TITLE OF CASE: Prubankers Association v Prudential Bank & Trust Co.

[GR NO. 131247 | DATE DECIDED: Jan. 25, 1999 | JUSTICE: Panganiban | DIGEST
MAKER: Francis Kyle Subido]

Doctrine

Case Keywords: Wage Distortion

Facts
Nov. 1993, Regional Tripartite Wages and Productivity Board issued Wage
Order(1st) providing for a COLA to workers in the private sector who
rendered service for at least 3 months before its effectivity and for the same
period thereafter: P17.50 = Naga and Legaspi city/ P15.50 for Tabaco,
Daraga, Pili and Iriga/ P10.00 = all other areas in Bicol Region
Subsequent Wage Order (2nd), directing integration of the COLA into the
basic pay of all workers. + increase in the minimum wage rates for all
workers/employees in the private sectors
Respondent granted COLA of P17.50 to its employees at Naga Branch, only
branch covered by the 1st wage order, integrated the P150/month COLA into
the basic pay of its rank-and-file employees at Cebu, Mabolo and P. del
Rosario branches, covered by the 2nd Wage Order
Ptr wrote respondent requesting Labor Management Committee to discuss
and resolve the alleged wage distortion created in the salary structure upon
implementation of said wage orders. demanded in the meetings for
extension of the application of wage orders to employees outside Regions V
and VII (regions that came up w/ the wage orders)
It went to voluntary arbitration. Arbitration Committee: Froilan Bacungan as
Chairman, Attys Anonuevo and de Guzman as members ruled wage
distortion, resolve in accordance w/ Art 124 (LC)
CA: Reversed. No wage distortion. Variance in salary rates of employees in
different regions justified by RA 6727 based on distinctive situations and
needs existing in each region.

PETITIONER: wage distortion in wage rates of employees nationwide

Issue/Holding/Ratio
W/N discrepancy of employees wages in different regions results to wage
distortion?
Wage distortion = 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
 o Presupposes a classification of positions and ranking of these
positions at various levels.
o (FROM GOOGLE) happens when a wage order increasing the rates of
wages removes or significantly reduces the pay advantage of one
position of employees over another.
Wage distortion. 4 elements:
1) Existing hierarchy of positions w/ corresponding salary rates
2) Significant change in the salary rate of lower pay class w/o a concomitant
increase in the salary rate of a higher one
3) Elimination of the distinction between the 2 levels
4) Existence of the distortion in the same region of the country
No wage distortion occurred in the covered branches
o Increase in salary rates of ALL pay classes the hierarchy of
positions was preserved
o Wage disparity between employees holding similar positions but in
different regions =/= wage distortion as contemplated by law
In addition, RA 6727 recognizes regional disparities in the cost of living.
o Uniform national wage is contrary to this law
o Still equal pay for equal work coz that only means all workers in the
region have to have equal pay for equal work but doesnt mean Region
1 = Region 13
Establishment does NOT include all branches and offices in different regions
o applicable in the place where they are sanctioned
Ruling
ASSAILED DECISION IS AFFIRMED