 shall
receive an across the board wage increase as follows:
xxx xxx xxx
1.2 P14.00 per day . . . Cagayan
xxx xxx xxx
Sec. 2. This amendment is curative in nature and shall retroact to the date of the
effectivity of Wage Order No. RO2-02.

On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and affirmed the Order of
Regional Director Martinez, Sr. Petitioner's motion for reconsideration was likewise denied. 3
On February 12, 1997, private respondent CARSUMCO EMPLOYEES UNION moved for execution of
the December 16, 1994 Order. Regional Director Martinet, Sr. granted the motion and issued the
writ of execution. On March 4, 1997, petitioner moved for reconsideration to set aside the writ of
execution. On March 5, the DOLE regional sheriff served on petitioner a notice of garnishment of
its account with the Far East Bank and Trust Company. On March 10, the sheriff seized petitioner's
dump truck and scheduled its public sale on March 20, 1997.
Hence, this petition, with a prayer for the issuance of a temporary restraining order (TRO).
On April 3, 1997, this Court issued a TRO enjoining respondents from enforcing the writ of
execution. 4 On July 16, upon petitioner's motion, we amended the TRO by also enjoining
respondents from enforcing the Decision of the Secretary of Labor and conducting further
proceedings until further orders from this Court. 5
In the case at bar, petitioner contends that:
I
WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN VIOLATION
OF THE PROCEDURE PROVIDED BY LAW AND IN VIOLATION OF PETITIONER'S RIGHT
TO DUE PROCESS OF LAW.
II
WAGE ORDER NO. RO2-02 CLEARLY PROVIDED FOR THE FIXING OF A STATUTORY
MINIMUM WAGE RATE AND NOT AN ACROSS THE BOARD INCREASE IN WAGES.
III
THE DECISION OF THE SECRETARY OF LABOR AND EMPLOYMENT IS NULL AND VOID
FOR LACK OF ANY LEGAL BASIS.
The petition has merit.
Wage Order No. RO2-02, passed on November 16, 1993, provided for an increase in the statutory
minimum wage rates for Region II. More than a year later, or on January 6, 1995, the Regional
Board passed Wage Order RO2-02-A amending the earlier wage order and providing instead for an
across the board increase in wages of employees in Region II, retroactive to the date of effectivity
of Wage Order RO2-02.
Petitioner assails the validity of Wage Order RO2-02-A on the ground that it was passed without
the required public consultation and newspaper publication. Thus, petitioner claims that public
respondent Labor Secretary Quisumbing abused his discretion in upholding the validity of said
wage order.
We agree.

Article 123 of the Labor Code provides:

Art. 123. Wage Order. Whenever conditions in the region so warrant, the Regional
Board shall investigate and study all pertinent facts, and, based on the standards
and criteria herein prescribed, shall proceed to determine whether a Wage Order
should be issued. Any such Wage Order shall take effect after (15) days from its
complete publication in at least one (1) newspaper of general circulation in the
region.
In the performance of its wage-determining functions, the Regional Board shall
conduct public hearings/consultations giving notices to employees' and employers'
groups and other interested parties.
xxx xxx xxx
The record shows that there was no prior public consultation or hearings and newspaper
publication insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were not
denied by public respondents in their Comment. Public respondents' position is that there was no
need to comply with the legal requirements of consultation and newspaper publication as Wage
order No. RO2-02-A merely clarified the ambiguous provision of the original wage order.
We are not persuaded.
To begin with, there was no ambiguity in the provision of Wage Order RO2-02 as it provided in
clear and categorical terms for an increase in statutory minimum wage of workers in the region.
Hence, the subsequent passage of RO2-02-A providing instead for an across the board increase in
wages did not clarify the earlier Order but amended the same. In truth, it changed the essence of
the original Order. In passing RO2-02-A without going through the process of public consultation
and hearings, the Regional Board deprived petitioner and other employers of due process as they
were not given the opportunity to ventilate their positions regarding the proposed wage increase.
In wage-fixing, factors such as fair return of capital invested, the need to induce industries to
invest in the countryside and the capacity of employers to pay are, among others, taken into
consideration. 6 Hence, our legislators provide for the creation of Regional Tripartite Boards
composed of representatives from the government, the workers and the employers to determine
the appropriate wage rates per region to ensure that all sides are heard. For the same reason,
Article 123 of the Labor Code also provides that in the performance of their wage-determining
functions, the Regional Board shall conduct public hearings and consultations, giving notices to
interested parties. Moreover, it mandates that the Wage Order shall take effect only after
publication in a newspaper of general circulation in the region. It is a fundamental rule, borne out
of a sense of fairness, that the public is first notified of a law or wage order-before it can be held
liable for violation thereof. In the case at bar, it is indisputable that there was no public
consultation or hearing conducted prior to the passage of RO2-02-A. Neither was it published in a
newspaper of general circulation as attested in the February 3, 1995 minutes of the meeting of the
Regional Wage Board that the non-publication was by consensus of all the board members. 7
Hence, RO2-02-A must be struck down for violation of Article 123 of the Labor Code.
Considering that RO2-02-A is invalid, the next issue to settle is whether petitioner could be held
liable under the original wage order, RO2-02.

