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G.R. No.

L-17068 December 30, 1961

NATIONAL SHIPYARDS AND STEEL Ruling:


CORPORATION, petitioner,
vs. NO.
COURT OF INDUSTRIAL RELATIONS and DOMINADOR
MALONDRAS, respondents.
Seamen are required to stay on board their vessels by the very
nature of their duties, and it is for this reason that, in addition to
Work: Bargeman their regular compensation, they are given free living quarters
and subsistence allowances when required to be on board. It
Complainant: Dominador Malondras could not have been the purpose of our law to require their
employers to pay them overtime even when they are not actually
Employer: National Shipyard Corporation- a government-owned working; otherwise, every sailor on board a vessel would be
and controlled corporation, is the owner of several barges and entitled to overtime for sixteen hours each day, even if he had
tugboats used in the transportation of cargoes and personnel in spent all those hours resting or sleeping in his bunk, after his
connection with its business of shipbuilding and repair. regular tour of duty. The correct criterion in determining whether
or not sailors are entitled to overtime pay is not, therefore,
whether they were on board and cannot leave ship beyond the
Facts: regular eight working hours a day, but whether they actually
rendered service in excess of said number of hours. We have
In order that its bargeman could immediately be called to duty ruled to that effect in Luzon Stevedoring Co., Inc. vs. Luzon
whenever their services are needed, they are required to stay in Marine Department Union, et al., L-9265, April 29, 1957:
their respective barges, for which reason they are given living
quarters therein as well as subsistence allowance of P1.50 per As we understand this term, a laborer need not leave
day during the time they are on board. However, upon prior the premises of the factory shop or boat in order that
authority of their superior officers, they may leave their barges his period of rest shall not be counted, it being enough
when said barges are idle. that he "cease to work", may rest completely and leave
or may leave at his will the spot where he actually stays
while working, to go somewhere else, whether within
On April 15, 1957, 39 crew members of petitioner's tugboat or outside the premises of said factory, shop or boat. If
service, including therein respondent Dominador Malondras, these requisites are complied with, the period of such
filed with the Industrial Court a complaint for the payment of rest shall not be counted. (Emphasis supplied)
overtime compensation (Case No. 1059-V). In the course of the
proceeding, the parties entered into a stipulation of facts
wherein the NASSCO recognized and admitted — While Malondras' daily time sheets do not show his actual
working hours, nevertheless, petitioner has already admitted in
the Stipulation of Facts in this case that Malondras and his co-
4. That to meet the exigencies of the service in the claimants did render service beyond eight (8) hours a day when
performance of the above work, petitioners have to so required by the exigencies of the service; and in fact,
work when so required in excess of eight (8) hours a Malondras was credited and already paid for five (5) hours daily
day and/or during Sundays and legal holidays (actual overtime work during the period from May 1 to December 31,
overtime service is subject to determination on the 1957, under the examiner's first report. Since Malondras has
basis of the logbook of the vessels, time sheets and been at the same job since 1954, it can be reasonably inferred
other pertinent records of the respondent). that the overtime service he put in whenever he was required to
be aboard his barge all day from 1954 to 1957 would be more
xxx xxx xxx or less consistent. In truth, the other claimants who served with
Malondras under the same conditions and period have been
6. The petitioners are paid by the respondent their finally paid for an overtime of 5 hours a day, and no substantial
regular salaries and subsistence allowance, without difference exists between their case and the present one, which
additional compensation for overtime work; was not covered by the same award only because Malondras'
time records not found until later.
There appears to be no question that respondent Malondras
actually rendered overtime services during the periods covered Issue 2: Whether or not the subsistence allowance received by
by the examiner's report. This is admitted in the stipulation of Malondras for the periods covered by the report in question
facts of the parties in Case No. 1058-V; and it was on the basis should be deducted from his overtime compensation.
of this admission that the Court below, in its order of November
22, 1957, ordered the payment of overtime compensation to all NO. We do not think so, for the Stipulation of the Facts of the
the petitioners in Case No. 1058-V, including respondent parties show that this allowance is independent of and has
Dominador Malondras, after the overtime service rendered by nothing to do with whatever additional compensation for
them had been determined and computed on the basis of the overtime work was due the petitioner NASSCO's
log books, time sheets and other pertinent records of the bargemen. Petitioner having already paid Malondras and his
petitioner corporation. companions overtime for 1957 without deduction of the
subsistence allowances received by them during this period,
Issue 1: Whether or not Malondras is entitled of overtime pay and Malondras' companions having been paid overtime for the
(16 hours) for every hour in excess of the regular working hours other years also without deducting their subsistence allowances,
that he was on board his vessel or barge each day. there is no valid reason why Malondras should be singled out
now and his subsistence allowance deducted from the overtime
compensation still due him.
Therefore, Malondras is only entitled to 5 hours overtime work work is just as much a regular rate as the
daily and not 16 hours. While Malondras' daily time sheets do
not show his actual working hours, nevertheless, petitioner has lower rate for daytime work.
already admitted in the Stipulation of Facts in this case that
Malondras and his co-claimants did render service beyond eight
(8) hours a day when so required by the exigencies of the
service; and in fact, Malondras was credited and already paid PEMA thus requested PNB that the cost of
for five (5) hours daily overtime work during the period from May living allowance and longevity pay be taken
1 to December 31, 1957, under the examiner's first report.
into account in the computation of overtime
PHILIPPINE NATIONAL BANK, pay, effective as of the grant of said benefits
PETITIONER, VS. PHILIPPINE NATIONAL on January 1, 1958, in accordance with the
BANK EMPLOYEES ASSOCIATION (PEMA) ruling in said Decision of the Supreme Court.
AND COURT OF INDUSTRIAL RELATIONS,
RESPONDENTS. EN BANC. G.R. No. L-
30279, July 30, 1982 After discussing the pros and cons on the
issue involved as to whether or not the cost-
-from mokee’s digest (same ra man) of-living allowance otherwise denominated as
equity pay and longevity pay granted by the
bank, the first beginning January 1, 1958 and
Doctrine: the latter effective July 1, 1961, should be
included in the computation of overtime pay,
the court granted the demands of PEMA.
Cost-of-Living-Allowance and Longevity pay
are not included in the computation for
Overtime pay Issues:

Facts: 1. Whether or not the decision under


appeal is in accordance with that law
and the cited jurisprudence. In brief, as
Work: not indicated PEMA posits, is NAWASA four-square
with this case? NO.
Employer: Philippine National Bank

2. What does "regular wage or salary"


On Aug. 31, 1964, National Waterworks
mean or connote in the light of the
and Sewerage Authority vs. NAWASA
demand of PEMA?
Consolidated Unions, et al., G. R. No. L-
18938 was promulgated. It is there stated
that "for purposes of computing overtime
Ruling:
compensation, regular wage includes all
payments which the parties have agreed shall
be received during the work week, including -
- differential payments for working at In Our considered opinion, the answer to such
undesirable times, such as at night and the question lies in the basic rationale of overtime
board and lodging customarily furnished the pay. Why is a laborer or employee who works
employee. The 'regular rate' of pay also beyond the regular hours of work entitled to
ordinarily includes incentive bonus or profit- extra compensation called in this enlightened
sharing payments made in addition to the time, overtime pay? Verily, there can be no
normal basic, and it was also held that the other reason than that he is made to work
higher rate for night, Sunday and holiday longer than what is commensurate with his
agreed compensation for the statutorily fixed
or voluntarily agreed hours of labor he is bonuses other than those paid as a reward for
supposed to do. It is thus the additional work, extra output or time spent on the job.”
labor or service employed and the adverse
effects just mentioned of his longer stay in his
place of work that justify and is the real The cost-of-living allowance began to be
reason for the extra compensation that he granted in 1958 and the longevity pay in
called overtime pay. 1961. They were granted by PNB upon
realizing the difficult plight of its labor force in
the face of the unusual inflationary situation
Overtime work is actually the lengthening of in the economy of the country, which,
hours devoted to the interests of the however acute, was nevertheless expected to
employer and the requirements of his improve. There was thus evident an
enterprise. It follows that the wage or salary inherently contingent character in said
to be received must likewise be increased, allowances. They were not intended to be
and more than that, a special additional regular, much less permanent additional part
amount must be added to serve either as of the compensation of the employees and
encouragement or inducement or to make up workers.
for the things he loses which We have already
referred to. And on this score, it must always
be borne in mind that wage is indisputably The cost-of-living-allowance were based on
intended as payment for work done or the needs of their families as the conditions of
services rendered. the economy warranted. The longevity pay is
not based on the daily or monthly amount of
work done or service rendered – it was more
As can be seen, wage under said law, in of a gratuity for their loyalty, or their having
whatever means or form it is given to the been in the bank's employment for
worker, is "for work done or to be done or for considerable periods of time.
services rendered or to be rendered" and
logically "includes (only) the fair and
reasonable value as determined by the Nowhere did NAWASA refer to extra,
Secretary of Labor, of board, lodging or other temporary and contingent compensation
facilities customarily furnished by the unrelated to work done or service rendered,
employer to the employee". which as explained earlier is the very nature
of cost-of-living allowance.

