Case Summary (G.R. No. 236381)
Key Dates
• Labor Arbiter decision: December 10, 2010
• NLRC decision: July 20, 2011 (Resolution December 2, 2011)
• Court of Appeals decision: May 7, 2012 (Resolution November 27, 2012)
• Supreme Court decision: August 6, 2014
Applicable Law
• 1987 Philippine Constitution (labor clause)
• Labor Code Article 97(f)
• DOLE Memorandum Circular No. 2, Sec. 4 (Board and lodging deductions)
• Wage Orders NCR-13 (P362.00, Aug 28, 2007–Jun 13, 2008) and NCR-14 (P382.00, Jun 14, 2008–Jun 30, 2010)
• DOLE Department Orders No. 13–98 and No. 56–05 (construction safety and worker accommodations)
• Jurisprudential tests from Mayon Hotel v. Adana, Mabeza v. NLRC, SLL International Cables v. NLRC
Factual Background
Respondents claimed underpayment of daily minimum wages for 2007–2010 (except Tenedero, who earned above rates), nonpayment of holiday pay, service incentive leave (SIL), 13th‐month pay, and overtime. Our Haus had suspended projects in 2010, placed workers on leave, then asked them to return; instead the respondents filed wage complaints. Our Haus argued that the fair and reasonable values of board, lodging, and meals—subsidized and provided thrice daily—must be credited against minimum wages under Article 97(f).
Labor Arbiter Ruling
The Labor Arbiter held that including reasonable values for board and lodging brought respondents’ total daily compensation to or above minimum rates. Claims for holiday pay, SIL, 13th‐month pay, and overtime lacked proof and were dismissed.
NLRC Ruling
Reversing the Arbiter, the NLRC ruled:
• Board, lodging, and meal values were non‐creditable because respondents did not authorize any deduction in writing (Mayon Hotel v. Adana).
• Respondents were entitled to proportionate 13th‐month pay for 2010 and SIL for at least three years preceding May 31, 2010.
• Overtime pay was denied for failure to prove exact dates and hours.
Court of Appeals Ruling
Affirmed the NLRC in toto. It held that no meaningful distinction exists between “deducting” and “charging” facility values against wages: both reduce take-home pay and thus require compliance with Mabeza’s three requisites (customary furnishing, written employee consent, fair and reasonable valuation). It also sustained SIL entitlement (raised in position papers) and awarded attorney’s fees despite Public Attorney’s Office representation.
Issues on Review
• Whether the CA correctly found no distinction between deducting and merely charging facility values.
• Whether Our Haus complied with Mabeza’s requirements for crediting board, lodging, and meals.
• Validity of SIL claim and award of attorney’s fees.
Supreme Court Analysis
- Rule 45 review is confined to questions of law and grave abuse of discretion by the CA in affirming the NLRC.
- Deduction vs. charging: Both diminish actual wages; legal requirements apply equally.
- Mabeza requirements:
a. Customary furnishing by the trade: Our Haus failed to prove an industry or company practice; worker accommodations are mandated OSH project costs (DOLE DO 13–98, DO 56–05) and cannot be shifted to employees as wage deductions.
b. Written authorization: Kasunduans submitted post-ruling were undated, self-serving, and belated; properly disregarded.
c. Fair and reasonable value: No supporting receipts or payroll records were provided; valuations unsupported. - Purpose test: Board, lodging, and meals primarily benefited the employer
Case Syllabus (G.R. No. 236381)
Facts
- Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero were laborers of Our Haus Realty Development Corporation, a construction company.
- Employment records (2007–2010):
• Parian (hired Oct. 1999; daily rate ₱353.50)
• Erinco (hired Jan. 2000; ₱342.00)
• Canlas (hired 2005; ₱312.00)
• Sabulao (hired Aug. 1999; ₱342.00)
• Tenedero (hired 1994; ₱383.50) - In May 2010 Our Haus faced financial distress, suspended projects, and placed workers on vacation leave.
- Upon recall to work, respondents filed before the Labor Arbiter a complaint for underpayment of daily wages, asserting non-compliance with Minimum Wage Orders NCR-13 (₱362.00, Aug. 28, 2007–Jun. 13, 2008) and NCR-14 (₱382.00, Jun. 14, 2008–Jun. 30, 2010).
- They also claimed unpaid holiday pay, service incentive leave (SIL), 13th-month pay and overtime.
Procedural History
- Labor Arbiter (LA) Decision (Dec. 10, 2010, NLRC LAC No. 02-000489-11): ruled for Our Haus, finding benefits compensated the wage shortfall.
- NLRC Decision (Jul. 20, 2011) and Resolution (Dec. 2, 2011): reversed LA, awarded underpayment, 13th-month and SIL but denied overtime.
- Court of Appeals (CA) Decision (May 7, 2012) and Resolution (Nov. 27, 2012, CA-G.R. SP No. 123273): affirmed NLRC in toto.
- Supreme Court Rule 45 Petition for Review on Certiorari (G.R. No. 204651): filed by Our Haus, assailing CA ruling.
Issues
- Can the values of free meals and lodging be credited against minimum wages without written employee authorization and compliance with legal requirements?
- Are respondents entitled to proportionate 13th-month pay and unpaid SIL?
- Did the CA err in refusing to distinguish between “deduction” and “charging” of facility values?
- Are respondents entitled to attorney’s fees despite PAO representation?
Labor Arbiter Ruling
- Our Haus: respondents’ cash wages p