Public respondents insist that despite the wording of Wage Order RO2-02 providing for a statutory
increase in minimum wage, the real intention of the Regional Board was to provide for an across
the board increase. Hence, they urge that petitioner is liable for merely providing an increase in
the statutory minimum wage rates of its employees.
The contention is absurd. Petitioner clearly complied with Wage Order RO2-02 which provided for
an increase in statutory minimum wage rates for employees in Region II. It is not just to expect
petitioner to interpret Wage RO2-02 to mean that it granted an across the board increase as such
interpretation is not sustained by its text. Indeed, the Regional Wage Board had to amend Wage
Order RO2-02 to clarify this alleged intent.
In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and nonpublication in a newspaper of general circulation, in violation of Article 123 of the Labor Code. We
likewise find that public respondent Secretary of Labor committed grave abuse of discretion in
upholding the findings of Regional Director Ricardo S. Martinez, Sr. that petitioner violated Wage
Order RO2-02.
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Secretary of Labor, dated October
8, 1996, is set aside for lack of merit.
SO ORDERED.
Regalado, Mendoza and Martinez, JJ., concur.

C.b. Nasipit Lumber Co. vs. NWPC, et al., April 27, 1998
FIRST DIVISION
[G.R. No. 113097. April 27, 1998]
NASIPIT LUMBER COMPANY, INC., and PHILIPPINE WALLBOARD CORPORATION, petitioners, vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION, WESTERN AGUSAN WORKERS UNION
(WAWU-ULGWP LOCAL 101), TUNGAO LUMBER WORKERS UNION (TULWU-ULGWP LOCAL
102) and UNITED WORKERS UNION (UWU-ULGWP LOCAL 103), respondents.
DECISION
PANGANIBAN, J.:
The Labor Code, as amended by RA 6727 (the Wage Rationalization Act), grants the National
Wages and Productivity Commission (NWPC) the power to prescribe rules and guidelines for the
determination of appropriate wages in the country. Hence, guidelines issued by the Regional
Tripartite Wages and Productivity Boards (RTWPB) without the approval of or, worse, contrary to
those promulgated by the NWPC are ineffectual, void and cannot be the source of rights and
privileges.

The Case

This is the principle used by the Court in resolving this petition for certiorari under
Rule 65 of the Rules of Court assailing the Decision i dated March 8, 1993, promulgated by
the NWPCii which disposed as follows:WHEREFORE, premises considered, the Decision
appealed from is hereby MODIFIED. The application for exemption of Anakan Lumber
Company is hereby GRANTED for a period of one (1) year retroactive to the date subject
Wage Orders took effect until November 21, 1991. The applications for exemption of
Nasipit Lumber Company and Philippine Wallboard Corporation are hereby DENIED for lack
of merit, and as such, they are hereby ordered to pay their covered workers the wage
increases under subject Wage Orders retroactive to the date of effectivity of said Wage
Orders plus interest of one percent (1%) per month.
SO ORDERED.
Petitioners also challenge the NWPCs Decision iii dated November 17, 1993 which denied their
motion for reconsideration.The RTWPBs August 1, 1991 Decision, which the NWPC modified,
disposed as follows:
WHEREFORE, all foregoing premises considered, the instant petition for exemption
from compliance with Wage Order Nos. RX-01 and RX-01-A is hereby approved under and
by virtue of criteria No. 2, Section 3 of RTWPB Guidelines No. 3 on Exemption, dated
November 26, 1990, for a period of only one (1) year, retroactive to the date said Wage
Order took effect up to November 21, 1991.

SO ORDERED.ivThe Facts
The undisputed facts are narrated by the NWPC as follows:
On October 20, 1990, the Region X [Tripartite Wages and Productivity] Board issued
Wage Order No. RX-01 which provides as follows:
Section 1. Upon the effectivity of this Wage Order, the increase in minimum
wage rates applicable to workers and employees in the private sector in Northern
Mindanao (Region X) shall be as follows:
a.The provinces of Agusan del Norte, Bukidnon, Misamis Oriental,
and the Cities of Butuan, Gingoog, and Cagayan de Oro - - - - -P13.00/day
b. The provinces of Agusan del Sur, Surigao del Norte and Misamis
Occidental, and the Cities of Surigao Oroquieta, Ozamis and Tangub - - - - P11.00/day
c.

The province of Camiguin P9.00/day

Subsequently, a supplementary Wage Order No. RX-01-A was issued by the Board on
November 6, 1990 which provides as follows:
Section 1. Upon the effectivity of the original Wage Order RX-01, all workers
and employees in the private sector in Region X already receiving wages above
the statutory minimum wage rates up to one hundred and twenty pesos
(P120.00) per day shall also receive an increase of P13, P11, P9 per day, as
provided for under Wage Order No. RX-01;
Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine Wallboard
Corporation (PWC), and Anakan Lumber Company (ALCO), claiming to be separate and
distinct from each other but for expediency and practical purposes, jointly filed an
application for exemption from the above-mentioned Wage Orders as distressed
establishments under Guidelines No. 3, issued by the herein Board on November 26,
1990, specifically Sec. 3(2) thereof which, among others, provides:
A.

