OUR HAUS REALTY DEVELOPMENT CORPORATION, petitioner,
vs. ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARDO TENEDERO and
JERRY SABULAO, respondents
GR No. 204651 | August 6, 2014
TOPIC:
Wages
FACTS:
Respondents were all laborers working for
petitioner Our Haus Realty Development Corporation, a company engaged in the
construction business.
Sometime in May 2010, Our Haus experienced
financial distress. To alleviate its condition, Our Haus suspended some of its
construction projects and asked the affected workers, including the
respondents, to take vacation leaves.
Eventually, respondents were asked to
report back to work but instead of doing so, they filed a complaint for
underpayment of their daily wages with the LA. They claimed that except for
Tenedoro, their wages were below the prescribed minimum rates.
Our Haus argued that the respondents’ wages
complied with the law’s minimum requirement. In determining the total amount of
the respondents’ daily wages, the petitioner considered the value of the
benefits that respondents also enjoy -- their subsidized meals and their free
lodging. Our Haus also rejected the respondents’ other monetary claims for lack
of proof that they were entitled to it.
On the other hand, respondents argued that
the value of their meals should not be considered in determining their wages’
total amount since the requirements set under Sec. 4 of DOLE Memorandum
Circular No. 2 were not complied with. The respondents pointed out that Our
Haus never presented any proof that they agreed in writing to the inclusion of
their meals’ value in their wages. Also, Our Haus failed to prove that the
value of the facilities it furnished was fair and reasonable. Finally, instead
of deducting the maximum amount of 70% of the value of the meals, Our Haus
actually withheld its full value.
The LA ruled in favor of Our Haus. He held
that if the reasonable values of the board and lodging would be taken into
account, the respondents’ daily wages would meet the minimum wage rate. As to
the other benefits, the LA found that the respondents were not able to
substantiate their claims for it.
The NLRC, in turn, reversed the LA’s
decision. The NLRC noted that the respondents did not authorize Our Haus in
writing to charge the values of their board and lodging to their wages. Thus,
it cannot be credited. The NLRC also
ruled that respondents are entitled 13th month payments and SIL
payments. However, it sustained the LA’s ruling that the respondents were not
entitled to overtime pay since the exact dates and times when they rendered
overtime work had not been proven.
Our Haus moved for reconsideration and
submitted 5 kasunduans as new evidence to show that the respondents authorized
Our Haus in writing to charge the values of their meals and lodging to their
wages. The NLRC denied Our Haus’ motion, thus it appealed to the CA.
In its petition, Our Haus made a
distinction between deduction and charging. According to them, a written
authorization is only necessary if the facility’s value will be deducted and
will not be needed if it will merely be charged or included in the computation
of wages. Our Haus claimed that it did not actually deduct the values of the
meals and housing benefits. It only considered these in computing the total
amount of wages paid to the respondents for purposes of compliance with the
minimum wage law. Hence, the written authorization requirement should not
apply.
The CA affirmed in toto the NLRC’s rulings.
It found no real distinction between deduction and charging and ruled that the
legal requirements before any deduction or charging can be made, apply to both.
Our Haus, however, failed to prove that it complied with any of the
requirements laid down in Mabeza v. National Labor Relations Commission.
Accordingly, it cannot consider the values of its meal and housing facilities
in the computation of the respondents’ total wages.
ISSUE:
Whether or not the facility’s value should
be included in the computation of respondent’s wages
RULING:
To justify its noncompliance with the
requirements for the deductibility of a facility Our Haus made a substantial
dinstinction between deduction and the charging of a facility’s value to the
wages. It explained that in deduction, the amount of the wage would still be
lessened by the facility’s value, thus needing the employee’s consent. On the
other hand, in charging, there is no reduction of the employee’s wages since the facility’s value will just be
theoretically added to the wage for purposes of complying with the minimum wage
requirement.
Our Haus’ argument is a vain attempt to
circumvent the minimum wage law by trying to create a distinction where none
exists.
In reality, deduction and charging both
operate to lessen the actual take-home pay of an employee; they are two sides
of the same coin. In both, the employee receives a lessened amount because
supposedly, the facility’s value, which is part of his wage, had already been
paid to him in kind. As there is no substantial distinction between the two, the
requirements set by law must apply to both.
