CASE 1 Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R.

142399 Facts:
In 1987, petitioner PAL and respondent and PALEA entered into a CBA covering the period of 1986-1989. Part of said agreement required PAL to pay its rank-and-file employees 13th month pay and Christmas bonus. The 13th month pay, equivalent to one month current basic pay, shall be paid in advance in May consistent with the existing practice while the Christmas bonus, equivalent to one month current basic pay as of November 30, shall be paid in December.

In 1988, prior to the payment of the 13th month pay, PAL released a guideline stating that the only employees eligible for payment of 13th month pay are those ground employees in the general payroll who are regular as of April 30, 1988. Others not falling in said category shall receive their 13th month pay on or before December 24, 1988. Respondent PALEA assailed the implementation of the said guideline on the ground that all employees of PAL, regular or non-regular, must be paid their 13th month pay. In response thereto, PAL informed PALEA that rank-andfile employees who were regularized after 30th of April 1988 were not entitled to the 13th month pay as they were already given their Christmas bonuses on December 9, 1988 per the Implementing Rules of PD 851. Issue: Whether the 13th month pay or mid-year bonus can be equated to the Christmas bonus. Held: The 13th month pay or mid-year bonus can be equated to the Christmas bonus. In the case under consideration, the provision for the payment of the Christmas bonus, apart from the 13th month pay, was incorporated into the 1986-1989 CBA between respondent PALEA and petitioner PAL without any condition. The Christmas bonus, payable in December of every year, is distinguished from the 13thmonth pay, due yearly in May, for which reason it was denominated as the mid-year bonus. Such being the case, the only logical inference that could be derived therefrom is that petitioner PAL intended to give the members of the bargaining unit, represented by respondent PALEA, a Christmas bonus over and above its legally mandated obligation to grant the 13th month pay. In United CMC Textile Workers Union v. The Labor Arbiter, one of the issues passed upon by the Court was whether or not an employer who was already paying Christmas bonus pursuant to a CBA, was still bound to pay the 13th month pay pursuant to Presidential Decree No. 851 which provides that A bonus under the CBA is an obligation created by the contract between the management and workers while the 13th month pay is mandated by the law.Finding that the intention of the parties to the CBA was that the Christmas bonus was meant to be on top of the 13th month pay, the Court ordered the employer to pay the employees both. It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its employees 1) the 13th month pay or the mid-year bonus, and 2) the Christmas bonus. The 13th month pay, guaranteed by Presidential Decree No. 851, is explicitly covered or provided for as the mid-year bonus in the CBA, while the Christmas bonus is evidently and distinctly a separate benefit. Petitioner PAL may not be allowed to brush off said distinction, and unilaterally and arbitrarily declare that for non-regular employees, their Christmas bonus is the same as or equivalent to the 13th month pay. As it had willfully and intentionally agreed to under the terms of the CBA, petitioner PAL must pay its regular and non-regular employees who are members of the bargaining unit represented by respondent PALEA their 13th month pay or mid-year bonus separately from and in addition to their Christmas bonus.

CASE 2 Baron republic vs peralta GR No 170525 October 2, 2009

CASE 3
ABUNDIO BARAYOGA and BISUDECO-PHILSUCOR CORFARM WORKERS UNION (PACIWU CHAP-TPC) v. ASSET PRIVATIZATION Promulgated: TRUST G.R. No. 160073 October 24, 2005 Facts: Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur. Asset Privatization Trust (APT), a public trust was created under Proclamation No. 50, as amended, mandated to take title to and possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine government identified for privatization or disposition. Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino issued Administrative Order No. 14 identifying certain assets of government institutions that were to be transferred to the National Government. Among the assets transferred was the financial claim of the Philippine National Bank against BISUDECO in the form of a secured loan. Consequently, by virtue of a Trust Agreement executed between the National Government and APT on February 27, 1987, APT was constituted as trustee over BISUDECOs account with the PNB. Sometime later, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take over the management of the sugar plantation and milling operations until August 31, 1992. Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its mortgaged properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriffs Certificate of Sale. The union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages and other labor standard benefits plus damages. In the meantime, APTs Board of Trustees issued a resolution accepting the offer of Bicol -Agro-Industrial Cooperative (BAPCI) to buy the sugar plantation and mill. Again, on September 23, 1992, the board passed another resolution authorizing the payment of separation benefits to BISUDECOs employees in the event of the companys privatization. Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT and took over its sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil). The union alleged that when Philsucor initially took over the operations of the company, it retained BISUDECOs existing personnel under the same terms and conditions of employment. Nonetheless, at the start of the season sometime in May 1991, Philsucor started recalling workers back to work, to the exception of the union members. Management told them that they will be re-hired only if they resign from the union. Just the same, thereafter, the company started to employ the services of outsiders under the pakyaw system. Issue: whether APT is liable to pay petitioners monetary claims, including back wages from May 1, 1991, to October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI) Held: No. Pursuant to Administrative Order No. 14, Series of 1987, PNBs assets, loans and receivables from its borrowers were transferred to APT as trustee of the national government. Among the liabilities transferred to APT was PNBs financial claim against BISUDECO, not the latters assets and chattel. BISUDECO remained the owner of the mortgaged properties in August 1988, when the Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar plantation until August 31, 1992, under a so-called Contract of Lease between the two corporations. At the time, APT was merely a secured creditor of BISUDECO.