For purposes of this Guidelines the following criteria to

determine whether the applicant-firm is actually distressed shall be

used.
xxx

xxx

xxx

2. Establishment belonging to distressed industry - an

establishment that is engaged in an industry that is distressed due to
conditions beyond its control as may be determined by the Board in
consultation with DTI and NWPC. (Underscoring supplied)
xxx

xxx

xxx

Applicants/appellees aver that they are engaged in logging and integrated wood
processing industry but are distressed due to conditions beyond their control, to wit: 1)
Depressed economic conditions due to worldwide recession; 2) Peace and order and other
emergency-related problems causing disruption and suspension of normal logging
operations; 3) Imposition of environmental fee for timber production in addition to regular
forest charges; 4) Logging moratorium in Bukidnon; 5) A reduction in the annual allowable
volume of cut logs of NALCO& ALCO by 59%; 6) Highly insufficient raw material supply; 7)
Extraordinary increases in the cost of fuel, oil, spare parts, and maintenance; 8) Excessive
labor cost/production ratio that is more or less 47%; and 9) Lumber export ban.
On the other hand, oppositor/appellant Unions jointly opposed the application for exemption
on the ground that said companies are not distressed establishments since their capitalization has
not been impaired by 25%.vCiting liquidity problems and business decline in the wood-processing
industry, the RTWPB approved the applicants joint application for exemption in this wise:
1.The Board considered the arguments presented by petitioners and the oppositors.
The Board likewise took note of the financial condition of petitioner firms. One of the
affiliates, Anakan Lumber Company, is confirmed to be suffering from capital impairment
by: 14:80% in 1988, 71.35% in 1989 and 100% in 1990. On the other hand, NALCO had a
capital impairment of 6.41%. 13.53% and 17.04% in 1988, 1989 and 1990, respectively,
while PWC had no capital impairment from 1988 to 1990. However, the Board also took
note of the fact that petitioners are claiming for exemption, not on the strength of capital
impairment, but on the basis of belonging to a distressed industry - an establishment that
is engaged in an industry that is distressed due to conditions beyond its control as may be
determined by the Board in consultation with DTI and NWPC.
2.
Inquiries made by the Board from the BOI and the DTI confirm that all petitionerfirms are encountering liquidity problems and extreme difficulty servicing their loan
obligations.
3.
A perusal of the Provincial Trade and Industry Development Plan for Agusan del
Norte and Butuan City where petitioners are operating their business, confirms the
existence of a slump in the wood-processing industry due to the growing scarcity of [a]
large volume of raw materials to feed the various plywood and lumber mills in the area. A
lot of firms have closed and shifted to other ventures, the report continued, although the
competitive ones are still in operation.
4. The Board took note of the fact that most of the circumstances responsible for the financial
straits of petitioners are largely external, over which petitioners have very little control. The Board
feels that as an alternative to closing up their business[es] which could bring untold detriment and
dislocation to [their] 4,000 workers and their families, petitioners should be extended assistance
and encouragement to continue operating - so that jobs could thereby be preserved during these
difficult times. One such way is for the Board to grant them a temporary reprieve from compliance
with the mandated wage increase specifically W.O. RX-01 and RX-01-A only. viDissatisfied with the
RTWPBs Decision, the private respondents lodged an appeal with the NWPC, which affirmed ALCOs
application but reversed the applications of herein petitioners, NALCO and PWC. The NWPC
reasoned:
The Guidelines No. 3 dated November 26, 1990, issued by the herein Board cannot be
used as valid basis for granting applicants/appellees application for exemption since it did

not pass the approval of this Commission.

Under the Rules of Procedure on Minimum Wage Fixing dated June 4, 1990, issued by
this Commission pursuant to Republic Act 6727, particularly Section 1 of Rule VIII thereof
provides that:
Section 1. Application For Exemption. Whenever a wage order provides for
exemption, applications thereto shall be filed with the appropriate Board which
shall process the same, subject to guidelines issued by the Commission.
(Underscoring supplied)
Clearly, it is the Commission that is empowered to set [the] criteria on exemption
from compliance with wage orders. While the Boards may issue supplementary guidelines
on exemption, the same should first pass the Commission for the purpose of determining
its conformity to the latters general policies and guidelines relative thereto. In fact, under
the Guidelines on Exemption from Compliance with the Prescribed Wage/Cost of Living
Allowance Increases Granted by the Regional Tripartite Wages and Productivity Boards
dated February 25, 1991, issued by the Commission, there is a provision that (T)he Board
may issue supplementary guidelines for exemption x x x subject to review/approval by the
Commission. (Section 11). In the case at bar, after the Commission Secretariat made
some comments on said Guidelines No. 3, the same was never submitted again for [the]
Commissions approval either justifying its original provisions or incorporating the
comments made thereon. Until and unless said Guidelines No. 3 is approved by the
Commission, it has no operative force and effect.
The applicable guidelines on exemption therefore is that one issued by the
Commission dated February 25, 1991, the pertinent portion of which reads:
Section 3. CRITERIA FOR EXEMPTION
x x xx x x

