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OUR HAUS REALTY DEVELOPMENT CORPORATION v. ALEXANDER PARIAN

FACTS:

Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao, and Bernardo Tenedero were all laborers working for petitioner Our Haus Realty Development Corporation, a company engaged in the construction business. In May 2010, Our Haus experienced financial distress and suspended some of its construction projects, asking affected workers, including the respondents, to take vacation leaves. However, the respondents filed a complaint for underpayment of their daily wages instead. They claimed that their wages were below the minimum rates prescribed in wage orders from 2007 to 2010. They also alleged that Our Haus failed to pay them holiday, service incentive leave (SIL), 13th month, and overtime pays. The labor arbiter ruled in favor of Our Haus, but the NLRC reversed the decision. Our Haus filed a petition with the CA, but it was dismissed. The CA affirmed the NLRC's rulings in favor of the respondents. Our Haus filed a motion for reconsideration, which was denied, prompting it to file a petition for review on certiorari.

ISSUES:

  1. Did the Court of Appeals (CA) correctly determine that the National Labor Relations Commission (NLRC) did not commit grave abuse of discretion in ruling on the case?

  2. Is there a substantial distinction between deducting and charging a facility's value from the employee's wage?

  3. Did Our Haus comply with the legal requirements on the deductibility of the value of facilities?

  4. Whether the board and lodging provided by the employer should be categorized as facilities or supplements.

  5. Whether the deduction of the value of the board and lodging from the employees' wages is valid.

  6. Whether the subsidized meals and free lodging provided by Our Haus are supplements or part of the workers' wages.

  7. Whether the provision of deductible facilities must be voluntarily accepted in writing by the employee.

  8. Whether the valuation of the facilities provided by Our Haus is fair and reasonable.

  9. Whether a claim not raised in the pro forma complaint may still be raised in the position paper.

  10. Whether the cause of action for illegal dismissal can be raised even if not included in the complaint before the NLRC.

  11. Whether the employer has the burden of proving payment of monetary claims in labor cases.

  12. Whether the respondents are entitled to attorney's fees despite availing of free legal services from the PAO.

RULING:

  1. The CA correctly determined that the NLRC did not commit grave abuse of discretion in ruling on the case.

  2. There is no substantial distinction between deducting and charging a facility's value from the employee's wage. Both operate to lessen the actual take-home pay of an employee. The legal requirements for creditability apply to both.

  3. Our Haus did not comply with the legal requirements on the deductibility of the value of facilities. It failed to show that the facilities were customarily furnished by the trade, that the provision of the facilities was voluntarily accepted in writing by the employee, and that the facilities were charged at a fair and reasonable value.

  4. The board and lodging provided by the employer should be categorized as supplements and not as facilities. The distinction lies in the purpose for which the benefit or privilege is given. If it is primarily for the employee's gain, then it is considered a facility. If its provision is mainly for the employer's advantage, then it is considered a supplement. In this case, the board and lodging were provided for the purpose of maintaining the efficiency and health of the construction workers while they were working on their projects.

  5. The deduction of the value of the board and lodging from the employees' wages is not valid. The law allows the deduction of the value of facilities from employees' wages, but not the value of supplements. Supplements are considered extra remuneration or benefits given to the employees on top of their basic pay and are free of charge. Since supplements do not form part of the wage, their value may not be included in determining compliance with minimum wage rates.

  6. The subsidized meals and free lodging provided by Our Haus are considered supplements rather than part of the workers' wages. The benefits were given primarily for Our Haus' convenience and advantage and were not given in consideration of the workers' services. Therefore, their values cannot be considered in computing the total amount of the workers' wages.

  7. The provision of deductible facilities must be voluntarily accepted in writing by the employee. In this case, Our Haus failed to present any written authorization from the workers allowing the deduction from their wages. Therefore, the deductions for the facilities provided by Our Haus were not valid.

  8. The valuation of the facilities provided by Our Haus must be fair and reasonable. Our Haus failed to present relevant documents such as receipts and company records to support the valuation of the benefits. Without any corroborative evidence, it cannot be said that Our Haus complied with this requirement.

  9. A claim not raised in the pro forma complaint may still be raised in the position paper. The omission of the claim for SIL pay in the pro forma complaint does not bar the labor tribunals from addressing this cause of action since it was raised in the position paper.

  10. The cause of action for illegal dismissal can still be determined by the labor tribunals even if not included in the complaint before the NLRC, as long as it is raised and discussed in the position paper.

  11. The burden of proving payment of monetary claims in labor cases rests on the employer, as the pertinent documents are usually in the custody and control of the employer. In this case, the employer failed to provide credible documents to show payment of the 13th month pay, holiday pay, and service incentive leave.

  12. The respondents are entitled to attorney's fees, as it is justifiable in actions for recovery of wages or where an employee was forced to litigate to protect their rights and interests. The fact that respondents availed of free legal services from the PAO does not disqualify them from receiving attorney's fees. The attorney's fees shall be paid to the PAO.

PRINCIPLES:

  • Only questions of law may be raised in a Rule 45 petition.

  • Factual issues cannot be considered in a Rule 45 petition except in the course of resolving whether the CA correctly determined if the NLRC committed grave abuse of discretion.

  • The CA ruling in a labor case should be examined from the perspective of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision, not on the merits of the case.

  • The legal requirements for the deductibility of facilities apply to both deducting and charging a facility's value from the employee's wage.

  • One of the badges to show that a facility is customarily furnished by the trade is the existence of a company policy or guideline designating the facility as part of the employees' salaries.

  • Compliance with the first requirement can also be proven by showing the existence of an industry-wide practice of furnishing the benefits in question among enterprises engaged in the same line of business.

  • The construction industry has peculiarities such as the provision of occupational safety and health services mandated by law.

  • Living accommodation in the construction industry is not simply a matter of business practice, as it is necessary to ensure humane working conditions for construction employees.

  • The purpose test distinguishes between facilities and supplements. Facilities are items necessary for the laborer's and his family's existence and subsistence and form part of the wage, while supplements are given as extra remuneration above and over the basic wage.

  • The distinction between facilities and supplements is based on the purpose for which the benefit or privilege is given. If it primarily benefits the employee, it is considered a facility. If it primarily benefits the employer, it is considered a supplement.

  • The purpose test considers the nature of the employer's business in relation to the work performed by the employees. It seeks to prevent employers from designating benefits as deductible from wages that work to the employer's greater convenience or advantage.

  • Deductions from employees' wages are valid for facilities but not for supplements. The value of facilities may be deducted from wages, while the value of supplements may not be included in determining compliance with minimum wage rates.

  • The provision of deductible facilities must be voluntarily accepted in writing by the employee.

  • The valuation of the facilities provided must be fair and reasonable and supported by relevant documents.

  • A claim not raised in the pro forma complaint may still be raised in the position paper.

  • The validity of a dismissal can still be determined even if not included in the initial complaint, as long as it is raised and discussed in the position paper.

  • In labor cases, the burden of proving payment of monetary claims rests on the employer.

  • The award of attorney's fees is justifiable in actions for recovery of wages or when an employee incurs expenses to protect their rights and interests.

  • Availing of free legal services from the Public Attorney's Office (PAO) does not disqualify an employee from receiving attorney's fees.