It was only in April 1991 that APT foreclosed the assets and chattels of BISUDECO because of the latters continued failure to pay outstanding loan obligations to PNB/APT. The properties were sold at public auction to APT, the highest bidder, as indicated in the Sheriffs Certificate of Sale issued on April 2, 1991. It was only in September 1992 (after the expiration of the lease/management Contract with Philsucor in August 1992), however, when APT took over BISUDECO assets, preparatory to the latters privatization. In the present case, petitioner-unions members who were not recalled to work by Philsucor in May 1991 seek to hold APT liable for their monetary claims and allegedly illegal dismissal. Significantly, prior to the actual sale of BISUDECO assets to BAPCI on October 30, 1992, the APT board of trustees had approved a Resolution. The Resolution authorized the payment of separation benefits to the employees of the corporation in the event of its privatization. Not included in the Resolution, though, were petitioner-unions members who had not been recalled to work in May 1991. The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were not all automatically assumed by APT as purchaser of the foreclosed properties at the auction sale. Any assumption of liability must be specifically and categorically agreed upon. Unless expressly assumed, labor contracts like collective bargaining agreements are not enforceable against the transferee of an enterprise. No succession of employment rights and obligations can be said to have taken place between the two. Between the employees of BISUDECO and APT, there is no privity of contract that would make the latter a substitute employer that should be burdened with the obligations of the corporation. Furthermore, under the principle of absorption, a bona fide buyer or transferee of all, or substantially all, the properties of the seller or transferor is not obliged to absorb the latters employees. The most that the purchasing company may do, for reasons of public policy and social justice, is to give preference of reemployment to the selling companys qualified separated employees, who in its judgment are necessary to the continued operation of the business establishment. In any event, the national government (in whose trust APT previously held the mortgage credits of BISUDECO) is not the employer of petitioner-unions members, who had been dismissed sometime in May 1991, even before APT took over the assets of the corporation. Hence, under existing law and jurisprudence, there is no reason to expect any kind of bailout by the national government. Even the NLRC found that no employer-employee relationship existed between APT and petitioners. The liabilities of the previous owner to its employees are not enforceable against the buyer or transferee, unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made in bad faith. Thus, APT cannot be held responsible for the monetary claims of petitioners who had been dismissed even before it actually took over BISUDECOs assets. Moreover, it should be remembered that APT merely became a transferee of BISUDECOs assets for purposes of conservation because of its lien on those assets -- a lien it assumed as assignee of the loan secured by the corporation from PNB. Subsequently, APT, as the highest bidder in the auction sale, acquired ownership of the foreclosed properties. Relevant to this transfer of assets is Article 110 of the Labor Code, as amended by Republic Act No. 6715, which reads: Article 110. Workers preference in case of bankruptcy. In the event of bankruptcy or liquidation of the employers business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. Under Articles 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred credit that enjoys preference with respect to a specific/determinate property of the debtor. On the other hand, the workers preference under Article 110 of the Labor Code is an ordinary preferred credit. While this provision raises the workers money claim to first priority in the order of preference established under Article 2244 of the Civil Code, the claim has no preference over special preferred credits. Workers claims for unpaid wages and monetary benefits cannot be paid outside of a bankruptcy or judicial liquidation proceedings against the employer. The application of Article 110 of the Labor Code is contingent upon the institution of those proceedings, during which all creditors are convened, their claims ascertained and inventoried, and their preferences determined.

CASE 4 Lapanday vs CA GR No 112139 January 13, 2000

CASE 5 MERALCO vs NLRC GR No 145402 March 14, 2008

CASE 6
Pag Asa Steel Works vs CA (2006) G.R. 166647 Facts: Petitioner is engaged in the manufacture of steel bars and wire rods while Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees. RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a letter to the union with the list of adjustments involving rank and file employees. In September 1999, the petitioner and union entered into an collective bargaining agreement where it provided wage adjustments namely P15, P25, P30 for three succeeding year. On the first year, the increase provided were followed until RTWPB issued another wage order where it provided for a P25.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file employees. On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per day. The union president asked that the wage order be implemented where petitioner rejected the request claiming that there was no wage distortion and it was not obliged to grant the wage increase. The union submitted the matter for voluntary arbitration where it favored the position of the company and dismissed the complaint. The matter was elevated to CA where it favored the respondents. Issue: WON the company was obliged to grant the wage increase under the Wage Order as a matter of practice. Held: Company is not obliged to grant the wage increase. It is submitted that employers unless exempt are mandated to implement the said wage order but limited to those entitled thereto. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the workers. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in support of an across-the-board increase. Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein, and not all employees

across-the-board as respondent Union would want petitioner to do. Considering therefore that none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company practice.

