Marby Food Ventures Corporation vs. Dela Cruz

Employees who regularly perform duties away from the employer's principal place of business but whose actual hours of work can be determined with reasonable certainty—such as delivery drivers required to log time-in and time-out and directed to deliver at specified times and places—are regular employees, not field personnel, and are entitled to overtime pay, holiday pay, and service incentive leave pay under Article 82 of the Labor Code. Double indemnity under Section 12 of R.A. No. 6727, as amended by R.A. No. 8188, requires prior notice from a competent authority advising the employer to correct the violation, with a warning that failure to do so will result in double indemnity liability.

Marby Food Ventures Corporation is a domestic corporation engaged in the production and distribution of baked goods, with Mario Valderrama as President/CEO and Ma. Emelita Valderrama as Vice-President. The respondents—Roland dela Cruz, Jose Paulo Anzures, Efren Tadeo, Bongbong Santos, Marlon de Rafael, Cris Santiago, Jr., Elmer Maraño, Armando Rivera, Louie Balmes, Raymond Pagtalunan, and Gabriel dela Cruz—were employed by Marby as drivers, while Mark Francis Bernardino was hired as salesman. Their employment was governed by a Collective Bargaining Agreement (CBA) that provided for vacation leave, sick leave, and other benefits. The dispute arose from the parties' disagreement over the proper classification of the respondents' employment status and the corresponding entitlement to labor standards benefits.

Marby Food Ventures Corporation is a domestic corporation engaged in the production and distribution of baked goods. Mario Valderrama serves as its President/CEO and Ma. Emelita Valderrama as Vice-President. The respondents—Roland dela Cruz, Jose Paulo Anzures, Efren Tadeo, Bongbong Santos, Marlon de Rafael, Cris Santiago, Jr., Elmer Maraño, Armando Rivera, Louie Balmes, Raymond Pagtalunan, and Gabriel dela Cruz—were all employed by Marby as drivers, while Mark Francis Bernardino was hired as salesman. Their employment was covered by a Collective Bargaining Agreement.

On September 30, 2016, the respondents and Bernardino filed a complaint against petitioners before the National Labor Relations Commission, docketed as NLRC Case No. RAB-III-10-24653-16, alleging underpayment of wage, overtime pay, and 13th month pay; non-payment of holiday pay, service incentive leave pay for 2013, and eight days each of vacation leave and sick leave under the CBA; and unauthorized salary deductions labeled as "everything" in their payslips. Bernardino additionally alleged that he was made to shoulder the salaries of drivers and helpers assigned to him and that Marby made unauthorized deductions from his commissions.

Petitioners countered that respondents had been receiving the required minimum wage and 13th month pay. They maintained that the questioned deductions were penalties imposed for deliveries made outside imposed delivery hours, bad orders, shortages in liquidation, and cell phone plans, and that respondents were duly informed of and had consented to these deductions. Petitioners claimed to have ceased imposing said deductions since September 2016. As to overtime pay, holiday pay, and service incentive leave pay, petitioners maintained that respondents were not entitled to the same because they were field personnel. On the issue of minimum wage, petitioners argued that the amount labeled "overtime pay" in the payslips was in reality a "premium" given by the company whether or not extended hours were rendered, and should be included in computing the daily wage rate.

The Labor Arbiter dismissed the complaint with prejudice on December 15, 2016. The NLRC partially reversed, ordering Marby to pay wage differentials and 13th month pay differentials to the listed respondents, while declaring them field personnel unqualified for certain monetary claims. Both parties filed motions for reconsideration, which were denied on April 24, 2017. The parties then filed separate petitions for certiorari before the Court of Appeals, which were consolidated. The CA granted the respondents' petition, ruling them to be regular employees entitled to overtime pay, holiday pay, and service incentive leave pay, and awarding double indemnity, reimbursement of deductions, and attorney's fees. Petitioners elevated the case to the Supreme Court via a Petition for Review on Certiorari under Rule 45.

• Employment Classification: Petitioners maintained that respondents are field personnel who are not entitled to overtime pay, holiday pay, and service incentive leave pay, because they regularly perform their duties away from the principal place of business.
• Payment of Minimum Wage: Petitioners claimed to have paid the correct minimum wage, arguing that the amount labeled "overtime pay" in the payslips was in reality a "premium" given by the company whether or not extended hours were rendered, and should be included in the computation of the daily wage rate.
• 13th Month Pay: Petitioners insisted that respondents received the proper 13th month pay.
• Illegal Deductions: Petitioners argued that the deductions were penalties for deliveries outside imposed delivery hours, bad orders, shortages in liquidation, and cell phone plans, and that respondents were duly informed of and had consented to the same.
• Double Indemnity: Petitioners contended that the rule on double indemnity under Section 12 of R.A. No. 6727, as amended by R.A. No. 8188, applies only if there is refusal or failure to pay the adjustment in wage rate, and denied that they unjustly refused any payment respondents were legally entitled to.
• Attorney's Fees: Petitioners assailed the award of attorney's fees.

