INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs.

HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment; HON.
CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN
MACCAULEY in his capacity as the Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC., respondents.

Facts:
Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic
educational institution established primarily for dependents of foreign diplomatic personnel and other temporary
residents.1 To enable the School to continue carrying out its educational program and improve its standard of instruction,
Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected
by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise
applicable laws and regulations attending their employment, except laws that have been or will be enacted for the
protection of employees.

Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two:
(1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires. Foreign-hires are paid more than local-hires.

When negotiations for a new collective bargaining agreement were held petitioner International School Alliance of
Educators, "a legitimate labor union and the collective bargaining representative of all faculty members" 4 of the School,
contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether
foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties.

Issue:
Whether or not local hire teachers shall enjoy the same salary as foreign hire teachers where they perform the same
work

Ruling:
In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and
discrimination by the employer are all the more reprehensible.
The Constitution 17 specifically provides that labor is entitled to "humane conditions of work." These conditions are not
restricted to the physical workplace — the factory, the office or the field — but include as well the manner by which
employers treat their employees.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable
conditions of work, which ensure, in particular:
a. Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work;
xxx xxx xxx
The employer in this case has failed to discharge the burden of proving that foreign-hires perform 25% more efficiently
or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under
similar working conditions.
The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance
of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith."

International law prohibits discrimination, such as the Universal Declaration of Human Rights and the International
Covenant on Economic, Social, and Cultural Rights. The latter promises “Fair wages and equal remuneration for work
of equal value without distinction of any kind.”
In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and
discrimination by the employer are all the more reprehensible.
The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor
Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed. Article 248
declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.

In this jurisdiction, there is the term “equal pay for equal work”, pertaining to persons being paid with equal salaries
and have similar skills and similar conditions. There was no evidence here that foreign-hires perform 25% more
efficiently or effectively than the local-hires.
The State, therefore, has the right and duty to regulate the relations between labor and capital. These relations are not
merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements
included, must yield to the common good.[

1
Atok Big Wedge

Facts:
On 04 September 1950, the Atok-Big Wedge Mutual Benefit Association, a labor union, demanded from the Atok-Big
Wedge Mining Company, among others, an increase of 50 centavos in the daily wage. In the course of conciliatory
measures, some of the demands were granted and the others, including the daily wage increase, rejected. The Court
fixed, effective from the date of the demand, the minimum wage at 2.65 pesos with rice ration and 3.20 without rice
ration, denying deduction from the minimum wage, the value of housing facilities furnished by Atok to its employees and
efficiency bonus. Respondent subsequently presented an urgent petition for authority to cease its operations and lay-
off employees due to heavy losses, increased taxes, high cost of materials, negligible quantity of ore deposits, and the
enforcement of the Minimum Wage Law, the continued operation of the company would lead to its immediate bankruptcy
and collapse.

Instead of hearing the petition, the Court convened the parties for voluntary conciliation and mediation and thereafter,
the parties reached an agreement valuing the facilities that will form part of the wages and to be charged in full or
partially by Respondent against laborer or employee in the exigencies of operation. The labor union argues that to allow
the deduction of facilities appearing in the Agreement would be contrary to the mandate of Section 19 of the Minimum
Wage Law, which states that an employer is not justified in reducing supplements furnished on the date of enactment.

Issue:
Whether or not facilities come within the term “supplements”.

Ruling:
Facilities do not come within the term “supplements”.

The meaning of the term "supplements" has been fixed by the Code of Rules and Regulations promulgated by the Wage
Administration Office to implement the Minimum Wage Law as: extra renumeration or benefits received by wage earners
from their employees and include but are not restricted to pay for vacation and holidays not worked; paid sick leave or
maternity leave; overtime rate in excess of what is required by law; sick, pension, retirement, and death benefits; profit-
sharing; family allowances; Christmas, war risk and cost-of-living bonuses; or other bonuses other than those paid as a
reward for extra output or time spent on the job.

