METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP AND ANTONIO V. BALINANG, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) AND METROPOLITAN BANK & T…

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 effective 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 July 1989, Republic Act 6727,
“an act to rationalize wage policy
determination by establishing the mechanism and proper standards
therefor, x x x 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, x x x: 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, x x x.

x x x                                                          x
x x                                                          x
x x.

(d) If expressly
provided for and agreed upon in the collective bargaining agreements, all
increases 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 continuous 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 January 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 impending strike,
the bank petitioned the Secretary of Labor to assume jurisdiction over the case
or to certify the same to the National Labor Relations Commission (NLRC) under
Article 263 (g) of the Labor Code.^[1] The
parties ultimately agreed to refer the issue for compulsory arbitration to the
NLRC.

The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor arbiter disagreed
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 rates 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:

“x x x a wage
distortion can arise only in a situation where the salary structure is
characterized 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 distinctions are obliterated or contracted by subsequent wage
increases (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 Levels
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 employee groups. For this reason, the basic requirement for a
wage distortion to exist does not appear 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 my 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%) percent 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 cases of wage distortion
as in the case at bar which is:

Minimum Wage
= % x Prescribed = Distortion

Actual Salary Increase Adjustment

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 modification of the Labor Arbiter’s decision as afore-discussed.”^[4]

The MBTCEU filed a motion for the 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 grave 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 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 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 officials’ findings rest.^[8] As
such, factual findings of the NLRC are generally accorded not only respect but
also finality provided that its decisions
are supported by substantial evidence and devoid of any taint of unfairness or
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 the 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 Bonto­Perez 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]

“x x x. (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. x x x.”

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 COURSE, 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, (Acting Chairman), Romero, and
Melo, JJ., concur.

Feliciano, (Chairman), J., on
leave.

^[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 interest, 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 of certification shall
have the effect of automatically enjoining the intended or impanding strike or
lockout as specified in the assumption or certification order. x x x .”

^[2]
Rollo, pp. 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. NRLC, G.R. 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.