FACTS: Respondents Dela Cruz, Guasis, Pugal, Hermo, Somero, Jr.

, Diocares, and
Ichapare were route helpers assigned to work with petitioner Coca-Cola Bottlers's
trucks. Pursuant to their work, respondents go from the Coca- Cola sales offices or
plants to customer outlets such as sari-sari stores, restaurants, groceries,
supermarkets and the like. They likewise claim that they were hired either directly
by the petitioner or by its contractors, but they do not enjoy the full
remuneration, benefits and privileges granted to the petitioner’s regular sales
force. As a result, they filed to separate complaints for their regularization with
money claims against petitioner. They argued that the services they rendered were
necessary and desirable in the regular business of the petitioner. On the other
hand, petitioner Coca-Cola Bottlers contended that it did not have employer-
employee relationship with the respondents on the ground that it entered into
contracts of services with Peerless and Excellent Partners Cooperative, Inc. which
entitled the latter the right to select, hire, dismiss, supervise, control and
discipline and pay the salaries of all personnel they assign to the petitioner.
Respondents disclaimed the contention of the petitioner, claiming that they worked
under the control and supervision of the company’s supervisors who prepared their
work schedules and assignments and that Peerless was in the nature of a labor-only
contractor because of its insufficient capital to provide services to petitioner.

LA: Dismissed the complaint for lack of jurisdiction after finding that the
respondents were employees of Peerless and not of Coca-Cola Bottlers.

NLRC: Affirmed LA's ruling.

CA: Reversed the previous decisions and ruled that Peerless was engaged in labor-
only contract based on the respondents’ assertions and the petitioner’s admissions
that Peerless simply supplied the company with manpower. Furthermore, the Court
found no proof in the records that Peerless met the required capitalization and
tools.

ISSUES:

1. Whether or not Peerless and Excellent Partners Cooperative, Inc. is a labor-only

contractor.
2. Whether or not the respondents are regular employees.

RULING:

1.The Court ruled in affirmative.

Labor-only contracting shall refer to an arrangement where the contractor or

subcontractor merely recruits, supplies or places workers to perform a job, work
or service for a principal, and any of the following elements are present: 1. The
contractor or subcontractor does not have sufficient capital or investment which
relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal; OR, 2. The
contractor does not exercise the right to control over the performance of the
work of the contractual-employee.

By "right to control”, it pertains to the prerogative of a party to determine, not

only the end result sought to be achieved, but also the means and manner to be
used to achieve this end.

A key consideration in resolving whether either of the two elements of a labor-only

contractor is present in a given case is the contract between the company and the
purported contractors. However, the contract between the principal and the
contractor is not the final word on how the contracted workers relate to the
principal and the purported contractor; the relationships must be tested on the
basis of how they actually operate.

The facts of the case show that the respondents, acting as sales route helpers,
were only engaged in the marginal work of helping in the sale and distribution of
company products. They only provided the muscle work that sale and distribution
required and were thus necessarily under the company’s control and supervision in
doing these tasks. Also, respondents were not independently selling and
distributing company products, using their own equipment, means and methods of
selling and distribution. They only supplied the manpower that helped the company
in the handing of products for sale and distribution. Therefore, Peerless and
Excellent were mere labor-only contractors who had no sufficient capitalization
and equipment to undertake sales and distribution of softdrinks as independent
activities separate from the manufacture of softdrinks, and who had no control
and supervision over the contracted personnel.

2. The Court ruled in affirmative.

It found that respondents, for being engaged in component functions in the main
business of the company under the latter’s supervision and control, were regular
employees who are entitled to their respective claims.
FACTS: The Riverside Mills Corporation (RMC) established a Plan for its regular
employees. The contributions to the plan shall form part of the Fund which shall
be held, invested and distributed by the Commercial Bank and Trust Company.
The BOT of the fund entered into an agreement with Philbank to act as an agent
of the BOT and to hold, manage, invest and reinvest the Fund in Trust Account
No. 1797 in its behalf. When RMC ceased its business operations, the BOD of
Philbank decided to apply the remaining trust assets held by it in the name of
the Fund against part of the RMC’s outstanding obligations.

When the unpaid employees of RMC learned of the trust account, they
demanded the payment of their share, which went unheeded. They, together
with the members of the Fund, filed a complaint for accounting against the BOD
of Philbank and its officers. The trial court ruled in favor of the BOT of RMC
and was affirmed on appeal. The BOD on petition for review on certiorari under
Rule 45 of the Rules of Court contends that without known claimants of the
Fund for eleven (11) years since RMC closed shop, it was justifiable for
petitioner to consider the Fund to have “technically reverted” to, and formed
part of RMC’s assets. Hence, it could be applied to satisfy RMC’s debts to
Philbank.