"Supplements", therefore, constitute extra renumeration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary
for the laborer's and his family's existence and subsistence, so that by express provision of the law (sec. 2 [g]) they form
part of the wage and when furnished by the employer are deductible therefrom since if they are not so furnished, the
laborer would spend and pay for them just the same. It is thus clear that the facilities mentioned in the agreement of
October 29, 1952 do not come within the term "supplements" as used in Art. 19 of the Minimum Wage Law.

Mabeza vs NLRC

Facts: Petitioner Norma Mabeza and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel’s
management to sign an instrument attesting to the latter’s compliance with minimum wage and other labor standard
provision. The instrument provides that they have no complaints against the management of the Hotel Supreme as they
are paid accordingly and that they are treated well. The petitioner signed the affidavit but refused to go to the City’s
Prosecutor’s Office to confirm the veracity and contents of the affidavit as instructed by management. That same day,
as she refused to go to the City Prosecutor’s Office, she was ordered by the hotel management to turn over the keys to
her living quarters and to remove her belongings to the hotel’s premises. She then filed a leave of absence which was
denied by her employer. She attempted to return to work but the hotel’s cashier told her that she should not report to
work and instead continue with her unofficial leave of absence. Three days after her attempt to return to work, she filed
a complaint against the management for illegal dismissal before the Arbitration Branch of the NLRC in Baguio City. In
addition to that, she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th
month pay, night differential and other benefits. Peter Ng, in their Answer, argued that her unauthorized leave of absence
from work is the ground for her dismissal. He even maintained that her alleged of underpayment and non-payment of
benefits had no legal basis. He raises a new ground of loss of confidence, which was supported by his filing of criminal
case for the alleged qualified theft of the petitioner. The Labor Arbiter ruled in favor of the hotel management on the
ground of loss of confidence. She appealed to the NLRC which affirmed the Labor Arbiter’s decision. hence, this
petition.

Issue: Whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice.

Held: The NLRC’s decision is reversed. The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or
2
coercion, against his employee’s right to institute concerted action for better terms and conditions of employment.
Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor
standard provisions of the law when he might not have, together with the act of terminating or coercing those who refuse
to cooperate with the employees’ scheme constitutes unfair labor practice. The labor arbiter’s contention that the reason
for the monetary benefits received by the petitioner between 1981 to 1987 were less than the minimum wage was
because petitioner did not factor in the meals, lodging, electric consumption and water she received during the period
of computations. Granting that meals and lodging were provided and indeed constituted facilities, such facilities could
not be deducted without the employer complying first with certain legal requirements. Without satisfying
these requirements, the employer simply cannot deduct the value from the employee’s ages. First, proof must be shown
that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntary
accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value.
These requirements were not met in the instant case. Private respondent failed to present any company policy
to show that the meal and lodging are part of the salary. He also failed to provide proof of the employee’s written
authorization and he failed to show how he arrived at the valuations. More significantly, the food and lodging, or
electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an
employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not
so much lies in the kind but the purpose. Considering, therefore, that hotel workers are required to work on different
shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the
operations of a small hotel, such as the private respondent’s hotel.

Prubankkers Association vs

On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued Wage Order No. RB
05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who ha[d] rendered service
for at least three (3) months before its effectivity, and for the same period [t]hereafter, in the following categories:
SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN PESOS AND
FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00)
for all other areas in the Bicol Region.
Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region VII issued Wage
Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A
into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and
employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five
Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the
cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran.

The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage
Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its
Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03.

ISSUE : The main issue is whether or not a wage distortion resulted from respondents implementation of the aforecited
Wage Orders

a wage distortion shall mean 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.

Elaborating on this statutory definition, this Court ruled: Wage distortion presupposes a classification of positions and
ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically
in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of
basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof
the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level
and the next higher level or rank, between new entrants and old hires, there exists a wage distortion.xxx. The concept
of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among
such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of
the existing classes of employees[11]
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate
of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.
no wage distortion resulted when respondent implemented the subject Wage Orders in the covered branches. In the
said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based
3
on skills, length of service and other logical bases of differentiation was preserved.In other words, the quantitative
difference in compensation between different pay classes remained the same in all branches in the affected region. Put
differently, the distinction between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the
implementation of the two Wage Orders in the said region. Hence, it cannot be said that there was a wage distortion.

