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[1] of the Court of Appeals in CA-GR SP No. 42525. The dispositive portion of the
challenged Decision reads:

WHEREFORE, the petition is GRANTED. The assailed decision of the Voluntary

Arbitration Committee dated June 18, 1996 is hereby REVERSED and SET ASIDE
for having been issued with grave abuse of discretion tantamount to lack of or excess
of jurisdiction, and a new judgment is rendered finding that no wage distortion
resulted from the 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, [2] 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.[3]

The Facts

The facts of the case are summarized by the Court of Appeals thus:

On November 18, 1993, the Regional Tripartite Wages and Productivity Board of
Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living
Allowance (COLA) to workers in the private sector who ha[d] rendered service for at
least three (3) months before its effectivity, and for the same period [t]hereafter, in the
following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in
the cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50)
in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN
PESOS (P10.00) for all other areas in the Bicol Region.
Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity
Board of Region VII issued Wage Order No. RB VII-03, which directed the
integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the
basic pay of all workers. It also established an increase in the minimum wage rates for
all workers and 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.[4]
Ruling of the Court of Appeals

In ruling that there was no wage distortion, the Court of Appeals held that the variance in the
salary rates of employees in different regions of the country was justified by RA 6727. It noted
that the underlying considerations in issuing the wage orders are diverse, based on the distinctive
situations and needs existing in each region. Hence, there is no basis to apply the salary increases
imposed by Wage Order No. VII-03 to employees outside of Region VII. Furthermore, the Court
of Appeals ruled that the distinctions between each employee group in the region are maintained,
as all employees were granted an increase in minimum wage rate.[5]
The Issues

In its Memorandum, petitioner raises the following issues:[6]

I

Whether or not the Court of Appeals departed from the usual course of
judicial procedure when it disregarded the factual findings of the Voluntary
Arbitration Committee as to the existence of wage distortion.
II

Whether or not the Court of Appeals committed grave error in law when it
ruled that wage distortion exists only within a region and not nationwide.
III

Whether or not the Court of Appeals erred in implying that the term
establishment as used in Article 125 of the Labor Code refers to the regional
branches of the bank and not to the bank as a whole.
The main issue is whether or not a wage distortion resulted from 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.[7]

Preliminary Issue: Forum-Shopping

Respondent asks for the dismissal of the petition because petitioner allegedly engaged in
forum-shopping. It maintains that petitioner failed to comply with Section 2 of Rule 42 of the
Rules of Court, which requires that parties must certify under oath that they have not commenced
any other action involving the same issues in the Supreme Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency; if there is such other action or
proceeding, they must state the status of the same; and if they should thereafter learn that a
similar action or proceeding has been filed or is pending before the said courts, they should
promptly inform the aforesaid courts or any other tribunal or agency within five days
therefrom. Specifically, petitioner accuses respondent of failing to inform this Court of the
pendency of NCMB-NCR-RVA-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. 28-91 and Administrative Circular No. 04-94. Ultimately, the rule was embodied in
the 1997 amendments to the Rules of Court.
As explained by this Court in First Philippine International Bank v. Court of Appeals,
forum-shopping exists where the elements of litis pendentia are present, and where a final
judgment in one case will amount to res judicata in the other. Thus, there is 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 orlis pendens.[9] Another
case elucidates the consequence of forum-shopping: [W]here a litigant sues the same party
against whom another action or actions for the alleged violation of the same right and the
enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a
bar to the others; and, a final judgment in one would constitute res judicata and thus would cause
the dismissal of the rest.[10]
[8]

The voluntary arbitration case involved the issue of whether the adoption by the Bank of
regionalized hiring rates was valid and binding.
On the other hand, the issue now on hand revolves around the existence of a wage distortion
arising from the 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 employees[11]
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a concomitant increase in
the salary rate of a higher one
3. The elimination of the distinction between the two levels

4. The existence of the distortion in the same region of the country.

In the present case, it is clear that no wage distortion resulted when respondent implemented
the subject Wage Orders in the covered branches. In the said branches, there was an increase in
the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, 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 indifferent 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 well-being of the employees within the frame work of
the national economic and social development program. In the determination of such
regional minimum wages, the Regional Board shall, among other relevant factors,
consider the following:
(a) 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. [12] RA 6727
recognizes that there are different needs for the different situations in different regions of the
country. The fact that a person is receiving more in one region does not necessarily mean that he
or she is better off than a person receiving less in another region. We must consider, among
others, such factors as cost of living, fulfillment of national economic goals, and standard of
living. In any event, this Court, in its decisions, merely enforces the law. It has no power to pass
upon its wisdom or propriety.
Equal Pay for Equal Work

Petitioner also avers that the implementation of the Wage Order in only one region violates
the equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we
stress that RA 6727 mandates that wages in every region must be set by the particular wage
board of that region, based on the prevailing situation therein. Necessarily, the wages in different
regions will not be uniform.Thus, under RA 6727, the minimum wage in Region 1 may be
different from that in Region 13, because the socioeconomic conditions in the two regions are
different.
Meaning of Establishment

Petitioner further contends that the Court of Appeals erred in interpreting the meaning of
establishment in relation to wage distortion. It quotes the RA 6727 Implementing Rules,
specifically Section 13 thereof which speaks of workers working in branches or agencies of
establishments in or outside the National Capital Region. Petitioner infers from this that the
regional offices of the Bank do not themselves constitute, but are simply branches of, the
establishment which is the whole bank. In effect, petitioner argues that wage distortion covers
the pay scales even of employees in different regions, and not onlythose 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.

[1]

Penned by J. Delilah Vidallon-Magtolis, acting chairman, Ninth Division; with the concurrence of JJ. Hilarion L.
Aquino and Marina L. Buzon, members.
[2]

Composed of Dean Froilan M. Bacungan, chairman; Attys. Domingo T. Anonuevo and Emerico O. de Guaman,
members.
[3]

CA Decision, p. 1; rollo, p. 41.

[4]

CA Decision, pp. 1-2; rollo, pp. 41-42.

[5]

Ibid., pp. 3-4; rollo, pp. 43-44.

[6]

Petitioners Memorandum p. 18; rollo, p. 169.

[7]

This case was deemed submitted for resolution upon receipt by the Court on September 9, 1998 of respondents
Memorandum.
[8]
[9]

252 SCRA 259, January 24, 1996, per Panganiban, J.

Buan v. Lopez Jr., 145 SCRA 34, per Narvasa, CJ; citing Moran, Comments on the Rules, 1979 ed., Vol. 1, pp.
484-485 and cases therein collated; Salacup v. Madela, Jr., 91 SCRA 275, June 29, 1979; PNB v. CA, 98 SCRA 207,
June 25, 1980; Punongbayan v. Pineda, 131 SCRA 496, August 30, 1984; Arceo v. Oliveros, 134 SCRA 308, January
31, 1985; Laroza v. Guia, 134 SCRA 341, January 31, 1985.

[10]

First Philippine International Bank v. Court of Appeals, supra.

[11]

National Federation of Labor v. NLRC, 234 SCRA 311, July 21, 1994, per Feliciano, J. See also Metropolitan
Bank and Trust Company Employees Union-ALU-TUCP v. NLRC, 226 SCRA 268, September 10,
1993; Cardona v. NLRC, 195 SCRA 92, March 11, 1991; Associated Labor Unions-TUCP v. NLRC, 235 SCRA 395,
August 16, 1994.
[12]

Petitioners Memorandum, p. 10; rollo, p. 161.