Indeed, for the purpose of avoiding any


misunderstanding or misinterpretation of the We hold that, in the absence of any specific
word "wage" used in the law and to provision on the matter in a collective
differentiate it from "supplement”, defined as bargaining agreement, what are decisive in
“extra remuneration or benefits received by determining the basis for the computation of
wage earners from their employers and overtime pay are two very germane
include but are not restricted to pay for considerations, namely:
vacation and holidays not worked; paid sick
leave or maternity leave; over time rate in
excess of what is required by law; pension, (1) whether or not the additional pay is for
retirement, and death benefits; profit- extra work done or service rendered and (2)
sharing; family allowances; Christmas, war whether or not the same is intended to be
risk and cost-of-living bonuses; or other permanent and regular, not contingent nor
temporary and given only to remedy a NAWASA Consolidated Unions, et al G.R. No. L-18938, August
31, 1964, 11 SCRA 766.
situation which can change any time.
On May 3, 1966, the Philippine Refining Co. Inc. filed its answer
to the petition alleging, among others, that never did the parties
intend, in the 1965 collective bargaining agreement and in prior
We reiterate, overtime pay is for extra effort agreements, to include the employees' Christmas bonus and
beyond that contemplated in the employment other fringe benefits in the computation of the overtime pay and
contract, hence when additional pay is given that the company precisely agreed to a rate of 50%, which is
much higher than the 25% required by the Eight-Hour Labor Law
for any other purpose, it is illogical to include (Commonwealth Act No. 444, as amended), on the condition
the same in the basis for the computation of that in computing the overtime pay only the "regular base pay"
would be considered. Furthermore, respondent company
overtime pay. This holding supersedes contended that the ruling of this Court in the NAWASA case
NAWASA. relative to the computation of overtime compensation could not
be applied to its employees since it was a private corporation
and not a government-owned or controlled corporation like the
NAWASA.

Issue:

November 3, 1986
1. Whether or not the phrase "regular base pay" as used
in the above-quoted provision of the 1965 CBA
CALTEX PHIL. VS. CIR includes Christmas bonus and other fringe benefits.
2. Whether or not the stipulation in the CBA on overtime
Ruling: If the Sunday, holiday and night differential pay and pay violates the Nawasa doctrine if the answer to
other fringe benefits are not continuously and regularly received question No. I is in the negative.
by the employees, and considering that CA No. 444 (8-hour
Labor Law) makes the regular pay the basis of computing the Ruling:
overtime pay, which term should be sensibly interpreted and
given its ordinary meaning, it should not include premiums dor
1. No. The phrase "regular base pay" is clear, unequivocal and
for done on rest days, night differentials, cost of living allowance,
requires no interpretation. It means regular basic pay and
payments for sick leave etc., which items constitute extra pay or
necessarily excludes money received in different concepts such
additions to the regular or basic pay.
as Christmas bonus and other fringe benefits. In this connection
it is necessary to remember that in the enforcement of previous
collective bargaining agreements containing the same provision
of overtime pay at the rate of regular base pay plus 50%
G.R. No. L-27761 September 30, 1981 thereof", the overtime compensation was invariably based only
on the regular basic pay, exclusive of Christmas bonus and
other tinge benefits. Appellant union knew all the while of such
BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO.,
interpretation and precisely attempted to negotiate for a
INC., plaintiff-appellants,
provision in the subject collective bargaining agreement that
vs.
would include the Christmas bonus and other fringe benefits in
PHILIPPINE REFINING CO., INC., defendant-appellee.
the computation of the overtime pay. Significantly, the appellee
company did not agree to change the phrase "regular base pay"
Work: wla man gistate. Bsta RANK AND FILE EMPLOYEES sila as it could not consent to the inclusion of the fringe benefits in
the computation of the overtime pay. Hence, the appellant union
Employer: PHILIPPINE REFINING CO., INC could not question the intended definition of the phrase but could
only claim that the same violated the Nawasa doctrine and insist
that the phrase should be redefined to conform to said doctrine.
Complainant: Bisig ng Manggagawa ng Philippine Refining
Company, Inc., as the representative union of the rank and file
employees of the Philippine Refining Co., Inc. 2. No. We are thus tasked not so much with the interpretation of
the phrase "regular base pay" in the CBA, which unquestionably
excludes Christmas bonus and other fringe benefits, but with the
Facts: question of whether as understood, the contractual stipulation
violates the ruling laid down in the Nawasa case.
On April 15, 1966, the Bisig ng Manggagawa ng Philippine
Refining Company, Inc., as the representative union of the rank The pertinent portions of the decision in the case of NAWASA
and file employees of the Philippine Refining Co., Inc., filed with vs. NAWASA Consolidated Unions (L-18938, August 31, 1964,
the Court of First Instance of Manila a petition for declaratory 11 SCRA 766, 782-783) invoked by the appellant union read as
relief. follows:

