567 Phil.

580

SANDOVAL-GUTIERREZ, J.:

The Court has always promoted the policy of encouraging employers to grant wage and allowance
increases to their employees higher than the minimum rates of increases prescribed by statute or
administrative regulation. Consistent with this, the Court also adopts the policy that requires recognition
and validation of wage increases given by employers either unilaterally or as a result of collective
bargaining negotiations in an effort to correct wage distortions.[1]

Before us is a motion for reconsideration of our Resolution dated April 18, 2005 denying the present
petition for review on certiorari for failure of the petitioner to show that a reversible error has been
committed by the Court of Appeals in its (a) Decision dated July 21, 2004 and (b) Resolution dated
February 18, 2005.

The facts are:

Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in the manufacture and
sale of household appliances. On the other hand, respondent P.I. Manufacturing Supervisors and
Foremen Association (PIMASUFA) is an organization of petitioner's supervisors and foremen, joined in
this case by its federation, the National Labor Union (NLU).

On December 10, 1987, the President signed into law Republic Act (R.A.) No. 6640[2] providing, among
others, an increase in the statutory minimum wage and salary rates of employees and workers in the
private sector. Section 2 provides:

SEC. 2. The statutory minimum wage rates of workers and employees in the private sector, whether
agricultural or non-agricultural, shall be increased by ten pesos (P10.00) per day, except non-agricultural
workers and employees outside Metro Manila who shall receive an increase of eleven pesos (P11.00) per
day: Provided, That those already receiving above the minimum wage up to one hundred pesos
(P100.00) shall receive an increase of ten pesos (P10.00) per day. Excepted from the provisions of this
Act are domestic helpers and persons employed in the personal service of another.

Thereafter, on December 18, 1987, petitioner and respondent PIMASUFA entered into a new Collective
Bargaining Agreement (1987 CBA) whereby the supervisors were granted an increase of P625.00 per
month and the foremen, P475.00 per month. The increases were made retroactive to May 12, 1987, or
prior to the passage of R.A. No. 6640, and every year thereafter until July 26, 1989. The pertinent
portions of the 1987 CBA read:

ARTICLE IV

SALARIES AND OVERTIME

Section 1. The COMPANY shall grant to all regular supervisors and foremen within the coverage of the
unit represented by the ASSOCIATION, wage or salary increases in the amount set forth as follows:

A. For FOREMEN

Effective May 12, 1987, an increase of P475,00 per month to all qualified regular foremen who are in the
service of the COMPANY as of said date and who are still in its employ on the signing of this Agreement,
subject to the conditions set forth in sub-paragraph (d) hereunder;

a) Effective July 26, 1988, an increase of P475.00 per month/employee to all covered foremen;

b) Effective July 26, 1989, an increase of P475.00 per month/per employee to all covered foremen;

c) The salary increases from May 12, 1987 to November 30, 1987 shall be excluding and without
increment on fringe benefits and/or premium and shall solely be on basic salary.

B. For SUPERVISORS

a) Effective May 12, 1987, an increase of P625.00 per month/employee to all qualified regular
supervisors who are in the service of the COMPANY as of said date and who are still in its employ on the
signing of the Agreement, subject to the conditions set forth in subparagraph (d) hereunder;

b) Effective July 26, 1988, an increase of P625.00 per month/employee to all covered supervisors;
c) Effective July 26, 1989, an increase of P625.00 per month/employee to all covered supervisors;

d) The salary increase from May 12, 1987 to November 30, 1987 shall be excluding and without
increment on fringe benefits and/or premiums and shall solely be on basic salary.

On January 26, 1989, respondents PIMASUFA and NLU filed a complaint with the Arbitration Branch of
the National Labor Relations Commission (NLRC), docketed as NLRC-NCR Case No. 00-01-00584, charging
petitioner with violation of R.A. No. 6640.[3] Respondents attached to their complaint a numerical
illustration of wage distortion resulting from the implementation of R.A. No. 6640.

On March 19, 1990, the Labor Arbiter rendered his Decision in favor of respondents. Petitioner was
ordered to give the members of respondent PIMASUFA wage increases equivalent to 13.5% of their basic
pay they were receiving prior to December 14, 1987. The Labor Arbiter held:

As regards the issue of wage distortion brought about by the implementation of R.A. 6640

It is correctly pointed out by the union that employees cannot waive future benefits, much less those
mandated by law. That is against public policy as it would render meaningless the law. Thus, the waiver
in the CBA does not bar the union from claiming adjustments in pay as a result of distortion of wages
brought about by the implementation of R.A. 6640.

Just how much are the supervisors and foremen entitled to correct such distortion is now the question.
Pursuant to the said law, those who on December 14, 1987 were receiving less than P100.00 are all
entitled to an automatic across- the-board increase of P10.00 a day. The percentage in increase given
those who received benefits under R.A. 6640 should be the same percentage given to the supervisors
and foremen.

