Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL AN!, petitioner,
vs.
PHILIPPINE NATIONAL AN! EMPLO"EES ASSOCIATION #PEMA$ %&' COURT
O( IN)USTRIAL RELATIONS, respondents.
Conrado E. Medina, Edgardo M. Magtalas and Nestor Kalaw for petitioner.
Leon O. Ty, Gesmundo Fernandez !ulueta, Oli"er #. Gesmundo and $srael #o%o&o
for respondents.

ARRE)O, J.:
Appeal by the Philippine National Bank from the decision of the trial court of the Court of
ndustrial Relations in Case No. PA!"# dated Au$ust ", %&'( and affirmed en &an% by
said court on )anuary %", %&'*.
+his case started on )anuary ,*, %&'" in conse-uence of the certification of the
President of the Philippines of an industrial dispute bet.een the Philippine National
Bank Employees Association /PEMA, for short0, on the one hand, and the Philippine
National Bank /PNB, for short0, on the other, .hich arose from no more than the alle$ed
failure of the PNB to comply .ith its commitment of or$ani1in$ a Committee on
Personnel Affairs to take char$e of screenin$ and deliberatin$ on the promotion of
employees covered by the collective bar$ainin$ a$reement then in force bet.een the
said parties. 2n )anuary ,*, %&'", the ndustrial Court issued an order aimed at settlin$
the dispute temporarily bet.een the parties, .hich .as certified by the President.
Pertinent portions of the order read thus3
444 444 444
%. +hat in order to settle the strike and for the employees to return to .ork immediately
startin$ )anuary ,&, %&'", the Committee on Personnel Affairs is hereby created to start
functionin$ on 5ebruary %, %&'"6
444 444 444
f. +hat in return for this concession, an in7unction a$ainst future strikes or lockouts shall
be issued by the Court to last for a period of si4 months but .hich shall terminate even
before that period should all disputes of the parties be already resolved6 /Pa$e *8,
Record.0
Accordin$ to the very decision no. on appeal, 9on May ,,, %&'", petitioner /private
respondent herein0 filed another pleadin$ submittin$ to this Court for determination
certain matters .hich it claims cannot be resolved by the parties, .hich are as follo.s3
First Cause of '%tion
a. n a Resolution No. %%', dated :eptember %', %&"(, the Respondent;s Board of
<irectors approved a revision of the computation of overtime pay retroactive as of )uly
%, %&"8, and authori1ed a recomputation of the re$ular one! hour and e4tra overtime
already rendered by all officers and employees of the Respondent Bank.
+he details of the benefits involved in said Resolution are contained in a Memorandum
of the Respondent Bank dated :eptember %*, %&"(.
b. :ince the $rant of the benefits in -uestion, the employees of the Respondent,
represented by the petitioner, have al.ays considered them to be a part of their salaries
and=or frin$e benefits6 nevertheless, the Respondent, in %&'#, .ithout 7ust cause,
.ithdre. said benefits and in spite of repeated demands refused, and still refuses to
reinstate the same up to the present.
(e%ond Cause of '%tion
c. After the promul$ation of the <ecision in National >ater.orks and :e.era$e
Authority vs. NA>A:A Consolidated ?nions, et al. @.R. No. A!%*&#*, Au$. #%, %&'8,
the Petitioner has repeatedly re-uested Respondent that the cost of livin$ allo.ance
and lon$evity pay be taken into account in the computation of overtime pay, effective as
of the $rant of said benefits on )anuary %, %&"*, in accordance .ith the rulin$ in said
<ecision of the :upreme Court.
1
d. ?ntil no. Respondent has not taken any concrete steps to.ard the payment of the
differential overtime and ni$httime pays arisin$ from the cost of livin$ allo.ance and
lon$evity pay.
444 444 444
Respondent in its ans.er of )une (, %&'" took e4ception to this mentioned petition on
several $rounds, namely, /%0 the said alle$ed causes of action .ere not disputes
e4istin$ bet.een the parties, /,0 the same are mere money claims and therefore not
.ithin this Court;s 7urisdiction, and /#0 that the parties have not so stipulated under the
collective bar$ainin$ a$reement bet.een them, or the same is premature as the
pertinent collective bar$ainin$ a$reement has not yet e4pired.9 /Pp. *8!*', Record.0
1

Resolvin$ the issues of 7urisdiction and prematurity thus raised by PNB, the court held3
As to the first $round, it is .ell to note that this Court in its 2rder of )anuary ,*, %&'"
has en7oined the parties not to strike or lockout for a period of si4 /'0 months startin$
from said date. n a very definite sense the labor disputes bet.een the parties have
been $iven a specific period for the settlement of their differences. +he fact that
thereafter the -uestion of the manner of payment of overtime pay is bein$ put in issue,
appears to indicate that this .as a part of the labor dispute. f .e are to consider that
this -uestion, particularly the second cause of action, has in fact e4isted as early as
%&"*, sho.s the necessity of resolvin$ the same no.. And the same .ould indeed be
an e4istin$ issue considerin$ that the present certification came only in %&'".
t is further to be noted that the presidential certification has not limited specific areas of
the labor dispute embraced .ithin the said certification. t speaks of the e4istence of a
labor dispute bet.een the parties and of a strike declared by the PEMA, for .hich the
Court has been re-uested to take immediate steps in the e4ercise of its po.ers under
the la..
Even on the assumption that the present issue is not one embraced by the presidential
certification or it is an issue presented by one party on a cause arisin$ subse-uent to
the certification, the same .ould still be sub7ect to the 7urisdiction of this Court. n 9Apo
Cement >orkers ?nion versus Cebu Portland Cement9, Case No. %% PA /@.R. No. A!
%,8"%, )uly %B, %&"(0, the Court en banc /.here this :ala has taken an opposite vie.0
upheld its 7urisdiction under the circumstances 7ust enumerated. t .ould seem that this
-uestion has been further settled by our :upreme Court in 9National >ater.orks C
:e.era$e Authority vs. NA>A:A Consolidated ?nions, et al.9 /supra0, .hich .e -uote
in part3
444 444 444
8. Petitioner;s claim that the issue of overtime compensation not havin$ been raised in
the ori$inal case but merely dra$$ed into it by intervenors, respondent Court cannot
take co$ni1ance thereof under :ection %, Rule %# of the Rules of Court.
444 444 444
... +he fact that the -uestion of overtime payment is not included in the principal case in
the sense that it is not one of the items of dispute certified to by the President is of no
moment, for it comes .ithin the sound discretion of the Court of ndustrial Relations.
Moreover, in labor disputes technicalities of procedure should as much as possible be
avoided not only in the interest of labor but to avoid multiplicity of action. +his claim has
no merit.
444 444 444
As to the ob7ection posed that the issues are mere money claims, there appears to be
no $round for the same. n the first place, althou$h the same involves a claim for
additional compensation it is also a part of the labor dispute e4istin$ bet.een the parties
and sub7ect to the compulsory arbitration po.ers of the Court, pursuant to :ection %B of
Rep. Act No. *(". n the second place, on the basis of the so!called PR:C2 doctrine
/@.R. No. A! %#*B', May ,#,.%&'B0, there is an e4istin$ and current employer!employee
relationship bet.een the respondent and the members of petitioner union, for .hom the
additional overtime compensation is claimed.
