BUNKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS v.
● According to Wage Rationalization Act, RA 6727 – Wage
NLRC, BANKARD INC.
Doctrine: Salary increase made by the employer does not
automatically result in wage distortion absent the 4 elements. Even
so, there is no need to correct a wage distortion absent any bad faith
on the part of the employer and absent any law which mandates them
to do so.
FACTS:
● In May 1993 - Bankard issued a New Salary Scale directive for
purpose of making its hiring rate competitive in the industry’s
labor market.
● The increase for the hiring rates of new employees are
reflected accordingly:
● Level I and V – by 1k
● Level II, III, IV - by 900
● The scale was made to apply retroactively to April 1993,
thereby increasing the salary rates of employees hired at that
time.
● Bankard Union also demanded increase in salary of the old
regular employees. But it was unheeded on the ground that
Bankard has no obligation to grant the same to all.
● Bankard Union then sent notice of strike but the director of
National Conciliation and Mediation found that the issue is
not strikeable.
● So filed another notice of strike. This time the issue was
certified to Sec. of Labor and Employment.
● To this effect, NLRC found no case of wage distortion. CA
affirmed.
ISSUE: Whether unilateral adoption by an employer of an upgraded
salary scale that increased the hiring rates of new employees BUT not
the rates of old ones resulted in WAGE DISTORTION
HELD: NO
distortion is a situation where an increase in prescribed wage
rates 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 distinctions embodies in wage
structures based on skills, length of service, or other logical
bases of differentiation.
● Prubankers v. Prudential Bank laid down 4 ELEMENTS of
wage distortion:
1. Existing hierarchy of positions with corresponding salary
rates
➢ Wage distortion presupposes classification of
employees based on skills, knowledge, complexity of
job and other logical differentiation.
➢ In this case, the classification was not among those
considered as logical.
➢ Here, classification was between newly hired and
old regular employees. No hierarchy of positions
involved.
2. Significant change in salary rate of a lower pay class w/o
increase in salary rate of a higher one
➢ Seniority cannot be the basis of the change when
the nature of employees’ works differs.
➢ The gap in wage rate does not matter if there is no
classification based on rank to begin with.
3. Elimination of distinction between two levels
4. Existence of distortion in same region of the country
● Thus, some elements are absent.
● Further, classification of employees is a matter of
management prerogative and cannot be created by
employees themselves.
 ● Accordingly, they cannot be compelled or obliged under the
law to correct wage distortion. Because if that is the case,
then adjustment or increase in salary rates would be more
unachievable because of the employer’s fear to have to
increase all of its employees wages.
● So, existence of wage distortion does not call for its
correction unless the law or any other source of obligation
requires them to do so.
● Therefore, absent any manifestation of bad faith in increasing
salary of certain employees but denied that of the others, is a
valid management decision.
Petition is denied.