CASE: OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.

ERINCO, ALEXANDER
CANLAS, BERNARD TENEDERO and JERRY SABULAO

G.R. No. 204651 August 6, 2014

FACTS:
This is a petition for review on certiorari to challenge the CA rulings and the NLRC resolution who reversed the LA’s
decision to favor the herein respondents.

Respondents Alexander Parian, Jay C. Erinco, Alexander Canlas, Bernard Tenedero and Jerry Sabulao were all
laborers working for petitioner Our Haus Realty Development Corporation, a company engaged in the construction business.

On May 2010, the petitioner company experienced financial distress and had to suspend some of its construction
projects to alleviate its condition. The respondents were among those who were affected and were asked to take vacation
leaves.

Eventually, these laborers were asked to report back to work but instead of doing so, they filed with the LA a complaint
for underpayment of their daily wages claiming that except for Tenedero, their wages were below the minimum rates
prescribed in the following wage orders from 2007 to 2010. They also claimed that Our Haus failed to pay them their holiday,
Service Incentive Leave (SIL), 13th month and overtime pays.

The LA ruled in favor of Our Haus who claimed that the respondents’ wages complied with the law’s minimum
requirement because aside from paying the monetary amount of the respondents’ wages, Our Haus also subsidized their
meals (3 times a day), and gave them free lodging near the construction project they were assigned to. In determining the total
amount of the respondents’ daily wages, the value of these benefits should be considered, in line with Article 97(f) of the Labor
Code. LA did not give merit on the laborers’ contention that that the value of their meals should not be considered in
determining their wages’ total amount since the requirements set under Section 413 of DOLE Memorandum Circular No. 215
were not complied with. Besides, Our Haus failed to present any proof that they agreed in writing to the inclusion of their
meals’ value in their wages.

The laborers appealed LA’s decision to NLRC who reversed it in favor of them. It ruled that that the laborers did
not authorize Our Haus in writing to charge the values of their board and lodging to their wages. Thus, the same cannot be
credited and further ruled that they are entitled to their respective proportionate 13th month payments for the year 2010 and
SIL payments for at least three years, immediately preceding May 31, 2010, the date when the respondents left Our Haus.
However, it maintains LA’s decision that they are not entitled to overtime pay since the exact dates and times when they
rendered overtime work had not been proven.

Our Haus moved for the reconsideration of the NLRC’s decision and submitted new evidence (the five kasunduans) to
show that the respondents authorized Our Haus in writing to charge the values of their meals and lodging to their wages.
However, NLRC denied this motion, thus, Our Haus filed a Rule 65 petition with the CA propounding a new theory that there
is a distinction between deduction and charging; that 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. The CA dismissed Our
Haus’ certiorari petition and affirmed the NLRC rulings in toto finding that there is no distinction between deduction and
charging and that the legal requirements before any deduction or charging can be made, apply to both. Our Haus filed a
motion for reconsideration but the CA denied its motion, prompting it to file the present petition for review on certiorari under
Rule 45.

ISSUE:
Whether or not the NLRC committed grave abuse of discretion in its decision favoring the herein respondents.

HELD:

Under the law, only the value of the facilities may be deducted from the employees’ wages but not the value of
supplements. 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.
Ultimately, the real difference lies not on the kind of the benefit but on the purpose why it was given by the employer. 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.

Under the purpose test, substantial consideration must be given to the nature of the employer’s business in relation
to the character or type of work performed by the employees involved.
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.

The Court ruled that there is no substantial distinction between deducting and charging a facility’s value from the
employee’s wage; the legal requirements for creditability apply to both. Herein petitioner’s argument is a vain attempt to
circumvent the minimum wage law by trying to create a distinction where none exists because in reality, deduction and
charging both operate to lessen the actual take-home pay of an employee. Thus, the Court held that NLRC did not commit
grave abuse of discretion in its rulings. It DENIED this petition and AFFIRMED CA’s decision.