G.R. No. 109328 August 16, 1994
ASSOCIATED LABOR UNIONS-TUCP representing its members, DMPIEU-ALU-TUCP, LOCAL 302 and/or GERONIMO DE LOS SANTOS, petitioners, vs. THE HON. NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), ATTY. NOEL AUGUSTO S. MAGBANUA in his capacity as Labor Arbiter, and DEL MONTE PHILIPPINES, INC., respondents.

FACTS

On July 1, 1989, Republic Act No. 6727 (Wage Rationalization Act) took effect, granting a P25.00/day increase in the statutory minimum wage. Private respondent Del Monte Philippines, Inc. gave this P25.00/day increase to its temporary employees (“broilers”) who were then receiving P54.00/day. The regular employees, members of petitioner union who were receiving P100.80/day, were not initially granted a similar increase, prompting them to complain. On February 14, 1990, the parties executed a Memorandum Agreement wherein private respondent granted the union members a P10.00/day wage increase effective January 1, 1990, subject to the union’s right to claim a P15.00/day balance through compulsory arbitration. Petitioners subsequently filed a complaint alleging that a wage distortion was created by the grant of the P25.00/day increase to temporary employees, reducing the salary difference between regular and temporary employees from P46.80 to P21.80. The Labor Arbiter dismissed the complaint, finding no wage distortion due to subsequent salary increases granted to petitioners under their Collective Bargaining Agreement (CBA) and the February 14, 1990 agreement. The National Labor Relations Commission (NLRC) affirmed this decision.

ISSUE

Whether or not a wage distortion existed by reason of the grant of the statutory wage increase to temporary employees, considering the subsequent negotiated wage increases granted to the regular employees.

RULING

The Supreme Court dismissed the petition, ruling that no wage distortion existed. The Court held that whether a wage distortion exists is essentially a question of fact, and the findings of the Labor Arbiter and the NLRC, based on substantial evidence, are entitled to respect and finality. The Court emphasized that Article 124 of the Labor Code, as amended by R.A. No. 6727, expressly provides that where a prescribed wage increase results in wage distortions, the employer and union shall negotiate to correct them, thereby recognizing the validity of negotiated wage increases for this purpose. The legislative intent is to encourage solutions through voluntary negotiation or arbitration. The Court further stated that validating wage increases given by employers to correct distortions is in keeping with the policy of encouraging employers to grant increases higher than the statutory minimum. In this case, the subsequent CBA increases and the voluntary agreement had not only restored but increased the original wage differential between the regular and temporary employees, thus there was no “effective obliteration” of the wage structure distinctions based on skills, length of service, or other logical bases.