ISSUE: Whether the BOD’s contention is correct.

HELD: No. The Court held that “a trust is a “fiduciary relationship with respect
to property which involves the existence of equitable duties imposed upon the
holder of the title to the property to deal with it for the benefit of another.” A
trust is either express or implied. Express trusts are those which the direct and
positive acts of the parties create, by some writing or deed, or will, or by words
evincing an intention to create a trust.”
FACTS:

 Respondent Perfect Balogo works in the wire drawing department at

petitioner Pentagon Steel Corporation
 Petitioner alleges that on Aug. 7, 2002; respondent was absent without
giving prior notice, a letter was sent by registered mail asking him to explain
his absence
 Another letter was sent on Aug 21 informing him that he has been absent
without official leave (AWOL) from Aug. 7-21, other letters were sent but
petitioner failed to answer
 Respondent filed a complaint with the Arbitration Branch of the NLRC for
underpayment/nonpayment of salaries and wages, overtime pay, holiday pay,
service incentive leave, 13th month pay, separation pay, and ECOLA
 He alleged that on Aug. 6, he contracted flu associated with diarrhea and
suffered loose bowel movement due to the infection. The respondent
maintained that his illness had prevented him from reporting for work for
ten (10) days
 When the respondent finally reported for work on Aug. 17, the petitioner
refused to take him back despite the medical certificate he submitted
 On Aug. 19, the respondent again reported for work, exhibiting a note from
his doctor indicating that he was fit to work. The petitioner, however, did
not allow him to resume work on the same date. Subsequently, the
respondent again reported for work on August 21 and 23, 2002 and October
10 and 18, 2002, to no avail
 He subsequently amended his complaint to include illegal dismissal
 LA dismissed the illegal dismissal complaint for lack of merit, seeing as no
dismissal occurred
 NLRC reversed the decision and ruled that respondent was illegally
dismissed because absences without official leave was unlike respondent’s
character as he has served for the company for 23 years
 Separation pay in lieu of reinstatement was awarded along with backwages
 CA affirmed NLRC ruling
 In present petition, the petitioner imputes grave abuse of discretion against
CA for:
o basing its decision on the proceedings that transpired when the
parties were negotiating for a compromise agreement during the
preliminary conference of the case
ISSUE: Was respondent illegally dismissed?

HELD: Yes, respondent was constructively dismissed when he was prevented from
returning to work then he showed up and asked to return. The illegally dismissed
employee is entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances and other benefits or
their monetary equivalent, computed from the time his compensation was withheld
from him up to the time of his actual reinstatement. The court held that
respondent is entitled to reinstatement and not separation pay.
FACTS: Case is for illegal dismissal with money claims filed by respondents against
petitioner. Latter is the owner and manager of G.S. Saberola Electrical Services, a
firm engaged in the construction business specializing in installing electrical
devices in subdivision homes and in commercial and non-commercial buildings.
Respondents were employed by petitioner as electricians. They worked from
Monday to Saturday and, occasionally, on Sundays, with a daily wage of P110.00.
Petitioner averred that respondents were part-time project employees and were
employed only when there were electrical jobs to be done in a particular housing
unit contracted by petitioner. He maintained that the services of respondents as
project employees were coterminous with each project. As project employees, the
time of rendition of their services was not fixed. Thus, there was no practical way
of determining the appropriate compensation of the value of respondents’
accomplishment, as their work assignment varied depending on the needs of a
specific project.

LABOR ARBITER: they are project employees, not entitled to benefits

NLRC: affirmed, but said they were illegally dismissed

CA: affirmed

ISSUE: What is their status? And were they illegally dismissed?

HELD: Project employees (BUT were illegally dismissed)

Petitioner, as an electrical contractor, depends for his business on the contracts
that he is able to obtain from real estate developers and builders of buildings.
Thus, the work provided by petitioner depends on the availability of such contracts
or projects. The duration of the employment of his work force is not permanent
but coterminous with the projects to which the workers are assigned. Viewed in
this context, the respondents are considered as project employees of petitioner.

A project employee is one whose “employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the
season.”
However, respondents, even if working as project employees, enjoy security of
tenure.