Art. 124. Standards/Criteria for Minimum Wage Fixing. - The regional minimum wages to be established by the Regional
Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary
for the health, efficiency and general well-being of the employees within the frame work of the national economic and
social development program. In the determination of such regional minimum wages, the Regional Board shall, among
other relevant factors, consider the following:

(a) The demand for living wages;

(b) Wage adjustment vis-a-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(I) Effects on employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of social and economic
development.
From the above-quoted rationale of the law, as well as the criteria enumerated, a disparity in wages between
employees with similar positions in different regions is necessarily expected. In insisting that the employees of the same
pay class in different regions should receive the same compensation, petitioner has apparently misunderstood both the
meaning of wage distortion and the intent of the law to regionalize wage rates.
It must be understood that varying in each region of the country are controlling factors such as the cost of living;
supply and demand of basic goods, services and necessities; and the purchasing power of the peso. Other
considerations underscore the necessity of the law. Wages in some areas may be increased in order to prevent
migration to the National Capital Region and, hence, to decongest the metropolis. Therefore, what the petitioner herein
bewails is precisely what the law provides in order to achieve its purpose.

BANKARD EMPLOYEES UNION WORKERS ALLIANCE TRADE UNIONS VS NLRC AND BANKARD

Facts:
On May 28, 1993, Bankard's Board of Directors approved a "New Salary Scale", made retroactive to April 1, 1993, for
the purpose of making its hiring rate competitive in the industry’s labor market. The "New Salary Scale" increased the
hiring rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by
nine hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were also
adjusted to reach such rates under their levels.Bankard’s move drew the Bankard Employees Union-WATU (petitioner),
the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to press for the increase
in the salary of its old, regular employees.

Bankard took the position, however, that there was no obligation on the part of the management to grant to all its
employees the same increase in an across-the-board manner.The Second Division of the NLRC, by Order of May 31,
1995, finding no wage distortion, dismissed the case for lack of merit.
Petitioner’s motion for reconsideration of the dismissal of the case was, by Resolution of July 28, 1995, denied.

ISSUE:WHETHER OR NOT THE NEW SALARY SCALE OF BANKARD RESULTED IN WAGE DISTORTION

RULINGS:
No. Normally, a company has a wage structure or method of determining the wages of its employees. In a problem
dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of employees that
establishes distinctions among them on some relevant or legitimate bases.6

Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each
of the existing classes of employees reflects this classification. The employees of private respondent have been
"historically" classified into levels, i.e. I to V, and not on the basis of their length of service. Put differently, the entry of
new employees to the company ipso facto place[s] them under any of the levels mentioned in the new salary scale
which private respondent adopted retroactive [to] April 1, 1993. Petitioner cannot make a contrary classification of private
respondent’s employees without encroaching upon recognized management prerogative of formulating a wage
structure, in this case, one based on level.7 (Emphasis and underscoring supplied)

4
It is thus clear that there is no hierarchy of positions between the newly hired and regular employees of Bankard, hence,
the first element of wage distortion provided in Prubankers is wanting.

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.