THIRD DIVISION
[G.R. No. 108556. November 19, 1996]

MANILA MANDARIN EMPLOYEES UNION, petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION, Second Division, and the
MANILA MANDARIN HOTEL, respondents.
DECISION
NARVASA, C.J.:

The petitioner in this special civil action of certiorari seeks nullification of

the September 11, 1992 Decision of the Second Division of the National Labor
Relations Commission reversing the judgment of the Labor Arbiter in NLRC
NCR Case No. 10-4336-86 and dismissing the case for lack of merit, as well
as of the Commissions November 24, 1992 Resolution denying
reconsideration of said decision.
On October 30, 1986, the Manila Mandarin Employees Union (hereafter
UNION), as exclusive bargaining agent of the rank-and-file employees of the
Manila Mandarin Hotel, Inc. (hereafter MANDARIN), filed with the NLRC
Arbitration Branch a complaint in its members behalf to compel MANDARIN to
pay the salary differentials of the individual employees concerned because of
wage distortions in their salary structure allegedly created by the upward
revisions of the minimum wage pursuant to various Presidential Decrees and
Wage Orders, and the failure of MANDARIN to implement the corresponding
increases in the basic salary rate of newly-hired employees.
The relevant Presidential Decrees and Wage Orders were specified by
the UNION as follows:

a. PD 1389, amending PD 928, mandating an increase in the statutory

minimum wage by P3.00 spread out over a period of three years, as
follows: P1.00 starting July 1, 1978; P1.00 starting May 1, 1979; and P1.00
starting May 1, 1980.
b. PD 1614, providing that workers covered by PD 1389, whether agricultural
or non-agricultural, should receive an increase of P2.00 in their statutory
minimum wage effective April 1, 1979, the same representing an acceleration
of the remaining increases under PD 1389; and that all non-agricultural
workers in Metro Manila shall receive a minimum wage of P12.00;
c. PD 1713, issued on august 18, 1980 providing an increase in the minimum
daily wage rates and for additional allowance; increasing the minimum daily
wage rates by P1.00 and providing that all private employers shall pay their
employees with wages or salaries not exceeding P1,500.00 a month, an
additional mandatory living allowance of P60.00 a month for non-agricultural
workers,P45.00 for plantation workers and P30.00 a month for agricultural
non-plantation workers;
d. PD 1751, issued on December 14, 1980, increasing the statutory daily
minimum wages by integrating the P4.00 mandatory allowance under PD 525
and PD 1123 into the basic pay of all covered workers;
e. Wage Order No. 1, issued on March 26, 1981, increasing the mandatory
emergency living allowance of all workers with salaries or wages
of P1,500.00 a month by P2.00 a day for non-agricultural workers, P1.50 a
day for agricultural plantation workers, P1.00 a day for agricultural nonplantation workers, effective March 22, 1981;
f. Wage Order No. 2 issued on July 6, 1983 increasing the mandatory basic
minimum wage and living allowance for non-agricultural and agricultural
workers in the following manner:
1) For non-agricultural employees, receiving not more than P1,800.00
monthly, P1.00 a day as minimum wage and P1.50 a day as cost of
living allowance;
2) For plantation agricultural employees, P1.00 a day as minimum
wage and P0.50 a day as cost of living allowance subject to the same
salary ceiling provided in the immediately preceding section; and

3) For non-plantation agricultural employees, P1.00 a day as minimum

wage; and
also, providing that effective October 1, 1983, the living allowances rates as
adjusted in the preceding section shall be further increased subject to the same
salary ceiling, for non-agricultural employees, by P1.00.
g. Wage Order No. 3 issued November 7, 1983 increasing the statutory
minimum wage rates for workers in the private sector by P1.00 per day
effective November 1, 1983, and also increasing the statutory wage rates
by P1.00 per day, effective December 1, 1983;
h. Wage Order No. 4 issued on May 1, 1984 increasing the statutory daily
minimum wages, after integrating the mandatory living allowance under PDs
1614, 1634, 1678 and 1713 into the basic pay of all covered employees,
effective May 1, 1984; -- after the integration, the minimum daily wage rate
was increased by P11.00 for non-agricultural workers.
i. Wage Order No. 5 issued on June 11, 1984 increasing the statutory daily
minimum wage rates and living allowances of workers in the private sector
by P3.00 effective June 16, 1984 -- the minimum daily wage rates
became P35.00 for Metro Manila and P34.00 for outside Metro Manila; and
j. Wage Order No. 6, effective November 1, 1984, increasing the statutory
minimum wage rate by P2.00 per day.
On January 15, 1987, the UNION filed its Position Paper amplifying the
allegations of its complaint and setting forth the legal bases of its demands
against MANDARIN; and on March 25, 1987, it filed an Amended Complaint
presenting an additional claim for payment of salary differentials to the union
members affected, allegedly resulting from underpayment of wages.
The Labor Arbiter eventually ruled in favor of the UNION, holding that
there were in fact wage distortions entitling its members to salary adjustments
totalling P26,173,601.25 -- for 541 employees -- as well as underpayments
amounting to P1,978,296.18 -- 182 employees. The dispositive portion of his
decision reads:[1]
WHEREFORE, judgment is hereby rendered ordering the respondent Hotel to
pay the individual complainants who are members of the respondent Union

whose names appear on the respective computations embodied in this

Decision, the aggregate amount of P26,173,601.25 representing their salary
adjustments by way of correcting the wage distortions in their respective
salary structure, for the period from October 30, 1983 up to October 31, 1990,
and continuously thereafter to pay the corresponding amounts due them as
such salary adjustments until the same are properly and finally restored in
their basic monthly rates; to pay the aggregate amount of P1,978,296.18
representing their salary differentials resulting from underpayment of wages
in violation of the minimum wage laws, Presidential Decrees and Wage
Orders for the period from March 25, 1984 up to October 31, 1990, and
continuously thereafter to pay the corresponding amounts due them as such
salary differentials until the same are properly and finally restored into their
basic monthly rates.
Likewise, the respondent Hotel is ordered to pay an amount equivalent to ten
percent (10%) of the total awards granted to individual complainants, by way
of and as attorneys fees.
On appeal, the Second Division of respondent Commission (composed of
Commissioner Domingo H. Zapanta, ponente, and Presiding Commissioner
Edna Bonto-Perez) rendered the dispositions already referred to and now
assailed -- setting aside the Labor Arbiters judgment and dismissing the
UNIONs complainant, and later denying the UNIONs motion for
reconsideration.[2]
The principal issues raised in this Court are: (1) Whether or not the NLRC
had jurisdiction to take cognizance of MANDARINS appeal from the Labor
Arbiters decision; and (2) if so, whether or not it gravely abused its discretion
in setting aside the Labor Arbiters judgment and dismissing the UNIONS
complaint.
The issue of jurisdiction is grounded on the posited tardiness of private
respondents appeal from the Labor Arbiters judgment to the NLRC, and fatal
defect in their supersedeas bond.
The UNION contends[3] that the records indubitably show that MANDARIN
received on January 22, 1991 its copy of the Labor Arbiters Decision (of
January 15, 1991), but filed its appeal and paid the appeal fee only on
February 4, 1991, three (3) days beyond the reglementary ten-day period for