xxx

2. Distressed Employers/Establishment:
a. In the case of a stock corporation, partnership, single
proprietorship or non-stock, non-profit organization engaged in business
activity or charging fees for its services.
When accumulated losses at end of the period under review have
impaired by at least 25 percent the:
- Paid-up-capital at the end of the last full accounting period
preceding the application, in the case of corporations;
- Total invested capital at the beginning of the last full accounting
period preceding the application, in the case of partnership and single
proprietor-ships(Underscoring supplied)
A perusal of the financial documents on record shows that for the year 1990, which is
the last full accounting period preceding the applications for exemption, appellees NALCO,
ALCO, and PWC incurred a capital impairment of 1.89%, 28.72%, and 5.03%, respectively.
Accordingly, based on the criteria set forth above in the NWPC Guidelines on Exemption,
only the application for exemption of ALCO should be approved in view of its capital
impairment of 28.72%.
We are not unmindful of the fact that during the Board hearing conducted, both labor and
management manifested their desire for a uniform decision to apply to all three (3) firms.
However, we cannot grant the same for want of legal basis considering that we are required by the
rules to decide on the basis of the merit of application by an establishment having a legal
personality of its own.viiIn denying petitioners motion for reconsideration, public respondent
explained:
The fact that applicant companies relied in good faith upon Guidelines No. 3 issued by

the Board a quo, the same is not sufficient reason that they should be assessed based on
the criteria of said Guidelines considering that it does not conform to the policies and
guidelines relative to wage exemption issued by this Commission pursuant to Republic Act
6727. Consequently, it has no force and effect. As such, said Guidelines No. 3 cannot
therefore be a source of a right no matter if one has relied on it in good faith. In like
manner that the workers, who are similarly affected, cannot be bound thereof.

Moreover, even assuming that Guidelines No. 3 conforms to the procedural requirement, still, the
same cannot be given effect insofar as it grants exemption by industry considering that the
subject Wage Order mentioned only distressed establishments as one of those to be exempted
thereof. It did not mention exemption by industries. Well-settled is the rule that an implementing
guidelines [sic] cannot expand nor limit the provision of [the] law it seeks to implement.
Otherwise, it shall be considered ultra vires. And, contrary to applicant companies claim, this
Commission does not approve rules implementing the Wage Orders issued by the Regional
Tripartite Wages and Productivity Boards. Perforce, it cannot be said that this Commission has
approved the Rules Implementing Wage Order No[s]. RX-01 and RX-01-A. viiiHence, this
recourse.ixThe Issue
Petitioners raise this solitary issue:
With all due respect, Public Respondent National Wages and Productivity Commission
committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in
ruling that RTWPB-X-Guideline No. 3 has no operative force and effect, among others, and
consequently, denying for lack of merit the application for exemption of petitioners Nasipit
Lumber Company, Inc. and Philippine Wallboard Corporation from the coverage of Wage
Orders Nos. RX-01 and RX-01-A.
In the main, the issue boils down to a question of power. Is a guideline issued by an RTWPB
without the approval of or, worse, contrary to the guidelines promulgated by the NWPC valid?

The Courts Ruling

The petition is unmeritorious. The answer to the above question is in the negative.

Sole Issue: Approval of NWPC Required

Petitioners contend that the NWPC gravely abused its discretion in overturning the RTWPBs
approval of their application for exemption from Wage Orders RX-01 and RX-01-A. They argue that
under Art. 122 (e) of the Labor Code, the RTWPB has the power [t]o receive, process and act on
applications for exemption from prescribed wage rates as may be provided by law or any wage
order.x They also maintain that no law expressly requires the approval of the NWPC for the
effectivity of the RTWPBs Guideline No. 3. Assuming arguendo that the approval of the NWPC was
legally necessary, petitioners should not be prejudiced by their observance of the guideline,
pointing out that the NWCPs own guidelines xi took effect only on March 18, 1991 long after
Guideline No. 3 was issued on November 26, 1990.xii Lastly, they posit that the NWPC guidelines
cannot be given retroactive effect as [they] will affect or change the petitioners vested rights. xiiiThe
Court is not persuaded.

