In Genesis Transport Service, Inc. v. Unyon ng Malayang Manggagawa ng Genesis Transport, the Supreme Court addressed the legality of deducting toll fees from employees’ gross earnings and the importance of adhering to due process during employee dismissals. The Court affirmed that deducting toll fees without the employee’s consent is a violation of labor laws and that while an employer may have a valid cause for termination, failure to observe statutory due process entitles the employee to remedies. This ruling reinforces the protection of employee wages and upholds the procedural safeguards necessary in termination cases.

When Toll Fees Eat Away at Wages: Balancing Company Practice and Employee Rights

The case arose from a complaint filed by Juan Taroy, a driver for Genesis Transport, who alleged illegal dismissal, unfair labor practice, and illegal deductions from his earnings. Genesis Transport maintained that Taroy’s dismissal was due to reckless driving and that he was afforded due process. The central issue was whether the deduction of toll fees from Taroy’s gross earnings was legal and whether his dismissal complied with statutory due process requirements.

The Labor Arbiter initially dismissed the illegal dismissal claim but ordered Genesis Transport to refund the toll fee deductions. The NLRC affirmed this decision, deleting the award of attorney’s fees. On appeal, the Court of Appeals partly granted Taroy’s appeal, finding that Genesis Transport violated his right to due process by placing him under preventive suspension for more than thirty days and reinstating the order to refund the underpayment. The Supreme Court then took up the case to resolve these conflicting rulings.

The petitioners argued that the NLRC had previously ruled in their favor in similar cases involving the same union, asserting the principle of res judicata. They also claimed that deducting tollgate fees from the gross earnings of drivers is an accepted practice in the transportation industry. However, the Supreme Court rejected these arguments, stating that the previous NLRC cases had not been proven to have attained finality and that it could not take judicial notice of the alleged industry practice without proper evidence.

Regarding the toll fee deductions, the Court emphasized that while the amounts were deducted from gross revenues rather than directly from Taroy’s commissions, this practice still reduced the base amount from which his 9% commission was calculated. This, according to the Court, constituted a diminution of Taroy’s wages, violating Article 113 in relation to Article 100 of the Labor Code. The Court quoted Article 100 of the Labor Code, emphasizing the prohibition against eliminating or diminishing employee benefits:

No employer shall eliminate or diminish benefits being enjoyed by the employees at the time of the promulgation of this Code.

The Court further explained that without Taroy’s written consent or authorization, the deduction was considered illegal. The invocation of the rule on “company practice” was deemed inapplicable, as this rule generally applies to the grant of additional benefits, not the diminution of existing ones. This ruling underscores the importance of obtaining employee consent before implementing any changes that could affect their wages or benefits.

The Court then addressed the issue of statutory due process. The Court cited Sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules and Regulations of the Labor Code, which govern preventive suspensions:

Section 8. Preventive suspension. – The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or his co-workers.

Section 9. Period of Suspension – No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker.

The Court of Appeals had ruled that Genesis Transport violated Taroy’s right to due process by suspending him for more than thirty days. However, the Supreme Court pointed out that the issue of preventive suspension was raised for the first time on appeal. According to the Court, issues not raised in the lower court cannot be raised for the first time on appeal due to basic considerations of due process. The Court stated that the company had until May 20, 2002, to act on Taroy’s case, and it did so by terminating him through a notice dated May 10, 2002, thus complying with the 30-day requirement.

Because the issue was raised late and Genesis Transport acted on Taroy’s employment status within the 30-day window, the Court found no violation of Taroy’s statutory due process rights. Therefore, he was not entitled to nominal damages. This part of the Supreme Court decision highlights the importance of raising issues promptly and adhering to procedural rules.

FAQs

What was the key issue in this case?	The key issues were the legality of deducting toll fees from an employee’s gross earnings without consent and whether the employee was afforded due process during termination.
Can an employer deduct toll fees from an employee’s salary?	No, not without the employee’s written consent or authorization. Deducting toll fees without consent is considered an illegal deduction and a diminution of wages.
What is the maximum period for preventive suspension under the Labor Code?	Preventive suspension should not last longer than thirty (30) days. After this period, the employer must reinstate the worker or extend the suspension while paying wages and benefits.
What happens if an employer fails to act within the 30-day suspension period?	The employer must reinstate the employee or extend the suspension, paying wages and benefits in the interim, while they complete the investigation.
What is ‘res judicata,’ and why didn’t it apply here?	Res judicata prevents relitigation of issues already decided in a final judgment. It didn’t apply because the previous NLRC cases cited by the petitioners were not proven to have reached finality.
Why was the issue of preventive suspension not considered by the Supreme Court?	The issue of preventive suspension was raised for the first time on appeal, which is not allowed. Issues must be raised in the lower courts to be considered on appeal.
What is the significance of Article 100 of the Labor Code?	Article 100 prohibits employers from eliminating or diminishing benefits being enjoyed by employees. This provision protects employees from having their existing benefits reduced or taken away.
What is considered a violation of statutory due process in termination cases?	Violations include failure to provide notice and hearing, prolonged preventive suspension without action, or failure to act within the prescribed periods.

The Supreme Court’s decision in Genesis Transport Service, Inc. v. Unyon ng Malayang Manggagawa ng Genesis Transport underscores the importance of protecting employee wages and adhering to due process in termination cases. Employers must ensure that any deductions from employee earnings are made with the employee’s consent and that termination procedures comply with labor laws. This case serves as a reminder of the rights afforded to employees under Philippine labor law.

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: GENESIS TRANSPORT SERVICE, INC. VS. UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT (UMMGT), G.R. No. 182114, April 05, 2010