BALINANG, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK and TRUST
COMPANY, respondents.
Facts:
On 25 May 1989, the Metropolitan Bank & Trust Company entered into a collective bargaining agreement with the
Metropolitan Bank & Trust Company Employees Union MBTCEU, granting a monthly P900 wage increase effective 01
January 1989. With the exclusion of the probationary employees.
Republic Act 6727 was enacted "an act to rationalize wage policy determination be establishing the mechanism and
proper standards thereof, . . . fixing new wage rates, providing wage incentives for industrial dispersal to the countryside,
and for other purposes," took effect which provides for the agricultural or non-agricultural employees salary, be increased
by twenty-five pesos (P25) per day, . . .: Provided, That those already receiving above the minimum wage rates up to
one hundred pesos(P100.00) shall shall also receive an increase of twenty-five pesos (P25.00) per day, . . .
Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary
employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose daily
rate was P100 and below. The bank refused to give the same increase to its regular employees who were receiving
more than P100 per day and recipients of the P900 CBA increase.
Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees into (a)
the probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who had been
promoted to permanent or regular status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose
pay was over P100 a day, and that, between the two groups, there emerged a substantially reduced salary gap.

The Union sought from the bank the correction of the alleged distortion in pay by granting 750 increase in regular
employees with above 100 pay and reciepient of 900 CBA increase. To avoid strike the bank petitioned the secretary of
Labor to assume jurisdiction, then assigned to Labor Arbiter for arbitration.

The Labor arbiter sided with the Union, that such salary increase resulted in the severe contraction of an intentional
quantitative difference in wage between employee groups. The bank appealed to the NLRC, and the NLRC reversed
the decision of the Labor Arbiter in favour of Metrobank and Trust Company.

Issue:
Whether there has been a wage distortion, and a need to grant the increase 750 to regular employees receiving above
100 peso per day.

Ruling:

There has been a wage distortion. However it is not conductive to grant the increase of P750 to regular employees
receiving above 100 peso per day.
The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:

(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the elimination or severe
contradiction 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 definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as a result of an
increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative differences in wage
or salary rates" would occur "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."
In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage
or salary differences; a severe contraction thereof is enough.

We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard considered by
the regional Tripartite Wages and Productivity Commission for the correction of pay scale structures in cases of wage
distortion, 15 to well be the appropriate measure to balance the respective contentions of the parties in this instance. We
also view it as being just and equitable.
Minimum Wage = % x Prescribed = Distortion
—————— Increased Adjustment
Actual Salary
5
G.R. No. 91980 June 27, 1991
ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN TALUSAN and SAN MIGUEL
CORPORATION, respondents.

FACTS: There was a wage order that cause a wage distortion with the 4500 employees of the company. The union then
proposed to the management that the wage distortion be corrected by implementing a php 25.00 as wage increase and
later on lowered to php 15.00. The company however, only effected a php7.00 wage increase. The union considered
the company’s move as ignoring their demand.

As a result the union went on strike/slowdown by only rendering 8 hours per day work shift as against the company’s
common practice for 5 years of 10-14 hours per day work shift. caused substantial losses to SMC.

SMC filed with the Arbitration Branch of the National Labor Relations Commission a complaint against the Union and
its members "to declare the strike or slowdown illegal" and to terminate the employment of the union officers and shop
stewards.

It is SMC's submittal that the coordinated reduction by the Union's members of the work time theretofore willingly and
consistently observed by them, thereby causing financial losses to the employer in order to compel it to yield to the
demand for correction of "wage distortions," is an illegal and "unprotected" activity.

ISSUE: Is the Union’s action proper?

HELD: No, although the Union have a right to self organization and to concerted activities, they are not absolute. It is
usually dependent on the legality & purpose sought to be attained and the means employed therefore. The distortion of
wage structure within the establishment resulting from the application of any prescribed wage increase by virtue of a
law of wage is order can be resolved in sec. 3 of RA 6727, it describes a specific, detailed and comprehensive procedure
for the correction thereof and implicitly excluding strikes or lockouts as mode of settlement of such issue.

the employer and the union shall negotiate to correct the distort-ions. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under their collective bargaining agreementand, if it remains unresolved,
through voluntary arbitration.

the employer and the union shall negotiate to correct the distort-ions. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under their collective bargaining agreementand, if it remains unresolved,
through voluntary arbitration. U

illicit because contrary to the workers' explicit contractual commitment "that there shall be no strikes, walkouts, stoppage
or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of
any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during
the term of . . . (their collective bargaining) agreement.16