>ith respect to $round three of the ans.er on .hich ob7ection is based, on C.A. 888, as
amended, :ection ' thereof, provides as follo.s3
;Any a$reement or contract bet.een the employer and the laborer or employee contrary
to the provisions of this Act shall be null and void ab initio;.
+he instant action is partially sub7ect to the provisions of Common.ealth Act 888, as
amended. Even if, the parties have stipulated to the e4tent that overtime .ill not be
paid, the same .ill not be bindin$. More so under the present circumstances, .here the
only -uestion is the correctness of the computation of the overtime payments.
>hile the Court notes that the first cause of action has become moot and academic in
vie. of the compliance by respondent, hence there is no further need to resolve the
same /t.s.n., pp. "!(, Au$ust %', %&'"0, the settlement of said first cause of action
further stren$thens the vie. that the second cause of action is indeed an e4istin$
dispute bet.een the parties. Both causes of fiction involve overtime -uestions. Both
stem from dates .ell beyond and before the presidential certification of the present
proceedin$s. f respondent has been fit to take steps to e4pedite and resolve, .ithout
2
court intervention, the first cause of action, it cannot deny the e4istence of the second
cause of action as the first and second appear to be interrelated matters. /Pp. *'!*&,
Record0
And >e a$ree that the fore$oin$ holdin$ is .ell taken. t .ould be more .orth.hile to
proceed to the basic issues immediately than to add anythin$ more of 2ur o.n
discourse to the sufficiently based disposition of the court a -uo of the above!
mentioned preliminary -uestions.
After discussin$ the pros and cons on the issue involved in the second cause of action
as to .hether or not the cost!of!livin$ allo.ance other.ise denominated as e-uity pay
and lon$evity pay $ranted by the bank, the first be$innin$ )anuary %, %&"* and the latter
effective )uly %, %&'%, should be included in the computation of overtime!pay, the court
$ranted the demands of PE MA, e4cept the additional rate of .ork for ni$ht pay, and
rendered the follo.in$ 7ud$ment3
>DERE52RE, in vie. of the fore$oin$, this Court hereby promul$ates the follo.in$3
%. +he respondent Philippine National Bank is hereby re-uired to pay overtime and
ni$httime rates to its employees from )anuary ,*, %&',6 and such overtime
compensation shall be based on the sum total of the employee;s basic salary or .a$e
plus cost of livin$ allo.ance and lon$evity pay under the follo.in$ schedule3
;a. 2vertime services rendered shall be paid at the rate of time and one!third, but
overtime .ork performed bet.een '3BB P.M. and '! .BB A.M. shall be paid at the rate of
%"BE or "BE beyond the re$ular rate6
;b. +he rate for .ork performed in the ni$ht shift, or durin$ the period from '3BB P.M. to
'3BB A.M. shall be compensated at the rate of %"BE or "BE beyond the re$ular rate,
provided the .ork performed involved a definite ni$ht shift and not merely a continuation
by .ay of overtime of the re$ular and established hours of the respondent Bank.
,. +he Chief of the E4aminin$ <ivision of the Court or any of his duly desi$nated
representatives is hereby ordered to compute the overtime rates due each employee of
the respondent Bank from )anuary ,*, %&',, in accordance .ith the above
determination6 and to complete the same .ithin a period of si4ty /'B0 days from receipt
of this 2rder. Do.ever, considerin$ that the Philippine National Bank is a $overnment
depository, and renders and performs functions distinct and uni-ue6 and, .hile it may be
a bankin$ institution, its relationship .ith other $overnment a$encies and the public is
such that it has no basis for comparison .ith other bankin$ institutions or$ani1ed under
the corporation la. or special charter. +o re-uire it to pay immediately the liability after
the e4act amount shall have been determined by the Court E4aminer and duly approved
by the Court, as in other cases, .ould .ork undue hardship to the .hole $overnment
machinery, not to mention the outstandin$ forei$n liabilities and outside commitments, if
any. Moreover, the records sho. that this case .as initiated lon$ before the takin$ over
of the incumbent bank officials.
Accordin$ly, the Court feels that the payment shall be sub7ect to the ne$otiations by the
parties as to time, amount, and duration.
+he Court may intervene in said ne$otiations for the purpose of settlin$ once and for all
this case to maintain industrial peace pursuant to :ection %# of Common.ealth Act %B#,
as amended, if desired, ho.ever by the parties.
After all this is not an unfair labor practice case.
:2 2R<ERE<. /Pp. &*!%BB, Record.0
n connection .ith the above decision, t.o interestin$ points appear at once to be of
determinative relevance3
+he first is that in upholdin$ its 7urisdiction to take co$ni1ance of the demand in -uestion
about cost!of!livin$ allo.ance and lon$evity pay, the ndustrial Court carefully noted that
it .as not resolvin$ a petition for declaratory relief in the li$ht of the decision of this
Court in NA>A:A vs. NA>A:A Consolidated ?nions, @.R. No. A! %*&#*, Au$ust #%,
%&'8, %% :CRA (''. +hus the decision under revie. states3
ncidentally, the present action is not one for declaratory relief as to the applicability of a
7udicial decision to the herein parties. A careful perusal of the pleadin$s indicates that
.hat is bein$ sou$ht is the payment of differential overtime and ni$httime pay based on
e4istin$ la. and 7urisprudence. +he cause of action is not anchored on any decision of
any court but on provisions of the la. .hich have been in effect at the time of the
occurrence of the cause of the action in relation to a labor dispute. Dence, this is not a
petition for declaratory relief. /Pp. &8!&", Record.0
+he second refers to a subse-uent decision of the same $ndustrial Court in ()ell Oil
*or+ers ,nion "s. ()ell Co., et al., Case No. ,8%B!F and ()ell 'ffiliates (uper"isors
,nion "s. ()ell Company of t)e -)ilippines, et al., Case No. ,8%%! F, in .hich the court
made an e4planatory discourse of its understandin$ of the NA>A:A rulin$, supra, and
on that basis re7ected the claim of the .orkers. n brief, it held that /%0 NA>A:A does
not apply .here the collective bar$ainin$ a$reement does not provide for the method of
computation of overtime pay herein insisted upon by private respondent PEMA and /,0
the fact!situation in the :hell cases differed from that of NA>A:A, since the sole and
definite ratio decidendi in NA>A:A .as merely that inasmuch as Republic Act %**B
3
merely fi4ed a 8B!hour "!day .ork for all .orkers, laborers and employees includin$
$overnment!o.ned corporations like NA>A:A, the .eekly pay of NA>A:A .orkers
.orkin$ more than five days a .eek should remain intact6 .ith overtime pay in e4cess
of ei$ht hours .ork and ," E additional compensation on :undays. +here .as no
pronouncement at all therein re$ardin$ the basis of the computation of overtime pay in
re$ard to bonuses and other frin$e benefits.
5or bein$ commendably lucid and comprehensive, >e deem it 7ustified to -uote from
that :hell decision3
T)e main issue.
+he ?nions appear to have read the NA>A:A case very broadly. +hey .ould .ant it
held that in vie. of the said rulin$ of the :upreme Court, employers and employees
must, even in the face of e4istin$ bar$ainin$ contracts providin$ other.ise, determine
the daily and hourly rates of employees in this manner3 Add to basic pay all the money
value of all frin$e benefits a$reed upon or already received by the .orkers individually
and overtime pay shall be computed thus G
Basic yearly Rate plus Falue of all 5rin$e Benefits divided by number of days .orked
durin$ the year e-uals daily .a$e6 <aily .a$e divided by * e-uals hourly rate. Dourly
rate plus premium rate e-uals hourly overtime rate.