The statutory minimum pay then was P54.00 a day. With the addition of P10.00 a day, the said minimum
pay raised to P64.00 a day. The increase of P10.00 a day is P13.5% of the minimum wage prior to
December 14, 1987. The same percentage of the pay of members of petitioner prior to December 14,
1987 should be given them.
Finally, the claim of respondent that the filing of the present case, insofar as the provision of R.A. 6640 is
concerned, is premature does not deserve much consideration considering that as of December 1988,
complainant submitted in grievance the aforementioned issue but the same was not settled.[4]

On appeal by petitioner, the NLRC, in its Resolution dated January 8, 1991, affirmed the Labor Arbiter's
judgment.

Undaunted, petitioner filed a petition for certiorari with this Court. However, we referred the petition to
the Court of Appeals pursuant to our ruling in St. Martin Funeral Homes v. NLRC.[5] It was docketed
therein as CA-G.R. SP No. 54379.

On July 21, 2004, the appellate court rendered its Decision affirming the Decision of the NLRC with
modification by raising the 13.5% wage increase to 18.5%. We quote the pertinent portions of the Court
of Appeals Decision, thus:

Anent the fourth issue, petitioner asseverates that the wage distortion issue is already barred by Sec. 2
Article IV of the Contract denominated as "The Company and Supervisors and Foremen Contract" dated
December 18, 1987 declaring that it "absolves, quit claims and releases the COMPANY for any monetary
claim they have, if any there might be or there might have been previous to the signing of this
agreement." Petitioner interprets this as absolving it from any wage distortion brought about by the
implementation of the new minimum wage law. Since the contract was signed on December 17, 1987, or
after the effectivity of Republic Act No. 6640, petitioner claims that private respondent is deemed to
have waived any benefit it may have under the new law.

We are not persuaded.

Contrary to petitioner's stance, the increase resulting from any wage distortion caused by the
implementation of Republic Act 6640 is not waivable. As held in the case of Pure Foods Corporation vs.
National Labor Relations Commission, et al.:

"Generally, quitclaims by laborers are frowned upon as contrary to public policy and are held to be
ineffective to bar recovery for the full measure of the worker's rights. The reason for the rule is that the
employer and the employee do not stand on the same footing."

Moreover, Section 8 of the Rules Implementing RA 6640 states:

No wage increase shall be credited as compliance with the increase prescribed herein unless expressly
provided under valid individual written/collective agreements; and provided further that such wage
increase was granted in anticipation of the legislated wage increase under the act. But such increases
shall not include anniversary wage increases provided in collective bargaining agreements.

Likewise, Article 1419 of the Civil Code mandates that:

When the law sets, or authorizes the setting of a minimum wage for laborers, and a contract is agreed
upon by which a laborer accepts a lower wage, he shall be entitled to recover the deficiency.

Thus, notwithstanding the stipulation provided under Section 2 of the Company and Supervisors and
Foremen Contract, we find the members of private respondent union entitled to the increase of their
basic pay due to wage distortion by reason of the implementation of RA 6640.

On the last issue, the increase of 13.5% in the supervisors and foremen's basic salary must further be
increased to 18.5% in order to correct the wage distortion brought about by the implementation of RA
6640. It must be recalled that the statutory minimum pay before RA 6640 was P54.00 a day. The increase
of P10.00 a day under RA 6640 on the prior minimum pay of P54.00 is 18.5% and not 13.5%. Thus,
petitioner should be made to pay the amount equivalent to 18.5% of the basic pay of the members or
private respondent union in compliance with the provisions of Section 3 of RA 6640."

Petitioner filed a motion for reconsideration but it was denied by the appellate court in its Resolution
dated February 18, 2005.

Hence, the present recourse, petitioner alleging that the Court of Appeals erred:

1) In awarding wage increase to respondent supervisors and foremen to cure an alleged wage distortion
that resulted from the implementation of R.A. No. 6640.

2) In disregarding the wage increases granted under the 1987 CBA correcting whatever wage distortion
that may have been created by R.A. No. 6640.

3) In awarding wage increase equivalent to 18.5% of the basic pay of the members of respondent
PIMASUFA in violation of the clear provision of R.A. No. 6640 excluding from its coverage employees
receiving wages higher than P100.00.
4) In increasing the NLRC's award of wage increase from 13.5% to 18.5%, which increase is very much
higher than the P10.00 daily increase mandated by R.A. No. 6640.

Petitioner contends that the findings of the NLRC and the Court of Appeals as to the existence of a wage
distortion are not supported by evidence; that Section 2 of R.A. No. 6640 does not provide for an
increase in the wages of employees receiving more than P100.00; and that the 1987 CBA has obliterated
any possible wage distortion because the increase granted to the members of respondent PIMASUFA in
the amount of P625.00 and P475.00 per month substantially widened the gap between the foremen and
supervisors and as against the rank and file employees.

Respondents PIMASUFA and NLU, despite notice, failed to file their respective comments.

In a Minute Resolution dated April 18, 2005, we denied the petition for petitioner's failure to show that
the Court of Appeals committed a reversible error.

Hence, this motion for reconsideration.

We grant the motion.

In the ultimate, the issue here is whether the implementation of R.A. No. 6640 resulted in a wage
distortion and whether such distortion was cured or remedied by the 1987 CBA.

R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly defines "wage distortion" as:

x x x 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 the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of differentiation.

Otherwise stated, wage distortion means the disappearance or virtual disappearance of pay differentials
between lower and higher positions in an enterprise because of compliance with a wage order.[6]
In this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the
implementation of R.A. No. 6640. The numerical illustration submitted by respondents[7] shows such
distortion, thus:

II WAGE DISTORTION REGARDING RA-6640 (P10.00 per day increase effective December 31, 1987)

Illustration of Wage Distortion and corresponding wage adjustments as provided in RA-6640

NAME OF SUPERVISOR (S)

AND

FOREMAN (F)

RATE

BEFORE

INCREASE

OF

RA-6640

P10.00

RATE

AFTER

INCREASE

OF

RA-6640

P10.00

P109.01
OVER-

PASSED

P108.80

RATE AFTER

ADJUSTMENT

P10.00

P118.80

OVER-

PASSED

P188.08

RATE AFTER

ADJUSTMENT

P10.00

P128.08

OVER-

PASSED

P123.76

RATE AFTER

ADJUSTMENT

P10.00
1. ALCANTARA, V (S)

P 99.0

P 109.01

2. MORALES, A (F)

94.93

104.93

3. SALVO, R (F)

96.45

106.45

Note: No. 1 to 3 with increase of RA-6640

4. BUENCHUCHILLO, C (S)

102.38

102.38

P 112.38
5. MENDOZA, D (F)

107.14

107.14

117.14

6. DEL PRADO, M (S)

108.80

108.80

118.80

7. PALENSO, A (F)

109.71

109.71

P 119.71

8. OJERIO, E (S)

111.71

111.71

121.71
9. REYES, J (S)

114.98

114.98

124.98

10. PALOMIQUE, S (F)

116.79

116.79

126.79

11. PAGLINAWAN, A (S)

116.98

116.98

126.98

12. CAMITO, M (S)

117.04

117.04

127.04

13. TUMBOCON, P (S)

117.04

117.44

127.44

14. SISON JR., B (S)

118.08

118.08

128.08

15. BORJA, R (S)

119.80

119.80

P129.80

16. GINON, D (S)

123.76

123.76

133.76

17. GINON, T (S)

151.49
151.49

18.ANDRES, M (S)

255.72

255.72

Note: No. 4 to 18 no increase in R.A. No. 6640

Notably, the implementation of R.A. No. 6640 resulted in the increase of P10.00 in the wage rates of
Alcantara, supervisor, and Morales and Salvo, both foremen. They are petitioner's lowest paid supervisor
and foremen. As a consequence, the increased wage rates of foremen Morales and Salvo exceeded that
of supervisor Buencuchillo. Also, the increased wage rate of supervisor Alcantara exceeded those of
supervisors Buencuchillo and Del Prado. Consequently, the P9.79 gap or difference between the wage
rate of supervisor Del Prado and that of supervisor Alcantara was eliminated. Instead, the latter gained a
P.21 lead over Del Prado. Like a domino effect, these gaps or differences between and among the wage
rates of all the above employees have been substantially altered and reduced. It is therefore undeniable
that the increase in the wage rates by virtue of R.A. No. 6640 resulted in wage distortion or the
elimination of the intentional quantitative differences in the wage rates of the above employees.

However, while we find the presence of wage distortions, we are convinced that the same were cured or
remedied when respondent PIMASUFA entered into the 1987 CBA with petitioner after the effectivity of
R.A. No. 6640. The 1987 CBA increased the monthly salaries of the supervisors by P625.00 and the
foremen, by P475.00, effective May 12, 1987. These increases re-established and broadened the gap, not
only between the supervisors and the foremen, but also between them and the rank-and-file employees.
Significantly, the 1987 CBA wage increases almost doubled that of the P10.00 increase under R.A. No.
6640. The P625.00/month means P24.03 increase per day for the supervisors, while the P475.00/month
means P18.26 increase per day for the foremen. These increases were to be observed every year,
starting May 12, 1987 until July 26, 1989. Clearly, the gap between the wage rates of the supervisors and
those of the foremen was inevitably re-established. It continued to broaden through the years.
Interestingly, such gap as re-established by virtue of the CBA is more than a substantial compliance with
R.A. No. 6640. We hold that the Court of Appeals erred in not taking into account the provisions of the
CBA viz-a-viz the wage increase under the said law. In National Federation of Labor v. NLRC,[8] we held:

We believe and so hold that the re-establishment of a significant gap or differential between regular
employees and casual employees by operation of the CBA was more than substantial compliance with
the requirements of the several Wage Orders (and of Article 124 of the Labor Code). That this re-
establishment of a significant differential was the result of collective bargaining negotiations, rather than
of a special grievance procedure, is not a legal basis for ignoring it. The NLRC En Banc was in serious
error when it disregarded the differential of P3.60 which had been restored by 1 July 1985 upon the
ground that such differential "represent[ed] negotiated wage increase[s] which should not be considered
covered and in compliance with the Wage Orders. x x x"

In Capitol Wireless, Inc. v. Bate,[9] we also held:

x x x The wage orders did not grant across-the-board increases to all employees in the National Capital
Region but limited such increases only to those already receiving wage rates not more than P125.00 per
day under Wage Order Nos. NCR-01 and NCR-01-A and P142.00 per day under Wage Order No. NCR-02.
Since the wage orders specified who among the employees are entitled to the statutory wage increases,
then the increases applied only to those mentioned therein. The provisions of the CBA should be read in
harmony with the wage orders, whose benefits should be given only to those employees covered
thereby.

It has not escaped our attention that requiring petitioner to pay all the members of respondent
PIMASUFA a wage increase of 18.5%, over and above the negotiated wage increases provided under the
1987 CBA, is highly unfair and oppressive to the former. Obviously, it was not the intention of R.A. No.
6640 to grant an across-the-board increase in pay to all the employees of petitioner. Section 2 of R.A. No.
6640 mandates only the following increases in the private sector: (1) P10.00 per day for the employees
in the private sector, whether agricultural or non-agricultural, who are receiving the statutory minimum
wage rates; (2) P11.00 per day for non-agricultural workers and employees outside Metro Manila; and
(3) P10.00 per day for those already receiving the minimum wage up to P100.00. To be sure, only those
receiving wages P100.00 and below are entitled to the P10.00 wage increase. The apparent intention of
the law is only to upgrade the salaries or wages of the employees specified therein.[10] As the numerical
illustration shows, almost all of the members of respondent PIMASUFA have been receiving wage rates
above P100.00 and, therefore, not entitled to the P10.00 increase. Only three (3) of them are receiving
wage rates below P100.00, thus, entitled to such increase. Now, to direct petitioner to grant an across-
the-board increase to all of them, regardless of the amount of wages they are already receiving, would
be harsh and unfair to the former. As we ruled in Metropolitan Bank and Trust Company Employees
Union ALU-TUCP v. NLRC:[11]

x x x To compel employers simply to add on legislative increases in salaries or allowances without regard
to what is already being paid, would be to penalize employers who grant their workers more than the
statutory prescribed minimum rates of increases. Clearly, this would be counter-productive so far as
securing the interests of labor is concerned.

Corollarily, the Court of Appeals erred in citing Pure Foods Corporation v. National Labor Relations
Commission[12] as basis in disregarding the provisions of the 1987 CBA. The case involves, not wage
distortion, but illegal dismissal of employees from the service. The Release and Quitclaim executed
therein by the Pure Food's employees were intended to preclude them from questioning the termination
of their services, not their entitlement to wage increase on account of a wage distortion.

At this juncture, it must be stressed that a CBA constitutes the law between the parties when freely and
voluntarily entered into.[13] Here, it has not been shown that respondent PIMASUFA was coerced or
forced by petitioner to sign the 1987 CBA. All of its thirteen (13) officers signed the CBA with the
assistance of respondent NLU. They signed it fully aware of the passage of R.A. No. 6640. The duty to
bargain requires that the parties deal with each other with open and fair minds. A sincere endeavor to
overcome obstacles and difficulties that may arise, so that employer-employee relations may be
stabilized and industrial strife eliminated, must be apparent.[14] Respondents cannot invoke the
beneficial provisions of the 1987 CBA but disregard the concessions it voluntary extended to petitioner.
The goal of collective bargaining is the making of agreements that will stabilize business conditions and
fix fair standards of working conditions.[15] Definitely, respondents' posture contravenes this goal.

In fine, it must be emphasized that in the resolution of labor cases, this Court has always been guided by
the State policy enshrined in the Constitution that the rights of workers and the promotion of their
welfare shall be protected. However, consistent with such policy, the Court cannot favor one party, be it
labor or management, in arriving at a just solution to a controversy if the party concerned has no valid
support to its claim, like respondents here.

WHEREFORE, we GRANT petitioner's motion for reconsideration and REINSTATE the petition we likewise
GRANT. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 54379 is REVERSED.

SO ORDERED.

Puno, C.J., Corona, Azcuna and Leonardo-De Castro, JJ., concur.

[1] National Federation of Labor v. National Labor Relations Commission, G.R. No. 103586, July 21, 1994,
234 SCRA 311.

[2] An Act Providing for an Increase in the Wage of Public or Government Sector Employees on a Daily
Wage Basis and in the Statutory Minimum Wage and Salary Rates of Employees and Workers in the
Private Sector and for other Purposes. Official Gazette, Vol. 84, No. 7, February 15, 1988, pp. 759-761.

[3] Rollo, NCR-AC-N0.-00112, p. 2.

[4] Record, National Labor Relations Commission, pp. 172-173.

[5] G.R. No. 130866, September 16, 1998, 295 SCRA 494, ruling that all references in the amended
Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and
hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such
petitions should henceforth be initially filed in the Court of Appeals in strict observance of the doctrine
on the hierarchy of courts as the appropriate forum for the relief desired.

[6] Azucena, The Labor Code with Comments and Cases, Vol. 1, p. 301.

[7] Rollo, NCR-AC-No. 00112, p. 120.

[8] Supra, footnote 1.

[9] 316 Phil. 355 (1995).

[10] Manila Mandarin Employees Union v. National Labor Relations Commission, G.R. No. 108556,
November 19, 1996, 264 SCRA 320.

[11] G.R. No. 102636, September 10, 1993, 226 SCRA 269.
[12] G.R. No. 122653, December 12, 1987, 283 SCRA 133.

[13] Mactan Workers Union v. Aboitiz, G.R. No. L-30241, June 30, 1972, 45 SCRA 577, citing Shell Oil
Workers Union v. Shell Company of the Philippines, 39 SCRA 276 (1971).

[14] Werne, Law and Practice of the Labor Contract, Volume 1 Origin and Operation Disputes, 1957, p.
20.

[15] Werne, Law and Practice of the Labor Contract, Volume 1 Origin and Operation Disputes, 1957, p.
180.

DIVISION

[ GR NO. 157098, Jun 30, 2005 ]

NORKIS FREE v. NORKIS TRADING COMPANY +

DECISION

501 Phil. 170

PANGANIBAN, J.:

Wage Order No. ROVII-06, issued by the Regional Tripartite Wages and Productivity Board (RTWPB),
merely fixed a new minimum wage rate for private sector employees in Region VII; hence, respondent
cannot be compelled to grant an across-the-board increase to its employees who, at the time of the
promulgation of the Wage Order, were already being paid more than the existing minimum wage.

The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the July 30,
2002 Decision[2] and the January 16, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No.
54611. The disposition of the assailed Decision reads as follows:

"ACCORDINGLY, We GRANT the instant petition for certiorari. The Decision of public respondent
Voluntary Arbitrator in VA Case No. 374-VII-09-014-98E dated July 8, 1999, and Order dated August 13,
1999, denying petitioner's 'Motion for Reconsideration', are hereby SET ASIDE. Petitioner is hereby
declared to have lawfully complied with Wage Order No. ROVII-06. No pronouncement as to costs."[4]

The Decision[5] of Voluntary Arbitrator Perfecto R. de los Reyes III,[6] reversed by the CA, disposed as
follows:

"WHEREFORE, premises considered, this Office hereby decides in favor of Complainant. Respondent is
hereby ordered to grant its employees the amount of increases granted under RTWPB Wage Order
ROVII-06 in an across-the-board manner retroactive to the dates provided for under the said Wage
Order."[7]

The January 16, 2003 Resolution denied petitioner's Motion for Reconsideration.

The Facts

The CA summarized the undisputed factual antecedents as follows:

"The instant case arose as a result of the issuance of Wage Order No. ROVII-06 by the Regional Tripartite
Wages and Productivity Board (RTWPB) increasing the minimum daily wage by P10.00, effective October
1, 1998.

"Prior to said issuance, herein parties entered into a Collective Bargaining Agreement (CBA) effective
from August 1, 1994 to July 31, 1999.

'Sec. 1. Salary Increase. The Company shall grant a FIFTEEN (P15.00) PESOS per day increase to all its
regular or permanent employees effective August 1, 1994.'

'Sec. 2. Minimum Wage Law Amendment. In the event that a law is enacted increasing minimum wage,
an across-the-board increase shall be granted by the company according to the provisions of the law.'
"On January 27, 1998, a re-negotiation of the CBA was terminated and pursuant to which a
Memorandum of Agreement was forged between the parties. It was therein stated that petitioner shall
grant a salary increase to all regular and permanent employees as follows:

'Ten (10) pesos per day increase effective August 1, 1997; Ten (10) pesos per day increase effective
August 1, 1998.'

"Pursuant to said Memorandum of Agreement, the employees received wage increases of P10.00 per
day effective August 1, 1997 and P10.00 per day effective August 1, 1998. As a result, the agreed P10.00
re-negotiated salary increase effectively raised the daily wage of the employees to P165.00 retroactive
August 1, 1997; and another increase of P10.00, effective August 1, 1998, raising the employees['] daily
wage to P175.00.

"On March 10, 1998, the Regional Tripartite Wage Productivity Board (RTWPB) of Region VII issued Wage
Order ROVII-06 which established the minimum wage of P165.00, by mandating a wage increase of five
(P5.00) pesos per day beginning April 1, 1998, thereby raising the daily minimum wage to P160.00 and
another increase of five (P5.00) pesos per day beginning October 1, 1998, thereby raising the daily
minimum wage to P165.00 per day.

"In accordance with the Wage Order and Section 2, Article XII of the CBA, [petitioner] demanded an
across-the-board increase. [Respondent], however, refused to implement the Wage Order, insisting that
since it has been paying its workers the new minimum wage of P165.00 even before the issuance of the
Wage Order, it cannot be made to comply with said Wage Order.

"Thus, [respondent] argued that long before the passage of Wage Order ROVII-06 on March 10, 1998,
and by virtue of the Memorandum of Agreement it entered with herein [petitioner], [respondent] was
already paying its employees a daily wage of P165.00 per day retroactive on August 1, 1997, while the
minimum wage at that time was still P155.00 per day. On August 1, 1998, [respondent] again granted an
increase from P165.00 per day to P175.00, so that at the time of the effectivity of Wage Order No. 06 on
October 1, 1998 prescribing the new minimum wage of P165.00 per day, [respondent's] employees were
already receiving P175.00 per day.
"For failure of the parties to settle this controversy, a preventive mediation complaint was filed by herein
[petitioner] before the National Conciliation and Mediation Board, pursuant to which the parties
selected public respondent Voluntary Arbitrator to decide said controversy.

"Submitted for arbitral resolution is the sole issue of whether or not [respondent] has complied with
Wage Order No. ROVII-06, in relation to the CBA provision mandating an across-the-board increase in
case of the issuance of a Wage Order.

"In his decision, public respondent arbitrator found herein [respondent] not to have complied with the
wage order, through the following dispositions:

'The CBA provision in question (providing for an across-the-board increase in case of a wage order) is
worded and couched in a vague and unclear manner.

'x x x In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered (Art. 1371, New Civil Code). Thus, this Office x x x required the
parties to submit additional evidence in order to be able to know and interpret the parties working
intent and application of Wage Order No. 06 issued by the Regional Tripartite Wages and Productivity
Board, Regional Office VII in relation to Section 2, Article XII provided for in the parties['] existing CBA.

'x x x Viewed from the foregoing facts and evidence, the working intent and application of RTWPB Wage
Order ROVII-06 in relation to Section 2, Article XII of the parties['] existing CBA is clearly established. The
evidence submitted by the parties, all point to the fact that their true intention on how to implement
existing wage orders is to grant such wage orders in an across-the-board manner in relation to the
provisions of Section 2, Article XII of their existing CBA. Respondent in this case [has] failed to comply
with its contractual obligation of implementing the increase under RTWPB Wage Order ROVII-06 in an
across-the-board manner as provided in Section 2, Article XII of its CBA with [petitioner].

'x x x x x x x x x'"[8]

Respondent elevated the case to the CA via a Petition for Certiorari and Prohibition under Rule 65 of the
Rules of Court.
Ruling of the Court of Appeals

The CA noted that the grant of an across-the-board increase, provided under Section 2 of Article XII of
the CBA, was qualified by the phrase "according to the provisions of the law." It thus stressed the
necessity of determining the import of Wage Order No. ROVII-06, the law involved in the present
controversy. Taking into consideration the opinion of the RTWPB, Region VII, the appellate court held
that respondent had sufficiently complied with Wage Order No. ROVII-06. The Board had opined that
"since adjustments granted are only to raise the minimum wage or the floor wage as a matter of policy, x
x x wages granted over the above amount set by this Board is deemed a compliance."

The CA added that the policy and intent of the Wage Order was to cushion the impact of the regional
economic crisis upon both the workers and the employers, not to enrich the employees at the expense
of the employers. Further, it held that to compel respondent to grant an across-the-board wage
increase, notwithstanding that it was already paying salaries to its employees above the minimum wage,
would be to penalize generous employers and effectively make them "wait for the passage of a new
wage order before granting any increase. This would be counter-productive [insofar] as securing the
interests of labor is concerned."[9]

The appellate court said that the Wage Order exempted from compliance those enterprises already
paying salaries equal to or more than the prescribed minimum wage; thus, the Order effectively made
the previous voluntary increases given by respondent to its employees creditable against the law-
mandated increase. Consequently, there was no need for the Collective Bargaining Agreement (CBA) to
provide expressly for such creditability.

Finally, the CA sustained respondent's explanation that the across-the-board increases provided in the
CBA was required only when a minimum wage law caused a distortion in the wage structure.

Hence, this Petition.[10]

Issues

In its Memorandum, petitioner submits the following issues for our consideration:
"I. Whether or not the Honorable Court of Appeals gravely abused its discretion in setting aside the
decision and resolution of the honorable voluntary arbitrator[.]

II. Whether or not the Honorable Court of Appeals gravely abused its discretion in considering the
Supplemental Memorandum of respondent and giving merit to evidence presented for the first time on
appeal and filed after the lapse of the non[-]extendible period of time to file memorandum and despite
an extension granted to respondent[.]

III. Whether or not the Honorable Court of Appeals gravely abused its discretion in disregarding
established jurisprudence on statutory construction."[11]

The main issue is whether respondent violated the CBA in its refusal to grant its employees an across-
the-board increase as a result of the passage of Wage Order No. ROVII-06. Also raised is the procedural
issue relating to the propriety of the admission by the CA of RTWPB's letter-opinion, which was attached
to respondent's Supplemental Memorandum submitted to that court on August 30, 2000, beyond the
July 17, 2000 extended deadline.

The Court's Ruling

The Petition lacks merit.

Main Issue:

Effect of Wage Order No. ROVII-06

on the Parties' CBA

Petitioner insists that respondent should have granted to the employees the increase stated in Wage
Order No. ROVII-06. In addition to the increases both parties had mutually agreed upon, the CBA
supposedly imposed upon respondent the obligation to implement the increases mandated by law
without any condition or qualification. To support its claim, petitioner repeatedly invokes Section 2 of
Article XII of the CBA, which reads:
"SECTION 2. Minimum Wage Law Amendment. In the event that a law is enacted increasing minimum
wage, an across-the-board increase shall be granted by the Company according to the provisions of the
law."

Interestingly, petitioner disregards altogether in its argument the qualifying phrase "according to the
provisions of the law" and merely focuses its attention on the "across-the-board increase" clause. Given
the entire sentence, it is clear that the above-quoted CBA provision does not support the unyielding view
of petitioner that the issuance of Wage Order No. ROVII-06 entitles its members to an across-the-board
increase, absolutely and without any condition.

Stipulations in a contract must be read together,[12] not in isolation from one another. When the terms
of its clauses are clear and leave no room for doubt as to the intention of the contracting parties, it
would not be necessary to interpret those terms, whose literal meanings should prevail.[13]

The CA correctly observed that the import of Wage Order No. ROVII-06 should be considered in the
implementation of the government-decreed increase. The present Petition makes no denial or
refutation of this finding, but merely an averment of the silence of the CBA on the creditability of
increases provided under the Agreement against those in the minimum wage under a wage order. It
insists that the parties intended no such creditability; otherwise, they would have expressly stated such
intent in the CBA.

We hold that the issue here is not about creditability, but the applicability of Wage Order No. ROVII-06 to
respondent's employees. The Wage Order was intended to fix a new minimum wage only, not to grant
across-the-board wage increases to all employees in Region VII. The intent of the Order is indicated in its
title, "Establishing New Minimum Wage Rates," as well as in its preamble: the purpose, reason or
justification for its enactment was "to adjust the minimum wage of workers to cushion the impact
brought about by the latest economic crisis not only in the Philippines but also in the Asian region."

In Cagayan Sugar Milling Company v. Secretary of Labor and Employment [14] and Manila Mandarin
Employees Union v. NLRC,[15] the Wage Orders that were the subjects of those cases were substantially
and similarly worded as Wage Order No. ROVII-06. In those cases, this Court construed the Orders along
the same line that it follows now: as providing for an increase in the prevailing statutory minimum wage
rates of workers. No across-the-board increases were granted.
Parenthetically, there are two methods of adjusting the minimum wage. In Employers Confederation of
the Phils. v. National Wages and Productivity Commission,[16] these were identified as the "floor wage"
and the "salary-ceiling" methods. The "floor wage" method involves the fixing of a determinate amount
to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling"
method, the wage adjustment was to be applied to employees receiving a certain denominated salary
ceiling. In other words, workers already being paid more than the existing minimum wage (up to a
certain amount stated in the Wage Order) are also to be given a wage increase.

A cursory reading of the subject Wage Order convinces us that the intention of the Regional Board of
Region VII was to prescribe a minimum or "floor wage"; not to determine a "salary ceiling." Had the
latter been its intention, the Board would have expressly provided accordingly. The text of Sections 2
and 3 of the Order states:

"Section 2. AMOUNT AND MANNER OF INCREASE. Upon the effectivity of this Order, the daily minimum
wage rates for all the workers and employees in the private sector shall be increased by Ten Pesos
(P10.00) per day to be given in the following manner:

i. Five Pesos (P5.00) per day effective April 1, 1998, and

ii. Additional Five Pesos (P5.00) per day effective October 1, 1998.

"Section 3. UNIFORM WAGE RATE PER AREA CLASSIFICATION. To effect a uniform wage rate pursuant to
Section 1 hereof, the prescribed minimum wage after full implementation of this Order for each area
classification shall be as follows:

Area Classification Non-Agriculture Sector Agriculture Sector

Class A 165.00 150.00

Class B 155.00 140.00

Class C 145.00 130.00

Class D 135.00 120.00"

These provisions show that the prescribed minimum wage after full implementation of the P10 increase
in the Wage Order is P165 for Class A private non-agriculture sectors. It would be reasonable and logical,
therefore, to infer that those employers already paying their employees more than P165 at the time of
the issuance of the Order are sufficiently complying with the Order.
Further supporting this construction of Wage Order No. ROVII-06 is the opinion of its drafter, the RTWPB
Region VII. In its letter-opinion[17] answering respondent's queries, the Board gave a similar
interpretation of the essence of the Wage Order: to fix a new floor wage or to upgrade the wages of the
employees receiving lower than the minimum wage set by the Order.

Notably, the RTWPB was interpreting only its own issuance, not a statutory provision. The best authority
to construe a rule or an issuance is its very source,[18] in this case the RTWPB. Without a doubt, the
Board, like any other executive agency, has the authority to interpret its own rules and issuances; any
phrase contained in its interpretation becomes a part of those rules or issuances themselves.[19]
Therefore, it was proper for the CA to consider the letter dated June 13, 2000, written by the RTWPB to
explain the scope and import of the latter's own Order, as such interpretation is deemed a part of the
Order itself. That the letter was belatedly submitted to that Court is not fatal in the determination of this
particular case.

We cannot sustain petitioner, even if we assume that its contention is right and that the implementation
of any government-decreed increase under the CBA is absolute. The CBA is no ordinary contract, but
one impressed with public interest.[20] Therefore, it is subject to special orders on wages,[21] such as
those issued by the RTWPB. Capitol Wireless v. Bate[22] is squarely in point. The union in that case
claimed that all government-mandated increases in salaries should be granted to all employees across-
the-board without any qualification whatsoever, pursuant to the CBA provision that any government-
mandated wage increases should be over and above the benefits granted in the CBA. The Court denied
such claim and held that the provisions of the Agreement should be read in harmony with the Wage
Orders. Applying that ruling to the present case, we hold that the implementation of a wage increase for
respondent's employees should be controlled by the stipulations of Wage Order No. ROVII-06.

At the risk of being repetitive, we stress that the employees are not entitled to the claimed salary
increase, simply because they are not within the coverage of the Wage Order, as they were already
receiving salaries greater than the minimum wage fixed by the Order. Concededly, there is an increase
necessarily resulting from raising the minimum wage level, but not across-the-board. Indeed, a "double
burden" cannot be imposed upon an employer except by clear provision of law.[23] It would be unjust,
therefore, to interpret Wage Order No. ROVII-06 to mean that respondent should grant an across-the-
board increase. Such interpretation of the Order is not sustained by its text.[24]

In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the
Constitution: social justice[25] and the protection of the working class.[26] Social justice does not,
however, mandate that every dispute should be automatically decided in favor of labor. In every case,
justice is to be granted to the deserving and dispensed in the light of the established facts and the
applicable law and doctrine.[27]

WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against
petitioner.

SO ORDERED.

Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

[1] Rollo, pp. 3-24.

[2] Annex "A" of Petition; id., pp. 26-39. Penned by Justice Eriberto U. Rosario Jr. and concurred in by
Justices Oswaldo D. Agcaoili (chairman, Special Fifteenth Division) and Danilo B. Pine (member).

[3] Annex "B" of Petition; id., p. 42. Penned by Justice Danilo B. Pine and concurred in by Justices Romeo
A. Brawner (acting chairman, Special Former Special Fifteenth Division) and Oswaldo D. Agcaoili.

[4] CA Decision, p. 13; rollo, p. 38.

[5] Annex "G" of Petition; id., pp. 117-129.

[6] Office of the Voluntary Arbitrator, Cebu City.

[7] Annex "T" of Petition, p. 6; rollo, p. 114.

[8] CA Decision, pp. 1-5; id., pp. 26-30.

[9] Id., pp. 11 & 36.

[10] This case was deemed submitted for decision on December 22, 2003, upon this Court's receipt of
petitioner's Memorandum, signed by Atty. Armando M. Alforque. Respondent's Memorandum -- signed
by Attys. Anastacio T. Muntuerto Jr., Arturo C. Fernan, Deolito L. Alvarez and Arlan Richard S. Alvarez --
was received by this Court on December 1, 2003.

[11] Petitioner's Memorandum, p. 7; rollo, p. 421. Original in uppercase.

[12] Article 1374, New Civil Code.

[13] Article 1370, New Civil Code.

[14] 284 SCRA 150, January 15, 1998.

[15] 264 SCRA 320, November 19, 1996.

[16] 201 SCRA 759, September 24, 1991.

[17] Rollo, p. 249.

[18] Bocobo v. Commission on Elections, 191 SCRA 576, November 21, 1990.

[19] City Government of Makati v. Civil Service Commission, 426 Phil. 631, February 6, 2002.
[20] Samahang Manggagawa sa Top Form Manufacturing v. NLRC, 356 Phil. 480, September 7, 1998.

[21] Article 1700 of the Civil Code provides: "The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must yield to the common
good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining,
strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

[22] 246 SCRA 289, July 14, 1995.

[23] Vassar Industries, Inc. v. Vassar Industries Employees Union, 177 SCRA 323, September 7, 1989.

[24] Cagayan Sugar Milling Company v. Secretary of Labor and Employment, 284 SCRA 150, January 15,
1998.

[25] Section 10, Article II, 1987 Constitution.

[26] Section 18, Article II, 1987 Constitution.

[27] Lawin Security Services, Inc. v. NLRC, 339 Phil. 330, June 9, 1997.