doing so. It also condemns as anomalous the certification of Deputy Executive

Clerk Gaudencio P. Demaisip, Jr., NLRC, to the effect that
MANDARINs lawyer had approached Hon. Domingo H. Zapanta, a member of
the Second Division, NLRC, for assistance to have the appeal including the
appeal fee in said case duly received and acknowledged on February 1,
1991, at 4:40 P.M; and claims that the anomally was aggravated when it was
Commissioner Zapanta who wrote the Decision for the Second Division [4]-reversing the Labor Arbiters judgment, as aforesaid -- despite the UNIONS
motion for his disqualification and/or inhibition. The UNION finally argues that
MANDARINS appeal was not only tardy but also fatally flawed in that its
supersedeas bond had been issued by a surety company -- Plaridel Surety &
Insurance Company -- which had pending obligations and liabilities at the
time, the Insurance Commissioner having in fact issued a Cease-and-Desist
Order against said company for issuing bonds of no little magnitude without
authority; and that moreover, the replacement bond of the Commonwealth
Insurance Company -- subsequently filed by order of the NLRC -- was just as
defective because the latter company had an authorized maximum net
retention level in the amount of only P686,582.80, way below the monetary
award subject of MANDARINS appeal to the Commission.
The Court rules that respondent Commission acted correctly in accepting
and acting on MANDARINs appeal. The circumstances attendant upon the
filing of the appeal and supersedeas bond are clearly set forth in the
Certification of Deputy Executive Clerk Demaisip, Jr.[5] above mentioned, viz.:
This is to certify that when Atty. Godofredo Labay filed the appeal in NLRC
NCR Case No. 10-4335-86 entitled Manila Mandarin Employees Union vs.
Manila Mandarin on Friday, February 1, 1991, the Cashier and the Docket
Section, NCR, were not around, that no one would receive the pleadings and
the appeal fee. He therefore approached Commissioner Domingo H. Zapanta
for assistance and to have the appeal including the appeal bond in said case
duly received on February 1, 1991 at 4:50 p.m.
with respect to the appeal fee, since no one was authorized to act as substitute
for the Cashier of the NCR for purposes of receiving the appeal fee and
issuing a temporary receipt and/or official receipt therefor, Commissioner
Zapanta requested Atty. Gaudencio P. Demaisip, Jr. to receive said pleadings
and allowed Atty. Labay to pay the appeal fee on Monday, February 4, 1991.

This certification is issued upon request of Atty. Labay for whatever purpose
it may serve him.
(SGD.) GAUDENCIO P. DEMAISIP, JR.
Deputy Executive Clerk
Second Division

MANDARIN cannot be faulted for paying the appeal fee only on February
4, 1991. The fact is that on February 1, 1991, its lawyer was in the NLRC
premises, ready to pay said fee, but was unable to do so because the NLRC
Cashier or any other employee authorized to receive payment in his stead,
was no longer around. This is why Commissioner Zapanta allowed payment of
the appeal fee to be made on the next business day, as in fact the appeal fee
was paid on, February 4, 1991. This Court has ruled that the failure to pay the
appeal docketing fee within the reglementary period confers a directory, not
mandatory, power to dismiss an appeal, to be exercised with circumspection
in light of all the relevant facts.[6] In view of these considerations, and the
meritoriousness of MANDARINs appeal -- as later pronounced by respondent
NLRC -- the interest of justice was quite evidently served when MANDARINs
appeal was given due course despite delayed payment of the docketing fee.
The contention concerning MANDARINs ostensibly defective appeal bond,
issued by Plaridel Surety and Insurance Company, deserves short shrift,
too. The issuance of the bond antedated this Courts resolution of January 15,
1992 -- to which the attention of respondent NLRC had been invited by the
UNION -- declaring said surety company to be of doubtful solvency. More
important, the issue was mooted when MANDARIN posted a new surety
bond, through Commonwealth Insurance Company, in compliance with the
Order of the respondent Commission dated December 10, 1991. The UNIONs
contention that this new bond was equally defective because the bonding
company had an authorized maximum net retention level lower than the sum
of P30,967,087.17 involved in this dispute, is inconsequential, the new
bonding company being duly accredited by this Court and licensed by the
Insurance Commission.
At any rate, this Court has invariably ruled that Article 223 of the Labor
Code, requiring a bond in appeals involving monetary awards, must be
liberally construed, in line with the desired objective of resolving controversies

on their merits.[7] The circumstance under which the bond was filed in this case
adequately justify such liberal application of the provision.
As to the alleged partiality of Commissioner Domingo Zapanta, the Court
finds that his intervention on February 1, 1991 in the matter of payment of the
appeal docketing fee did not, in the circumstances already related, constitute
impropriety or pre-judgment of the case and a ground for his disqualification
as a member of the Second Division to which the case was thereafter
raffled. Significantly, in its motion to inhibit, the UNION mentioned that the
case was assigned particularly to the late Commissioner Rustico Diokno **
(but) that upon the latters demise, the case was reassigned to Commissioner
Domingo Zapanta as the new ponente.[8] As Commissioner Zapanta had
always been a member of the Second Division, the UNIONs motion for his
inhibition, filed more than a year after the occurrence of the incident on which
it was based, becomes suspect as a mere afterthought. In any case,
Commissioner Zapanta did inhibit himself from taking part in the resolution of
the UNIONS motion for reconsideration of the assailed decision of September
11, 1992, thus dispelling what doubts might linger about his impartiality.
Coming now to the issue of wage distortion, prior to the effectivity on June
9, 1989 of Republic Act No. 6727 which, among others, amended Article 124
(Standards/Criteria for Minimum Wage Fixing) of the Labor Code, the concept
to wage distortion was relatively obscure. So it was observed by this Court
in National Federation of Labor vs. NLRC,[9] a case involving the same subject
Wage Orders:
We note that neither the Wage Orders noted above, nor the Implementing
Rules promulgated by the Department of Labor and Employment, set forth a
clear and specific notion of wage distortion.What the Wage Orders and the
Implementing Rules did was simply to recognize that implementation of the
Wage Orders could result in a distortion of the wage structure of an employer,
and to direct the employer and the union to negotiate with each other to
correct the distortion. Thus, Section 6 of Wage Order No. 3, dated 7
November 1983, provided as follows:
Section 6. Where the application of the minimum wage rate prescribed
herein results in distortions of the wage structure of an establishment,
the employer and the union shall negotiate to correct the
distortions. Any dispute arising from wage distortions shall be resolved

through the grievance procedure under their collective bargaining

agreement of through conciliation.
In case where there is no collective bargaining agreement or recognized
labor organization, the employer shall endeavor to correct such
distortions in consultation with their workers. Any dispute arising from
wage distortions shall be resolved through conciliation by the
appropriate Regional Office of the Ministry of Labor and Employment
or through arbitration by the NLRC Arbitration Branch having
jurisdiction over the work-place. (Underscoring supplied)
It is therefore opportune to re-state the general principles enunciated in
that case, summarized in Metro Transit Organization, Inc. vs. NLRC, et al.
[10]
as follows:
(a) The concept of wage distortion assumes an existing grouping or
classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected
in a differing wage rate for each of the existing classes of employees.
(b) Wage distortions have often been the result of government-decreed
increases in minimum wages. There are, however, other causes of wage
distortions, like the merger of two (2) companies (with differing classification
of employees and different wage rates) where the surviving company absorbs
all the employees of the dissolved corporation. (In the present Metro case, as
already noted, the wage distortion arose because the effectivity dates of wage
increases given to each of the two (2) classes of employees (rank-in-file and
supervisory) had not been synchronized in their respective CBAs.)
(c) Should a wage distortion exist, there is no legal requirement that, in the
rectification of that distortion by re-adjustment of the wage rates of the
differing classes of employees, the gap which had previously or historically
existed be restored in precisely the same amount. In other words, correction of
a wage distortion may be done by re-establishing a substantial or
significant gap (as distinguished from the historical gap) between the wage
rates of the differing classes of employees.
(d) The re-establishment of a significant difference in wage rates may be the
result of resort to grievance procedures or collective bargaining negotiations.

