GR 140689; (February, 2004) (Digest)
G.R. No. 140689 February 17, 2004
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC., respondents.
FACTS
Bankard, Inc. adopted a New Salary Scale effective April 1, 1993, to make its hiring rates competitive. The scale increased the hiring rates for new employees by P1,000 for Levels I and V, and P900 for Levels II, III, and IV. Salaries of existing employees falling below the new minimums for their respective levels were adjusted upward to meet these new minimums. The Bankard Employees Union-WATU demanded a corresponding across-the-board increase for all old, regular employees, arguing that the new scheme created a wage distortion by favoring new hires.
The Union filed a Notice of Strike, leading the Secretary of Labor to certify the dispute for compulsory arbitration. The NLRC dismissed the case, finding no wage distortion. The Court of Appeals affirmed this decision. The Union elevated the case to the Supreme Court via a petition for review on certiorari.
ISSUE
Did Bankard’s unilateral implementation of a new salary scale, which increased hiring rates for new employees, result in wage distortion under Article 124 of the Labor Code, thereby obligating the employer to grant a corresponding across-the-board increase to all employees?
RULING
No. The Supreme Court ruled that no wage distortion existed and Bankard had no obligation to grant an across-the-board increase. Wage distortion, as defined by law, occurs when an increase eliminates or severely contracts the intentional quantitative differences in wage rates between employee groups in an establishment, blurring distinctions based on skills, length of service, or other logical bases.
The Court found the historical and intentional classification of Bankard employees was based on job levels (I to V), not on the dichotomy between newly hired and old employees. The new salary scale preserved the differentials and hierarchy between these established levels. The increases to hiring rates and the adjustments for incumbent employees below the new minimums were made within the framework of this existing level classification, thus maintaining the structural wage differences. Furthermore, the Collective Bargaining Agreement explicitly recognized management’s prerogative to establish minimum salaries for specific jobs and to adjust rates accordingly. Absent any showing that the action was arbitrary, illegal, or discriminatory, the Court upheld it as a valid exercise of business judgment. The petition was denied.