Petitioner union contended that the respondent company was It has been held that for purposes of
under obligation to include the employees' Christmas bonus and computing overtime compensation a regular
other fringe benefits in the computation of their overtime pay by wage includes all payments which the parties
virtue of the ruling of this Court in the case of NAWASA vs. have agreed shall be received during the work
week, including piece work wages, differential
payments for working at undesirable times,
such as at night or on Sundays and holidays,
and the cost of board and lodging customarily
furnished the employee Walling v.
Yangermah-Reynolds Hardwork Co., 325
U.S. 419; Walling v. Harischfeger Corp., 325
U.S. 427. The 'regular rate' of pay also
ordinarily includes incentive bonus or profit-
sharing payments made in addition to the
normal basic pay (56 C.J.S., pp. 704-705),
and it was also held that the higher rate for
night, Sunday and holiday work is just as
much a regular rate as the lower rate for
daytime work. The higher rate is merely an
inducement to accept employment at times
which are not as desirable from a workman's
standpoint (International L. Ass'n. v. National
Terminals Corp. c.c. Wise, 50 F. Supp. 26,
affirmed CCA Casbunao v. National
Terminals Corp. 139 F. 2d 853).

Respondent court, therefore, correctly


included such differential pay in computing
the weekly wages of those employees and
laborers who worked seven days a week and
were continuously receiving 25% Sunday
differential for a period of three months
immediately p g the implementation of
Republic Act 1880. "

Applying the aforequoted NAWASA ruling to the above provision


of law, We arrive at the following conclusion: an employers
covered by said law are under legal compulsion to grant their
employees overtime compensation in amounts not less than
their basic pay and the fringe benefits regularly and continuously
received by them plus 25% thereof. This does not however
mean that agreements concerning overtime compensation
should always provide for a computation based on the
employee's "regular wage or salary i.e. regular base pay plus
fringe benefits regularly and continuously received. For it is
axiomatic that in multiplication, the product is directly related to
the multiplicand the multiplier, and that the multiplicand is
inversely related to the multiplier conveniently, the same product
may be obtained despite reduction of the multiplicand provided
that the multiplier is correspondingly increased. Conformably
with the foregoing mathematical axioms there is still compliance
with the above-stated ruling despite the fact that the overtime
compensation is based only on the employee's "regular base
pay" (the multiplicand) as long as the rate of 25% (the multiplier)
is increased by such amount as to produce a result (the product)
which is not less than the result to be obtained in computing 25%
of the employee's "regular wage or salary" ("regular base pay"
plus fringe benefits regularly and continuously received). In fine,
the parties may agree for the payment of overtime
compensation in an amount to be determined by applying a
formula other than the statutory formula of "regular wage or qqqs
plus at least twenty-five per centum additional" provided that the
result in applying the contractual formula is not less than the
result in applying said statutory formula.

In the case at bar, it is admitted that the contractual formula of


"regular base pay plus 50% thereof" yields an overtime
compensation which is higher than the result in applying the
statutory formula as elaborated in the Nawasa case.
Consequently, its validity is upheld and the parties are enjoined
to accord due respect to it.

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