• Regular Employment Status: Respondents argued that they were regular employees entitled to overtime pay, holiday pay, and service incentive leave pay, because they were directed to deliver goods at specified times and places and were required to log their time-in and time-out, making their actual work hours ascertainable with reasonable certainty.
• Underpayment: Respondents averred that they were underpaid their daily wage, overtime work pay, and 13th month pay, and did not receive holiday pay, service incentive leave pay for 2013, and CBA-mandated vacation and sick leave.
• Unauthorized Deductions: Respondents questioned the unauthorized salary deductions labeled as "everything" in their payslips, asserting that there was no written conformity to these deductions.
• Double Indemnity: Respondents argued before the CA that the NLRC committed grave abuse of discretion in not awarding double indemnity as provided in Section 12, R.A. No. 6727, as amended by R.A. No. 8188.

• Employment Classification: Whether respondents are field personnel excluded from the coverage of Title I (Working Conditions and Rest Periods) of the Labor Code, or regular employees entitled to overtime pay, holiday pay, and service incentive leave pay.
• Minimum Wage Differentials: Whether respondents are entitled to salary differentials, notwithstanding petitioners' claim that the "overtime pay" in payslips was actually premium pay that should be included in computing the daily wage rate.
• 13th Month Pay Differentials: Whether respondents are entitled to 13th month pay differentials.
• Illegal Deductions: Whether the deductions made by petitioners from respondents' wages were lawful and whether reimbursement is warranted.
• Attorney's Fees: Whether respondents are entitled to attorney's fees.
• Double Indemnity: Whether petitioners are liable for double the unpaid benefits under Section 12 of R.A. No. 6727, as amended by R.A. No. 8188.

• Employment Classification: No. Respondents are not field personnel but regular employees, because their actual hours of work could be determined with reasonable certainty—they were directed to make deliveries at specified times and places and were required to log their time-in and time-out.
• Minimum Wage Differentials: Yes. Respondents are entitled to salary differentials, the nomenclature "overtime pay" in the payslips carrying a presumption that overtime was rendered, and petitioners having failed to present daily time records to prove that premium pay was given for work not rendered.
• 13th Month Pay Differentials: Yes. Because respondents received salaries below the minimum wage, the basis for computing their 13th month pay was inaccurate, entitling them to differentials.
• Illegal Deductions: Yes. The deductions were unlawful for lack of written conformity from the employees, violating Articles 113 and 116 of the Labor Code, and must be reimbursed.
• Attorney's Fees: Yes. Respondents were compelled to litigate to protect their interest due to petitioners' failure to pay minimum wage and labor standards benefits, justifying an award of 10% of the monetary awards under Article 2208 of the New Civil Code.
• Double Indemnity: No. The award of double indemnity was deleted because no competent authority had first advised petitioners to pay unpaid benefits with a warning that failure to correct the violation would result in double indemnity liability.

• Employment Classification: Article 82 of the Labor Code defines "field personnel" as non-agricultural employees who regularly perform their duties away from the principal place of business and whose actual hours of work in the field cannot be determined with reasonable certainty. In Auto Bus Transport Systems, Inc. vs. Bautista, the Court clarified that the definition is not merely concerned with the location where the employee performs duties but also with whether the employee's performance is unsupervised and actual hours cannot be determined with reasonable certainty. Here, three established facts demonstrate that respondents are not field personnel: (1) they were directed to make deliveries at specified times and places; (2) they were required to log time-in and time-out, making actual work hours ascertainable with reasonable certainty; and (3) their time and performance were supervised. Consequently, they are regular employees entitled to overtime pay, holiday pay, and service incentive leave pay, computed from three years prior to the filing of the complaint (September 30, 2013) pursuant to Arriola vs. Filipino Star Ngayon, which prescribes a three-year prescriptive period for money claims arising from employer-employee relations.

