Philippine National Bank vs. Philippine National Bank Employees Association (PEMA)

Cost-of-living allowance and longevity pay that are contingent, temporary, and not paid for extra work done or service rendered are not part of regular wage or salary for computing overtime pay under Commonwealth Act No. 444, absent a collective bargaining agreement provision including them. The NAWASA pronouncements on regular rate were confined to their fact-situation and superseded to the extent they suggested a broader inclusion of fringe benefits.

The Philippine National Bank and the Philippine National Bank Employees Association (PEMA) were employer and employees bound by periodically renewed collective bargaining agreements governing salaries, monthly living allowance, longevity pay, and overtime premium rates above the statutory minimum. Commonwealth Act No. 444, the Eight-Hour Labor Law, required overtime and Sunday/holiday work to be compensated at regular wage or remuneration plus at least twenty-five per centum additional, without defining regular wage. Republic Act No. 875 encouraged free collective bargaining, while the Court of Industrial Relations exercised compulsory arbitration over certified labor disputes affecting national interest.

By Resolution No. 1162 dated September 16, 1957, implemented by memorandum dated September 18, 1957, PNB's Board approved revision and recomputation of regular one-hour and extra overtime retroactive to July 1, 1954. Beginning January 1, 1958, PNB granted a monthly living allowance, initially P40.00 and later increased to P150.00, P140.00 plus P10.00 for each minor dependent child below 21 years without exceeding P200.00 or 25% of monthly salary, whichever was higher, with parallel rules for widows, widowers, and spouses both employed by the Bank. Effective July 1, 1961, PNB also granted longevity pay, with the collective bargaining agreement expressly stating that this benefit shall not form part of the basic salaries of the officers so affected.

Thereafter, PEMA repeatedly demanded integration of the cost-of-living allowance and longevity pay into basic salary in successive collective bargaining negotiations, but PNB opposed on grounds including added cost, increased GSIS contributions, and the temporary philosophy of cost-of-living relief subject to decrease if living costs declined. No agreement for integration was ever included, although the parties understood to await judicial authority, particularly the pending NAWASA case decided August 31, 1964. After presidential certification of a separate dispute over the Committee on Personnel Affairs and the January 28, 1965 interim order enjoining strikes, PEMA filed on May 22, 1965 its claims for (a) restoration of 1957 overtime benefits allegedly withdrawn in 1963 and (b) inclusion of cost-of-living allowance and longevity pay in overtime computation effective from their grant, later pressed from January 1, 1958. PNB promptly complied with the first demand in the interest of industrial peace, rendering it moot, while the parties stipulated to exclude the second demand from ongoing bargaining and submit it to judicial determination.

The Industrial Court found an existing labor dispute within its compulsory arbitration power, rejected the money-claim and prematurity objections, and treated the action as based on existing law and jurisprudence rather than declaratory relief. It ordered PNB to pay overtime and nighttime rates from January 28, 1962 based on basic salary plus cost-of-living allowance and longevity pay, at time-and-one-third generally and 150% for work between 6:00 P.M. and 6:00 A.M. or definite night shift, directing the Chief of the Examining Division to compute individual liabilities within sixty days but leaving time, amount, and duration of payment to negotiation given PNB's character as government depository.

• Jurisdiction and Nature of Dispute: Petitioner argued that the alleged causes of action were not disputes existing between the parties at certification, were mere money claims outside the Industrial Court's jurisdiction, and were not stipulated under the collective bargaining agreement or were premature because the pertinent agreement had not yet expired.
• Collective Bargaining Agreement as Control: Petitioner maintained that the basis for overtime computation must be the collective bargaining agreement, whose premium rates already far exceeded the 25% statutory minimum, and that the court could not impose inclusion of benefits the parties never agreed to include.
• Character of Benefits: Petitioner argued that cost-of-living allowance was temporary in nature and longevity pay was expressly excluded from basic salaries, so neither could enlarge the base for overtime.

• Certified Dispute and Arbitration Power: Respondent countered that presidential certification embraced the labor dispute generally without limiting specific areas, that jurisdiction follows referral of the industrial dispute, and that certification as affecting an industry indispensable to national interest left no room for doubt on jurisdiction.
• Money Claim as Compensation: Respondent argued that the claim was not a pure money claim because certification, likelihood of strike, national interest, unsevered employer-employee relationship, and the injunction against striking were involved, and that money claim is embraced within compensation subject to compulsory arbitration.
• NAWASA as Authority: Respondent maintained that cost-of-living allowance and longevity pay should be taken into account in overtime computation effective from their grant in accordance with the ruling in National Waterworks and Sewerage Authority vs. NAWASA Consolidated Unions, cited not as source of right but as legal authority supporting the demand.

• Jurisdiction: Whether the Court of Industrial Relations had jurisdiction over the claim for differential overtime and nighttime pay based on cost-of-living allowance and longevity pay in a presidentially certified dispute.
• Longevity Pay: Whether longevity pay expressly excluded from basic salaries by the collective bargaining agreement may be included in the basis for computing overtime pay.
• Cost-of-Living Allowance and NAWASA Applicability: Whether cost-of-living allowance must be added to regular wage in computing overtime pay under Commonwealth Act No. 444 in light of NAWASA.

• Jurisdiction: Yes. Jurisdiction was sustained, the certification being general and the overtime question being part of the existing labor dispute subject to compulsory arbitration where employer-employee relationship continued.
• Longevity Pay: No. Longevity pay was excluded because the collective bargaining agreement expressly provided it shall not form part of basic salaries, which as the law between the parties precluded enlarging the overtime base.
• Cost-of-Living Allowance and NAWASA Applicability: No. Cost-of-living allowance was not includable, NAWASA being inapplicable and superseded to the extent it suggested inclusion of contingent fringe benefits unrelated to work rendered.

• Jurisdiction: The broader view of jurisdiction was adopted in the interest of finally settling a long-standing dispute without multiplicity of actions. The presidential certification spoke generally of a labor dispute and strike, the January 28, 1965 order enjoined strikes for six months to allow settlement, and the overtime issue dating from 1958 was deemed an existing dispute interrelated with the mooted first cause. Reliance was placed on compulsory arbitration under Section 10 of Republic Act No. 875, the PRISCO doctrine on continuing employer-employee relationship, and NAWASA on discretion to resolve overtime questions dragged into a certified case.
• Longevity Pay: The express contractual exclusion was given effect, since terms and conditions of a collective bargaining agreement constitute the law between the parties absent illegality. If basic pay could not be deemed increased, overtime logically could not be based on any increased amount. Imposing a contrary term through arbitration where the remedy was sought on legal rather than purely arbitral grounds was not permitted, especially where agreed overtime premiums of time-and-one-third and 50% already exceeded the 25% statutory minimum.
• Cost-of-Living Allowance and NAWASA Applicability: Overtime pay was reasoned to compensate extra effort beyond contracted hours and its adverse effects, while wage means remuneration for work done or services rendered, excluding supplements such as cost-of-living bonuses unrelated to work. Testimony and bargaining history showed the allowance was contingent relief against inflation, variable, expected to decrease if living costs fell, based on family needs rather than work rendered, and never accepted for integration despite repeated union demands. NAWASA was distinguished as deciding only inclusion of 25% Sunday differential of seven-day workers to avoid diminution under Republic Act No. 1880, with its broader American-law discussion treated as obiter dictum, and Shell Oil Workers Union vs. Shell Company of the Philippines was followed in holding the collective bargaining agreement controls and irregular or non-universal fringe benefits fail the regularity test.

• Collective bargaining agreement as law between the parties — Where terms are not tainted with infirmity, irregularity, or illegality, they must be strictly complied with and govern the employer-employee relationship; courts must develop respect for agreements bona fide negotiated under Republic Act No. 875 and may not reconstruct them to impose more than agreed. Applied to enforce the express exclusion of longevity pay from basic salaries and to retain the agreed overtime base and premium rates.
• Basis for overtime computation absent contractual provision — Doctrinally, what are decisive are (1) whether or not the additional pay is for extra work done or service rendered and (2) whether or not the same is intended to be permanent and regular, not contingent nor temporary and given only to remedy a situation which can change any time. Applied to exclude cost-of-living allowance, found contingent and unrelated to work, and to supersede any broader reading of National Waterworks and Sewerage Authority vs. NAWASA Consolidated Unions.
• Regular wage under the Eight-Hour Labor Law — Regular wages, salary, or remuneration under Sections 3 and 4 of Commonwealth Act No. 444 means pay for work done or services rendered, sensibly and ordinarily understood, and does not include extra, temporary, contingent compensation such as cost-of-living allowance, longevity pay, or other fringe benefits given for family needs, loyalty, or economic relief. Applied to deny enlargement of the overtime base beyond basic pay.
• Scope of compulsory arbitration — The Industrial Court in certified national-interest disputes may arbitrate terms and conditions, but may not impose terms inconsistent with existing law and jurisprudence where relief is sought on legal grounds rather than purely on arbitration discretion; grave abuse or legal error remains reviewable. Applied to review the Industrial Court's interpretation of Commonwealth Act No. 444 in light of NAWASA rather than treating it as unreviewable arbitration.
• Limited application of NAWASA — The NAWASA ruling on including Sunday differential in daily-wage conversion under Republic Act No. 1880 benefits only workers working seven days a week and regularly receiving such differential, requires regularity and continuity, and does not establish a universal rule adding all fringe-benefit values to basic pay for overtime. Applied through Shell Oil Workers Union vs. Shell Company of the Philippines to reject recomputation in PNB.

