The Supreme Court discussed in the case of Our Haus Realty Development Corporation vs. Alexander Parian, et. al (G. R. No. 204651, August 6, 2014) the difference between “Supplements” and “Facilities”.
The test set by numerous cases decided by the Supreme Court is whether or not the benefits or privileges granted by the employer to the employees is for the former’s convenience. If the benefits or privileges granted is for the employer’s convenience, it is considered “Supplements”. In resolving the issue in the above – mentioned case, the Supreme Court made reference to the case of Atok-Big Wedge Mutual Benefit Association vs. Atok Big Wedge Mining Company, Incorporated (G.R. No. L-7349, July 19, 1955), which states that the term “supplements” refer to extra remuneration or benefits received by wage earners from their employers. Said supplements include but are not limited to pay for vacation and holidays not worked; paid sick leave or maternity leave; overtime rate in excess of what is required by law; sick, pension, retirement, and death benefits; profit-sharing; family allowances; Christmas, war risk and cost-of-living bonuses; or bonuses other than those paid as a reward for extra output or time spent on the job. In other words, supplements constitute remuneration or special privileges received by the employees over and above their ordinary earnings.
“Facilities”, on the other hand, include articles or services for the benefit of the employee or his family but exclude tools of the trade or articles for the benefit of the employer or necessary to the conduct of the employer’s business. They are items or expense necessary for the laborer’s and his family’s existence and subsistence.
Is there a significance of knowing the difference of “Supplements” from “Facilities”? YES! The value of supplements does not form part of and may not be deducted from the employee’s wage. Facilities, when furnished by the employer, are deductible from the employee’s wage, since if they are not so furnished, the laborer would spend and pay for them just the same. The next question is: Are facilities automatically deductible from the employee’s wage? No. The Supreme Court ruled in the case of Mabeza vs. NLRC (G. R. No. 1188506, April 18, 1997) that the employer cannot simply deduct the value of facilities from the employee’s wages. The requirements before deducting said value of facilities are the following:
- There must be a proof that such facilities are customarily furnished by the trade;
- The provision of deductible facilities must be voluntarily accepted in writing (this would prove that the employer was authorized by the employee to make said deduction) by the employee; and
- Facilities must be charged at fair and reasonable value.
To sum up, three questions must always come to mind with respect to the benefits or privileges furnished by the employer to the employees. First, for whose benefit or convenience were those items furnished? Facilities are for the benefit of the employees. Supplements are for the benefit of the employers. Second, are the items furnished part of the wage? Facilities are part of the wage. Supplements are not. Lastly, are those items furnished deductible from the wage? Facilities are deductible. Supplements are not.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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