+he NA>A:A case must be vie.ed to determine .hether it is that broad. NA>A:A
case must be understood in its settin$. +he .ords used by the :upreme Court in its
reasonin$ should not be disen$a$ed from the fact!situation .ith .hich it .as confronted
and the specific -uestion .hich it .as there re-uired to decide. Above all care should be
taken not to lose si$ht of the truth that the facts obtainin$, the issue settled, and the la.
applied in the said case, and these, thou$h e4tractable from the records thereof as
material in the resolution herein, .ere, as they are, primarily declarative of the ri$hts
and liabilities of the parties involved therein.
Recourse to the records of the NA>A:A case sho.s that the fact! situation, as far as
can be materially connected .ith the instant case, is as follo.s3
n vie. of the enactment of Rep. Act %**B, providin$ that the le$al hours of .ork for
$overnment employees, /includin$ those in $overnment!o.ned or controlled
corporations0 shall be ei$ht /*0 hours a day for five /"0 days a .eek or forty /8B0 hours a
.eek, its implementation by NA>A:A .as disputed by the ?nion. +he .orkers affected
.ere those .ho, for a period of three /#0 months prior to or immediately precedin$ the
implementation of Rep. Act %**B, .ere .orkin$ seven /(0 days a .eek and .ere
continuously receivin$ ,"E :unday differential pay. +he manner of computin$ or
determinin$ the daily rate of monthly salaried employees.
And the :upreme Court, specifically laid out the issue to be decided, as it did decide, in
the NA>A:A, as follo.s3
(. and *. Do. is a daily .a$e of a .eekly employee computed in the li$ht of Republic
Act %**BH;/@.R. A!%*&#*0
Resolvin$ the above issue, it .as held6
Accordin$ to petitioner, the daily .a$e should be computed e4clusively on the basic
.a$e .ithout includin$ the automatic increase of ,"E correspondin$ to the :unday
differential. +o include said :unday differential .ould be to increase the basic pay .hich
is not contemplated by said Act. Respondent court disa$rees .ith this manner of
computation. lt holds that Republic Act %**B re-uires that the basic .eekly .a$e and
the basic monthly salary should not be diminished not.ithstandin$ the reduction in the
number of .orkin$ days a .eek. f the automatic increase correspondin$ to the salary
differential should not be included there .ould be a diminution of the .eekly .a$e of the
laborer concerned. 2f course, this should only benefit those .ho have been .orkin$
seven days a .eek and had been re$ularly receivin$ ,"E additional compensation for
:unday .ork before the effectivity of the Act.
t is thus necessary to analy1e the Court;s rationale in the said NA>A:A case, ;in the
li$ht of Rep. Act %**B;, and the ;specific corollaries; discussed preparatory to arrivin$ at
a final conclusion on the main issue. >hat .as re-uired to be done, by .ay of
implementin$ R. A. %**BH +he statute directs that .orkin$ hours and days of
$overnment employees /includin$ those of $overnment o.ned and controlled
proprietary corporations0 shall be reduced to five days!forty hours a .eek. But, the
same la. carried the specific proviso, desi$ned to $uard a$ainst diminution of salaries
or earnin$s of affected employees. +he :upreme Court itself clearly spelled this out in
the follo.in$ lan$ua$e3 ;t is evident that Republic Act %**B does not intend to raise the
.a$es of the employees over .hat they are actually receivin$. Rather, its purpose is to
limit the .orkin$ days in a .eek to five days, or to 8B hours .ithout ho.ever permittin$
any reduction in the .eekly or daily .a$e of the compensation .hich .as previously
received. ...
f the ob7ect of the la. .as to keep intact, /not either to increase it or decrease it0 it is
but natural that the Court should concern itself, as it did, .ith the corollary, .hat is the
.eekly .a$e of .orker .ho, prior to R.A. %**B, had been .orkin$ seven /(0 days a
.eek and re$ularly receivin$ differential payments for .ork on :undays or at ni$htH t
seems clear that the Court .as only concerned in implementin$ correctly R.A. %**B by
ensurin$ that in diminishin$ the .orkin$ days and hours of .orkers in one .eek, no
4
diminution should result in the .orker;s .eekly or daily .a$e. And, the conclusion
reached by the :upreme Court .as to affirm or reco$ni1e the correctness of the action
taken by the industrial court includin$ such differential pay in computin$ the .eekly
.a$es of these employees and laborers .ho .orked seven days a .eek and .ere
continuously receivin$ ,"E :unday differential for a period of three months immediately
precedin$ the implementation of R.A. %**B.; Nothin$ .as said about addin$ the money
value of some other bonuses or allo.ances or money value of other frin$e benefits,
received outside the .eek or at some other periods. +hat .as not .ithin the scope of
the issue before the Court. in fact, the limited application of the decision is e4pressed in
the decision itself. +he resolution of this particular issue .as for the benefit of only a
se$ment of the NA>A:A employees. :aid the Court ;2f course, this should only benefit
those .ho have been .orkin$ seven days a .eek and had been re$ularly receivin$
,"E additional compensation for :unday .ork before the effectivity of the Act.;
?nions make capital of the follo.in$ pronouncement of the :upreme Court in the
NA>A:A case3
t has been held that for purposes of computin$ overtime compensation a re$ular .a$e
includes all payments .hich the parties have a$reed shall be received durin$ the .ork
.eek, includin$ piece!.ork .a$es, differential payments for .orkin$ at undesirable
times, such as at ni$ht or on :undays and holidays, and the cost of board and lod$in$
customarily furnished the employee />allin$ v. Ian$erman!Reynolds Dard.ook Co.,
#," ?.:. 8%&6 >allin$ v. Darischfe$er Corp. #," ?.:. 8,(0. +he ;Re$ular rate of pay
also ordinarily includes incentive bonus or profit! sharin$ payments made in addition to
the normal basic pay /"' C.).:., pp. (B8!(B"0, and it .as also held that the hi$her rate
for ni$ht, :unday and holiday .ork is 7ust as much as re$ular rate as the lo.er rate for
daytime .ork. +he hi$her rate is merely an inducement to accept employment at times
.hich are not at desirable form a .orkman;s standpoint /nternational A. Ass;n. >ise "B
5. :upp. ,', affirmed C.C.A. Carbunao v. National +erminals Corp. %#& 5. *"#0.
But this para$raph in the decision appears to have been used and cited by the Court to
sustain the action of the court a -uo3 that it .as correct to include the ,"E :unday
premium for the purpose of settin$ the .eekly .a$e of specified .orkers .hose .eekly
earnin$s before the passa$e of R.A. %**B .ould be diminished, if said premium pay
re$ularly received for three months .ere not included. t is si$nificant that the citations
therein used by the :upreme Court are e4cerpts from American decisions .hose
le$islation on overtime is at variance .ith the la. in this 7urisdiction in this respect3 the
?.:. le$islation considers .ork in e4cess of forty hours a .eek as overtime6 .hereas,
.hat is $enerally considered overtime in the Philippines is .ork in e4cess ;of the re$ular
*!hours a day. t is understandably material to refer to precedents in the ?.:. for
purposes of computin$ .eekly .a$es under a 8B! hour a .eek rule, since the particular
issue involved in NA>A:A is the conversion of prior .eekly re$ular earnin$s into daily
rates .ithout allo.in$ diminution or addition.
