10 MBTC Union v. NLRC

10 Metropolitan Bank and Trust Company Employees Union v. NLRC effect. Under Sec.
effect. Under Sec. 4, “the statutory minimum wage rates of all

G.R. No. 102636 | 10 September 1993 | Vitug | Santos workers and employees in the private sector, whether agricultural
or non-agricultural, shall be increased by P25 per day xxx Provided,
PETITIONER: METROPOLITAN BANK & TRUST COMPANY EMPLOYEES those already receiving above the minimum wage rates up to
UNION-ALU-TUCP and ANTONIO V. BALINANG P100.00 shall also receive an increase of P25.00 per day. xxx”
RESPONDENTS: METROPOLITAN BANK & TRUST COMPANY - Pursuant to such provision, the bank gave the 25.00 increase per
day, or 750 per month to its probationary employees and and to
RECIT-READY: MBTC (respondent bank) entered into a collective bargaining those who had been promoted to regular or permanent status
agreement with MBTCEU (petitioner union), granting the following increases: before 01 Jan 1989 but whose daily rate was 100 below.
900.00 effective 01 Jan. 1989; 600.00 effective 01 Jan. 1990; 200.00 effective 01 - However, the bank refused to give the same treatment to its regular
Jan. 1991. One month later, RA 6727 or the Wage Rationalization Act took effect employees who was receiving more than 100 pesos per day and
it provided an across-the-board hike of 25php wage increase. Respondent the recipients of the 900.00 wage increase.
complied with the wage order except to the recipients of the 900.00 wage 3. MBTCEU argues that the bank’s implantation of RA 6727 resulted in the
increase. MBTCEU argues that the bank’s implantation of RA 6727 resulted in categorization of the employees into probationary and regular employees.
the categorization of the employees into probationary and regular employees, Between those two groups, there emerged a substantially salary gap.
and a wage distortion arose of from it. LA ruled in favor of union. NLRC reversed. MBTCEU then sought from the bank the correction of the alleged wage
However, Presiding Commissioner Bonto-Perez dissented. She opined that there distortion.
may not be an obliteration nor elimination of said quantitative - To prevent a strike, the parties agreed to refer the issue for
distinction/difference, but there is a contraction. SC ruled that a wage distortion compulsory arbitration.
exists in the case at bar. The Court held that in mandating an adjustment, the law 4. LA: Ruled in favor of the union on the ground that it is not necessary that a
did not require that there ba an elimination or total abrogation of quantitative big number of wage earners within a company be benefited by a mandatory
wage or salary differences. A severe contraction is enough. As observed by increase before a wage distortion will take effect.
Commissioner Bonto-Perez, the pay differentials contracted or went down by NLRC: Reversed LA. They ruled that the reduction in the wage gaps
about 83%. Clearly, there is severe contraction and wage distortion exists. between said levels is not significant as to obliterate or result in severe
contraction of the intentional qualitative differences in salary rates between
the employee groups. Consequently, wage distortion does not exist.
DOCTRINE:
IMPT! Presiding Commissioner Bonto-Perez dissented. She opined that
Wage Distortion means a situation where an increase in prescribed wage results there may not be an obliteration nor elimination of said quantitative
in the elimination or severe contraction of intentional quantitative differences in distinction/difference aforecited but clearly there is a contraction. The
wage or salary rates between and among employee groups in an establishment quantitative intended distinction in pay between the two groups of workers in
as to effectively obliterate the distinctions embodied in such wage structure respondent compant was contracted by more than 50%, particularly, 83%.
based on skills, length of service, or other logical bases of differentiation. Hence, there is evident severe contraction resulting in the wage distortion.
She held that the formula incorporated under Wage Order No. IV-02 for
correction of pay scale structures in cases of wage distortion is applicable in
FACTS: the case at bar:
1. MBTC (respondent bank) entered into a collective bargaining agreement Minimum Wage = % x Prescribed = Distortion Actual Salary Increase Adjustment
with MBTCEU (petitioner union), granting the following increases: 5. MBTCEU now argues before the SC to give due course to its claim for an
- 900.00 effective 01 Jan. 1989; across-the-board hike of 25.00 under RA 6727. It alleges that NLRC acted
- 600.00 effective 01 Jan. 1990; with gadalej when it refused to acknowledge the existence of a wage
- 200.00 effective 01 Jan. 1991. distortion.
2. MBTCEU also bargained for the inclusion of the probationary employees so
they can likewise benefit from the increases. The bank refused. ISSUES: 1. W/N a wage distortion exists in the case at bar? YES
Consequently, only regular employees as of 01 January 1989 were given the
increase. RULING:
- One month later, RA 6727 or the Wage Rationalization Act took
1. Wage Distortions means a situation where an increase in prescribed wage 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.
The Court held that in mandating an adjustment, the law did not require that there ba
an elimination or total abrogation of quantitative wage or salary differences. A severe
contraction is enough. As observed by Commissioner Bonto-Perez, the pay
differentials contracted or went down by about 83%. Clearly, there is severe
contraction and wage distortion exists.
The intentional quantitative differences in wage among employees of the bank has
been set by the CBA to about 900php per month as of 1 Jan. 1989. It is intentional
as it has been arrived at through the collective bargaining process. The Court
explained it is the intention of the parties, whether the benefits under a CBA should
be equated with those granted by law or not, must prevail and be given effect unless
there are compelling reasons.

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10 Metropolitan Bank and Trust Company Employees Union v. NLRC effect. Under Sec.

effect. Under Sec. 4, “the statutory minimum wage rates of all

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