• "The 'regular rate' of pay on the basis of which overtime must be computed must reflect all payments which the parties have agreed shall be received regularly during the work week, exclusive of overtime payments." — Cited to state the regularity-and-agreement test that PEMA failed, since the disputed benefits were not regularly agreed as part of basic weekly pay.
• "Doctrinally, We hold that, in the absence of any specific provision on the matter in a collective bargaining agreement, what are decisive in determining the basis for the computation of overtime pay are two very germane considerations, namely, (1) whether or not the additional pay is for extra work done or service rendered and (2) whether or not the same is intended to be permanent and regular, not contingent nor temporary and given only to remedy a situation which can change any time." — States the controlling two-part test superseding a broad reading of NAWASA and excluding the allowances.
• "It is the duty of this Court to see to it that contracts between parties, not tainted with infirmity or irregularity or illegality, be strictly complied with by the parties themselves." — States the contractual sanctity principle justifying enforcement of the collective bargaining agreement's exclusion of longevity pay and agreed overtime formula.
• "The fact that the question 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 within the sound discretion of the Court of Industrial Relations." — States the jurisdictional rationale for entertaining the overtime claim within a certified dispute to avoid technicality and multiplicity.

• National Waterworks and Sewerage Authority vs. NAWASA Consolidated Unions, G.R. No. L-18938, August 31, 1964 — Distinguished and limited; held to decide only daily-wage conversion including 25% Sunday differential under Republic Act No. 1880 for regular seven-day workers, with broader regular-rate discussion treated as obiter dictum and superseded as universal overtime rule.
• Shell Oil Workers Union vs. Shell Company of the Philippines, G.R. No. L-30658-59, March 31, 1976 — Followed; held NAWASA not in point, required regularity and continuity of benefits, and enforced the collective bargaining agreement's overtime formula far above the statutory minimum.
• Mactan Workers Union vs. Aboitiz, 45 SCRA 577 — Cited for the rule that terms and conditions of a collective bargaining agreement constitute the law between the parties, supporting exclusion of longevity pay.
• Apo Cement Workers Union vs. Cebu Portland Cement, G.R. No. L-12451, July 10, 1957 — Cited by the Industrial Court to sustain jurisdiction over issues arising subsequent to or not expressly embraced by certification.
• Philippine Postal Savings Bank, et al. vs. CIR, et al., L-24572, December 20, 1967; Liberation Steamship vs. CIR, L-25389 and 25390; Republic vs. CIR, L-21303 — Cited in PEMA's memorandum to support that certification of a national-interest dispute confers compulsory arbitration jurisdiction on the Industrial Court.

• Sections 3 and 4, Commonwealth Act No. 444, Eight-Hour Labor Law — Require overtime and Sunday/holiday work to be paid at regular wages, salary, or remuneration plus at least 25% additional; construed to mean ordinary pay for work rendered, excluding contingent allowances, so neither cost-of-living allowance nor longevity pay enlarges the base.
• Section 6, Commonwealth Act No. 444 — Provides that any agreement contrary to the Act is null and void ab initio; invoked to argue stipulations cannot defeat statutory overtime, but found inapplicable to require inclusion beyond what law and contract provide.
• Section 10, Republic Act No. 875, Industrial Peace Act; Section 4 and Section 13, Commonwealth Act No. 103 — Confer compulsory arbitration and dispute-settlement powers on the Court of Industrial Relations in certified disputes; relied upon to sustain jurisdiction while limiting power to impose terms contrary to law.
• Section 2(g), Republic Act No. 602, Minimum Wage Law; Section 97(b), New Labor Code — Define wage as remuneration for work done or services rendered, including only fair value of board, lodging, or facilities customarily furnished; used to distinguish wage from supplements such as cost-of-living bonuses.
• Republic Act No. 1880 — Fixed an eight-hour day for five days or forty hours a week for government employees including government-owned corporations without diminution of weekly wage; identified as the specific statutory context limiting NAWASA.

Guerrero, De Castro, Plana, Escolin, Vasquez, Relova and Gutierrez, Jr., JJ., concur. Fernando, C.J., Concepcion and Abad Santos, JJ., took no part. Melencio-Herrera, J., concur in the result. Aquino, J., in a separate concurrence, agreed that regular wages or remuneration under Commonwealth Act No. 444, sensibly interpreted, means basic pay and excludes cost-of-living allowance, longevity pay, and other fringe benefits, with American cases cited in NAWASA not controlling and Shell Oil Workers Union supporting exclusion.