G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL BANK, petitioner, vs. PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) and COURT OF INDUSTRIAL RELATIONS, respondents.

FACTS

This case originated from a presidential certification of an industrial dispute between PNB and its employees’ union, PEMA, concerning the bank’s alleged failure to organize a Committee on Personnel Affairs for promotions. To settle the strike, the Court of Industrial Relations (CIR) issued an order on January 28, 1965, creating the committee and enjoining strikes or lockouts for six months. Subsequently, PEMA filed a petition with the CIR raising two main money claims: first, the reinstatement of overtime pay benefits allegedly withdrawn by PNB in 1963, and second, the inclusion of cost-of-living allowance and longevity pay in the computation of overtime pay, effective from their grant in 1958, citing the precedent set in the NAWASA case.
PNB contested the CIR’s jurisdiction over these claims, arguing they were mere money claims not arising from the certified dispute, were not stipulated in the collective bargaining agreement, and that the petition was premature. The CIR assumed jurisdiction, reasoning that the presidential certification did not limit the specific areas of dispute and that the claims, having existed since 1958, were part of the ongoing labor dispute. The CIR ultimately ruled in favor of PEMA, ordering PNB to compute overtime pay based on the employee’s basic salary plus cost-of-living allowance and longevity pay.

ISSUE

Whether the Court of Industrial Relations correctly assumed jurisdiction over PEMA’s money claims for overtime pay differentials. Corollarily, whether the cost-of-living allowance and longevity pay should be included in the “regular wage” for the purpose of computing overtime pay under Commonwealth Act No. 444 (The Eight-Hour Labor Law).

RULING

The Supreme Court reversed the decision of the CIR. On the jurisdictional issue, the Court held that the CIR correctly assumed jurisdiction. The presidential certification broadly covered the existing labor dispute, and the overtime pay claims, having been longstanding issues between the parties, were integrally related to that dispute. The Court emphasized that in labor cases, technicalities are avoided to prevent multiplicity of suits.
However, on the substantive issue, the Court ruled that the CIR erred in including the cost-of-living allowance and longevity pay in the computation of the “regular wage” for overtime pay under Commonwealth Act No. 444 . The law specifically bases overtime computation on “regular wages or salary” or “regular remuneration.” The Court gave these terms their ordinary meaning, concluding they refer to the basic pay and do not encompass fringe benefits like allowances. It distinguished the NAWASA case, which dealt with computation under Republic Act No. 1880 (the Five-Day Week Law), and noted that the collective bargaining agreements themselves stipulated that longevity pay did not form part of basic salaries. The Court cited its subsequent ruling in Shell Oil Workers Union vs. Shell Company of the Philippines, which held that fringe benefits should not be added to the basic pay for overtime computation under the Eight-Hour Labor Law.