Our Haus V Parian G.R. No. 204651

Our Haus v Parian G.R. No. 204651 August 6, 2014.
Facts:
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and
Bernardo Tenedero were all laborers working for petitioner Our Haus Realty
Development Corporation (Our Haus), a company engaged in the construction
business.
Sometime in May 2010, Our Haus experienced financial distress. To alleviate its
condition, Our Haus suspended some of its construction projects and asked the affected
workers, including the respondents, to take vacation leaves.
Eventually, the respondents 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. The
respondents also alleged that Our Haus failed to pay them their holiday, service
incentive leave (SIL), 13th month and overtime pays.
Before the LA, Our Haus primarily argued that the respondents’ wages complied with
the law’s minimum requirement. 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.
ISSUE:
Whether the facility’s value will be deducted or merely included in the computation of
the wages.
RULING:
No substantial distinction between

deducting and charging a facility’s
value from the employee’s wage;
the legal requirements for creditability
apply to both
To justify its non-compliance with the requirements for the deductibility of a facility, Our
Haus asks us to believe that there is a substantial distinction between the deduction and
the charging of a facility’s value to the wages. Our Haus explains that in deduction, the
amount of the wage (which may already be below the minimum) would still be lessened
by the facility’s value, thus needing the employee’s consent. On the other hand, in
charging, there is no reduction of the employee’s wage since the facility’s value will just
be theoretically added to the wage for purposes of complying with the minimum wage
requirement.39cralawred
Our Haus’ argument is a vain attempt to circumvent the minimum wage law by trying to
create a distinction where none exists.
In reality, deduction and charging both operate to lessen the actual take-home pay
of an employee; they are two sides of the same coin. In both, the employee receives a
lessened amount because supposedly, the facility’s value, which is part of his wage, had
already been paid to him in kind. As there is no substantial distinction between the two,
the requirements set by law must apply to both.
As the CA correctly ruled, these requirements, as summarized in Mabeza, are the

following: chanRoblesvirtualLawlibrary
• proof must be shown that such facilities are customarily furnished by the trade;
• the provision of deductible facilities must be voluntarily accepted in writing by
the employee; and
• The facilities must be charged at fair and reasonable value.40
We examine Our Haus’ compliance with each of these requirements in seriatim.

The facility must be customarily
furnished by the trade
In a string of cases, we have concluded that one of the badges to show that a facility is
customarily furnished by the trade is the existence of a company policy or guideline
showing that provisions for a facility were designated as part of the employees’
salaries.41 To comply with this, Our Haus presented in its motion for reconsideration
with the NLRC the joint sinumpaang salaysay of four of its alleged employees. These
employees averred that they were recipients of free lodging, electricity and water, as
well as subsidized meals from Our Haus.42 cralawred
We agree with the NLRC’s finding that the sinumpaang salaysay statements submitted
by Our Haus are self-serving. For one, Our Haus only produced the documents when
the NLRC had already earlier determined that Our Haus failed to prove that it was
traditionally giving the respondents their board and lodging. This document did not state
whether these benefits had been consistently enjoyed by the rest of Our Haus’
employees. Moreover, the records reveal that the board and lodging were given on a
per project basis. Our Haus did not show if these benefits were also provided in its
other construction projects, thus negating its claimed customary nature.
Even assuming the sinumpaang salaysay to be true, this document would still work
against Our Haus’ case. If Our Haus really had the practice of freely giving lodging,
electricity and water provisions to its employees, then Our Haus should not deduct its
values from the respondents’ wages. Otherwise, this will run contrary to the affiants’
claim that these benefits were traditionally given free of charge.
Apart from company policy, the employer may also prove compliance with the first
requirement by showing the existence of an industry-wide practice of furnishing the
benefits in question among enterprises engaged in the same line of business. If it
were customary among construction companies to provide board and lodging to their
workers and treat their values as part of their wages, we would have more reason to
conclude that these benefits were really facilities.
However, Our Haus could not really be expected to prove compliance with the first
requirement since the living accommodation of workers in the construction industry is
not simply a matter of business practice. Peculiar to the construction business are the
occupational safety and health (OSH) services which the law itself mandates employers
to provide to their workers. This is to ensure the humane working conditions of
construction employees despite their constant exposure to hazardous working
environments. Under Section 16 of DOLE Department Order (DO) No. 13, series of
1998,43 employers engaged in the construction business are required to provide the
following welfare amenities: chanRoblesvirtualLawlibrary
16.1 Adequate supply of safe drinking water
16.2 Adequate sanitary and washing facilities
16.3 Suitable living accommodation for workers, and as may be applicable, for their
families
16.4 Separate sanitary, washing and sleeping facilities for men and women workers.
[emphasis ours] chanrobleslaw
Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for the
implementation of DOLE DO No. 13, mandates that the cost of the implementation of
the requirements for the construction safety and health of workers, shall be integrated
to the overall project cost.44 The rationale behind this is to ensure that the living
accommodation of the workers is not substandard and is strictly compliant with the
DOLE’s OSH criteria.
As part of the project cost that construction companies already charge to their clients,
the value of the housing of their workers cannot be charged again to their employees’
salaries. Our Haus cannot pass the burden of the OSH costs of its construction projects
to its employees by deducting it as facilities. This is Our Haus’ obligation under the law.
Lastly, even if a benefit is customarily provided by the trade, it must still pass the
purpose test set by jurisprudence. Under this test, if a benefit or privilege granted to the
employee is clearly for the employer’s convenience, it will not be considered as a facility
but a supplement.45 Here, careful consideration is given to the nature of the employer’s
business in relation to the work performed by the employee. This test is used to
address inequitable situations wherein employers consider a benefit deductible from the
wages even if the factual circumstances show that it clearly redounds to the employers’
greater advantage.
While the rules serve as the initial test in characterizing a benefit as a facility, the
purpose test additionally recognizes that the employer and the employee do not stand
at the same bargaining positions on benefits that must or must not form part of an
employee’s wage. In the ultimate analysis, the purpose test seeks to prevent a
circumvention of the minimum wage law.
a1. The purpose test in jurisprudence
Under the law,46 only the value of the facilities may be deducted from the employees’
wages but not the value of supplements. Facilities include articles or services for the
benefit of the employee or his family but exclude tools of the trade or articles or services
primarily for the benefit of the employer or necessary to the conduct of the employer’s
business.47cralawred
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.48 Since it does not form part of the
wage, a supplement’s value may not be included in the determination of whether an
employer complied with the prescribed minimum wage rates.
In the present case, the board and lodging provided by Our Haus cannot be categorized
as facilities but as supplements.

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Our Haus V Parian G.R. No. 204651

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Our Haus v Parian G.R. No. 204651 August 6, 2014.

No substantial distinction between

As the CA correctly ruled, these requirements, as summarized in Mabeza, are the

We examine Our Haus’ compliance with each of these requirements in seriatim.

16.1 Adequate supply of safe drinking water

16.2 Adequate sanitary and washing facilities

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