No rule of universal application to other cases may, therefore, be 7ustifiably e4tracted
from the NA>A:A case. Aet it be enou$h that in arrivin$ at 7ust solution and correct
application of R.A. %**B, an inference .as dra.n from other decisions that a re$ular
.a$e includes payments ;a$reed by the parties to be received durin$ the .eek.; But to
use this analo$y in another fact! situation .ould unmiti$atin$ly stretch its value as basis
for le$al reasonin$, for analo$ies are not perfect and can brin$ a collapse if stretched far
beyond their lo$ical and reasoned efficacy. Neither .ould it be far to ascribe to the
:upreme Court;s citation of forei$n 7urisprudence, .hich .as used for purposes of
analo$y, the force of statute la., for this .ould be the conse-uence if it .ere allo.ed to
be used as authority for all fact!situations, even if different from the NA>A:A case.
+his, because courts do not le$islate. All they do is apply the la..
+he above discussions impel the ob7ective analyst to re7ect the proposition that the
NA>A:A decision is an embracin$ and can be used .ith the authority of a statute;s
effects on e4istin$ contracts.
t appears that the ans.er to dispute lies, not in the te4t of the NA>A:A case but in the
terms and conditions and practice in the implementation of, the a$reement, an area
.hich makes resolution of the issue dependent on the relation of the terms and
conditions of the contract to the phraseolo$y and purpose of the Ei$ht!Dour Aabor Aa.
/Act 8880.
+he more .e read the NA>A:A case, the more .e are convinced that the overtime
computation set therein cannot apply to the cases at bar. 5or to do so .ould lead to
un7ust results, ine-uities bet.een and amon$ the employees themselves and absurd
situations. +o apply the NA>A:A computation .ould re-uire a different formula for each
and every employee, .ould re-uire reference to and continued use of individual
earnin$s in the past, thus multiplyin$ the administrative difficulties of the Company. t
.ould be cumbersome and tedious a process to compute overtime pay and this may
a$ain cause delays in payments, .hich in turn could lead to serious disputes. +o apply
this mode of computation .ould retard and stifle the $ro.th of unions themselves as
Companies .ould be irresistibly dra.n into denyin$, ne. and additional frin$e benefits,
if not those already e4istin$, for fear of bloatin$ their overhead e4penses throu$h
overtime .hich, by reason of bein$ unfi4ed, becomes instead a veritable source of
irritant in labor relations.
2ne other reason .hy application of the NA>A:A case should be re7ected is that this
Court is not prepared to accept that it can lay do.n a less cumbersome formula for a
company!.ide overtime pay other than that .hich is already provided in the collective
bar$ainin$ a$reement. Courts cannot make contracts for the parties themselves.
Common.ealth Act 888 prescribes that overtime .ork shall be paid ;at the same rate as
their re$ular .a$es or salary, plus at least t.enty!five per centum additional; /:ecs. 8 C
5
"0. +he la. did not define .hat is a ;re$ular .a$e or salary;. >hat the la. emphasi1ed
by .ay of repeated e4pression is that in addition to ;re$ular .a$e;, there must be paid
an additional ,"E of that ;re$ular .a$e; to constitute overtime rate of pay. +he parties
.ere thus allo.ed to a$ree on .hat sha$ be mutually considered re$ular pay from or
upon .hich a ,"E premium shall be based and added to make up overtime
compensation. +his the parties did by a$reein$ and acceptin$ for a very lon$ period to a
basic hourly rate to .hich a premium shall be added for purposes of overtime.
Also si$nificant is the fact that Common.ealth Act 888 merely sets a minimum, a least
premium rate for purposes of overtime. n this case, the parties a$reed to premium rates
four /80 or even si4 /'0 times than that fi4ed by the Act. 5ar from bein$ a$ainst the la.,
therefore, the a$reement provided for rates ;commensurate .ith the Company;s
reputation of bein$ amon$ the leadin$ employers in the Philippines; /Art. %, :ec. ,, Coll.
Bar$. A$reement0 at the same time that the Company is maintained in a competitive
position in the market Coll. Bar$. A$reement, lbid0.
:ince the a$reed rates are .ay above prevailin$ statutory .a$es and premiums, fi4ed
by themselves bona fide throu$h ne$otiations favored by la., there appears no
compellin$ reason nor basis for declarin$ the same ille$al. A basic principle formin$ an
important foundation of R.A. *(" is the encoura$ement $iven to parties to resort to
peaceful settlement of industrial problems throu$h collective bar$ainin$. t behooves
this Court, therefore, to help develop respect for those a$reements .hich do not e4hibit
features of ille$ality +his is the only .ay to build confidence in the democratic process of
collective bar$ainin$. Parties cannot be permitted to avoid the implications and
ramifications of the a$reement.
Althou$h this Court has $one very far in resolvin$ an doubts and in $ivin$ $reat .ei$ht
to evidence and presumptions in favor of labor, it may not $o as far as reconstruct the
la. to fit particular cases.9 /Pp. %(8!%*%, Record0
Proof of the correctness of the afore-uoted considerations, the appeal of the .orkers
from the ndustrial Court;s decision did not prosper. Affirmin$ the appealed decision, >e
held3
+he theory, therefore, of the petitioners is to the effect that, not.ithstandin$ the terms
and conditions of their e4istin$ collective bar$ainin$ a$reement .ith respondent :hell
Company, particularly E4hibit ;A!l; for the Petitioners and E4hibit ;l!A; for the
Respondent /.hich is Appendi4 ;B; of the Collective Bar$ainin$ A$reement of the
parties0, considerin$ the rulin$ in the NA>A:A case, a recomputation should be made
of their basic .a$e by addin$ the money value of the frin$e benefits en7oyed by them
from .hence the premium rates a$reed upon shall be computed in order to arrive at
the correct computation of their overtime compensation from the Company. 2n the
other hand, respondent :hell Company maintains that the NA>A:A case should not
be utili1ed as the basis for the alteration of their mode of computin$ overtime rate of
pay as set forth in their collective Bar$ainin$ A$reement. t insists that their collective
bar$ainin$ a$reement should be the la. bet.een them.
After a careful and thorou$h re!e4amination of the NA>A:A case, supra, and a minute
e4amination of the facts and the evidence of the case no. before ?s, >e rule that the
NA>A:A case is not in point and, therefore, is inapplicable to the case at bar.
+he rulin$ of this Court in the NA>A:A case contemplates the re$ularity and continuity
of the benefits en7oyed by the employees or .orkers /for at least three /#0 months0 as
the condition precedent before such additional payments or benefits are taken into
account. +his is evident in the afore-uoted rulin$ of this Court in the NA>A:A case as
.ell as in the hereinbelo. cited authorities, to .it3
+he ;re$ular rate; of pay on the basis of .hich overtime must be computed must reflect
an payments .hich parties have a$reed shall be received re$ularly durin$ the .ork
.eek, e4clusive of overtime payments.; >allin$ v. @arlock Packin$ Co. C.C.A.N.I., %"&
5. ,d 88, 8". /Pa$e ,*&, >2R<: And PDRA:E:, Permanent Edition, Fol. #'A6 talics
supplied06 and
As a $eneral rule the .ords ;re$ular rate; mean the hourly rate actually paid for the
normal, non!overtime .ork .eek, and an employee;s re$ular compensation is the
compensation .hich re$ularly and actually reaches him, ... .; /"' C.).:. (B86 Emphasis
supplied0.