CASE 7 Metropolitan Bank vs NWPC (2007) G.R. 144322 Facts: On October 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment are granted an across-the-board increase of P15.00 daily. The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order. Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage of the wage order since the members bank are paying more than the regular wage. NWPC replied that the member banks are covered by the wage order and does not fall with the exemptible categories. In another letter inquiry, Metrobank asked for the interpretation of the applicability of the wage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region 2 are Issue: WON the wage order is void thus it has no legal effect and the RTWPB acted in excess of its jurisdiction. Held: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the separability clause of the Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage rate. The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. - The Commission shall have the following powers and functions: (d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; (g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards. R.A. No. 6727 declared it a 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 industrial dispersal; and to allow business and industry reasonable returns on investment, expansion and growth. In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage rates applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by the NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates, based on the standards or criteria set by Article 124 of the Labor Code. The Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method and the "salaryceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase.

In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits not contemplated by R.A. No. 6727.

CASE 8 TSPIC Corp vs Union GR No. 163419

CASE 9 NIASSI vs NELU GR No 162411 June 30, 2008

CASE

10

Cagayan Sugar Milling vs SOLE GR No 128399 Jan 15, 1998

CASE 11 PI Manufacturing vs Union GR No. 167217 Feb 4, 2008

CASE 12 Bay Haven vs Abuan GR No. 160859

July 30, 2008

CASE 13 Balladares vs Peak Ventures GR No. 161794 June 16, 2009

CASE 14
Jethro Intelligence & Security Corp., vs Secretary of DOLE (2009) G.R. 172537 Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the Department of Labor and Employment (DOLE)Regional Office No. IV conducted an inspection at Yakults premises in Calamba, Laguna in t he course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order No. 18-02. Hearings on Garcias complaint and on the subsequent complaints of his co-respondents Gil Cordero et al. were conducted during which Jethro submitted copies of payrolls covering June 16 to 30, 2003, February to May 16-31, 2004, June 16-30, 2003, and February 1-15, 2004. Jethro failed to submit daily time records of the claimants from 2002 to June 2004, however, despite the order for it to do so. By Order of September 9, 2004, the DOLE Regional Director, noting petitioners failure to r ectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials, regular holiday pay, special day premium pay, 13 th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium. Petitioners were also ordered to submit proof of payment to the claimants within ten calendar days, failing which the entire award would be doubled, pursuant to Republic Act No. 8188, and the corresponding writs of execution and garnishment would be issued.

Issues: 1. Whether the SOLE has no jurisdiction over the case because, following Article 129 of the Labor Code, the aggregate money claim of each employee exceeded P5,000.00. 2. Whether petitioner Jethro, as the admitted employer of respondents, could not be expected to keep payrolls and daily time records in Yakults premises as its office is in Quezon City, hence, the inspection conducted in Yakults plant had no basis. 3. Whether or not the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order. Held: While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730). Art. 128 explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary xxx thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representative to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law. Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor standard vio lation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law. It bears emphasis that the SOLE, under Article 106 of the Labor Code, as amended, exercises quasi-judicial power, at least to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He/she or the Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The significance of and binding effect of the compliance orders of the DOLE Secretary is enunciated in Article 128 of the Labor Code. And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor Standards Cases in Regional Offices provides that the filing of a petition for certiorari shall not stay the execution of the appealed order or decision, unless the aggrieved party secures a temporary restraining order (TRO) from the Court. In the case at bar, no TRO or injunction was issued, hence, the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order.

CASE 15
Bankard Employees Union vs NLRC (2004) G.R. 140689 Facts: Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the purpose of

making its hiring rate competitive in the 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. This made Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to request for the increase in the salary of its old, regular employees. Bankard insisted that there was no obligation on the part of the management to grant to all its employees the same increase in an across-the-board manner. Petioner filed a notice of strike. The strike was averted when the dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. NLRC finding no wage distortion dismissed the case for lack of merit. Petitioners motion for reconsideration of the dismissal of the case was denied. Issue: Whether the unilateral adoption by an employer of an upgraded salary resulted in wage distortion within the contemplation of Article 124 of the Labor Code. Held: There exists a wage distortion but the Court will not interfere in the management prerogative of the petitioner. Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article 124 of the Labor Code), the term "wage distortion" was explicitly defined as... a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four elements of wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of the distortion in the same region of the country. Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases. Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each of the existing classes of employees reflects this classification. Put differently, the entry of new employees to the company ipso facto places them under any of the levels mentioned in the new salary scale which private respondent adopted retroactive to April 1, 1993. While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases where the nature of their work differs. Moreover, for purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary. The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage adjustments, then the language of the law should have been broad, not restrictive as it is currently phrased:
Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.

Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage fixing, the intention of the law being that in the event of an increase in minimum wage, the distinctions embodied in the wage structure based on skills, length of service, or other logical bases of differentiation will be preserved.

If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of 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 across-the-board increase. Wage distortion is a factual and economic condition that may be brought about by different causes. The mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification.