PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION v. CHEVRON GEOTHERMAL PHILS. HOLDINGS, INC. G.R. No. 207252 | 2018
Labor Organization vs. Chevron Geothermal Phils.: A Dispute Over Salary Increases and Distortion
Labor Organization Petitions Against Chevron Geothermal Phils. Over Alleged Salary Distortion
A Collective Bargaining Agreement Leads to a Dispute Over Salary Increases
G.R. No. 207252. January 24, 2018
PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION (PGIEU), Petitioner, -versus-
CHEVRON GEOTHERMAL PHILS. HOLDINGS, INC., Respondent.
Ponente: REYES, JR., J:
Nature of petition:
This is a Petition for Review on Certiorari[1] pursuant to Rule 45 of the Rules of Court, as amended, seeking to reverse and set aside the Decision[2] dated November 5, 2012 of the Court of Appeals (CA) in CA-G.R. SP. No. 115796, dismissing the Petition for Review entitled "Philippine Geothermal, Inc. Employees Union (PGIEU) vs. Chevron Geothermal Phils. Holdings, Inc.'' as well as the Resolution[3] dated May 17, 2013 denying Philippine Geothermal, Inc. Employees Union's (petitioner) Motion[4] for Reconsideration dated November 27, 2012.
Dispositive Portion:
WHEREFORE, premises considered, the petition is DENIED. The Decision dated November 5, 2012 of the Court of Appeals in CA-G.R. SP No. 115796 is hereby AFFIRMED.
Doctrines:
Prubankers Association v. Prudential Bank and Trust Company laid down the four elements of wage distortion, to wit:
(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; and(4) the existence of the distortion in the same region of the country.
The apparent increase in Lanao and Cordovales' salaries as compared to the other company workers who also have the same salary/pay grade with them should not be interpreted to mean that they were given a premature increase for November 1, 2008, thus resulting to a wage distortion. The alleged increase in their salaries was not a result of the erroneous application of Article VII and Annex D of the CBA, rather, it was because when they were hired by respondent in 2009, when the hiring rates were relatively higher as compared to those of the previous years. Verily, the setting and implementation of such various engagement rates were purely an exercise of the respondent's business prerogative in order to attract or lure the best possible applicants in the market and which We will not interfere with, absent any showing that it was exercised in bad faith.
Management prerogative gives an employer freedom to regulate according to their discretion and best judgment, all aspects of employment including work assignment, working methods, the processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. This right is tempered only by these limitations: that it must be exercised in good faith and with due regard to the rights of the employees.
If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of Bankard's hiring rate. An employer would be discouraged from adjusting the salary rates of a particular group of employees for fear that it would result to a demand by all employees for a similar increase, especially if the financial conditions the business cannot address an across-the-board increase.
It is the prerogative of management to regulate, according to its discretion and judgment all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or agreements and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.
Short Facts:
A labor organization, acting as the bargaining agent for the rank-and-file employees of Chevron Geothermal Phils. Holdings, Inc., filed a complaint against the company for breaching a provision on salary increases in their Collective Bargaining Agreement. The dispute arose when Chevron granted salary increases to probationary employees, allegedly resulting in salary distortion among union members. The case went to voluntary arbitration, with the arbitrator ruling in favor of Chevron. The labor organization filed a petition for review, but the Court of Appeals sustained the arbitrator's decision, leading to this petition.
In 2008, a labor organization acting as the certified bargaining agent of the rank-and-file employees of Chevron Geothermal Phils. Holdings, Inc. executed a Collective Bargaining Agreement (CBA) with the company. The CBA contained a provision on salary increases for the employees, which the labor organization alleged was not being implemented properly. In 2009, the labor organization sent a letter to the company expressing its concern over the matter, but the company denied any occurrence of salary distortion and explained its remuneration philosophy. The labor organization, with the company's approval, referred the dispute to voluntary arbitration, claiming that the company breached the CBA provision on salary increases by granting them to probationary employees, which resulted in salary distortion among union members. The arbitrator ruled in favor of the company, but the labor organization filed a petition for review with the Court of Appeals, which sustained the arbitrator's decision. The labor organization filed this petition, seeking to reverse the previous rulings.
Issue:
WON the grant of wage increase to Lanao and Cordovales is a valid exercise of management
prerogative by respondent. - YES.
Held:
YES, and there was no wage distortion in this case.
Upon the enactment of Republic Act (R.A.) No. 6727 (Wage
Rationalization Act, amending among others, Article 124 of the Labor Code) on June 9, 1989, the
term "Wage Distortion" was explicitly defined as "a situation where an increase in prescribed wage
rates results in the elimination or severe contraction of intentional quantitative differences in wage or
salary rate between and among employee groups 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."
Contrary to petitioner's claim of alleged "wage distortion", Article 124 of the Labor Code of the
Philippines only cover wage adjustments and increases due to a prescribed law or wage order,
viz.: Article 124. Standards/Criteria for Minimum Wage Fixing. x x x x (Take note of this. Kailangan
may wage order or law that caused wage distortion. If the company raises the entry salary of the
newbies, it is part of management prerogative to lure caliber applicants)
Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.
Prubankers Association v. Prudential Bank and Trust Company laid down the four elements of wage
distortion, to wit: (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; and (4) the existence
of the distortion in the same region of the country.
The apparent increase in Lanao and Cordovales' salaries as compared to the other company workers
who also have the same salary/pay grade with them should not be interpreted to mean that they were
given a premature increase for November 1, 2008, thus resulting to a wage distortion. The alleged
increase in their salaries was not a result of the erroneous application of Article VII and Annex D of
the CBA, rather, it was because when they were hired by respondent in 2009, when the hiring rates were relatively higher as compared to those of the previous years. Verily, the setting and
implementation of such various engagement rates were purely an exercise of the respondent's
business prerogative in order to attract or lure the best possible applicants in the market and which
we will not interfere with, absent any showing that it was exercised in bad faith.
Management prerogative gives an employer freedom to regulate according to their discretion and best
judgment, all aspects of employment including work assignment, working methods, the processes to
be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers. This right is tempered only by these limitations: that it
must be exercised in good faith and with due regard to the rights of the employees.
Petitioner claims that the wages of other employees should also be increased in order to maintain the
difference between their salaries and those of employees granted a "premature" wage increase. Such
a situation may be remedied if it falls under the concept of a wage distortion as defined by Article 124
of the Labor Code of the Philippines. However, as already discussed, there is no wage distortion in
the case at bench. Not all increases in salary which obliterate the salary differences of certain
employees should be perceived as wage distortion.
On a final note, the Court has ruled time and again that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence and affirmed by the CA, in the exercise of its expanded jurisdiction to review findings of the National Labor Relations Commission.