Even in the definition of .a$e under the Minimum >a$e Aa., the .ords ;customarily
furnished; are used in referrin$ to the additional payments or benefits, thus, !
;>a$e; paid to any employee sha$ mean the remuneration or earnin$s, ho.ever
desi$nated, capable of bein$ e4pressed in terms of money, .hether fi4ed or ascertained
on a time, task, piece, commission basis, or other method of calculatin$ the same,
.hich is payable by an employer to an employee under a .ritten or un.ritten contract of
employment for .ork done or to be done or for services rendered or to be rendered, and
includes the fair and reasonable value, as determined by the :ecretary of Aabor, of
board, lod$in$ or other facilities customarily furnished by the employer to the employee.;
/:ec. , /$0, R.A. No. 'B,0.
Davin$ been stipulated by the parties that ... the +in 5actory ncentive Pay has ceased
in vie. of the closure of the factory in May %&'' the frin$e benefits as described sho.
that they are occasionally not re$ularly en7oyed and that not all employees are entitled
to them;, herein petitioners failed to meet the test laid do.n by this Court in the
NA>A:A case. 5urther, the collective bar$ainin$ a$reement resorted to by the parties
6
bein$ in accordance .ith R.A. *(", .ith its provision on overtime pay far .ay beyond
the premium rate provided for in :ections 8 and " of Common.ealth Act 888, the same
should $overn their relationship. :ince this is their contract entered into by them
pursuant to bar$ainin$ ne$otiations under e4istin$ la.s, they are bound to respect it. t
is the duty of this Court to see to it that contracts bet.een parties, not tainted .ith
infirmity or irre$ularity or ille$ality, be strictly complied .ith by the parties themselves.
+his is the only .ay by .hich unity and order can be properly attained in our society.
t should be noted in passin$ that Common.ealth Act 888 prescribes only a minimum of
at least ,"E in addition to the re$ular .a$e or salary of an employee to constitute his
overtime rate of pay, .hereas, under Appendi4 ;B;, /E4hs. ;A!l;, Petitioners and ;l!A;,
Respondent0 of the Collective Bar$ainin$ A$reement of the parties, the premium rate of
overtime pay is as hi$h as l"BE on re$ular .orkin$ days up to ,"B E on :undays and
reco$ni1ed national holidays. /:hell 2il >orkers ?nion vs. :hell Company of the
Philippines, @.R. No. A!#B'"*!"&, March #%, %&(', (B :CRA ,8,!,8#.0
n the instant case, on May ,,, %&'" PEMA alle$ed in the court belo. the follo.in$
cause of action as amended on )une (, %&'"3
:ince the start of the $ivin$ of cost of livin$ allo.ance and lon$evity pay and reiterated,
after the promul$ation of the <ecision in National >ater.orks and :e.era$e Authority
vs. NA>A:A Consolidated ?nions et al., @.R. No. A!%*&#*, Au$ust #%, %&'8, the
petitioner has repeatedly re-uested respondent that the cost of livin$ allo.ance and
lon$evity pay be taken into account in the computation of overtime pay, effective as of
the $rant of said benefits on )anuary %, %&"*, in accordance .ith the rulin$ in said
<ecision of the :upreme Court. /Pa$e %8, PNB;s Brief.0
+o be sure, there could be some plausibility in PNB;s pose re$ardin$ the 7urisdiction of
the ndustrial Court over the above cause of action. But, as >e have already stated, >e
a$ree .ith the broader vie. adopted by the court a -uo on said point, and >e find that
it is in the best interests of an concerned that this almost ,"!year dispute be settled
once and for all .ithout the need of $oin$ throu$h other forums only for the matter to
ultimately come back to this Court probably years later, takin$ particular note as >e do,
in this re$ard, of the cases cited on pa$es &!%B of PEMA;s ori$inal memo, as follo.s3
Reali1in$ its error before in not considerin$ the present case a certified labor dispute,
the Bank no. concedes that the case at bar ;belon$s to compulsory arbitration;.
Dence, the la.ful po.ers of the CR over the same. Do.ever, the Bank says ;overtime
differential is but a money claim, /and0 respondent court does not have 7urisdiction to
take co$ni1ance of the same;.
But this is not a pure money claim /pp. %B!%%, 2pposition0 because other factors are
involved ! certification by the President, the matter may likely cause a strike, the
dispute concerns national interest and comes .ithin the CR;s in7unction a$ainst
strikin$, and the employer!employee relationship bet.een the Bank and the
employees has not been severed. Besides, ;money claim; is embraced .ithin the term
;compensation; and therefore falls s-uarely under the 7urisdiction of the CR in the
e4ercise of its arbitration po.er /:ec. 8, CA %B#6 Please see also Republic vs. CR, A!
,%#B#, :ept. ,#='*6 Makalintal )., N>:A Case, A!,'*&8!&', 5eb. ,*='&6 5ernando, ).0.
>hat confers 7urisdiction on the ndustrial Court, says )ustice ).B.A. Reyes, is not the
form or manner of certification by the President, but the referral to said court of the
industrial dispute bet.een the employer and the employees. /Aiberation :teamship vs.
CR, etc., A!,"#*& C ,"#&B, )une ,(='*0.
n -)il. -ostal (a"ings #an+, et al. "s. C$/, et al., A!,8"(,, <ec. ,B='(, this Donorable
Court, speakin$ throu$h Chief )ustice Concepcion, held that the certification of the
issue ;as a dispute affectin$ an industry indispensable to the national interest; leaves
;no room for doubt on the 7urisdiction of the CR to settle such dispute.;
Relatedly, ho.ever, it is to be noted that it is clear from the holdin$ of the ndustrial
Court;s decision >e have earlier -uoted, 9the cause of action /here0 is not on any
decision of any court but on the provisions of the la. .hich have been in effect at the
time of the occurrence of the cause of action in relation to a labor dispute9. Fie.ed from
such perspective laid by the lo.er court itself, it can hardly be said that it indeed
e4ercised purely its po.er of arbitration, .hich means layin$ do.n the terms and
conditions that should $overn the relationship bet.een the employer and employees of
an enterprise follo.in$ its o.n appreciation of the relevant circumstances rather
empirically. More accurately understood, the court in fact indul$ed in an interpretation of
the applicable la., namely, CA 888, in the li$ht of its o.n impression of the opinion of
this Court in NA>A:A and based its decision thereon.
