10 Metropolitan Bank and Trust Company Employees Union v. NLRC effect. Under Sec.
effect. Under Sec. 4, “the statutory minimum wage rates of all
G.R. No. 102636 | 10 September 1993 | Vitug | Santos
PETITIONER: METROPOLITAN BANK & TRUST COMPANY EMPLOYEES
UNION-ALU-TUCP and ANTONIO V. BALINANG
RESPONDENTS: METROPOLITAN BANK & TRUST COMPANY
RECIT-READY: MBTC (respondent bank) entered into a collective bargaining
agreement with MBTCEU (petitioner union), granting the following increases:
900.00 effective 01 Jan. 1989; 600.00 effective 01 Jan. 1990; 200.00 effective 01
Jan. 1991. One month later, RA 6727 or the Wage Rationalization Act took effect
it provided an across-the-board hike of 25php wage increase. Respondent
complied with the wage order except to the recipients of the 900.00 wage
increase. MBTCEU argues that the bank’s implantation of RA 6727 resulted in
the categorization of the employees into probationary and regular employees,
and a wage distortion arose of from it. LA ruled in favor of union. NLRC reversed.
However, Presiding Commissioner Bonto-Perez dissented. She opined that there
may not be an obliteration nor elimination of said quantitative
distinction/difference, but there is a contraction. SC ruled that a wage distortion
exists in the case at bar. The Court held that in mandating an adjustment, the law
did not require that there ba an elimination or total abrogation of quantitative
wage or salary differences. A severe contraction is enough. As observed by
Commissioner Bonto-Perez, the pay differentials contracted or went down by
about 83%. Clearly, there is severe contraction and wage distortion exists.
DOCTRINE:
Wage Distortion means 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.
FACTS:
1. MBTC (respondent bank) entered into a collective bargaining agreement
with MBTCEU (petitioner union), granting the following increases:
- 900.00 effective 01 Jan. 1989;
- 600.00 effective 01 Jan. 1990;
- 200.00 effective 01 Jan. 1991.
2. MBTCEU also bargained for the inclusion of the probationary employees so
they can likewise benefit from the increases. The bank refused.
Consequently, only regular employees as of 01 January 1989 were given the
increase.
- One month later, RA 6727 or the Wage Rationalization Act took
workers and employees in the private sector, whether agricultural
or non-agricultural, shall be increased by P25 per day xxx Provided,
those already receiving above the minimum wage rates up to
P100.00 shall also receive an increase of P25.00 per day. xxx”
- Pursuant to such provision, the bank gave the 25.00 increase per
day, or 750 per month to its probationary employees and and to
those who had been promoted to regular or permanent status
before 01 Jan 1989 but whose daily rate was 100 below.
- However, the bank refused to give the same treatment to its regular
employees who was receiving more than 100 pesos per day and
the recipients of the 900.00 wage increase.
3. MBTCEU argues that the bank’s implantation of RA 6727 resulted in the
categorization of the employees into probationary and regular employees.
Between those two groups, there emerged a substantially salary gap.
MBTCEU then sought from the bank the correction of the alleged wage
distortion.
- To prevent a strike, the parties agreed to refer the issue for
compulsory arbitration.
4. LA: Ruled in favor of the union on the ground that it is not necessary that a
big number of wage earners within a company be benefited by a mandatory
increase before a wage distortion will take effect.
NLRC: Reversed LA. They ruled that the reduction in the wage gaps
between said levels is not significant as to obliterate or result in severe
contraction of the intentional qualitative differences in salary rates between
the employee groups. Consequently, wage distortion does not exist.
IMPT! Presiding Commissioner Bonto-Perez dissented. She opined that
there may not be an obliteration nor elimination of said quantitative
distinction/difference aforecited but clearly there is a contraction. The
quantitative intended distinction in pay between the two groups of workers in
respondent compant was contracted by more than 50%, particularly, 83%.
Hence, there is evident severe contraction resulting in the wage distortion.
She held that the formula incorporated under Wage Order No. IV-02 for
correction of pay scale structures in cases of wage distortion is applicable in
the case at bar:
Minimum Wage = % x Prescribed = Distortion Actual Salary Increase Adjustment
5. MBTCEU now argues before the SC to give due course to its claim for an
across-the-board hike of 25.00 under RA 6727. It alleges that NLRC acted
with gadalej when it refused to acknowledge the existence of a wage
distortion.
ISSUES: 1. W/N a wage distortion exists in the case at bar? YES
RULING:
1. Wage Distortions means 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.

The Court held that in mandating an adjustment, the law did not require that there ba
an elimination or total abrogation of quantitative wage or salary differences. A severe
contraction is enough. As observed by Commissioner Bonto-Perez, the pay
differentials contracted or went down by about 83%. Clearly, there is severe
contraction and wage distortion exists.

The intentional quantitative differences in wage among employees of the bank has
been set by the CBA to about 900php per month as of 1 Jan. 1989. It is intentional
as it has been arrived at through the collective bargaining process. The Court
explained it is the intention of the parties, whether the benefits under a CBA should
be equated with those granted by law or not, must prevail and be given effect unless
there are compelling reasons.