These requirements as summarized in Mabeza
v. NLRC are the following:
a.
proof must be shown that such
facilities are customarily furnished by the trade;
b.
the provision of deductible
facilities must be voluntarily accepted in writing by the employee; and
c.
the facilities must be charged
at fair and reasonable value.
One of the badges to show that a facility
is customarily furnished by the trade is the existence of a company policy or
guideline showing that provisions for a facility were designated as part of the
employees’ salaries.
In this case, the records reveal that the
board and lodging were given on a per project basis. Our Haus did not show if
these benefits were also provided in its other construction projects, thus
negating its claimed customary nature. If Our Haus really had the practice of
freely giving lodging, electricity and water provisions to its employees, then
Our Haus should not deduct its values from the respondents’ wages. Otherwise,
this will run contrary to the affiants’ claim that these benefits were
traditionally given free of charge.
Apart from company policy, the employer may
also prove compliance with the first requirement by showing the existence of an
industry-wide practice of furnishing the benefits in question among enterprises
engaged in the same line of business. However, Our Haus could not really be
expected to prove compliance with the first requirement since the living
accommodation of workers in the construction industry is not simply a matter of
business practice they are mandated by the law itself to ensure the humane
working conditions of construction employees despite their constant exposure to
hazardous working environments.
Moreover, the law mandates that the cost of
the implementation of the requirements for the construction safety and health
of workers, shall be integrated to the overall project cost. As part of the
project cost that construction companies already charge to their clients, the
value of the housing of their workers cannot be charged again to their
employees’ salaries. Our Haus cannot pass the burden of the OSH costs of its
construction projects to its employees by deducting it as facilities. This is
Our Haus’ obligation under the law.
Lastly, even if a benefit is customarily
provided by the trade, it must still pass the purpose test. Under this test, if
a benefit or privilege granted to the employee is clearly for the employer’s
convenience, it will not be considered as a facility but a supplement. Here,
careful consideration is given to the nature of the employer’s business in
relation to the work performed by the employee. This test is used to address
inequitable situations wherein employers consider a benefit deductible from the
wages even if the factual circumstances show that it clearly redounds to the
employers’ greater advantage.
Under the law, only the value of the
facilities may be deducted from the employees’ wages but not the value of
supplements. Facilities include articles or services for the benefit of the
employee or his family but exclude tools of the trade or articles or services
primarily for the benefit of the employer or necessary to the conduct of the
employer’s business. The law also prescribes that the computation of wages
shall exclude whatever benefits, supplements or allowances given to employees.
Supplements are paid to employees on top of their basic pay and are free of
charge. Since it does not form part of the wage, a supplement’s value may not
be included in the determination of whether an employer complied with the
prescribed minimum wage rates.
In the present case, the board and lodging
provided by Our Haus cannot be categorized as facilities but as supplements. In
SLL International Cables Specialist v. NLRC, the court distinguished the two
terms. It said that the distinction lies not so much in the kind of benefit or
items given, but in the purpose for which it is given. If it is primarily for
the employee’s gain, then the benefit is a facility; if its provision is mainly
for the employer’s advantage, then it is a supplement.
Our Haus is engaged in the construction
business, a labor-intensive enterprise. The success of its projects is largely
a function of the physical strength, vitality and efficiency of its laborers.
Its business will be jeopardized if its workers are weak, sickly, and lack the
required energy to perform strenuous physical activities. Thus, by ensuring
that the workers are adequately and well fed, the employer is actually
investing on its business.
Moreover, in the construction business,
contractors are usually faced with the problem of meeting target deadlines.
More often than not, work is performed continuously, day and night, in order to
finish the project on the designated turn-over date. Thus, it will be more
convenient to the employer if its workers are housed near the construction site
to ensure their ready availability during urgent or emergency circumstances.
Also, productivity issues like tardiness and unexpected absences would be
minimized.
Based on these considerations, we conclude
that even under the purpose test, the subsidized meals and free lodging
provided by Our Haus are actually supplements. Although they also work to
benefit the respondents, an analysis of the nature of these benefits in
relation to Our Haus’ business shows that they were given primarily for Our
Haus’ greater convenience and advantage. If weighed on a scale, the balance
tilts more towards Our Haus’ side. Accordingly, their values cannot be
considered in computing the total amount of the respondents’ wages.
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