Power to Prescribe Guidelines Lodged in the NWPC, Not in the RTWPB

The three great branches and the various administrative agencies of the government can
exercise only those powers conferred upon them by the Constitution and the law. xiv It is through
the application of this basic constitutional principle that the Court resolves the instant case.RA
6727 (the Wage Rationalization Act), amending the Labor Code, created both the NWPC and the
RTWPB and defined their respective powers. Article 121 of the Labor Code lists the powers and
functions of the NWPC, as follows:
ART. 121. Powers and Functions of the Commission. - The Commission shall have the
following powers and functions:
(a) To act as the national consultative and advisory body to the President of the
Philippine[s] and Congress on matters relating to wages, incomes and productivity;
(b) To formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels;
(c) To prescribe rules and guidelines for the determination of appropriate minimum
wage and productivity measures at the regional, provincial or industry levels;
(d) To review regional wage levels set by the Regional Tripartite Wages and
Productivity Boards to determine if these are in accordance with prescribed guidelines and
national development plans;
(e) To undertake studies, researches and surveys necessary for the attainment of its
functions and objectives, and to collect and compile data and periodically disseminate
information on wages and productivity and other related information, including, but not
limited to, employment, cost-of-living, labor costs, investments and returns;
(f) To review plans and programs of the Regional Tripartite Wages and Productivity
Boards to determine whether these are consistent with national development plans;
(g) To exercise technical and administrative supervision over the Regional Tripartite
Wages and Productivity Boards;
(h) To call, from time to time, a national tripartite conference of representatives of
government, workers and employers for the consideration of measures to promote wage
rationalization and productivity; and
(i) To exercise such powers and functions as may be necessary to implement this Act.
xxx xxx

x x x (Underscoring supplied)

Article 122 of the Labor Code, on the other hand, prescribes the powers of the RTWPB thus:
ART.122. Creation of Regional Tripartite Wages and Productivity Boards.
xxx

xxx

xxx

The Regional Boards shall have the following powers and functions in their respective
territorial jurisdiction:
(a) To develop plans, programs and projects relative to wages, income and
productivity improvement for their respective regions;
(b) To determine and fix minimum wage rates applicable in their region, provinces or
industries therein and to issue the corresponding wage orders, subject to guidelines
issued by the Commission;
(c) To undertake studies, researches, and surveys necessary for the attainment of
their functions, objectives and programs, and to collect and compile data on wages,
incomes, productivity and other related information and periodically disseminate the
same;
(d) To coordinate with the other Regional Boards as may be necessary to attain the
policy and intention of this Code.

(e) To receive, process and act on applications for exemption from prescribed wage
rates as may be provided by law or any Wage Order; and
(f) To exercise such other powers and functions as may be necessary to carry out their
mandate under this Code. (Underscoring supplied)

The foregoing clearly grants the NWPC, not the RTWPB, the power to prescribe the rules and
guidelines for the determination of minimum wage and productivity measures. While the RTWPB
has the power to issue wage orders under Article 122 (b) of the Labor Code, such orders are
subject to the guidelines prescribed by the NWPC. One of these guidelines is the Rules on
Minimum Wage Fixing, which was issued on June 4, 1990.xv Rule IV, Section 2 thereof, allows the
RTWPB to issue wage orders exempting enterprises from the coverage of the prescribed minimum
wages.xvi However, the NWPC has the power not only to prescribe guidelines to govern wage
orders, but also to issue exemptions therefrom, as the said rule provides that [w]henever a wage
order provides for exemption, applications thereto shall be filed with the appropriate Board which
shall process the same, subject to guidelines issued by the Commission.xvii In short, the NWPC lays
down the guidelines which the RTWPB implements.Significantly, the NWPC authorized the RTWPB
to issue exemptions from wage orders, but subject to its review and approval. xviii Since the NWPC
never assented to Guideline No. 3 of the RTWPB, the said guideline is inoperative and cannot be
used by the latter in deciding or acting on petitioners application for exemption. Moreover, Rule
VIII, Section 1 of the NWPCs Rules of Procedure on Minimum Wage Fixing issued on June 4, 1990 -which was prior to the effectivity of RTWPB Guideline No. 3 -- requires that an application for
exemption from wage orders should be processed by the RTWPB, subject specifically to the
guidelines issued by the NWPC.To allow RTWPB Guideline No. 3 to take effect without the approval
of the NWPC is to arrogate unto RTWPB a power vested in the NWPC by Article 121 of the Labor
Code, as amended by RA 6727. The Court will not countenance this naked usurpation of authority.
It is a hornbook doctrine that the issuance of an administrative rule or regulation must be in
harmony with the enabling law. If a discrepancy occurs between the basic law and an
implementing rule or regulation, it is the former that prevails. xix This is so because the law cannot
be broadened by a mere administrative issuance. It is axiomatic that [a]n administrative agency
cannot amend an act of Congress.xx Article 122 (e) of the Labor Code cannot be construed to
enable the RTWPB to decide applications for exemption on the basis of its own guidelines which
were not reviewed and approved by the NWPC, for the simple reason that a statutory grant of
powers should not be extended by implication beyond what may be necessary for their just and
reasonable execution. Official powers cannot be merely assumed by administrative officers, nor
can they be created by the courts in the exercise of their judicial functions.xxiThere is no basis for
petitioners claim that their vested rights were prejudiced by the NWPCs alleged retroactive
application of its own rulesxxii which were issued on February 25, 1991 and took effect on March 18,
1991.xxiii Such claim cannot stand because Guideline No. 3, as previously discussed and as
correctly concluded by the NWPC,xxiv was not valid and, thus, cannot be a source of a right; much
less, a vested one. The Insertion in Guideline No. 3 of Distressed Industry as a Criterion for
Exemption Void

The Court wishes to stress that the law does not automatically grant exemption to all
establishments belonging to an industry which is deemed distressed. Hence, RX-O1, Section 3 (4),
must not be construed to automatically include all establishments belonging to a distressed
industry. The fact that the wording of a wage order may contain some ambiguity would not help
petitioners. Basic is the rule in statutory construction that all doubts in the implementation and the
interpretation of the provisions of the Labor Code, as well as its implementing rules and
regulations, must be resolved in favor of labor.xxv By exempting all establishments belonging to a
distressed industry, Guideline No. 3 surreptitiously and irregularly takes away the mandated
increase in the minimum wage awarded to the affected workers. In so acting, the RTWPB
proceeded against the declared policy of the State, enshrined in the enabling act, 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; x x x.xxvi Thus, Guideline No. 3 is void not only
because it lacks NWPC approval and contains an arbitrarily inserted exemption, but also because it
is inconsistent with the avowed State policies protective of labor. NWPC Decision Not Arbitrary
To justify the exemption of a distressed establishment from effects of wage orders, the NWPC
requires the applicant, if a stock corporation like petitioners, to prove that its accumulated losses
impaired its paid-up capital by at least 25 percent in the last full accounting period preceding the
applicationxxvii or the effectivity of the order.xxviii In the case at bar, it is undisputed that during the
relevant accounting period, NALCO, ALCO and PWC sustained capital impairments of 1.89, 28.72,
and 5.03 percent, respectively. xxix Clearly, it was only ALCO which met the exemption standard.
Hence, the NWPC did not commit grave abuse of discretion in approving the application only of
ALCO and in denying those of petitioners. Indeed, the NWPC acted within the ambit of its
administrative prerogative when it set guidelines for the exemption of a distressed establishment.
Absent any grave abuse of discretion, NWPCs actions will not be subject to judicial review. xxx
Accordingly, we deem the appealed Decisions to be consistent with law.WHEREFORE, the petition
is hereby DISMISSED. The assailed Decisions are hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
Davide, Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.

D. Frequency of a Wage Order

E. Penalty for Violation
4. Wage Distortion
A. Elements of Wage Distortion
A.a. Alliance Trade Unions vs. NLRC, February 17, 2004
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 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

1
2
3
4

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:
Level
I
II
III
IV
V

Hiring
From
3,100
3,200
3,300
3,500
3,700

To
4,100
4,100
4,200
4,400
4,700

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

Maximum
From
To
7,200
9,250
7,500
9,500
8,000
10,000
8,500
10,500
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)
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-

5
6
7
8

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)
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/
Pay of Newly
Regular Employees
A. Prior to April 1, 1993
Level I
P4,518.75
P3,100
(Sammy Guce)
Level II
P6,242.00
P3,200
(Nazario Abello)
Level III
P4,850.00
P3,300
(Arthur Chavez)
Level IV
P5,339.00
P3,500
Melissa Cordero)
Level V
P7,090.69
P3,700
(Ma. Lourdes Dee)
B. Effective April 1, 1993
Level I
P4,518.75
P4,100
Sammy Guce)
Level II
P6,242.00
P4,100
(Nazario Abello)
Level III
P4,850.00
P4,200
(Arthur Chavez)

9
10
11

Difference
Hired Employees
P1,418.75
P3,042.00
P1,550.00
P1,839.00
P3,390.69
P418.75
P2,142.00
P650.00

Level IV
Level V

P5,330.00
(Melissa Cordero)
P7,090.69
(Ma. Lourdes Dee)

P4,400

P939.00

P4,700

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 across-the-board increase.
Petitioner cites Metro Transit Organization, Inc. v. NLRC 13 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

12
13

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-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:
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

14
15

A.b. Prubankers Association vs. Prudential Bank, January 25,

1999
THIRD DIVISION
[G.R. No. 131247. January 25, 1999]
PRUBANKERS ASSOCIATION, petitioner, vs. PRUDENTIAL BANK & TRUST COMPANY, respondent.
DECISION
PANGANIBAN, J.:
Wage distortion presupposes an increase in the compensation of the lower ranks in an office
hierarchy without 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 xxxi
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 petitioners separate and regional
implementation of Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches.
The June 18, 1996 Decision of the Voluntary Arbitration Committee, xxxii which the Court of
Appeals reversed and set aside, disposed as follows:WHEREFORE, it is hereby ruled that the Banks
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.xxxiiiThe 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 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 petitioners 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 banks 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 the questioned decision. xxxivRuling 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. xxxvThe Issues
In its Memorandum, petitioner raises the following issues:xxxviI
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 respondents implementation
of the aforecited Wage Orders. As a preliminary matter, we shall also take up the question of
forum-shopping.
The Courts Ruling

The petition is devoid of merit.xxxviiPreliminary 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-04-012-97
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. 2891 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, xxxviii forumshopping 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.xxxix 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.xlThe 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 Banks 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
Banks regionalization of its wage structure based on RA 6727. Even if the voluntary arbitration
case calls for striking down the Banks 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 Banks 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:
Article 124. Standards/Criteria for Minimum Wage Fixing - xxx
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.
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. xxx. 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 employeesxliWage 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, 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. 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 petitioners 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

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. 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 wellbeing 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
(j) 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, xxx 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.
xxx 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. xlii 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.
Section 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
petitioners view that establishment includes all branches and offices in different regions.
Further negating petitioners 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.
SO ORDERED.
Romero, Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

iB.

