247: PNB V PNB EMPLOYEES ASSOCIATION

FACTS:

– PNB and PNB Employees Association (PEMA) had a dispute regarding the proper computation of
overtime pay. PEMA wanted the cost of living allowance (granted in 1958) and longevity pay (granted in
1961) to be included in the computation. PNB disagreed and the 2 parties later went before the CIR to
resolve the dispute.

– CIR decided in favor of PEMA and held that PNB should compute the overtime pay of its employees on
the basis of the sum total of the employee’s basic salary or wage plus cost of living allowance and
longevity pay. The CIR relied on the ruling in NAWASA v NAWASA Consolidated Unions, which held that
“for purposes of computing overtime compensation, regular wage includes all payments which the
parties have agreed shall be received during the work week, including differentiated payments for
working at undesirable times, such as at night and the board and lodging customarily furnished the
employee.” This prompted PNB to appeal, hence this case.

ISSUE: WON the cost of living allowance and longevity pay should be included in the computation of
overtime pay as held by the CIR

HELD: NO. Ratio Overtime pay is for extra effort beyond that contemplated in the employment contract;
additional pay given for any other purpose cannot be included in the basis for the computation of
overtime pay.

– Absent a specific provision in the CBA, the bases for the computation of overtime pay are 2
computations, namely:

1. WON the additional pay is for extra work done or service rendered

2. WON the same is intended to be permanent and regular, not contingent nor temporary as a given only
to remedy a situation which can change any time.

Reasoning

– Longevity pay cannot be included in the computation of overtime pay for the very simple reason that
the contrary is expressly stipulated in the CBA, which constitutes the law between the parties.

– As regards cost of living allowance, there is nothing in Commonwealth Act 444 [or “the 8-hour Labor
Law,” now Art. 87 Labor Code] that could justify PEMA’s posture that it should be added to the regular
wage in computing overtime pay. C.A. 444 prescribes that overtime work shall be paid “at the same rate
as their regular wages or salary, plus at least 25% additional.” The law did not define what is a regular
wage or salary. What the law emphasized is that in addition to “regular wage,” there must be paid an
additional 25% of that “regular wage” to constitute overtime rate of pay. Parties were thus allowed to
agree on what shall be mutually considered regular pay from or upon which a 25% premium shall be
based and added to makeup overtime compensation.

– No rule of universal application to other cases may be justifiably extracted from the NAWASA case. CIR
relies on the part of the NAWASA decision where the SC cited American decisions whose legislation on
overtime is at variance with the law in this jurisdiction. The US legislation considers work in excess of

in this enlightened time. there can be no other reason than that he is made to work longer than what is commensurate with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to do. whereas. he puts in more effort. by reason of being unfixed. labor or service employed and the adverse effects just mentioned of his longer stay in his place of work that justify and are the real reasons for the extra compensation that is called overtime pay. new and additional fringe benefits. **Overtime Pay Rationale Why is a laborer or employee who works beyond the regular hours of work entitled to extra compensation called. etc. which in turn could lead to serious disputes. It is computed by multiplying the overtime hourly rate by the number of hours worked in excess of eight. what I generally considered overtime in the Philippines is work in excess of the regular 8 hours a day. physical and/or mental. he might miss important pre- arranged engagements. the effect upon him is multi. he is delayed in going home to his family to enjoy the comforts thereof. It is understandably material to refer to precedents in the US for purposes of computing weekly wages under a 40-hour week rule. It would require reference to and continued use of individual earnings in the past. 444.A. Disposition decision appealed from is REVERSED . To apply this mode of computation would retard and stifle the growth of unions themselves as Companies would be irresistibly drawn into denying. becomes instead a veritable source of irritant in labor relations. if not those already existing. for fear of bloating their overhead expenses through overtime which. **Overtime Pay Definition The additional pay for service or work rendered or performed in excess of 8 hours a day by employees or laborers in employment covered by the 8 hour Labor Law [C. he might have no time for relaxation. since the particular issue involved in NAWASA is the conversion of prior weekly regular earnings into daily rates without allowing diminution or addition. – To apply the NAWASA computation would require a different formula for each and every employee. amusement or sports.forty hours a week as overtime. It would be cumbersome and tedious a process to compute overtime pay and this may again cause delays in payments. 87 Labor Code] and not exempt from its requirements. overtime pay? Verily.faceted. When he thus spends additional time to his work. now Art. It is thus the additional work. thus multiplying the administrative difficulties of the Company.

