Bankard

Facts

Bankard classified its employees, level 1-5. The Board of Directors approved a new salary scale for the
purpose of making its hiring rate competitive in the labor market. It increased the hiring rate of new
employees’ level 1 and 5 by P1000, levels 2-4 by P900. Accordingly, the salaries of employees who fell
below the new minimum rates were adjusted to reach the rates of their salary levels. the petitioner, the
duly certified exclusive bargaining agent of the regular RnF employees of Bankard, requested that the
salaries of its old regular employees be increased as well. There being no obligation on the part of the
management to grant to all its employees the same increase in an across-the-board manner, the request
was unheeded. The petitioner filed a Notice of Strike on the ground of discrimination and ULP which was
treated by the National Conciliation and mediation Board as a Preventive Mediation Case and saw the
issues as non-strikable. The petitioner once again filed another Notice of Strike on the grounds of refusal
to bargain and union busting, the dispute was certified by the NLRC for compulsory arbitration.

The NLRC dismissed the case finding that there was no wage distortion that occurred, it was affirmed by
the CA

Issue

WON the new salary scale scheme approved and use by Bankard constitutes wage distortion

Held

NO, the supreme court held in the negative. According to the case of Prubankers Association v.
Prudential Bank and Trust Company, there are 4 elements of wage distortion namely:

(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.

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.

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.

To determine the existence of wage distortion, the "historical" classification of the employees prior to the
wage increase must be established. Likewise, it must be shown that as between the different
classification of employees, there exists a "historical" gap or difference.

Thus, 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
respondents’ employees without encroaching upon recognized management prerogative of formulating a
wage structure, in this case, one based on level.

Whether or not a new additional scheme of classification of employees for compensation purposes should
be established by the Company (and the legitimacy or viability of the bases of distinction there embodied)
is properly a matter of management judgment and discretion, and ultimately, perhaps, a subject matter for
bargaining negotiations between employer and employees. It is assuredly something that falls outside the
concept of wage distortion.

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 of
the business cannot address an across-the-board increase.

Wage distortion is a factual and economic condition that may be brought about by different cause. The
mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it,
absent a law or other source of obligation which requires its rectification. Absent any indication that the
voluntary increase of salary rates by an employer was done arbitrarily and illegally for the purpose of
circumventing the laws or was devoid of any legitimate purpose other than to discriminate against the
regular employees, this Court will not step in to interfere with this management prerogative.  Employees
are of course not precluded from negotiating with its employer and lobby for wage increases through
appropriate channels, such as through a CBA.

Tan v lagrama

Facts

Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of
Crown and Empire Theaters, on Oct 17, 98, he summoned Lagrama citing that the latter urinated in his
working area and therefor no longer required him to draw for the theatres. Lagrama alleged that he wasn’t
the only person to enter his working premises and even if the allegation is true, the infraction does not
merit dismissal. His pleas unheard, Lagrama filed a complaint for illegal dismissal and non-payment of
benefits in the NLRC. Tan denied that Lagrama was his employee and claimed that the latter was only a
contractor citing the latter’s admission that he was paid on a piece work basis for every painting he made
for the theaters and on the no mural/billboard drawn no pay policy.

He submitted the affidavits of other cinema owners, an amusement park owner, and those supervising the
construction of a church to prove that the services of Lagrama were contracted by them. He denied
having dismissed Lagrama and alleged that it was the latter who refused to paint for him after he was
scolded for his habits.

The Labor Arbiter ruled in favor of Lagrama but The NLRC reverse the decision and ruled Lagrama to be
an independent contractor. The Court of Appeals found that petitioner exercised control over Lagrama's
work by dictating the time when Lagrama should submit his billboards and murals and setting rules on the
use of the work area and rest room. Although it found that Lagrama did work for other cinema owners, the
appeals court held it to be a mere sideline insufficient to prove that he was not an employee of Tan. The
appeals court also found no evidence of any intention on the part of Lagrama to leave his job or sever his
employment relationship with Tan.

Issue

WON Lagrama is an employee of Tan

Held
The Supreme Court applied the 4-fold test in order to determine the existence of an EER between Tan
and Lagrama.

As to the Power of Control, evidence shows that Lagrama’s work as a painter is under the control and
supervision of Tan as Lagrama worked in a designated work area inside the theater of Tan for the use of
which petitioner prescribed rules, which rules included the observance of cleanliness and hygiene and
prohibition against urinating in the work area and any other place other than rest rooms and Tan's control
over Lagrama's work extended not only the use of work area but also the result of Lagrama;s work and
the manner and means by which the work was to be accomplished. Lagrama is not an independent
contractor because he did not enjoy independence and freedom from the control and supervision of Tan
and he was subjected to Tan's control over the means and methods by which his work is to be performed
and accomplished.