Accordin$ly, upon the fact!situation of this case hereunder to be set forth, the
fundamental -uestion for ?s to decide is .hether or not the decision under appeal is in
accordance .ith that la. and the cited 7urisprudence. n brief, as PEMA posits, is
NA>A:A four!s-uare .ith this caseH And even assumin$, for a .hile, that in a sense
.hat is before ?s is an arbitration decision, private respondent itself admits in its above!
mentioned memorandum that this Court is not .ithout po.er and authority to determine
.hether or not such arbitration decision is a$ainst the la. or 7urisprudence or
constitutes a $rave abuse of discretion. +hus, in PEMA;s memorandum, it makes the
observation that 9/50urthermore, in the :hell cases, the unions are usin$ the NA>A:A
decision as a source of ri$ht for recomputation, .hile in the PNB, the ?nion merely cites
the NA>A:A doctrine, not as a source of ri$ht, but as a le$al authority or reference by
both parties so the ?nion demand may be $ranted. 9 /Motion to <ismiss, p. #.0
7
2bviously, therefore, the polestar to .hich 2ur mental vision must be focused in order
that >e may arrive at a correct le$al and e-uitable determination of this controversy
and, in the process make NA>A:A better understood as >e believe it should be, is
none other than :ections # and 8 of Com. Act No. 888, the Ei$ht Dour Aabor Aa., .hich
pertinently provide thus3
:EC. #. >ork may be performed beyond ei$ht hours a day in case of actual or
impendin$ emer$encies caused by serious accidents, fire, flood, typhoon, earth-uake,
epidemic, or other disaster or calamity in order to prevent loss to life and property or
imminent dan$er to public safety6 or in case of ur$ent .ork to be performed on the
machines, e-uipment, or installations in order to avoid a serious loss .hich the
employer .ould other.ise suffer, or some other 7ust cause of a similar nature6 but in all
such cases the laborers and employees shall be entitled to receive compensation for
the overtime .ork performed at the same rate as their re$ular .a$es or salary, plus at
least t.enty!five per centum additional.
n case of national emer$ency the @overnment is empo.ered to establish rules and
re$ulations for the operation of the plants and factories and to determine the .a$es to
be paid the laborers.
444 444 444
:EC. 8. No person, firm, or corporation, business establishment or place or center of
labor shall compel an employee or laborer to .ork durin$ :undays and le$al holidays,
unless he is paid an additional sum of at least t.enty!five per centum of his re$ular
remuneration3 Provided, ho.ever, that this prohibition shall not apply to public utilities
performin$ some public service such as supplyin$ $as, electricity, po.er, .ater, or
providin$ means of transportation or communication.
+he vital -uestion is, .hat does 9re$ular .a$e or salary9 mean or connote in the li$ht of
the demand of PEMAH
n 2ur considered opinion, the ans.er to such -uestion lies in the basic rationale of
overtime pay. >hy is a laborer or employee .ho .orks beyond the re$ular hours of
.ork entitled to e4tra compensation called in this enli$htened time, overtime payH Ferily,
there can be no other reason than that he is made to .ork lon$er than .hat is
commensurate .ith his a$reed compensation for the statutorily fi4ed or voluntarily
a$reed hours of labor he is supposed to do. >hen he thus spends additional time to his
.ork, the effect upon him is multi!faceted3 he puts in more effort, physical and=or
mental6 he is delayed in $oin$ home to his family to en7oy the comforts thereof6 he mi$ht
have no time for rela4ation, amusement or sports6 he mi$ht miss important pre!arran$ed
en$a$ements6 etc., etc. t is thus the additional .ork, labor or service employed and the
adverse effects 7ust mentioned of his lon$er stay in his place of .ork that 7ustify and is
the real reason for the e4tra compensation that he called overtime pay.
2vertime .ork is actually the len$thenin$ of hours developed to the interests of the
employer and the re-uirements of his enterprise. t follo.s that the .a$e or salary to be
received must like.ise be increased, and more than that, a special additional amount
must be added to serve either as encoura$ement or inducement or to make up fop the
thin$s he loses .hich >e have already referred to. And on this score, it must al.ays be
borne in mind that .a$e is indisputably intended as payment for .ork done or services
rendered. +hus, in the definition of .a$e for purposes of the Minimum >a$e Aa.,
Republic Act No. 'B,, it is stated3
;>a$e; paid to any employee shall mean the remuneration or earnin$s, ho.ever
desi$nated, capable of bein$ e4pressed in terms of money, .hether fi4ed or ascertained
on a time task, piece, commission basis or other method of calculatin$ the same, .hich
is payable by an employer to an employee under a .ritten or un.ritten contract of
employment for wor+ done or to &e done or for ser"i%es rendered or to &e rendered and
includes the fair and reasonable value as determined by the :ecretary of Aabor, of
board, lod$in$ or other facilities customarily furnished by the employer to the employee.
;5air and reasonable value; shall not include a profit to the employer .hich reduces the
.a$e received by the employee belo. the minimum .a$e applicable to the employee
under this Act, nor shall any transaction bet.een an employer or any person affiliated
.ith the employer and the employee of the employer include any profit to the employer
or affiliated person .hich reduces the employee;s .a$e belo. the .a$e applicable to
the employee under this Act.;
2
/Emphasis supplied0.
As can be seen, .a$e under said la., in .hatever means or form it is $iven to the
.orker, is 9for .ork done or to be done or for services rendered or to be rendered9 and
lo$ically 9includes /only0 the fair and reasonable value as determined by the :ecretary
of Aabor, of board, lod$in$ or other facilities customarily furnished by the employer to
the employee9.
ndeed, for the purpose of avoidin$ any misunderstandin$ or misinterpretation of the
.ord 9.a$e9 used in the la. and to differentiate it from 9supplement9, the >a$e
Administration :ervice to implement the Minimum >a$e Aa., defined the latter as3
e4tra remuneration or benefits received by .a$e earners from their employers and
include but are not restricted to pay for vacation and holidays not .orked6 paid sick
leave or maternity leave6 overtime rate in e4cess of .hat is re-uired by la.6 pension,
retirement, and death benefits6 profit!sharin$, family allo.ances6 Christmas, .ar risk
and %ost0of0li"ing &onuses1 or ot)er &onuses ot)er t)an t)ose paid as a reward for e2tra
output or time spent on t)e 3o&. /Emphasis ours0.
8
n these times .hen humane and di$nified treatment of labor is steadily becomin$
universally an obsession of society, .e, in our country, have reached a point in
employer! employee relationship .herein employers themselves reali1e the
indispensability of at least makin$ the compensation of .orkers e-ual to the .orth of
their efforts as much as this case can be statistically determined. +hus, in order to meet
the effects of uncertain economic conditions affectin$ adversely the livin$ conditions of
.a$e earners, employers, .henever the financial conditions of the enterprise permit,
$rant them .hat has been called as cost!of!livin$ allo.ance. n other .ords, instead of
leavin$ the .orkers to assume the risks of or drift by themselves amidst the cross
!currents of country!.ide economic dislocation, employers try their best to help them
tide over the hardships and difficulties of the situation. :ometimes, such allo.ances are
voluntarily a$reed upon in collective bar$ainin$ a$reements. At other times, it is
imposed by the $overnment as in the instances of Presidential <ecrees Nos. ",", &,*,
%%,#, %#*&, %'%8, %'(*, %("% and %(&B6 Aetters of nstructions No. %B"' and >a$e
2rder No. %. Notably, Presidential <ecree No. %("% increased the statutory .a$e at all
levels by P8BB in addition to inte$ratin$ the mandatory emer$ency livin$ allo.ances
under Presidential <ecree No. "," and Presidential <ecree No. %%,# into the basic pay
of all covered .orkers.