• Minimum Wage Differentials: Petitioners' argument that the "overtime pay" in payslips was actually "premium pay" given regardless of whether overtime was rendered was rejected. The nomenclature "overtime pay" in the payslips provides a presumption that overtime was rendered. Petitioners offered no tenable explanation for the practice and failed to present the daily time records of respondents to prove that premium pay was given for work not rendered. Had it truly been premium pay, that term would have been used in the payslips. The explanation was deemed a mere afterthought to escape liability. As for Tadeo, his daily wage rates as alleged in respondents' position paper (P120.00 for 2013, P294.00 for 2014, P349.00 for 2015, and P364.00 for 2016) were not disputed by petitioners and were deemed admitted. Comparing these to the Region III minimum wage rates under the relevant Wage Orders, Tadeo received below-minimum wages except for 2016, entitling him to salary differentials for 2013–2015.

• 13th Month Pay Differentials: Because respondents received salaries below the minimum wage, the basis for computing their 13th month pay was inaccurate. The same logic applies to Tadeo, whose 13th month pay was likewise below what he should have received. An award for 13th month pay differentials was therefore proper.

• Illegal Deductions: Article 113 of the Labor Code prohibits employers from making deductions from wages except in cases authorized by law or regulations issued by the Secretary of Labor, or with the written authorization of the employee for payment to a third person. Article 116 makes it unlawful to withhold any amount from wages without the worker's consent. Petitioners confirmed the deductions but admitted they were penalties for deliveries outside delivery hours, cell phone plans, bad orders, and liquidation shortages. No written conformity from the respondents was obtained, making the deductions a clear violation of the Labor Code. Reimbursement was therefore ordered.

• Attorney's Fees: Article 2208 of the New Civil Code allows recovery of attorney's fees where the defendant's act or omission has compelled the plaintiff to litigate to protect his interest, or where the defendant acted in gross and evident bad faith in refusing to satisfy a plainly valid, just, and demandable claim, or in any case where the court deems it just and equitable. Respondents were compelled to litigate by petitioners' failure to pay minimum wage and labor standards benefits, justifying the award of 10% of the monetary awards.

• Double Indemnity: Section 12 of R.A. No. 6727, as amended by R.A. No. 8188, requires the employer to pay double the unpaid benefits owing to employees, but only upon refusal or failure to pay prescribed increases or adjustments in wage rates. In Philippine Hoteliers, Inc., Dusit Hotel Nikko-Manila vs. NUWHRAIN-Dusit Hotel Nikko Chapter, the Court denied double indemnity because the DOLE Notice of Inspection Result did not contain an advice that failure to correct violations within five days would result in double indemnity liability. Applying the same principle, there was no order from any competent authority advising petitioners to pay unpaid employee benefits with sanctions for double indemnity in case of refusal or failure to correct the violation. Petitioners could not be said to have refused or failed to pay within the purview of Section 12. The CA's award of double indemnity was therefore deleted.

• Field Personnel Classification — The term "field personnel" under Article 82 of the Labor Code refers to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. The determination depends not merely on the location of work but on whether the employee's performance is unsupervised and actual hours cannot be determined with reasonable certainty. An inquiry must be made as to whether the employee's time and performance are constantly supervised by the employer. In this case, the respondents were held to be regular employees because they were directed to deliver at specified times and places, were required to log time-in and time-out, and their time and performance were supervised.

• Burden of Proof in Labor Cases for Payment of Monetary Claims — A party who alleges payment as a defense has the burden of proving it. In labor cases, the burden of proving payment of monetary claims rests on the employer, because the pertinent personnel files, payrolls, records, remittances, and other similar documents are in the custody and absolute control of the employer, not the worker. Petitioners' bare allegation of payment, unsupported by documentary proof, was insufficient.

• Presumption from Nomenclature in Payslips — The label "overtime pay" in an employee's payslip carries a presumption that overtime was actually rendered. An employer claiming that the amount is actually "premium pay" given regardless of overtime work bears the burden of proving this, including presenting daily time records. Failure to do so, combined with the use of the term "overtime pay" rather than "premium pay" in the payslips, renders the employer's explanation untenable.

• Prescriptive Period for Money Claims in Employer-Employee Relations — All money claims arising from employer-employee relations must be filed within three years from the time the cause of action accrued; otherwise, they are forever barred. Pursuant to Arriola vs. Filipino Star Ngayon, the money claims in this case were computed from September 30, 2013, or three years prior to the filing of the complaint on September 30, 2016.