Nonetheless, when a project employee is dismissed, such dismissal must still comply
with the substantive and procedural requirements of due process. Termination of
his employment must be for a lawful cause and must be done in a manner which
affords him the proper notice and hearing.

A project employee must be furnished a written notice of his impending dismissal

and must be given the opportunity to dispute the legality of his removal. In
termination cases, the burden of proof rests on the employer to show that the
dismissal was for a just or authorized cause. Employers who hire project employees
are mandated to state and prove the actual basis for the employee’s dismissal once
its veracity is challenged.

Petitioner failed to present any evidence to disprove the claim of illegal dismissal.
No evidence was presented by petitioner to show the termination of the project
which would justify the cessation of the work of respondents. Neither was there
proof that petitioner complied with the substantive and procedural requirements
of due process.
FACTS: Paloma worked with PAL from September 1957, rising from the ranks to
retire, after 35 years of continuous service, as senior vice president for finance.
In March 1992, or 9 months before Paloma retired on November 30, 1992, PAL was
privatized. By way of post-employment benefits, PAL paid Paloma the total amount
of PhP 5,163,325.64 which represented his separation/retirement gratuity and
accrued vacation leave pay. The leave benefits Paloma claimed being he is entitled
to refer to his 450-day accrued sick leave credits which PAL allegedly only paid
the equivalent of 18 days. He anchored his entitlement on EO 1077 dated January
9, 1986, and his having accumulated a certain number of days of sick leave credits,
as acknowledged in a letter of Alvia R. Leaño, then an administrative assistant in
PAL. Leaño’s letter substantially states that Paloma only acquired 230 days sick
leave credit because it is the maximum days laid down in PAL’s policy. Had there
been no ceiling as mandated by Company policy, Paloma’s sick leave credits would
have totaled 450 days to date.

Paloma filed before the Arbitration Branch of NLRC a Complaint for Commutation
of Accrued Sick Leaves Totaling 392 days. Paloma alleged having accrued sick leave
credits of 450 days commutable upon his retirement pursuant to EO 1077 which
allows retiring government employees to commute, without limit, all his accrued
vacation and sick leave credits. And of the 450-day credit, Paloma added, he had
commuted only 58 days, leaving him a balance of 392 days of accrued sick leave
credits for commutation.

Labor Arbiter (LA): ordered PAL to pay Paloma, the sum of P675,000.00
representing 162 accumulated sick leave credits, plus attorney’s fees . LA held that
PAL is not covered by the civil service system and, accordingly, its employees, like
Paloma, cannot avail themselves of the beneficent provision of EO 1077. This
executive issuance applies only to government officers and employees covered by
the civil service, exclusive of the members of the judiciary whose leave and
retirement system is covered by a special law. However, the labor arbiter ruled
that Paloma is entitled to a commutation of his alternative claim for 202 accrued
sick leave credits less 40 days for 1990 and 1991. Thus, the grant of commutation
for 162 accrued leave credits.

NLRC: Both parties appealed to NLRC. NLRC dismissed the appeal and affirmed
the decision of the LA. Both parties filed MR. NLRC, found Paloma to have
accumulated sick leave credits of 230 days, modified its earlier decision. PAL went
to the CA on a petition for certiorari under Rule 65. CA favored PAL. Paloma filed
for MR, CA vacated and set aside its former decision. And reinstated NLRC
decision with modification that the sum granted to Paloma shall earn legal interest.
But CA allowed a 230-day sick leave commutation, up from the 162 days only.

Paloma and PAL appealed the CA’s Amended Decision to SC.

ISSUE: WON EO 1077, before PAL’s privatization, applies to its employees, and
corollarily, whether or not Paloma is entitled to a commutation of his accrued sick
leave credits.

RULING: No. EO 1077 (Revising the Computation of Creditable Vacation and Sick
Leaves of Government Officers and Employees), provides:

“Section 1. Any officer [or] employee of the government who retires or voluntary
resigns or is separated from the service through no fault of his own and whose
leave benefits are not covered by special law, shall be entitled to the commutation
of all the accumulated vacation and/or sick leaves to his credit, exclusive of
Saturdays, Sundays, and holidays, without limitation as to the number of days of
vacation and sick leaves that he may accumulate.”
Contention of Paloma is without merit. PAL never ceased to be operated as a
private corporation, and was not subjected to the Civil Service Law
Through the years, PAL functioned as a private corporation and managed as such
for profit. Their personnel were never considered government employees. Civil
service law and rules and regulations have not been made to apply to PAL and its
employees. Of governing application to them was the Labor Code.

