G.R. No. 149758 August 25, 2005
Philex Gold Philippines, Inc., Gerardo H. Brimo, Leonard P. Josef, and Jose B. Anievas, Petitioners, vs. Philex Bulawan Supervisors Union, represented by its President, Jose D. Pampliega, Respondent.

FACTS

Respondent Philex Bulawan Supervisors Union is the exclusive bargaining agent for supervisors of petitioner Philex Gold Philippines, Inc. After signing a CBA, Philex Gold regularized supervisory employees from its sister company, Philex Mining Corporation. These “ex-Padcal” supervisors, absorbed into Philex Gold, were placed on a confidential payroll and received higher salaries and different benefits compared to locally hired supervisors of identical rank performing the same duties. The union filed a complaint for wage differential and damages, alleging discriminatory salary structures.
The Voluntary Arbitrator ruled for the union, finding the wage structure discriminatory and unreasonable. Notably, the maximum salary for an S-4 supervisor was higher than the minimum for an S-5, meaning a promotion could result in a pay cut. The Arbitrator ordered wage adjustments for local hires to match ex-Padcal rates and rectification of the wage scale. Philex Gold’s motion for reconsideration was denied. The Court of Appeals affirmed the Arbitrator’s core finding of discrimination but modified the effectivity date of the wage adjustment.

ISSUE

Whether the employer committed unlawful discrimination by maintaining a wage disparity between locally hired supervisors and ex-Padcal supervisors of the same rank performing similar work.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The employer committed unlawful discrimination, which constitutes an unfair labor practice under Article 248(e) of the Labor Code. The legal logic is anchored on the principle of “equal pay for equal work.” The ex-Padcal and local-hire supervisors were classified under the same ranks (S-1 to S-5) and performed substantially identical functions, yet were paid from separate, unequal pay scales. This created an invalid intra-corporate wage disparity based solely on hiring provenance, not on skill, experience, or job classification.
The Court rejected the argument that the disparity was a valid exercise of management prerogative. While employers have the right to set wages, this prerogative is not absolute. It must be exercised in good faith, with due regard for the rights of labor, and cannot be used as a tool for oppression. Granting higher pay to one group of employees for doing the same work as another group within the same company, without any rational or equitable basis, violates the fundamental rule against discrimination. The irrational wage structure, where a lower rank’s maximum pay exceeded a higher rank’s minimum, further evidenced the arbitrariness of the policy. The award of wage differentials was therefore justified to rectify this unfair labor practice.