Case Digest: Associated Labor Unions v. NLRC, G.R. No. 109328, August 16, 1994

 Labor Law | Art. 124

Facts:

  • On July 1, 1989, Republic Act No. 6727, also known as the Wage Rationalization Act, took effect, granting a P25.00/day increase in the statutory minimum wage of all workers in the private sector, subject to certain conditions.
  • Del Monte Philippines, Inc. implemented the law by granting a P25.00/day increase to its temporary employees or "broilers" who were initially receiving P54.00/day wages.
  • Regular employees, members of petitioner union Associated Labor Unions-TUCP, who were receiving P100.80/day, were not granted a similar increase, leading to complaints from the union.
  • On February 14, 1990, a Memorandum Agreement was executed, granting the members of the petitioner union a P10.00/day wage increase, subject to their right to claim P15.00/day as a balance through compulsory arbitration.
  • Petitioners Associated Labor Union-TUCP, representing its members, DMPIEU-ALU-TUCP, Local 302 and Geronimo de los Santos, filed a complaint against Del Monte Philippines, Inc. alleging a wage distortion due to the disparity in salary increases between regular employees and temporary employees.
  • Labor Arbiter & NLRC: Found no wage distortion, as demonstrated by the salary increases granted to both groups.
Issue: 
WoN the increases mandated by the parties’ Collective Bargaining Agreement and the voluntary agreement dated should not be considered as having corrected the wage distortion, since employee benefits derived from law are exclusive, distinct, and separate from those obtained through negotiation and agreement. NO

Held:
Art. 124 of the Labor Code, as amended by Republic Act No. 6727, expressly provides that 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. 

The law recognizes, therefore, the validity of negotiated wage increases to correct wage distortions. The legislative intent is to encourage the parties to seek solution to the problem of wage distortions through voluntary negotiation or arbitration, rather than strikes, lockouts, or other concerted activities of the employees or management.  Recognition and validation of wage increases given by employers either unilaterally or as a result of collective bargaining negotiations for the purpose of correcting wage distortions are in keeping with the public policy of encouraging employers to grant wage and allowance increases to their employees which are higher than the minimum rates of increase prescribed by statute or administrative regulation.

As this Court stated in Apex Mining, Inc. v. NLRC: 
To compel employers simply to add on legislated increases in salary or allowances without regard to what is already 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 interest of labor in concerned.

Thus in Cardona v. NLRC,  it was held that there was no wage distortion where the employer made salary adjustments in terms of restructuring of benefits and allowances and there was an increase pursuant to the CBA.

There is thus, to use the language of the law, no "effective obliteration of] the distinction embodied in [private respondent’s] wage structure based on skills, length of service, or other logical basis of differentiation" in this case. For it is undisputed that the difference in wages between petitioners and the temporary employees is now even greater than it used to be prior to the grant of the P25.00/day increase to the latter pay pursuant to Republic Act No. 6727.

Finally, whether or not a wage distortion exists by reason of the grant of a wage increase to certain employees is essentially a question of fact. In this case, the findings of the Labor Arbiter, affirmed by the NLRC, that no wage distortion exists being based on substantial evidence, are entitled to respect and finality.

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