Paloma cannot be accorded the benefits of EO 1077 which was issued to narrow
the gap between the leave privileges between the members of the judiciary, on one
hand, and other government officers and employees in the civil service, on the
other. It is the 1987 Constitution, which delimits the coverage of the civil service,
that should govern this case because it is the Constitution in place at the time the
case was decided, even if, incidentally, the cause of action accrued during the
effectivity of the 1973 Constitution.

Paloma, while with PAL, was never a government employee covered by the civil
service law. As such, he did not acquire any vested rights on the retirement
benefits accorded by EO 1077. What governs Paloma’s entitlement to sick leave
benefits and the computation and commutation of creditable benefits is not EO
1077 but PAL’s company policy on the matter.

To elaborate the decision of the lower tribunals, the labor arbiter granted 162
days commutation, while the NLRC allowed the commutation of the maximum 230
days. The CA, while seemingly affirming the NLRC’s grant of 230 days
commutation, actually decreed a 162-day commutation. These are all lacking legal
basis, for PAL’s company policy upon which either disposition was predicated did
not provide for a commutation of the first 230 days accrued sick leave credits
employees may have upon their retirement. NLRC and the CA, by their act of
allowing commutation to cash, erred because they read in the policy something not
written or intended therein. Indeed, no law provides for commutation of unused or
accrued sick leave credits in the private sector. Commutation is allowed by way of
voluntary endowment by an employer through a company policy or by a CBA. None
of such medium is present in the case at bar and it would be inappropriate if the
Court fills up the vacuum.
In the absence of any provision in the applicable company policy authorizing the
commutation of the 230 days accrued sick leave credits existing upon retirement,
Paloma may not, as a matter of enforceable right, insist on the commutation of his
sick leave credits to cash.

WHEREFORE, the petition under G.R. No. 148415 is hereby DISMISSED for lack
of merit, while the petition under G.R. No. 156764 is hereby GIVEN DUE COURSE.
FACTS: This is a case for illegal dismissal filed by Grace de Guzman against PT&T.

Grace de Guzman is a probationary employee of PT&T. In her job application, she

represented that she was single although she was married. When management
found out, she was made to explain. However, her explanation was found
unsatisfactory so she was subsequently dismissed from work.

Grace thus filed a case for illegal dismissal against PT&T with RAB. According to
the Labor Arbiter, Grace, who had already gained the status of regular employee,
was illegally dismissed by PT&T. Moreover, he ruled that Grace was apparently
discriminated against on account of her having contracted marriage in violation of
company rules.

On appeal to the NLRC, the decision of the Labor Arbiter was upheld. The Motion
for Reconsideration was likewise rebuffed, hence, this special civil action.

Petitioner argued that the dismissal was not because Grace was married but
because of her concealment of the fact that she was married. Such concealment
amounted to dishonesty, which was why she was dismissed from work.

ISSUES:

1. Whether or not the company policy of not accepting married women for
employment was discriminatory
2. Whether or not Grace’s act of concealment amounted to dishonesty, leading
to loss of confidence
3. Whether or not Grace was illegally dismissed

HELD:

There was discrimination

Article 136 of the Labor Code explicitly prohibits discrimination merely by reason
of the marriage of a female employee.

Petitioner’s policy of not accepting or considering as disqualified from work any

woman worker who contracts marriage runs afoul of the test of, and the right
against, discrimination, afforded all women workers by our labor laws and by no less
than the Constitution. Contrary to petitioner’s assertion that it dismissed private
respondent from employment on account of her dishonesty, the record discloses
clearly that her ties with the company were dissolved principally because of the
company’s policy that married women are not qualified for employment in PT&T, and
not merely because of her supposed acts of dishonesty.

Concealment did not amount to willful dishonesty

Verily, private respondent’s act of concealing the true nature of her status from
PT&T could not be properly characterized as willful or in bad faith as she was
moved to act the way she did mainly because she wanted to retain a permanent job
in a stable company. In other words, she was practically forced by that very same
illegal company policy into misrepresenting her civil status for fear of being
disqualified from work. While loss of confidence is a just cause for termination of
employment, it should not be simulated. It must rest on an actual breach of duty
committed by the employee and not on the employer’s caprices. Furthermore, it
should never be used as a subterfuge for causes which are improper, illegal, or
unjustified.

However, SC nevertheless ruled that Grace did commit an act of dishonesty, which
should be sanctioned and therefore agreed with the NLRC’s decision that the
dishonesty warranted temporary suspension of Grace from work.

Grace attained regular status as an employee

Private respondent, it must be observed, had gained regular status at the time of
her dismissal. When she was served her walking papers on Jan. 29, 1992, she was
about to complete the probationary period of 150 days as she was contracted as a
probationary employee on September 2, 1991. That her dismissal would be
effected just when her probationary period was winding down clearly raises the
plausible conclusion that it was done in order to prevent her from earning security
of tenure.
There was illegal dismissal

As an employee who had therefore gained regular status, and as she had been
dismissed without just cause, she is entitled to reinstatement without loss of
seniority rights and other privileges and to full back wages, inclusive of allowances
and other benefits or their monetary equivalent.

On Stipulation against Marriage

In the final reckoning, the danger of PT&T’s policy against marriage is that it
strikes at the very essence, ideals and purpose of marriage as an inviolable social
institution and, ultimately, of the family as the foundation of the nation.

Petition dismissed.
Apocada vs NLRC

Facts: Petitioner was employed in respondent corporation. Respondent Jose M.

Mirasol persuaded petitioner to subscribe to 1,500 shares of respondent
corporation at P100.00 per share or a total of P150,000.00. He made an initial
payment of P37,500.00. Petitioner was appointed President and General Manager of
the respondent corporation. However, he resigned. Petitioner instituted with the
NLRC a complaint against private respondents for the payment of his unpaid wages,
his cost of living allowance, the balance of his gasoline and representation expenses
and his bonus compensation. Private respondents admitted that there is due to
petitioner the amount of P17,060.07 but this was applied to the unpaid balance of
his subscription in the amount of P95,439.93. Petitioner questioned the set-off
alleging that there was no call or notice for the payment of the unpaid subscription
and that, accordingly, the alleged obligation is not enforceable. The labor arbiter
ruled in favor of the petitioner. Then, NLRC held that a stockholder who fails to
pay his unpaid subscription on call becomes a debtor of the corporation and that
the set-off of said obligation against the wages and others due to petitioner is not
contrary to law, morals and public policy.

Issue: WON the corporation can validly offset the unpaid shared in lieu of the
wages?

Held: No. The unpaid subscriptions are not due and payable until a call is made by
the corporation for payment. Private respondents have not presented a resolution
of the board of directors of respondent corporation calling for the payment of the
unpaid subscriptions. It does not even appear that a notice of such call has been
sent to petitioner by the respondent corporation. No doubt such set-off was
without lawful basis, if not premature. As there was no notice or call for the
payment of unpaid subscriptions, the same is not yet due and payable. Lastly, the
NLRC has no jurisdiction to determine such intra-corporate dispute between the
stockholder and the corporation as in the matter of unpaid subscriptions. This
controversy is within the exclusive jurisdiction of the Securities and Exchange
Commission.
Facts: Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III,
Level IV, and Level V. On May 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 industry’s 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.

This made Bankard Employees Union-WATU (petitioner), the duly certified

exclusive bargaining agent of the regular rank and file employees of Bankard, to
request for the increase in the salary of its old, regular employees. Bankard
insisted 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.

Petioner filed a notice of strike. The strike was averted when the dispute was
certified by the Secretary of Labor and Employment for compulsory arbitration.
NLRC finding no wage distortion dismissed the case for lack of merit. Petitioner’s
motion for reconsideration of the dismissal of the case was denied.

Issue: 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.

Ruling: The Court will not interfere in the management prerogative of the
petitioner. The employees are not precluded to negotiate through the provisions of
the CBA.

Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT,

amending, among others, Article 124 of the Labor Code), 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.
In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid
down the four elements of wage distortion, to wit: (1.) An existing hierarchy of
positions with corresponding salary rates; (2) A significant change in the salary
rate of a lower pay class without a concomitant increase in the salary rate of a
higher one; (3) The elimination of the distinction between the two levels; and (4)
The existence of the distortion in the same region of the country.

Normally, a company has a wage structure or method of determining the wages of

its employees. In a problem dealing with "wage distortion," the basic assumption is
that there exists a grouping or classification of employees that establishes
distinctions among them on some relevant or legitimate bases. 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.

Put differently, the entry of new employees to the company ipso facto places them
under any of the levels mentioned in the new salary scale which private respondent
adopted retroactive to April 1, 1993. 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.

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. 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.
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 Bankard’s 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.

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