• Double Indemnity Under R.A. No. 6727, as Amended by R.A. No. 8188 — Section 12 of R.A. No. 6727, as amended by R.A. No. 8188, requires the employer to pay double the unpaid benefits owing to employees upon refusal or failure to pay prescribed increases or adjustments in wage rates. However, double indemnity cannot be imposed absent prior notice from a competent authority advising the employer to correct the violation, with a warning that failure to do so will result in double indemnity liability. The employer must be afforded the opportunity to decide and act accordingly to avoid the penalty.

• "Field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Therefore, to determine whether an employee is a field employee, it is also necessary to confirm if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the employer." — This passage articulates the controlling test for distinguishing field personnel from regular employees, the central legal question in the case.

• "The nomenclature 'overtime pay' in the payslips of respondents provides a presumption that indeed overtime was rendered by them. There was no tenable explanation offered as to this ongoing practice. Petitioners did not even present the daily time records of the respondents to prove that they were given premium pay for work not rendered." — This passage establishes the evidentiary principle that the label used in payslips creates a rebuttable presumption, and the burden of rebuttal rests on the employer.

• "Here, there was no order from any competent authority advising the petitioners to pay unpaid employee benefits with sanctions for double indemnity in case of refusal or failure to correct the violation. Hence, it cannot be said that it refused or failed to pay any of the prescribed increases or adjustments in the wage rates to come within the purview of Section 12 of R.A. No. 6727, as amended by RA No. 8188." — This passage defines the requisite precondition for imposing double indemnity, distinguishing this case from the CA's ruling and establishing the basis for the modification.

• Auto Bus Transport Systems, Inc. vs. Bautista (cited as Veterans Security Agency, Inc. vs. Gonzalvo, Jr., 514 Phil. 488 [2005]) — Controlling precedent on the definition of "field personnel," clarifying that the classification depends not merely on the location of work but on whether actual hours can be determined with reasonable certainty and whether the employee's performance is supervised. Followed in this case to uphold the CA's finding that respondents are regular employees.

• Arriola vs. Filipino Star Ngayon (G.R. No. 175689, August 13, 2014) — Applied to establish the three-year prescriptive period for money claims arising from employer-employee relations, fixing the reckoning date for computation of monetary awards at three years prior to the filing of the complaint.

• Philippine Hoteliers, Inc., Dusit Hotel Nikko-Manila vs. NUWHRAIN-Dusit Hotel Nikko Chapter (613 Phil. 491–507) — Controlling precedent on the requirement of prior notice before double indemnity can be imposed. Followed to delete the CA's award of double indemnity, there having been no order from a competent authority advising petitioners to correct violations with a warning of double indemnity liability.

• Far East Bank and Trust Company vs. Ouerimit and other cases — Cited as a line of authorities supporting the doctrine that the burden of proving payment of monetary claims in labor cases rests on the employer.

• Article 82, Labor Code — Defines the coverage of Title I (Working Conditions and Rest Periods) and excludes "field personnel," defining the term as non-agricultural employees who regularly perform duties away from the principal place of business and whose actual hours of work in the field cannot be determined with reasonable certainty. Applied to determine that respondents are regular employees, not field personnel, because their work hours were ascertainable through time logs and their deliveries were directed to specified times and places.

• Article 113, Labor Code — Prohibits employers from making wage deductions except where authorized by law or regulations issued by the Secretary of Labor, or with the written authorization of the employee for payment to a third person. Applied to hold the deductions unlawful for lack of written conformity from respondents.

• Article 116, Labor Code — Makes it unlawful for any person to withhold any amount from a worker's wages without the worker's consent. Applied in conjunction with Article 113 to order reimbursement of illegal deductions.

• Article 2208, New Civil Code — Enumerates the exceptions to the general rule that attorney's fees cannot be recovered in the absence of stipulation. Applied to award 10% attorney's fees, respondents having been compelled to litigate to protect their interest.

• Section 12, R.A. No. 6727, as amended by R.A. No. 8188 — Requires employers who refuse or fail to pay prescribed increases or adjustments in wage rates to pay double the unpaid benefits owing to employees. Interpreted to require prior notice from a competent authority advising the employer to correct the violation, with a warning of double indemnity liability; applied to delete the CA's double indemnity award for lack of such prior notice.

• Rule VIII, Section 10, Omnibus Rules Implementing the Labor Code — Provides that deductions from wages may be made when authorized by law or with the written authorization of the employee for payment to a third person. Applied to reinforce the requirement of written authorization for lawful wage deductions.

Peralta, C.J. (Chairperson), Caguioa, Lazaro-Javier, and Lopez, JJ., concurred.