As to the power of the employer to pay wages, the court found that even though Lagrama worked for Tan
on a fixed piece work basis is of no moment. Payment by result is a method of compensation and does
not define the essence of the relation. that Lagrama was not reported as an employee to the SSS is not
conclusive, on the question whether he was an employee, otherwise Tan would be rewarded for his
failure or even neglect to perform his obligation.

As to the power of dismissal by Tan’s claim that he had the right to fire Lagrama, Tan in effect
acknowledged Lagrama to be his employee and lastly the power of Selection, there was no 3rd party that
intervened in Tan’s engaging of Lagrama’s services.

Bernardo v nlrc

Doctrine

The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same
terms and conditions of employment as qualified able-bodied employees. Once they have attained the
status of regular workers, they should be accorded all the benefits granted by law, notwithstanding written
or verbal contracts to the contrary. This treatments is rooted not merely on charity or accommodation, but
on justice for all.

Facts

The 43 petitioners are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent
Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement
called “Employment Contract for Handicapped Workers.”

The contract provided that: (1) “there are certain positions in the bank which may be filled-up by disabled
and handicapped persons, particularly deafmutes, and the bank has been approached by some civic-
minded citizens and authorized government agencies regarding the possibility of hiring handicapped
workers for these positions”; (2) “the employee hereby acknowledges that the provisions of Book Six of
the Labor Code of the Philippines as amended, particularly on regulation of employment and separation
pay are not applicable to him/her”; (3) “the Employment Contract shall be for a period of six (6) months
unless earlier terminated by the bank for any just or reasonable cause.”

The employments of the said deaf-mute were renewed every six (6) months such that by the time the
present case arose, there were fifty-six (56) deaf-mutes who were employed by respondent bank under
the said employment agreement. However, in 1993-4 the bank decided not to renew said contracts and
thus terminated the employment of the petitioners.

Petitioners maintain that they should be considered regular employees, because their task as money
sorters and counters was necessary and desirable to the business of respondent bank.  They further
allege that their contracts served merely to preclude the application of Article 280 and to bar them from
becoming regular employees. The Bank on the other hand claims that the petitioners were not regular
employees but were hired as “special workers and should not in any way be considered as part of the
regular complement of the Bank.” Rather, they were “special” workers under Article 80 of the Labor Code.

The LA and NLRC ruled against the petitioner hence this case

Issue

WON the petitioners are regular employees of the BANK

Held

At the outset, let it be known that this Court appreciates the nobility of private respondent's effort to
provide employment to physically impaired individuals and to make them more productive members of
society. However, we cannot allow it to elude the legal consequences of that effort, simply because it now
deems their employment irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for
Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed
regular employees. As such, they have acquired legal rights that this Court is duty-bound to protect and
uphold, not as a matter of compassion but as a consequence of law and justice.

The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of
one month, after which the employer shall determine whether or not they should be allowed to finish the
6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just
and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire
at the end of the term.

According to private respondent, the employment contracts were prepared in accordance with Article 80
of the Labor code, which provides;

Art. 80. Employment agreement. — Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:

(a) The names and addresses of the handicapped workers to be employed;

(b) The rate to be paid the handicapped workers which shall be not less than seventy-five (75%) per cent
of the applicable legal minimum wage;

(c) The duration of employment period; and

(d) The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly
authorized representatives.

In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should
be given the same terms and conditions of employment as a qualified able-bodied person.  Section 5 of
the Magna Carta provides:

“Section 5.  Equal Opportunity for Employment. —No disabled person shall be denied access to
opportunities for suitable employment.  A qualified disabled employee shall be subject to the same terms
and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives
or allowances as a qualified able-bodied person.”

The fact that the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80.  Since the Magna Carta accords them the rights of qualified able-
bodied persons, they are thus covered by Article 280 of the Labor Code
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed
the contracts of 37 of them.  In fact, two of them worked from 1988 to 1993.  Verily, the renewal of the
contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were
beneficial and necessary to the bank.  More important, these facts show that they were qualified to
perform the responsibilities of their positions.  In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.

Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank.  With the exception of sixteen of them, petitioners performed these tasks for more than
six months.