Distortion Adjustment FormulaB.a. Metropolitan Bank and

Trust Company Employees
Union vs. NLRC, September 10, 1993
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 102636 September 10, 1993

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.
BALINANG, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK and TRUST
COMPANY, respondents.
Gilbert P. Lorenzo for petitioners.
Marcial G. dela Fuente for private respondents.

VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP
(MBTCEU) and its president, Antonio V. Balinang, raise the issue of whether or not the
implementation by the Metropolitan Bank and Trust Company of Republic Act No. 6727, mandating
an increase in pay of P25 per day for certain employees in the private sector, created a distortion
that would require an adjustment under said law in the wages of the latter's other various groups
of employees.
On 25 May 1989, the bank 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. The MBTCEU had also bargained for the
inclusion of probationary employees in the list of employees who would benefit from the first P900
increase but the bank had adamantly refused to accede thereto. Consequently, only regular
employees as of 01 January 1989 were given the increase to the exclusion of probationary
employees.
Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy
determination be establishing the mechanism and proper standards thereof, . . . fixing new wage
rates, providing wage incentives for industrial dispersal to the countryside, and for other
purposes," took effect. Its provisions, pertinent to this case, state:

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 nonagricultural, 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, . . .
xxx xxx xxx
(d) If expressly provided for and agreed upon in the collective bargaining
agreements, all increase in the daily basic wage rates granted by the employers
three (3) months before the effectivity of this Act shall be credited as compliance
with the increases in the wage rates prescribed herein, provided that, where such
increases are less than the prescribed increases in the wage rates under this Act,
the employer shall pay the difference. Such increase shall not include anniversary
wage increases, merit wage increase and those resulting from the regularization or
promotion of employees.
Where the application of the increases in the wage rates under this Section results
in distortions as defined under existing laws in the wage structure within an
establishment and gives rise to a dispute therein, such dispute shall first be settled
voluntarily between the parties and in the event of a deadlock, the same shall be
finally resolved through compulsory arbitration by the regional branches of the
National Labor Relations Commission (NLRC) having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continous hearings and decide any
dispute arising under this Section within twenty (20) calendar days from the time
said dispute is formally submitted to it for arbitration. The pendency of a dispute
arising from a wage distortion shall not in any way delay the applicability of the
increase in the wage rates prescribed under this Section.
Pursuant to the above provisions, 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. In order to avert an impeding strike,
the bank petitioned the Secretary of Labor to assume jurisdiction over the case or to certify the
same to the National Labor Relations Commission (NLRC) under Article 263 (g) of the Labor Code. 1
The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC.
The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the
labor arbiter disregard with the bank's contention that the increase in its implementation of

Republic Act 6727 did not constitute a distortion because "only 143 employees or 6.8% of the
bank's population of a total of 2,108 regular employees" benefited. He stressed that "it is not
necessary that a big number of wage earners within a company be benefited by the mandatory
increase before a wage distortion may be considered to have taken place," it being enough, he
said, that such increase "result(s) in the severe contraction of an intentional quantitative
difference in wage between employee groups."
The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary
rates between and among groups of employees is not based purely on skills or length of service
but also on "other logical bases of differentiation, a P900.00 wage gap intentionally provided in a
collective bargaining agreement as a quantitative difference in wage between those who WERE
regular employees as of January 1, 1989 and those who WERE NOT as of that date, is definitely a
logical basis of differentiation (that) deserves protection from any distorting statutory wage
increase." Otherwise, he added, "a minimum wage statute that seek to uplift the economic
condition of labor would itself destroy the mechanism of collective bargaining which, with
perceived stability, has been labor's constitutional and regular source of wage increase for so long
a time now." Thus, since the "subjective quantitative difference" between wage rates had been
reduced from P900.00 to barely P150.00, correction of the wage distortion pursuant to Section 4(c)
of the Rules Implementing Republic Act 6727 should be made.
The labor arbiter disposed of the case, thus:
WHEREFORE, premises considered, the respondent is hereby directed to restore to
complainants and their members the Nine Hundred (P900.00) Pesos CBA wage gap
they used to enjoy over non-regular employees as of January 1, 1989 by granting
them a Seven Hundred Fifty (P750.00) Pesos monthly increase effective July 1, 1989.
SO ORDERED. 2
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1,
reversed the decision of the Labor Arbiter. Speaking, through Commissioners Rustico L. Diokno and
Domingo H. Zapanta, the NLRC said:
. . . a wage distortion can arise only in a situation where the salary structure is
characterized by intentional quantitative differences among employee groups
determined or fixed on the basis of skills, length of service, or other logical basis of
differentiation and such differences or distinction are obliterated (In Re: Labor
Dispute at the Bank of the Philippine Islands, NCMB-RB-7-11-096-89, Secretary of
Labor and Employment, February 18, 1991).
As applied in this case, We noted that in the new wage salary structure, the wage
gaps between Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were
maintained. While there is a noticeable decrease in the wage gap between levels 2
and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps between
said levels is not significant as to obliterate or result in severe contraction of the
intentional quantitative differences in salary rates between the employees groups.
For this reason, the basis requirement for a wage in this case. Moreover, there is
nothing in the law which would justify an across-the-board adjustment of P750.00 as
ordered by the labor Arbiter.

