GR 105963; (August, 1996) (Digest)
G.R. No. 105963 August 22, 1996
PAL EMPLOYEES SAVING AND LOAN ASSOCIATION, INC. (PESALA), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND ANGEL V. ESQUEJO, respondents.
FACTS
Angel V. Esquejo was employed by PESALA as a company guard starting March 1, 1986. His appointment memorandum stipulated a work schedule of twelve hours per day, six days a week, for a fixed monthly salary. Over the course of his employment, Esquejo received several salary increases. He filed a complaint for non-payment of overtime pay, arguing that despite his fixed monthly salary, he was entitled to additional compensation for the four hours of work rendered daily in excess of the statutory eight-hour workday.
PESALA contended that Esquejo’s fixed monthly salary, which was above the minimum wage, was intended to cover the stipulated twelve-hour workday. The company argued that the employment contract constituted a valid waiver of overtime pay, as the salary was mutually agreed upon and compensated for the longer hours. The Labor Arbiter ruled in favor of Esquejo, a decision which was affirmed with slight modification by the National Labor Relations Commission (NLRC).
ISSUE
The principal issue is whether an employee, whose contract specifies a twelve-hour workday for a fixed monthly salary above the minimum wage, is still entitled to separate overtime pay for work rendered in excess of eight hours a day.
RULING
The Supreme Court dismissed PESALA’s petition and affirmed the NLRC’s decision. The legal logic is anchored on the mandatory and non-waivable character of labor standards set by law. Article 87 of the Labor Code mandates that work performed beyond eight hours in a day constitutes overtime work, which must be paid with additional compensation. This right is not subject to stipulation, waiver, or compromise by the worker.
The Court rejected the argument that the fixed monthly salary constituted a waiver or was intended to cover the overtime hours. A fixed salary only compensates for the regular eight-hour workday. Any work beyond that requires additional premium pay, regardless of whether the fixed salary is above the minimum wage. The stipulation for a twelve-hour workday in the contract is void for being contrary to law and public policy. The employer cannot contract out of its legal obligation to pay overtime premiums. The computation of overtime pay must be based on the employee’s regular hourly rate derived from his monthly salary. The Court also declined to review factual findings, as these are conclusive when supported by substantial evidence and no grave abuse of discretion is shown.