BY ATTY. JULIUS GREGORY B. DELGADO
REQUISITES FOR MEAL SUBSIDY TO BE CONSIDERED AS “FACILITY” WHICH CAN BE INCLUDED IN THE COMPUTATION OF WAGES OF EMPLOYEES
In the case of Our Haus Realty Development Corporation vs. Alexander Parian, et al., G.R. No. 204651 (August 6, 2014), the Supreme Court had the opportunity to distinguish so-called “facility” and “supplement” or extra benefits given to employees. While “facility” can be included in the computation of wages of the employees, deducting “supplement” is not allowed. The Supreme Court held:
“’Supplements’, therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. ‘Facilities’, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.”
Can meal allowance or subsidy be considered as “facility”? The answer is in the affirmative if it complies with the requisites as provided for by law and jurisprudence. In Our Haus Realty Development Corporation vs. Alexander Parian, et al., supra, the Supreme Court laid down the following requisites: (1) the facility must be customarily furnished by trade; (2) the provision of deductible facility must be voluntarily accepted in writing by the employee; and (3) the facility must be charged at a fair and reasonable value.
On the first requisite, it must be shown and proven that it has been customarily given by the employer to the employees for it to be considered as “facility”. In Our Haus Realty Development Corporation vs. Alexander Parian, et al., supra, the industry involved is construction and the Supreme Court found it for labor because it was shown that board and lodging for these workers were enjoyed by the rest of Our Haus’ employees but was given on a project basis. Also, the Court also factored in the fact that relevant issuances concerning safety and health of workers in the construction industry provide that amenities should include adequate supply of safe drinking water, adequate sanitary and washing facilities, suitable living accommodation for workers, and as may be applicable, for their families, and separate sanitary, washing and sleeping facilities for men and women workers.
More importantly, the determinant is the so-called “purpose test”. The Court held that if “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.” In Our Haus Realty Development Corporation vs. Alexander Parian, et al., supra, the Supreme Court held that in the construction business, board and lodging is clearly for the benefit of the employer. The Court held:
“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.
Unlike in office enterprises where the work is focused on desk jobs, the construction industry relies heavily and directly on the physical capacity and endurance of its workers. This is not to say that desk jobs do not require muscle strength; we simply emphasize that in the construction business, bulk of the work performed are strenuous physical activities.
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. This observation strongly bears in the present case since three of the respondents are not residents of the National Capital Region. The board and lodging provision might have been a substantial consideration in their acceptance of employment in a place distant from their provincial residences.”
On the second requisite, the Supreme Court held that “facility” may only be deducted from the wage if the employer was authorized in writing by the concerned employee as it diminishes the take-home pay of an employee. In Our Haus Realty Development Corporation vs. Alexander Parian, et al., supra, the Supreme Court did not consider the belated Kasunduans submitted by the employer as it was offered only when the NLRC had already ruled that the respondents did not accomplish any written authorization to allow deduction from their wages.
On the third requisite, the Supreme Court held that there must be adequate support or justification that the value of the “facility” is fair and reasonable. In Our Haus Realty Development Corporation vs. Alexander Parian, et al., supra, the Court held that the figures given by employer was from its own accountable without corroborative evidence.
Hence, for meal subsidy to be considered as “facility”, the employer must comply with the above-discussed requisites. It must be shown that it was customarily given for the benefit or as added benefit for the employees and not for the benefit of the employer. More importantly, while it may be argued that explaining to them and made them sign Payslips with the meal subsidy factored in already is substantial compliance with the law, it is still best to prepare a separate document, preferably an Affidavit, wherein the workers acknowledged and expressly consented that the meal subsidy will form part of their wages. Finally, in this writing, the employer and workers can already agree what is the reasonable valuation of the meal subsidy and incorporate the same in the written document.