8/11/2019 Pal Employees Savings and Loan Association

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Pal Employees Savings and Loan Association,Inc. vs. NLRC

August 22, 1996G.R. No. 105963Panganiban, J.

Facts: The respondent used to be a security guard underthe employ of the petitioner company. He works for 12hours a day and is receiving a monthly salary. He wasthen dismissed by the petitioner company. Because of

this, the respondent filed a complaint with the LaborArbiter for the payment of his overtime pay. The LaborArbiter ruled that the respondent is entitled to anovertime pay. The NLRC affirmed the decision of theLabor Arbiter. Hence, the current petition.

The petitioner contends that the fact that the monthlysalary of the petitioner is higher than the minimum wageprovided by law is already compensatory of the excess of4 hours of work rendered by the said employee. It arguesthat the salary of the petitioner already includes thepayment for the excess of 4 hours of work rendered bythe respondent. It also contends that since there is a

meeting of the minds between the respondent and thepetitioner, there is already a perfected contract whichmeans that the parties are bound by their agreements.

Issue: Whether or not the respondent is entitled to anovertime pay.

Ruling: The Supreme Court ruled that the respondent isentitled to an overtime pay. The contention of thepetitioner that since the respondents monthly salary ishigher than the minimum wage, it is alreadycommensurate of the 4 hours excess of work rendered bythe respondent. The Supreme Court held that the factthat ones salary is higher than the minimum wage doesnot in any way offset the other benefits that are due tothe employees, in the absence of an agreement to thecontrary. To consider the overtime pay of the respondentincluded in his monthly salary would be in contraventionof the rule against non-diminution of benefits and a

violation of the Labor Code since it prescribes a certainmanner on how overtime pay is included. Moreover, theSupreme Court found that contrary to what thepetitioner aver, as shown in the computation of thepetitioner itself, the monthly salary of the respondent isonly a basic salary which is exclusive of all the other

benefits that the respondent is to receive.

With regard to the petitioners second contention thatthere is already a perfected contract, hence the termsand conditions imposed therein binds the parties to thecontract, the Supreme Court held that while suchcontention has the weight and force of law, it is stillsubject to certain exception. The general right to contractis subject to a limitation that such terms and conditionsmust not be contrary to law, public order, public policy,morals and good customs. Employment contracts areimbued with public interest and are therefore subject tothe police power of the state. The subject contract in thecase at bar is contrary to labor laws. Therefore, not

binding to the parties of the case.