@oin$ over these la.s, one readily notices t.o distinctive features3 5irst, it is evidently
$ratifyin$ that the $overnment, in keepin$ .ith the humanitarian trend of the times,
al.ays makes every effort to keep .a$es abreast .ith increased cost of livin$
conditions, doin$ it as soon as the necessity for it arises. Do.ever, obviously, in order
not to overdo thin$s, e4cept .hen other.ise provided, it spares from such obli$ation
employers .ho by mutual a$reement .ith their .orkers are already payin$ .hat the
correspondin$ la. provides /:ee :ec. 8 of P.<. No. ","6 :ection , of P.<. No. *"% until
P.<. %'*8 abolished all e4emptions under P.<. No. ",", P.<. No. %%,#, P.<. No. *"% and
P.<. No. &,* amon$ distressed employers .ho even thou$h $iven sufficient lapse of
time to make the necessary ad7ustment have not done so.0#
n the case at bar, as already related earlier, the cost!of!livin$ allo.ance be$an to be
$ranted in %&"* and the lon$evity pay in %&*%. n other .ords, they .ere $ranted by
PNB upon reali1in$ the difficult pli$ht of its labor force in the face of the unusual
inflationary situation in the economy of the country, .hich, ho.ever acute, .as
nevertheless e4pected to improve. +here .as thus evident an inherently contin$ent
character in said allo.ances. +hey .ere not intended to be re$ular, much less
permanent additional part of the compensation of the employees and .orkers. +o such
effect .ere the testimonies of the .itnesses at the trial. 5or instance, Mr. Aadislao
Iu1on declared3
A++2RNEI @E:M?N<2
Juestionin$ ....
J. Callin$ your attention to para$raph No. %, entitled monthly livin$ allo.ance, .hich
has been marked as E4hibit ;A!l;, .ill you kindly tell us the history of this benefit!
monthly livin$ allo.ance, .hy the same has been $rantedH
A. >ell, in vie. of the increasin$ standard of livin$, .e decided to demand from
mana$ement in our set of demands ... included in our set of demands in %&"(!%&"* a
monthly livin$ allo.ance in addition to our basic salary. +his benefit .as a$reed upon
and $ranted to take effect as of )anuary %, %&"*. +hat .as the first time it .as en7oyed
by the employees of the Philippine National Bank. t started on a lesser amount but year
after year .e have been demandin$ for increases on this livin$ allo.ance until .e have
attained the present amount of P % "B.BB a month, startin$ .ith P8B.BB .hen it .as first
$ranted. +he same is still bein$ en7oyed by the employees on a much hi$her amount.
+here .ere a fe. variations to that. /t. t.s.n., pp. %*!%&, Dearin$ of Au$ust %', %&'"0
.hich testimony .as affirmed by Mr. Panfilo <omin$o, on cross! e4amination by
counsel for the respondent, readin$ as follo.s3
A++2RNEI @E:M?N<23
J. <o you recall Mr. <omin$o, that in denyin$ the cost of livin$ allo.ance and lon$evity
pay for incorporation .ith the basic salary, the reason $iven by the mana$ement .as
that as accordin$ to you, it .ill mean an added cost and ; furthermore it .ill increase the
contribution of the Philippine National Bank to the @::, is that correctH
A. +his is one of the reasons, of the ob7ections for the inclusion of the livin$ allo.ance
and lon$evity pay to form part of the basic pay, mean amon$ others, because the
basic reason w)y management would o&3e%t is t)e %ost of li"ing allowan%e is temporary
in nature, t)e p)ilosop)y &e)ind t)e grant of t)is &enefit, Nonet)eless, it was t)e
understanding if $ re%all rig)t t)at in t)e e"ent t)at %ost of li"ing s)ould go down t)en
t)ere s)ould &e a %orresponding de%rease in t)e %ost of li"ing allowan%e &eing granted
$ )a"e to mention t)is &e%ause t)is is t)e fundamental p)ilosop)y in t)e grant of %ost of
li"ing allowan%e. /Pp. %&!,B, Record.0
Much less .ere they dependent on e4tra or special .ork done or service rendered by
the correspondin$ recipient. Rather, they .ere based on the needs of their families as
the conditions of the economy .arranted. :uch is the ine4orable import of the pertinent
provisions of the collective bar$ainin$ a$reement3
M2N+DAI AFN@ AAA2>ANCE
All employees of the Bank shall be $ranted a monthly livin$ allo.ance of P%8B, plus
P%B for each minor dependent child belo. ,% years of a$e, but in no case shall the total
9
allo.ance e4ceed P,BB or ,"E of the monthly salary, .hichever is hi$her, sub7ect to
the follo.in$ conditions3
a0 +hat this ne. basic allo.ance shall be applicable to all employees, irrespective of
their civil status6
b0 +hat a .ido. or .ido.er shall also en7oy the basic allo.ance of P%8B a month, plus
the additional benefit of P%B for each minor dependent child but not to e4ceed P,BB or
,"E of basic salary .hichever is hi$her.
c0 +hat in case the husband and .ife are both employees in the Bank both shall en7oy
this ne. basic monthly livin$ allo.ance of P%8B but only one of spouses shall be
entitled to claim the additional benefit of P%B for each minor le$itimate or ackno.led$ed
child. /Pp. #B!#%, PNB;s memo.0
:o also .ith the lon$evity pay6 manifestly, this .as not based on the daily or monthly
amount of .ork done or service rendered it .as more of a $ratuity for their loyalty, or
their havin$ been in the bank;s employment for consideration periods of time. ndeed,
.ith particular reference to the lon$evity pay, the then e4istin$ collective bar$ainin$
contract e4pressly provided3 9... +hat this benefit shall not form part of the basic salaries
of the officers so affected.9
PEMA may contend that the e4press e4clusion of the lon$evity pay, means that the
cost!of!livin$ allo.ance .as not intended to be e4cluded. Considerin$, ho.ever, the
contin$ent nature of the allo.ances and their lack of relation to .ork done or service
rendered, .hich in a sense may be other.ise in respect to lon$evity pay PEMA;s
contention is untenable. +he rule of e2%lusio unius, e2%lusio alterius .ould not apply
here, if only because in the very nature of the t.o benefits in -uestion, considerations
and conclusions as to one of them could be non0se4uitur as to the other.
>ithal, there is the indisputable si$nificant fact that after %&"*, everytime a collective
bar$ainin$ a$reement .as bein$ entered into, the union al.ays demanded the
inte$ration of the cost!of!livin$ allo.ances and lon$evity pay, and as many times, upon
opposition of the bank, no stipulation to such effect has ever been included in any of
said a$reements. And the e4press e4clusion of lon$evity pay .as continued to be
maintained.
2n this point, the respondent court held that under its broad 7urisdiction, it .as .ithin
the ambit of its authority to provide for .hat the parties could not a$ree upon. >e are
not persuaded to vie. the matter that .ay. >e are not convinced that the $overnment,
thru the ndustrial Court, then, could impose upon the parties in an employer!employee
conflict, terms and conditions .hich are inconsistent .ith the e4istin$ la. and
7urisprudence, particularly .here the remedy is sou$ht by the actors more on such le$al
basis and not purely on the court;s arbitration po.ers.