Petitioner based its contention primarily on the ruling of the Supreme Court in NAWASA vs. whether such interpretation would contravene the principle established in the Nawasa vs Nawasa case. This factual information by itself constrains the petitioner to question the intention of that particular phrase in their CBA pertaining to overtime pay but could only claim that it violated the Nawasa doctrine and insist that it be reformed to conform to said doctrine. and therefore is valid and not in contravention to the Nawasa doctrine. No. and that it did agree to raise the overtime rate to 50% instead of 25% of the regular base pay precisely on the consideration that it be based only on the regular base pay and should not include Christmas bonus. Inc. The Supreme Court held that the Nawasa ruling did not limit that the computation of overtime pay to be based solely on the employees' regular wage or salary. according to the court. and the same fact was undeniably known to the petitioner .the very reason. 11 SCRA 766 where it was declared that the 'regular rate' is also deemed to include other incentives and bonuses which employers may receive as part of their regular pay. which when computer is much higher than what can be arrived at using the statutory formula. What is important is that the product resulting from the computation must always be equal or higher than the statutory requirement of 25% more than the regular wage. Bisig ng Manggagawa ng Philippine Refining Company. Inc. unequivocal and requires no interpretation. et all G. which according to law includes bonuses and other benefits. filed with the Court of First Instance of Manila a petition for declaratory relief seeking. it was only the regular base pay that was considered. in the interpretation of the provision of the CBA of the parties on overtime pay. 1964. the Court declared that the provisions of the CBA as to the computation of overtime pay has amply complied with what is required by law. among others. . L-27761. why it attempted to have a different provision pertaining to overtime pay which would include Christmas bonus and other benefits.248. the formula adopted by the CBA is 50% more than the regular basi pay.R. on the other hand contended that in their collective bargaining agreement (CBA). the parties never intended to include the employees' Christmas bonus in the computation of the overtime pay. and that in case it should not. Philippine Refining Company. Inc. Ruling: The Supreme Court ruled that the term "regular base pay" is clear. Respondent Philippine Refining Company. vs. petitioner union Bisig ng Manggagawa ng Philippine Refining Company. It held that the term means regular basic pay which necessarily EXCLUDES money received in different concepts such as Christmas bonus and other fringe benefits. The Court observed that in framing up their CBA escpecially on the provision regarding overtime pay. August 31. L-18938. NAWASA Consolidated Unions. Issue: The issue resolved by the Supreme Court was whether or not. GR No. Inc.. 30 September 1981 Facts of the case: In 1966. the term "regular base pay" should include Christmas bonus. In the case at bar. the judgement that their Christmas bonus be included as part of their basic pay for the computation of overtime pay. Thus.

249: PNB V PNB EMPLOYEES ASSOCIATION FACTS: – PNB and PNB Employees Association (PEMA) had a dispute regarding the proper computation of overtime pay. PNB disagreed and the 2 parties later went before the CIR to resolve the dispute. plus at least 25% additional. hence this case. the bases for the computation of overtime pay are 2 computations. not contingent nor temporary as a given only to remedy a situation which can change any time. namely: 1. PEMA wanted the cost of living allowance (granted in 1958) and longevity pay (granted in 1961) to be included in the computation.” now Art.” there must be paid an additional 25% of that “regular wage” to constitute overtime rate of pay. C.A. – As regards cost of living allowance. regular wage includes all payments which the parties have agreed shall be received during the work week. Ratio Overtime pay is for extra effort beyond that contemplated in the employment contract. The US legislation considers work in excess of . – Absent a specific provision in the CBA. 87 Labor Code] that could justify PEMA’s posture that it should be added to the regular wage in computing overtime pay. WON the same is intended to be permanent and regular. – No rule of universal application to other cases may be justifiably extracted from the NAWASA case. Parties were thus allowed to agree on what shall be mutually considered regular pay from or upon which a 25% premium shall be based and added to makeup overtime compensation.” This prompted PNB to appeal. What the law emphasized is that in addition to “regular wage. additional pay given for any other purpose cannot be included in the basis for the computation of overtime pay. which held that “for purposes of computing overtime compensation. The CIR relied on the ruling in NAWASA v NAWASA Consolidated Unions. including differentiated payments for working at undesirable times. which constitutes the law between the parties. – CIR decided in favor of PEMA and held that PNB should compute the overtime pay of its employees on the basis of the sum total of the employee’s basic salary or wage plus cost of living allowance and longevity pay. CIR relies on the part of the NAWASA decision where the SC cited American decisions whose legislation on overtime is at variance with the law in this jurisdiction. 444 prescribes that overtime work shall be paid “at the same rate as their regular wages or salary. such as at night and the board and lodging customarily furnished the employee. Reasoning – Longevity pay cannot be included in the computation of overtime pay for the very simple reason that the contrary is expressly stipulated in the CBA. WON the additional pay is for extra work done or service rendered 2. there is nothing in Commonwealth Act 444 [or “the 8-hour Labor Law.” The law did not define what is a regular wage or salary. ISSUE: WON the cost of living allowance and longevity pay should be included in the computation of overtime pay as held by the CIR HELD: NO.

444. **Overtime Pay Rationale Why is a laborer or employee who works beyond the regular hours of work entitled to extra compensation called. by reason of being unfixed. he is delayed in going home to his family to enjoy the comforts thereof. which in turn could lead to serious disputes. whereas. To apply this mode of computation would retard and stifle the growth of unions themselves as Companies would be irresistibly drawn into denying. what I generally considered overtime in the Philippines is work in excess of the regular 8 hours a day. When he thus spends additional time to his work. since the particular issue involved in NAWASA is the conversion of prior weekly regular earnings into daily rates without allowing diminution or addition. thus multiplying the administrative difficulties of the Company. **Overtime Pay Definition The additional pay for service or work rendered or performed in excess of 8 hours a day by employees or laborers in employment covered by the 8 hour Labor Law [C. Disposition decision appealed from is REVERSED.faceted. It would be cumbersome and tedious a process to compute overtime pay and this may again cause delays in payments. if not those already existing. It would require reference to and continued use of individual earnings in the past. physical and/or mental. It is thus the additional work. It is computed by multiplying the overtime hourly rate by the number of hours worked in excess of eight. for fear of bloating their overhead expenses through overtime which. 87 Labor Code] and not exempt from its requirements. now Art. he might miss important pre- arranged engagements. overtime pay? Verily. the effect upon him is multi. It is understandably material to refer to precedents in the US for purposes of computing weekly wages under a 40-hour week rule. there can be no other reason than that he is made to work longer than what is commensurate with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to do. he puts in more effort. becomes instead a veritable source of irritant in labor relations. labor or service employed and the adverse effects just mentioned of his longer stay in his place of work that justify and are the real reasons for the extra compensation that is called overtime pay.A. new and additional fringe benefits. amusement or sports. etc. .forty hours a week as overtime. – To apply the NAWASA computation would require a different formula for each and every employee. he might have no time for relaxation. in this enlightened time.