WHEREFORE, premises considered, the appealed decision is hereby set aside and a
new judgment is hereby entered, dismissing the complaint for lack of merit.
SO ORDERED. 3
In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
There may not be an obliteration nor elimination of said quantitative
distinction/difference aforecited but clearly there is a contraction. Would such
contraction be severe as to warrant the necessary correction sanctioned by the law
in point, RA 6727? It is may considered view that the quantitative intended
distinction in pay between the two groups of workers in respondent company was
contracted by more than fifty (50%) per cent or in particular by more or less eightythree (83%) per cent hence, there is no doubt that there is an evident severe
contraction resulting in the complained of wage distortion.
Nonetheless, the award of P750.00 per month to all of herein individual
complainants as ordered by the Labor Arbiter below, to my mind is not the most
equitable remedy at bar, for the same would be an across the board increase which
is not the intention of RA 6727. For that matter, herein complainants cannot by right
claim for the whole amount of P750.00 a month or P25.00 per day granted to the
workers covered by the said law in the sense that they are not covered by the said
increase mandated by RA 6727. They are only entitled to the relief granted by said
law by way of correction of the pay scale in case of distortion in wages by reason
thereof.
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21
May 1991 by the Regional Tripartite Wages and Productivity Commission for
correction of pay scale structures in case of wage distortion as in the case at bar
which is:
Minimum Wage = % x Prescribed = Distortion
Increased Adjustment
Actual Salary
would be the most equitable and fair under the circumstances obtaining in this case.
For this very reason, I register my dissent from the majority opinion and opt for the
modification of the Labor Arbiter's decision as afore-discussed. 4
The MBTCEU filed a motion for reconsideration of the decision of the NLRC; having been denied,
the MBTCEU and its president filed the instant petition for certiorari, charging the NLRC with gave
abuse of discretion by its refusal (a) "to acknowledge the existence of a wage distortion in the
wage or salary rates between and among the employee groups of the respondent bank as a result
of the bank's partial implementation" of Republic Act 6727 and (b) to give due course to its claim
for an across-the-board P25 increase under Republic Act No. 6727. 5
We agree with the Solicitor General that the petition is impressed with merit. 6

The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:
(p) 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 issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC. 7 Judicial review of labor cases, we may add, does not
go beyond the evaluation of the sufficiency of the evidence upon which the labor official's findings
rest. 8 As such, factual findings of the NLRC are generally accorded not only respect but also finality
provided that its decision are supported by substantial evidence and devoid of any taint of
unfairness of arbitrariness. 9 When, however, the members of the same labor tribunal are not in
accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so
conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived
therefrom.
In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that
there is a wage distortion arising from the bank's implementation of the P25 wage increase; they
do differ, however, on the extent of the distortion that can warrant the adoption of corrective
measures required by law.
The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as
a result of an increase in the prescribed wage rate, an "elimination or severe contraction of
intentional quantitative differences in wage or salary rates" would occur "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." In
mandating an adjustment, the law did not require that there be an elimination or total abrogation
of quantitative wage or salary differences; a severe contraction thereof is enough. As has been
aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the
contraction between personnel groupings comes close to eighty-three (83%), which cannot, by any
stretch of imagination, be considered less than severe.
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. 11 The
Solicitor General, in recommending the grant of due course to the petition, has correctly
emphasized that the intention of the parties, whether the benefits under a collective bargaining
agreement should be equated with those granted by law or not, unless there are compelling
reasons otherwise, must prevail and be given effect. 12
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, 13 we must approximate an acceptable quantitative
difference between and among the CBA agreed work levels. We, however, do not subscribe to the
labor arbiter's exacting prescription in correcting the wage distortion. Like the majority of the
members of the NLRC, we are also of the view that giving the employees an across-the-board

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. As the Court, through Associate Justice Florentino
Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC: 14
. . . . (T)o 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
interests of labor is concerned. . . .
We find the formula suggested then by Commissioner Bonto-Perez, which has also been the
standard considered by the regional Tripartite Wages and Productivity Commission for the
correction of pay scale structures in cases of wage distortion, 15 to well be the appropriate measure
to balance the respective contentions of the parties in this instance. We also view it as being just
and equitable.
WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE
PROCESS, the questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter
is REINSTATED subject to the MODIFICATION that the wage distortion in question be corrected in
accordance with the formula expressed in the dissenting opinion of Presiding Commissioner Edna
Bonto-Perez. This decision is immediately executory.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Feliciano, J., is on leave.

C. Procedure for correction of a wage distortion

D.Wage Distortion as a ground for strike
E. a. Ilaw at Buklod ng Manggagawa vs. NLRC, June 27,
1991
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 91980

June 27, 1991

ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN TALUSAN and SAN
MIGUEL CORPORATION, respondents.

Banzuela, Flores,

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