The Supreme Court has affirmed that commissions are considered part of an employee’s wages, and thus, the burden of proving payment rests on the employer. This ruling clarifies employers’ responsibilities in documenting and proving the payment of commissions and other monetary benefits to employees. The decision emphasizes that employers must present clear evidence to substantiate claims of payment; otherwise, employees’ claims will be upheld.

Toyota’s Tale: Who Bears the Burden When Commissions Go Unpaid?

This case revolves around Vilma S. De Peralta, an Insurance Sales Executive (ISE) at Toyota Pasig, Inc., who filed a complaint for illegal dismissal and unpaid monetary benefits after her termination. The core issue is whether Toyota Pasig, Inc. was liable for De Peralta’s unpaid commissions, tax rebates, salary deductions, and profit sharing, amounting to P617,248.08. The resolution of this issue hinges on determining which party bears the burden of proof regarding the payment of these monetary claims.

The factual backdrop reveals that De Peralta’s husband was involved in organizing a labor union, which allegedly led to harassment and eventual termination. Following her dismissal, De Peralta sought the payment of her earned commissions and other benefits. Toyota Pasig, Inc. argued that De Peralta was dismissed for just cause due to dishonesty and falsification. The company further contended that her claims for commissions and tax rebates were unfounded and lacked documentation. The Labor Arbiter (LA) initially dismissed the complaint, but the National Labor Relations Commission (NLRC) modified the ruling, finding Toyota liable for the unpaid claims. The Court of Appeals (CA) affirmed the NLRC’s decision.

The Supreme Court’s analysis centers on Section 97 (f) of the Labor Code, which defines wages as remuneration of earnings, including commissions. This definition is critical because it establishes that commissions are not merely incentives but direct remunerations for services rendered. As the Court highlighted in Iran v. NLRC, commissions are “direct remunerations for services rendered.” The Supreme Court has consistently recognized that commissions are part of a salesman’s wage or salary, irrespective of whether they receive a basic salary.

ART. 97. Definitions. – As used in this Title:

x x x x

(f) “Wage” paid to any employee shall mean the remuneration of earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall not include any profit to the employer, or to any person affiliated with the employer.

Building on this principle, the Court reasoned that because De Peralta’s monetary claims fell under the definition of wages, the burden of proof shifted to Toyota Pasig, Inc. to demonstrate that these benefits were either paid or not due. This ruling aligns with established jurisprudence, which holds that employers bear the burden of proving payment of labor standard benefits. The Court emphasized that once an employee specifies the labor standard benefits they are entitled to, the employer must prove they have been paid. The rationale behind this rule is that employers possess the necessary documentation to prove payment, while employees typically do not.

In Heirs of Ridad v. Gregorio Araneta University Foundation, the Court articulated this principle clearly: “Once the employee has set out with particularity in his complaint, position paper, affidavits and other documents the labor standard benefits he is entitled to, and which he alleged that the employer failed to pay him, it becomes the employer’s burden to prove that it has paid these money claims.” Thus, it is incumbent upon the employer to provide concrete evidence of payment, such as payroll records or other relevant documents.

The Court found that Toyota Pasig, Inc. failed to discharge this burden. The company merely dismissed De Peralta’s claims as self-serving without presenting any evidence of payment. Moreover, Toyota Pasig, Inc. had the opportunity to submit company records during the LA proceedings but chose not to do so. This failure raised a presumption that the presentation of such documents would be prejudicial to its case. The Court reiterated that failure to submit necessary documents in one’s possession gives rise to the presumption that their presentation would be adverse to the party.

The Supreme Court thus affirmed the CA’s decision, holding Toyota Pasig, Inc. liable for the unpaid monetary benefits. The Court underscored that since De Peralta had already earned these benefits, she was entitled to receive them, even if her termination was deemed legal. The ruling reinforces the principle that employers must maintain meticulous records of payments to employees and be prepared to substantiate any claims of payment in labor disputes. The employer cannot simply deny the claim, but must present clear and convincing evidence to support its defense.

FAQs

What was the key issue in this case?	The central issue was whether Toyota Pasig, Inc. was liable for Vilma S. De Peralta’s unpaid commissions and other monetary benefits, and who bears the burden of proving payment. The court needed to determine if the employer provided sufficient evidence to show the employee had been paid.
Are commissions considered part of an employee’s wage?	Yes, the Supreme Court affirmed that commissions are included in the definition of wages under the Labor Code. This means they are considered direct remuneration for services rendered, not merely incentives.
Who has the burden of proving payment of wages and benefits?	The burden of proving payment rests on the employer. Once an employee claims non-payment, the employer must present evidence, such as payroll records, to show that the wages and benefits were paid.
What happens if the employer fails to provide evidence of payment?	If the employer fails to provide evidence of payment, the court may presume that the wages and benefits were not paid and rule in favor of the employee. This is because the employer has control over the relevant records.
Why is the employer required to keep accurate records?	Employers are required to maintain accurate records to comply with labor laws and to be able to substantiate claims of payment in case of disputes. These records serve as evidence of compliance and payment of wages and benefits.
What was the outcome of this case?	The Supreme Court affirmed the Court of Appeals’ decision, holding Toyota Pasig, Inc. liable for the unpaid monetary benefits claimed by Vilma S. De Peralta. This ruling emphasizes the employer’s responsibility to prove payment of wages and benefits.
Does legal termination affect the right to earned commissions?	No, even if an employee is legally terminated, they are still entitled to receive any commissions and other monetary benefits that they have already earned. The right to these benefits is not extinguished by the termination.
What kind of evidence can an employer use to prove payment?	An employer can use various types of evidence, including payroll records, payslips, bank statements, and any other documents that demonstrate the payment of wages and benefits to the employee. The evidence should be clear and convincing.

This case serves as a crucial reminder to employers about the importance of maintaining accurate records and being prepared to substantiate payments to employees. Failing to do so can result in significant financial liabilities.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Toyota Pasig, Inc. vs. Vilma S. De Peralta, G.R. No. 213488, November 07, 2016