As pointed out earlier in this opinion, 2ur task here is t.o!fold3 5irst, revie.in$ the
decision under scrutiny as based on la. and 7urisprudence, the -uestion is .hether or
not the rulin$s therein are correct. And second, readin$ such 7ud$ment as an arbitration
decision, did the court a -uo $ravely abuse its discretion in holdin$, as it did, that cost!
of!livin$ allo.ance and lon$evity pay should be included in the computation of overtime
payH
n re$ard to the first -uestion, >e have already pointed out to start .ith, that as far as
lon$evity pay is concerned, it is beyond -uestion that the same cannot be included in
the computation of overtime pay for the very simple reason that the contrary is
e4pressly stipulated in the collective bar$ainin$ a$reement and, as should be the case,
it is settled that the terms and conditions of a collective bar$ainin$ a$reement constitute
the la. bet.een the parties. /Mactan >orkers ?nion vs. Aboiti1, 8" :CRA "((. :ee
also :hell 2il >orkers ?nion et al. vs. :hell Company of the Philippines, supra0 +he
contention of PEMA that the e4press provision in the collective bar$ainin$ a$reement
that 9this benefit /lon$evity pay0 shall not form part of the basic salaries of the officers so
affected9 cannot imply the same dea insofar as the computation of the overtime pay is
concerned defies the rules of lo$ic and mathematics. f the basic pay cannot be deemed
increased, ho. could the overtime pay be based on any increased amount at allH
Do.ever, the matter of the cost!of!livin$ allo.ance has to be e4amined from another
perspective, namely, that .hile PEMA had been al.ays demandin$ for its inte$ration
into the basic pay, it never succeeded in $ettin$ the conformity of PNB thereto, and so,
all collective bar$ainin$ a$reements entered !8 into periodically by the said parties did
not provide therefor. And it .ould appear that PEMA took the non!a$reement of the
bank in $ood $race, for the record does not sho. that any remedial measure .as ever
taken by it in connection there.ith. n other .ords, the parties seemed to be mutually
satisfied that the matter could be better left for settlement on the bar$ainin$ table
sooner or later, pursuant to the spirit of free bar$ainin$ underlyin$ Republic Act *(", the
ndustrial Peace Act then in force. 2r, as observed by PEMA in its memorandum, /pa$e
,#0, the parties 9a$reed to let the -uestion remain open!pendin$ decision of authorities
that .ould 7ustify the demand of the ?nion.9 ndeed, on pa$es ,#!,8 of said
memorandum, the follo.in$ position of PEMA is stated thus3
+hus the follo.in$ proceedin$ took place at the Court a -uo3
A++I. @E:M?N<23
+hat is our position, Iour Donor, because apparently there .as an understandin$
reached bet.een the parties as to their havin$ to .ait for authorities and considerin$
10
that the issue or one of the issues then involved in the NA>A:A case pendin$ in the
CR supports the stand of the union, that the principle enunciated in connection .ith that
issue is applicable to this case.
444 444 444
J. <o .e understand from you, Mister Iuson, that it .as because of the mana$ement
askin$ you for authorities in allo.in$ the inte$ration of the cost of livin$ allo.ance .ith
your basic salary and your failure to produce at the time such authorities that the union
then did not brin$ any case to the CourtH
A. >ell, in the first place, it is not really my dea to be brin$in$ matters to the Court
durin$ my time but .ould much prefer that .e a$ree on the issue. >ell, insofar as you
said that the mana$ement .as askin$ me, .elt .ould say that they .ere invokin$ /on0
authorities that .e can sho. in order to become as a basis for $rantin$ or for a$reein$
.ith us althou$h .e .ere a.are of the e4istence of a pendin$ case .hich is very
closely similar to our demand, yet .e decided to .ait until this case should be decided
by the Court so that .e can avail of the decision to present to mana$ement as .hat
they are askin$ for. /t.s.n., pp. #%!#,, #"!#', Au$. ,*,%&'".0
No., to complete proper understandin$ of the character of the controversy before ?s,
and lest it be felt by those concerned that >e have overlooked a point precisely related
to the matter touched in the above immediately precedin$ para$raph, it should be
relevant to -uote a portion of the 9:tipulation of 5acts9 of the parties hereto3
%. +his particular demand .as amon$ those submitted by Petitioner!?nion in the current
collective bar$ainin$ ne$otiations to the Respondent Bank. Do.ever, since this case
.as already filed in court on May ,,, %&'", the parties a$reed not to include this
particular demand in the discussion, leavin$ the matter to the discretion and final 7udicial
determination of the courts of 7ustice.9 /Pa$e *%, Rec.0
n fine, .hat the parties commonly desire is for this Court to construe CA 888 in the li$ht
of NA>A:A, considerin$ the fact! situation of the instant case.
n this respect, it is 2ur considered opinion, after mature deliberation, that
not.ithstandin$ the portions of the NA>A:A;s opinion relied upon by PEMA, there is
nothin$ in CA 888 that could 7ustify its posture that cost!of!livin$ allo.ance should be
added to the re$ular .a$e in computin$ overtime pay.
After all, .hat .as said in NA>A:A that could be controllin$ hereH +rue, it is there
stated that 9for purposes of computin$ overtime compensation, re$ular .a$e includes
all payments .hich the parties have a$reed shall be received durin$ the .ork .eek,
includin$ ! differential payments for .orkin$ at undesirable times, such as at ni$ht and
the board and lod$in$ customarily furnished the employee. ... +he ;re$ular rate; of pay
also ordinarily includes incentive bonus or profit!sharin$ payments made in addition to
the normal basic pay /"' C.).:., pp. (B8!(B"0, and it .as also held that the hi$her rate
for ni$ht, :unday and holiday .ork is 7ust as much a re$ular rate as the lo.er rate for
daytime .ork. +he hi$her rate is merely an inducement to accept employment at times
.hich are not as desirable from a .orkmen;s standpoint /nternational A. Ass;n vs.
National +erminals Corp. C.C. >ise, "B 5. :upp. ,', affirmed C.C.A. Carbunoa v.
National +erminals Corp. %#& 5. ,d *"#0.9 /%% :CRA, p. (*#0
But no.here did NA>A:A refer to e4tra, temporary and contin$ent compensation
unrelated to .ork done or service rendered, .hich as e4plained earlier is the very
nature of cost!of! livin$ allo.ance. >ithal, in strict sense, .hat >e have 7ust -uoted
from NA>A:A .as o&iter di%tum, since the only issue before the Court there .as
.hether or not 9in computin$ the daily .a$e, /.hether0 the addition compensation for
:unday should be included. 9 /:ee No. ( of Record0
n any event, as stressed by ?s in the :hell cases, the basis of computation of overtime
pay beyond that re-uired by CA 888 must be the collective bar$ainin$ a$reement,
*
for,
to reiterate 2ur postulation therein and in Bisi$ n$ Man$$a$a.a, supra, it is not for the
court to impose upon the parties anythin$ beyond .hat they have a$reed upon .hich is
not tainted .ith ille$ality. 2n the other hand, .here the parties fail to come to an
a$reement, on a matter not le$ally re-uired, the court abuses its discretion .hen it
obli$es any 'f them to do more than .hat is le$ally obli$ed.
<octrinally, >e hold that, in the absence of any specific provision on the matter in a
collective bar$ainin$ a$reement, .hat are decisive in determinin$ the basis for the
computation of overtime pay are t.o very $ermane considerations, namely, /%0 .hether
or not the additional pay is for e4tra .ork done or service rendered and /,0 .hether or
not the same is intended to be permanent and re$ular, not contin$ent nor temporary
and $iven only to remedy a situation .hich can chan$e any time. >e reiterate, overtime
pay is for e4tra effort beyond that contemplated in the employment contract, hence
.hen additional pay is $iven for any other purpose, it is illo$ical to include the same in
the basis for the computation of overtime pay. +his holdin$ supersedes NA>A:A.
Davin$ arrived at the fore$oin$ conclusions, >e deem it unnecessary to discuss any of
the other issues raised by the parties.
>DERE52RE, 7ud$ment is hereby rendered reversin$ the decision appealed from,
.ithout costs.
11