GR 103586; (July, 1994) (Digest)
G.R. No. 103586 July 21, 1994
NATIONAL FEDERATION OF LABOR, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FRANKLIN BAKER COMPANY OF THE PHILIPPINES (DAVAO PLANT), respondents.
FACTS
Between November 1983 and November 1984, Wage Orders Nos. 3 to 6 were issued, raising statutory minimum wages. Prior to these orders, a wage gap of P4.56 existed between the regular and casual employees of Franklin Baker Company. The successive implementation of the wage orders progressively narrowed this gap. By June 16, 1984, upon the effectivity of Wage Order No. 5, the gap was completely eliminated, with both groups receiving P34.00 daily, creating a wage distortion. Subsequently, on July 1, 1984, a new Collective Bargaining Agreement (CBA) granted regular employees a P1.84 increase, re-establishing a differential. Later wage adjustments, including a company-granted across-the-board increase and another CBA increase, further widened the gap.
ISSUE
Did a wage distortion exist that required rectification under the law, and if so, what was the appropriate remedy and its effective period?
RULING
The Supreme Court dismissed the petition, upholding the NLRC’s finding. A wage distortion is defined as the elimination of the quantitative differences in wage rates between employee groups due to government-mandated increases. The distortion in this case commenced on June 16, 1984, when Wage Order No. 5 equalized the wages of regular and casual employees at P34.00. However, this distortion was not permanent. It was corrected fifteen days later, on July 1, 1984, when the new CBA took effect and granted regular employees a negotiated wage increase of P1.84, thereby restoring a differential. The law requires the restoration of the distortion only for its duration. Since the distortion existed merely from June 16 to June 30, 1984, the NLRC correctly limited the company’s obligation to pay a P2.00 daily increase to regular workers for that 15-day period to bridge the gap created by the statutory increase. The subsequent wage differentials resulted from voluntary, negotiated CBA increases and company-initiated adjustments, which are separate from the state-mandated corrections for distortion and do not perpetuate a legally cognizable distortion.