It was only on June 9, 1989, upon the enactment of R.A. No. 6727 (Wage
Rationalization Act, amending, among others, Article 124 of the Labor Code),
[11]
that the term wage distortion came to be explicitly defined as:
** a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment
as to effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of differentiation.
The same provision lays down the procedure to be followed where wage
distortion arises from the implementation of a wage increase prescribed by
law or ordered by a Regional Wage Board, viz.:
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. Unless
otherwise agreed by the parties in writing, such dispute shall be decided by
the voluntary arbitrator or panel of voluntary arbitrators within ten (10)
calendar days from the time said dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions,
the employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the National Conciliation
and Mediation Board and, if it remains unresolved after ten (10) calendar days
of conciliation, shall be referred to the appropriate branch of the National
Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to
conduct continuous hearings and decide the dispute within twenty (20)
calendar days from the time said dispute is submitted for compulsory
arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any increase in prescribed wage rates pusurant to the
provisions of law or Wage Order.
The issue of whether or not a wage distortion exists as a consequence of
the grant of a wage increase to certain employees, is a question of fact; [12] and

as a rule, factual findings in labor cases, where grounded on substantial

evidence, are not reviewed.[13] However, a disharmony such as exists here,
between the factual findings of the Labor Arbiter and those of the NLRC,
opens the door to a review thereof by this Court.[14]
The Labor Arbiter ruled that a wage distortion existed, and that the only
and logical way to correct ** (it) in the salary structure of the employees of
respondent Hotel is to apply the corresponding increase made by way of
revising upward the minimum wage or integration of the ECOLA into the basic
wage as embodied in the various Presidential Decrees and Wage Orders,
across-the-board, so that employees whose salaries are above the minimum
set by law who have already been long in the service will not be discriminated
against.[15]
On the other hand, respondent Commission declared in its decision[16] that
there was no wage distortion arising from the implementation of said
Presidential Decrees and Wage Orders such as warranted across-the-board
increases to all employees:
On the issue of wage distortion, we have examined the various presidential
decrees and wage orders referred to by the complainant and in the Labor
Arbiters decision and we found nothing therein that would justify the award of
across-the-board increases to all employees. The apparent intention of the law
is only to upgrade the salaries or wages of the employees receiving lower than
the minimum daily wage set therein. For example, Section 1 of Wage Order
No. 6 provides that effective November 1, 1984, the statutory minimum daily
wage rates workers in the private sector shall be increased by P2.00. Also,
Section 1 of Presidential Decree 1389 provides that Presidential Decree 928 is
hereby amended by increasing all existing statutory minimum wages in the
country by Three Pesos (P3.00) spread equally over a period of three years, as
follows: 1)One Peso (P1.00) starting July 1, 1978; 2)One Peso(P1.00) starting
May 1, 1979; and One Peso (P1.00) starting May 1, 1980.Thus, it is clear that
the presidential decrees and wage orders merely provide for a floor wage to be
observed by the employers in the private sector.
It indeed appears that the clear mandate of those issuances was merely to
increase the prevailing minimum wages of particular employee groups. There
were no across-the-board increases to all employees; increases were
required only as regards those specified therein.[17] It was therefore incorrect

for the UNION to claim that all its members became automatically entitled to
across-the-board increases upon the effectivity of the Decrees and Wage
Orders in question. And even if there were wage distortions, which is not the
case here, the appropriate remedy thereunder prescribed is for the employer
and the union to negotiate to correct them; or, if the dispute be not thereby
resolved, to thresh out the controversy through the grievance procedure in the
collective bargaining agreement, or through conciliation or arbitration.
A review of the records convinces this Court that respondent NLRC
committed no grave abuse of discretion in holding that no wage distortion was
demonstrated by the UNION. It was, to be sure, incumbent on the UNION to
prove by substantial evidence its assertion of the existence of a wage
distortion. This it failed to do. It presented no such evidence to establish, as
required by the law, what, if any, were the designed quantitative differences in
wage or salary rates between employee groups, and if there were any severe
contractions or elimination of these quantitative differences.
The UNIONs effort to prove wage distortion consisted only of the
presentation of an unverified list of thirteen (13) employees denominated a
Sample Comparison of Salary Rates Affected by Wage Distortion,[18] viz.:
SAMPLE COMPARISON OF SALARY RATES OF COMPLAINANTS
AFFECTED BY WAGE DISTORTION
F & B DEPT.
Name Position Date Hired Basic Rate
(12/30/85)
1. Pablo Trinidad -- Waiter -- 9/1/78 P1,300
2. Eduardo Vito -- Waiter -- 10/16/80 P1,375
3. Camilo Sanchez -- Busboy -- 8/1/83 P 954
4. Renato Solomon -- Busboy -- 7/19/84 P1,096
5. Buenconsejo Monico -- Busboy -- 4/15/85 P 968

HOUSEKEEPING DEPT.
1. Ruben A. Rillo -- Linen Uniform Att. -- 6/19/76 P 984
2. Hubert Malolot -- Linen Uniform Att. -- 1/16/80 P1,238
3. Aurella Kilat -- Linen Uniform Att. -- 5/2/79 P1,272
4. Rogelio Molaco -- Cloakroom Attn. -- 9/1/80 P 946
5. David Pineda -- Cloakroom Attn. -- 9/14/81 P1,194
6. Nemesio Matro -- Houseman Attn. -- 6/10/76 P1,142
7. Domgo Sabando -- Houseman Attn. -- 3/8/82 P1,194
8. Renato Guina -- Houseman Attn. -- 8/24/81 P1,194
SUBMITTED:
(SGD.) ATTY. R. E. ESPINOSA
9/17/87.
The UNIONs Internal Vice-President, Arnulfo Castro, deposed that the
employees named in this list were the more or less (13) persons found to
have suffered wage distortion,[19] and the UNION pointed out that while these
thirteen employees occupied similar positions, they were receiving different
rates of salary.
Respondent Commission however found that as explained by
respondents, such disparity was due simply to the fact that the employees
mentioned had been hired on different dates and were thus receiving different
salaries; or that an employee was hired initially at a position level carrying a
hiring rate than the others; or that an employee failed to meet the cut-off date
in the grant of yearly CBA increase; or that the union did not get the correct
data on salaries. The Commission accepted as more accurate the data
presented by MANDARIN respecting the same employees, to wit:[20]
ANNEX2

F & B Dept.
NAME Position Date Hired Basic Rate
per Hotel Records as of 12/30/85
1. Pablo Trinidad Waiter 09/01/78 P1,302.00*
2. Eduardo Vito Waiter 10/16/80 1,375.00*
3. Camilo Sanchez Busboy 08/01/83 1,194.00
4. Renato Solomon Busboy 07/19/84 1,096.00
5. Buenconsejo Monico Busboy 14/15/85 968.00
Housekeeping Dept.
1. Ruben A. Rillo Linen Uniform Att. 06/19/76 1,417.00
2. Hubert Malolot Linen Uniform Att. 01/16/80 1.238.00
3. Aurella Kilat Linen Uniform Att. 05/02/79 1,272.00
4. Rogelio Molaco Cloakroom Attn. 09/01/80 1,272.00
5. David Pineda Cloakroom Attn. 09/14/81 1,213.00
6. Nemesio Matro Houseman Attn. 06/10/77 1,342.00
7. Domingo Sabando Houseman Attn. 03/08/82 1,194.00
8. Renato Guina Houseman Attn. 08/24/81 1,194.00
* Vito was hired at a higher position with a higher hiring rate than that given to
Trinidad, i.e. Vito was hired at P366/mo. While Trinidad at P301/mo. Prior to hiring,
Vito already worked as a waiter at the Metropolitan Club.
The Court agrees that the claimed wage distortion was actually a result of
the UNIONS failure to appreciate various circumstances relating to the
employment of the thirteen employees.For instance, while some of these

employees mentioned by UNION Vice-President Arnulfo Castro occupied the

same or similar positions, they were hired by the Hotel on different dates and
at different salaries. As explained in part by MANDARIN:
With respect to the case of Pablo Trinidad and Eduardo Vito, while they were
both occupying the position of waiter in 1987, with monthly salaries
of P2,044.00 and P2,217.00, respectively, a comparative study of the records
of these employees shows one of them was initially hired at a higher position
level which naturally carried a higher hiring rate. Trinidad was originally
hired in 1978 as a mere Houseman at the Banquet Department with a basic
starting rate of P301.00 a month. On the other hand, Vito was originally hired
in 1980 already a Busboy at the Food and Beverage Department with a
starting salary of P366.00 a month. Before he was hired at the Mandarin
Hotel, Vito had already been working as Waiter at the Metropolitan
Club. Rrecords also show that it was only after some time that Trinidad was
promoted to Busboy but still with the smaller Banquet Department. The
headway in rate was carried by Vito although at some point in their careers,
these two employees achieved the same position as Waiter. Not long after,
Vito was promoted to Captain Waiter while Trinidad remained Waiter. There
is therefore no reason to compare the remuneration of these two employees as
the circumstances attendant to their employment are different. [21]
Respondent Commission correctly concluded that these did not represent
cases of wage distortion contemplated by the law (Article 124, Labor Code, as
amended), i.e., 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 employees groups in an
establishment as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other logical basis of
differentation.
Moreover, even assuming arguendo that there was really a wage
distortion, it was wrong for the Labor Arbiter, after first acknowledging that
some of the money claims had prescribed under Article 291 of the Labor
Code,[22] to nevertheless order the computation of salary differentials
retroactive to the effective dates of PDs 1389,1614,1713, 1751 and Wage
Orders Nos. 2,3,4,5,and 6: in 1978, 1979, 1980, 1980, July 1983, November
1983, May 1984, June 1981 and November 1984, respectively. Clearly, five of
these Decrees and Wage Orders took effectafter the lapse of the three-year

prescriptive period for litigating claims for wage distortion differentials, the
original complaint for wage distortion having been filed on October 30, 1986
and the amended complaint for underpayment of wages, on March 25,
1987. Consequently, the applicable cut-off dates, for purposes of prescription,
were October 30, 1983 and March 25, 1984, respectively.
Finally, the records show that the matter of wage distortion, actual or
imputed under the various issuances up to Wage Order No. 6, had been
settled by the parties as early as July 30, 1985. On that day they executed a
Compromise Agreement with the assistance of the then Regional Director of
the National Capital Region, Severo M. Pucan in which they affirmed that with
the implementation by MANDARIN of Wage Order Nos. 4 and 6 as well as
P.D. 1634, the latter was deemed for all legal and purposes to have fully
satisfied all its legal and contractual obligations to its employees under all
presidential issuances on wages,[23]
The Compromise Agreement pertinently states:
1. That the respondent shall implement Wage Order No. 6 effective July 1,
1985, without prejudice to the outcome of the application for exemption as
distressed employer filed by said respodent with the National Wage Council
as regards benefits that might be due between November 1, 1985 and June 30,
inclusive;
2. The the respondent shall also implement effective August 1, 1985 the
integration of the P90.00 a month cost of living allowance under P.D. 1634
into the basic wages of its employees as called for under Wage Order No. 4 in
accordance with the Guidelines contained in the Explanatory Bulletin issued
by the Bureau of Working Conditions on August 8, 1985;
3. That as soon as the respondent shall have complied with the above terms of
this Compromise Agreement, said respondent shall be deemed for all legal
intents and puposes to have fully satisfied all the legal and contractual
obligations to its employees under all presidential issuances on wages,
including Wage Orders No. 4 and 6, and Article XI of the collective
bargaining agreement,
The Labor Code recognizes the conclusiveness of compromises as a
means to settle and end labor disputes. Article 227 provides that (a)ny
compromise settlement, including those involving labor standard laws,

voluntary agreed upon by the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or any court shall not
assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facieevidence that the settlement was
obtained through fraud, misrepresentation or coercion. In Olaybar vs. NLRC,
[24]
this Court had occasion, in a labor dispute, to apply the rule that
compromises and settlements have the effect and conclusiveness of res
judicata upon the parties.
Thus, and again assuming arguendo the existence of a wage distortion,
this was corrected under the fully implemented Compromise Agreement;
[25]
and such correction having been explicitly acknowledge by the UNION, it is
now estopped from claiming that a distortion still subsists. In the same
manner, when the UNION entered into a new collective agreement with
MANDARIN, providing for wage increases in 1987, it is deemed to have
thereby settled any remaining question of wage distortion, since the subject of
wages and wage distortions were plainly and unavoidably an economic issue
and the proper subject of collective bargaining.[26]
Neither did respondent Commission gravely abuse its discretion in ruling
against the UNION on the issue of underpayment of wages.
The UNIONs theory was that since the employees of MANDARIN are paid
on a monthly basis under the Group III category, the applicable increase in
daily wage must be multiplied by 365 and then divided by 12 to determine the
equivalent monthly rate. MANDARINs position, on the other hand, was that it
had consistently been using the multiplier 313, and not 365, for the purpose of
deriving salary related benefits of its employees who are paid by the month,
excluding from 365, the 52 unpaid rest days in a year. This appears to have
been the consistent practice of MANDARIN, following the formula for daily
paid employees under Group II category as prepared by the Bureau of Labor
Standards:[27]
AR x 313 days = EMR
____________
12

Where: 313 days = 303 actual working days a year

plus the paid 10 unworked regular
holidays.
Actual working days . 303
10 legal holidays 10
_____
Total No. of Days 313.
MANDARIN presented evidence of its practice regarding the use of the
factor 313 in computing the monthly equivalent of the minimum daily wages
and other related benefits of its employees; i.e., Annexes 3 and 4 of its
Supplemental Appeal dated November 12, 1991. This was corroborated by
the UNIONs Internal Vice President, Arnulfo Castro, who admitted during
cross-examination that in his research and study, he found that the divisor
used in arriving at the daily rate of the hotel employees was 313 days, which
meant that the days-off or rest days are not paid.[28] The admission confirms
that the hotel employees pertain to Group II category under the Bureau of
Labor Standards Guidelines for computing the equivalent monthly minimum
wage rates.[29] Thus, instead of multiplying the applicable minimum daily wage
by 365 and dividing the result by 12 to derive the applicable minimum monthly
salary, the factor used is 313, composed of 303 actual working days and the
10 unworked but paid regular holidays in a year.
In his explanatory Bulletin on the payment of Holiday Pay -- Ref. No. 85-08
dated 6 November 1985 -- then Secretary Augusto Sanchez of the
Department of Labor and Employment, expatiating on the implications of the
Chartered Bank case,[30] stated:
6. Monthly Paid Employees
Oftentime confusion arises from the different interpretations as to who is a
monthly-paid employee. A monthly-paid employee is one whose monthly
salary includes payments for everyday of the month although he does not
regularly work on his rest days or Sundays and on regular and special

holidays. Group III in the above illustration covers monthly paid

employees. Employees falling under Group I, II and IV are in reality daily
paid employees but whose daily rate is translated into its monthly
equivalent. The fact, therefore, that an employee is regularly paid a fixed
monthly rate does not necessarily mean that he is a monthly-paid employee as
defined above. (Italics supplied)
As applied to the UNION, the monthly equivalent of the minimum wage
under the various Presidential Decrees and Wage Orders based on the above
formula should be as follows:
PD/WO NO. Effectivity Minimum Daily Equivalent
Wage Rate Monthly Rate
PD 1389 01 July 1978 P 11.00 P 286.96
PD 1614 1 March 1979 13.00 339.00
PD 1813 18 Aug. 1980 14.00 365.17
WO # 2 06 July 1983 19.00 495.58
WO # 3 01 Nov. 1983 20.00 521.67
WO # 4 01 May 1984 32.00 834.67
WO # 5 01 Nov. 1984 35.00 912.92
WO # 6 01 Nov. 1984 37.00 965.08
On the other hand, the monthly pay of the Hotel employees and their
hiring rate may be illustrated as follows:
PD/WO NO. Effectivity Equivalent Lowest Salary
Monthly Rate in the Hotel
PD 1389 01 July 1978 P 286.92 P 350.00
PD 1614 01 March 1979 339.08 411.00

PD 1813 18 Aug. 1980 365.17 562.00

WO # 2 06 July 1983 495.58 960.00
WO # 3 01 Nov. 1983 521.67 960.00
WO # 4 01 May 1984 834.67 960.00
WO # 5 16 May 1984 912.92 960.00
WO # 6 01 Nov. 1984 965.08 1,015.00.
A comparative analysis of the wages of the Hotels employees from 1978
to 1984 vis a vis the minimum wages fixed by law for the same period reveals
that at no time during the said period was there any underpayment of wages
by the respondent Hotel. On the contrary, the prevailing monthly salaries of
the subject hotel employees appear to be and above the minimum amounts
required under the applicable Presidential Decrees and Wage Orders.
WHEREFORE, the assailed Decision of respondent Commission
promulgated on September 11, 1992 -- reversing the judgment of the Labor
Arbiter and dismissing the UNIONS complaint - - being based on substantial
evidence and in accord with applicable laws and jurisprudence, as well as
said Commissions Resolution dated November 24, 1992 -- denying
reconsideration -- are hereby AFFIRMED in toto.
SO ORDERED.
Davide, Jr., Melo, Francisco, and Panganiban, JJ., concur.

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, the petition
was referred to the Court of Appeals which, by October 28, 1999, denied the same for
lack of merit.
[1]

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 rates[2]; 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 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.
[5]

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 companyipso 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.
(Emphasis and underscoring supplied)
[7]

The issue of whether wage distortion exists being a question of fact that is within the
jurisdiction of quasi-judicial tribunals, and it being a basic rule that findings of facts of
quasi-judicial agencies, like the NLRC, are generally accorded not only respect but at
times even finality if they are supported by substantial evidence, as are the
findings in the case at bar, they must be respected. For these agencies have acquired
expertise, their jurisdiction being confined to specific matters.
[8]

[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. teaches, the formulation of a wage

structure through the classification of employees is a matter of management judgment
and discretion.
[10]

[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. (Emphasis and
underscoring supplied)
[11]

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)
Level IV
P5,330.00
P4,400
(Melissa Cordero)
Level V
P7,090.69
P4,700
(Ma. Lourdes Dee)

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
P939.00
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. (Emphasis and
underscoring supplied)
[12]

Apart from the findings of fact of the NLRC and the Court of Appeals that some of
the elements of wage distortion are absent, petitioner cannot legally obligate Bankard to
correct the alleged wage distortion as the increase in the wages and salaries of the
newly-hired was not due to a prescribed law or wage order.
The wordings of Article 124 are clear. If it was the intention of the legislators to
cover all kinds of wage adjustments, then the language of the law should have been
broad, not restrictive as it is currently phrased:

Article 124. Standards/Criteria for Minimum Wage Fixing.

xxx
Where the application of any prescribed wage increase by virtue of a law or Wage
Order issued by any Regional Board results in distortions of the wage structure
within an establishment, the employer and the union shall negotiate to correct the
distortions. Any dispute arising from the wage distortions shall be resolved through
the grievance procedure under their collective bargaining agreement and, if it remains
unresolved, through voluntary arbitration.
x x x (Italics and emphasis supplied)
Article 124 is entitled Standards/Criteria for Minimum Wage Fixing. It is found
in CHAPTER V on WAGE STUDIES, WAGE AGREEMENTS AND WAGE
DETERMINATION which principally deals with the fixing of minimum wage. Article 124
should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the
distinctions embodied in the wage structure based on skills, length of service, or other
logical bases of differentiation will be preserved.
If the compulsory mandate under Article 124 to correct wage distortion is applied
to voluntary and unilateral increases by the employer in fixing hiring rates which is
inherently a business judgment prerogative, then the hands of the employer would be
completely tied even in cases where an increase in wages of a particular group is
justified due to a re-evaluation of the high productivity of a particular group, or as in the
present case, the need to increase the competitiveness of Bankards hiring rate. An
employer would be discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees for a similar
increase, especially if the financial conditions of the business cannot address an acrossthe-board increase.

Petitioner cites Metro Transit Organization, Inc. v. NLRC 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.
[13]

Reliance on Metro Transit is however misplaced, as the obligation therein to rectify

the wage distortion was not by virtue of Article 124 of the Labor Code, but on account of
a then existing company practice that whenever rank-and-file employees were paid a
statutorily mandated salary increase, supervisory employees were, as a matter
of practice, also paid the same amount plus an added premium. Thus this Court held in
said case:

We conclude that the supervisory employees, who then (i.e., on April 17, 1989) had,
unlike the rank-and-file employees, no CBA governing the terms and conditions of
their employment, had the right to rely on the company practice of unilaterally
correcting the wage distortion effects of a salary increase given to the rank-and-file
employees, by giving the supervisory employees a corresponding salary increase plus
a premium. . . . (Emphasis supplied)
[14]

Wage distortion is a factual and economic condition that may be brought about by
different causes. In Metro Transit, the reduction or elimination of the normal differential
between the wage rates of rank-and-file and those of supervisory employees was due to
the granting to the former of wage increase which was, however, denied to the latter
group of employees.
The mere factual existence of wage distortion does not, however, ipso facto result to
an obligation to rectify it, absent a law or other source of obligation which requires its
rectification.
Unlike in Metro Transit then where there existed a company practice, no such
management practice is herein alleged to obligate Bankard to provide an across-theboard increase to all its regular employees.
Bankards right to increase its hiring rate, to establish minimum salaries for specific
jobs, and to adjust the rates of employees affected thereby is embodied under Section
2, Article V (Salary and Cost of Living Allowance) of the parties Collective Bargaining
Agreement (CBA), to wit:

Section 2. Any salary increase granted under this Article shall be without prejudice to
the right of the Company to establish such minimum salaries as it may hereafter find
appropriate for specific jobs, and to adjust the rates of the employees thereby affected
to such minimum salaries thus established. (Italics and underscoring supplied)
[15]

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.

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
non-agricultural, shall be increased by twenty-five pesos (P25) per
day, . . .: Provided, That those already receiving above the minimum wage
rates up to one hundred pesos(P100.00) shall also receive an increase of
twenty-five pesos (P25.00) per day, . . .
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. 1The 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 eighty-three (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 counterproductive 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.

# Footnotes
1 This provision states:
(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national
interests, the Secretary of Labor and Employment may assume jurisdiction
over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect

of automatically enjoining the intended or impending strike or lockout as

specified in the assumption or certification order. . . .
2 Rollo, p. 35-37.
3 Ibid., pp. 49-50.
4 Ibid., pp. 55-56.
5 Ibid., p. 12.
6 Manifestation in lieu of Comment, p. 1; Rollo, p. 134.
7 Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92.
8 Philippine Overseas Drilling and Oil Development Corporation v. Ministry of
Labor, G.R. No. 55703, November 27, 1986, 146 SCRA 79, 88.
9 Artex Development Co., Inc., v. NLRC, G.R. No. 65045, July 20, 1990, 187
SCRA 611, 615; Five J Taxi v. NLRC, G.R. No. 100138, August 5, 1992, 212
SCRA 225.
10 This is now under Art. 124 of the Labor Code as amended by Rep. Act
6727.
11 Plastic Town Center Corporation v. NLRC, G.R. No. 81176, April 19, 1989,
172 SCRA 580, 585.
12 Filipinas Golf & Country Club, Inc. v. NLRC, G.R. No. 61918, August 23,
1989, 176 SCRA 625, 632.
13 International Pharmaceuticals, Inc. v. Secretary of Labor, G.R. Nos.
92981-83, January 9, 1992, 205 SCRA 59.
14 G.R. No. 86200, February 25, 1992, 206 SCRA 497, 501.
15 See: Employers Confederation of the Philippines v. National Wages and
Productivity Commission, G.R. No. 96169, September 24, 1991, 201 SCRA
759, 767.
The Lawphil Project - Arellano Law Foundation

FIRST DIVISION
[G.R. No. 128845. June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS

(ISAE), petitioner, vs. HON. LEONARDO A. QUISUMBING in his capacity
as the Secretary of Labor and Employment; HON. CRESENCIANO B.
TRAJANO in his capacity as the Acting Secretary of Labor and
Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC., respondents.
DECISION
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires
are paid more than their colleagues in other schools is, of course, beside the point. The
point is that employees should be given equal pay for work of equal value. That is a
principle long honored in this jurisdiction. That is a principle that rests on fundamental
notions of justice. That is the principle we uphold today.
Private respondent International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents. To enable
the School to continue carrying out its educational program and improve its standard of
instruction, Section 2(c) of the same decree authorizes the School to
[1]

employ its own teaching and management personnel selected by it either

locally or abroad, from Philippine or other nationalities, such personnel
being exempt from otherwise applicable laws and regulations attending
their employment, except laws that have been or will be enacted for the
protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs
four tests to determine whether a faculty member should be classified as a foreign-hire
or a local hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic allegiance?
d.....Was the individual hired abroad specifically to work in the School and
was the School responsible for bringing that individual to the Philippines?

[2]

Should the answer to any of these queries point to the Philippines, the faculty member
is classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than localhires. The School justifies the difference on two "significant economic disadvantages"
foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure.
The School explains:
A foreign-hire would necessarily have to uproot himself from his home
country, leave his family and friends, and take the risk of deviating from a
promising career path-all for the purpose of pursuing his profession as an
educator, but this time in a foreign land. The new foreign hire is faced with
economic realities: decent abode for oneself and/or for one's family,
effective means of transportation, allowance for the education of one's
children, adequate insurance against illness and death, and of course the
primary benefit of a basic salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the
same economic reality after his term: that he will eventually and inevitably
return to his home country where he will have to confront the uncertainty
of obtaining suitable employment after a long period in a foreign land.
The compensation scheme is simply the School's adaptive measure to
remain competitive on an international level in terms of attracting
competent professionals in the field of international education.
[3]

When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members" of the School, contested
the difference in salary rates between foreign and local-hires. This issue, as well as the
question of whether foreign-hires should be included in the appropriate bargaining unit,
eventually caused a deadlock between the parties.
[4]

On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the
Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute.
On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an
Order resolving the parity and representation issues in favor of the School. Then DOLE
Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for
reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this
Court.

Petitioner claims that the point-of-hire classification employed by the School is

discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty members,
numbering 38 in all, with nationalities other than Filipino, who have been hired locally
and classified as local hires. The Acting Secretary of Labor found that these nonFilipino local-hires received the same benefits as the Filipino local-hires:
[5]

The compensation package given to local-hires has been shown to apply to all,
regardless of race. Truth to tell, there are foreigners who have been hired locally and
who are paid equally as Filipino local hires.
[6]

The Acting Secretary upheld the point-of-hire classification for the distinction in salary
rates:
The principle "equal pay for equal work" does not find application in the
present case. The international character of the School requires the hiring
of foreign personnel to deal with different nationalities and different
cultures, among the student population.
We also take cognizance of the existence of a system of salaries and
benefits accorded to foreign hired personnel which system is universally
recognized. We agree that certain amenities have to be provided to these
people in order to entice them to render their services in the Philippines
and in the process remain competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited
contract of employment unlike the local hires who enjoy security of tenure.
To apply parity therefore, in wages and other benefits would also require
parity in other terms and conditions of employment which include the
employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and
provisions for salary and professional compensation wherein the parties
agree as follows:
All members of the bargaining unit shall be compensated
only in accordance with Appendix C hereof provided that the
Superintendent of the School has the discretion to recruit
and hire expatriate teachers from abroad, under terms and
conditions that are consistent with accepted international
practice.
Appendix C of said CBA further provides:

The new salary schedule is deemed at equity with the

Overseas Recruited Staff (OSRS) salary schedule. The 25%
differential is reflective of the agreed value of system
displacement and contracted status of the OSRS as
differentiated from the tenured status of Locally Recruited
Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition of the
difference in the status of two types of employees, hence, the difference in
their salaries.
The Union cannot also invoke the equal protection clause to justify its
claim of parity. It is an established principle of constitutional law that the
guarantee of equal protection of the laws is not violated by legislation or
private covenants based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply to all
members of the same class. Verily, there is a substantial distinction
between foreign hires and local hires, the former enjoying only a limited
tenure, having no amenities of their own in the Philippines and have to be
given a good compensation package in order to attract them to join the
teaching faculty of the School.
[7]

We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our
Constitution and laws reflect the policy against these evils. The Constitution in the
Article on Social Justice and Human Rights exhorts Congress to "give highest priority to
the enactment of measures that protect and enhance the right of all people to human
dignity, reduce social, economic, and political inequalities." The very broad Article 19 of
the Civil Code requires every person, "in the exercise of his rights and in the
performance of his duties, [to] act with justice, give everyone his due, and observe
honesty and good faith."
[8]

International law, which springs from general principles of law, likewise proscribes
discrimination. General principles of law include principles of equity, i.e., the general
principles of fairness and justice, based on the test of what is reasonable. The
Universal Declaration of Human Rights, the International Covenant on Economic,
Social, and Cultural Rights, the International Convention on the Elimination of All
Forms of Racial Discrimination, the Convention against Discrimination in Education,
the Convention (No. 111) Concerning Discrimination in Respect of Employment and
Occupation - all embody the general principle against discrimination, the very
antithesis of fairness and justice. The Philippines, through its Constitution, has
incorporated this principle as part of its national laws.
[9]

[10]

[11]

[12]

[13]

[14]

[15]

[16]

In the workplace, where the relations between capital and labor are often skewed in
favor of capital, inequality and discrimination by the employer are all the more
reprehensible.
The Constitution specifically provides that labor is entitled to "humane conditions of
work." These conditions are not restricted to the physical workplace - the factory, the
office or the field - but include as well the manner by which employers treat their
employees.
[17]

The Constitution also directs the State to promote "equality of employment

opportunities for all." Similarly, the Labor Code provides that the State shall "ensure
equal work opportunities regardless of sex, race or creed." It would be an affront to both
the spirit and letter of these provisions if the State, in spite of its primordial obligation to
promote and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment.
[18]

[19]

[20]

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.

Article 135, for example, prohibits and penalizes the payment of lesser compensation
to a female employee as against a male employee for work of equal value. Article 248
declares it an unfair labor practice for an employer to discriminate in regard to wages in
order to encourage or discourage membership in any labor organization.
[21]

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in
Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and favourable conditions of work,
which ensure, in particular:
a.....Remuneration which provides all workers, as a minimum, with:
i.....Fair wages and equal remuneration for work of equal
value without distinction of any kind, in particular women
being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored
legal truism of "equal pay for equal work." Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries. This rule applies to the School, its "international character"
notwithstanding.
[22]

The School contends that petitioner has not adduced evidence that local-hires perform
work equal to that of foreign-hires. The Court finds this argument a little cavalier. If an
[23]

employer accords employees the same position and rank, the presumption is that these
employees perform equal work. This presumption is borne by logic and human
experience. If the employer pays one employee less than the rest, it is not for that
employee to explain why he receives less or why the others receive more. That would
be adding insult to injury. The employer has discriminated against that employee; it is for
the employer to explain why the employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence
here that foreign-hires perform 25% more efficiently or effectively than the local-hires.
Both groups have similar functions and responsibilities, which they perform under
similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to
rationalize the distinction in salary rates without violating the principle of equal work for
equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for
services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is
the "[c]onsideration paid at regular intervals for the rendering of services." In Songco
v. National Labor Relations Commission, we said that:
[24]

"salary" means a recompense or consideration made to a person for his

pains or industry in another man's business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman soldier, it
carries with it the fundamental idea of compensation for services
rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not
be used as an enticement to the prejudice of local-hires. The local-hires perform the
same services as foreign-hires and they ought to be paid the same salaries as the latter.
For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and
limited tenure affecting foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as housing, transportation,
shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their
welfare," "to afford labor full protection." The State, therefore, has the right and duty
to regulate the relations between labor and capital. These relations are not merely
contractual but are so impressed with public interest that labor contracts, collective
bargaining agreements included, must yield to the common good. Should such
contracts contain stipulations that are contrary to public policy, courts will not hesitate to
strike down these stipulations.
[25]

[26]

[27]

[28]

In this case, we find the point-of-hire classification employed by respondent School to

justify the distinction in the salary rates of foreign-hires and local hires to be an invalid

classification. There is no reasonable distinction between the services rendered by

foreign-hires and local-hires. The practice of the School of according higher salaries to
foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of
this Court.
We agree, however, that foreign-hires do not belong to the same bargaining unit as the
local-hires.
A bargaining unit is "a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, consistent with equity to the employer indicate
to be the best suited to serve the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law." The factors in determining the appropriate
collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity
and unity of the employees' interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions (Substantial Mutual Interests Rule);
(3) prior collective bargaining history; and (4) similarity of employment status. The
basic test of an asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of
their collective bargaining rights.
[29]

[30]

[31]

It does not appear that foreign-hires have indicated their intention to be grouped
together with local-hires for purposes of collective bargaining. The collective bargaining
history in the School also shows that these groups were always treated separately.
Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreignhires perform similar functions under the same working conditions as the local-hires,
foreign-hires are accorded certain benefits not granted to local-hires. These benefits,
such as housing, transportation, shipping costs, taxes, and home leave travel
allowance, are reasonably related to their status as foreign-hires, and justify the
exclusion of the former from the latter. To include foreign-hires in a bargaining unit with
local-hires would not assure either group the exercise of their respective collective
bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED
IN PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996
and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold
the practice of respondent School of according foreign-hires higher salaries than localhires.
SO ORDERED.
Puno, and Pardo, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.
Ynares-Santiago, J., on leave.

Issued on June 19, 1975 (authorizing International School, Inc. to Donate Its Real Properties to the Government of
the Republic of the Philippines and Granting It Certain Rights.)
[2]
Rollo, p. 328.
[3]
Id., at 324.
[4]
Id., at 8.
[1]

[5]

Id., at 325. The breakdown is as follows:

American
s
Australian
Belgian
British
Burmese
Canadian
Chinese
French
German
Indian
Japanese
Malaysian
New
Zealander
Spanish

- 17
-2
-1
-2
-1
-2
-2
-1
-1
-5
-1
-1
-1
-1

Id., at 39.
Id., at 38-39.
[8]
In Section 1, Article XIII thereof.
[9]
Statute of the International Court of Justice, art. 38.
[10]
M. DEFENSOR-SANTIAGO, International Law 75 (1999), citing Judge Hudson in River Meuse Case, (1937)
Ser. A/B No. 70.
[11]
Ibid., citing Rann of Kutch Arbitration (India vs. Pakistan), 50 ILR 2 (1968)
[12]
Adopted by the General Assembly of the United Nations on December 10, 1948. Article 1 thereof states: "All
human beings are born free and equal in dignity and rights." Article 2 provides, "1. Everyone is entitled to all the
rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language,
religion, political or other opinion, national or social origin, property, birth or other status."
[13]
Adopted by the General of the United Nations in Resolution 2200 (XXI) of 16 December 1966. Article 2
provides: "2. The States Parties to the present Covenant undertake to guarantee that the rights enunciated in the
present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion,
political or other opinion, national or social origin, property, birth or other status."
[14]
Adopted by the General assembly of the United Nations in Resolution 2106 (XX) 21 December 1965. Article 2 of
the Convention states: "States Parties condemn racial discrimination and undertake to pursue by all appropriate
means and without delay a policy of eliminating racial discrimination in all its forms and promoting understanding
among all races xxx."
[15]
Adopted at Paris, December 14, 1960. Under Article 3, the States Parties undertake, among others, "to abrogate
any statutory provisions and any administrative instructions and to discontinue any administrative practices which
involve discrimination in education." Under Article 4, "The States Parties to this Convention undertake further more
[6]
[7]

to formulate, develop and apply a national policy which, by methods appropriate to the circumstances and to
national usage, will tend to promote equality of opportunity and of treatment in the matter of education xxx."
[16]
Adopted by the General Conference of the International Labor Organization at Geneva, June 25, 1958. Article 2
provides that, "Each Member for which this Convention is in force undertakes to declare and pursue a national
policy designed to promote, by methods appropriate to national condition and practice, equality of opportunity and
treatment in respect of employment and occupation, with a view to eliminating any discrimination in respect
thereof."
[17]
In Article XIII, Section 3 thereof.
[18]
Id.
[19]
In Article 3 thereof.
[20]
E.g., Article 135 of the Labor Code declares it unlawful for the employer to require, not only as a condition of
employment, but also as a condition for the continuation of employment, that a woman shall not get married.
[21]
In relation to Articles 288 and 289 of the same Code.
[22]
Indeed, the government employs this rule in fixing the compensation of government employees. Thus, Republic
Act No. 6758 (An Act Prescribing a Revised Compensation and Position Classification System in the Government
and for Other Purposes) declares it "the policy of the State to provide equal pay for substantially equal work and to
base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of
the positions. See also the Preamble of Presidential Decree No. 985 (A Decree Revising the Position Classification
and Compensation Systems in the National Government, and Integrating the same)
[23]
Rollo, p. 491.
[24]
183 SCRA 610 (1990)
[25]
In Section 18, Article II thereof.
[26]
In Section 3, Article XIII thereof. See also Article 3 of the Labor Code.
[27]
See Sec. 3, Article XIII, Constitution. Article 3 of the Labor Code.
[28]
Article 1700, Civil Code.
[29]
Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Federation Labor Union and the Secretary of
Labor and Employment, 268 SCRA 573 (1997); San Miguel Corporation vs. Laguesma, 236 SCRA 595 (1994)
[30]
San Miguel Corporation vs. Laguesma, supra.
[31]
Belyca Corporation vs. Ferrer-Calleja, 168 SCRA 184 (1988)