In a labor dispute, the Supreme Court has affirmed that employers bear the burden of proving they paid their employees’ wages fully. This means employers must present evidence like payrolls or payslips to demonstrate compliance with salary obligations. An employee does not have to initially prove their claim for underpayment. If the employer fails to present evidence of payment, the court may rule in favor of the employee’s claim for unpaid wages. This ruling underscores the employer’s responsibility to maintain accurate records and ensures that employees are rightfully compensated for their work.

Unfair Wages Abroad: Who Must Prove Fair Pay in Overseas Job Disputes?

Willie Batomalaque, a car painter, sought redress against G & M (Phil.), Inc., the recruitment agency that deployed him to Saudi Arabia, for alleged underpayment of wages by his foreign employer, Abdul Aziz Abdullah Al Muhaimid Najad Car Maintenance Association. Batomalaque claimed he received less than his contracted salary for a significant portion of his employment. The core legal question before the Supreme Court was: In a dispute over underpayment of wages, does the burden of proof rest on the employer to prove full payment, or on the employee to prove underpayment?

The Labor Arbiter initially ruled in favor of Batomalaque, finding that he had been underpaid during the first year of his contract. The National Labor Relations Commission (NLRC) affirmed this decision. The Court of Appeals also sided with Batomalaque, stating that the NLRC committed no grave abuse of discretion. G & M (Phil.), Inc. then elevated the case to the Supreme Court, arguing that it was the employee’s responsibility to prove that underpayment had occurred. G & M asserted that since Batomalaque was raising an issue of *underpayment*—not *non-payment*—the general rules regarding the burden of proof should not apply.

The Supreme Court disagreed with G & M’s argument. The Court cited established jurisprudence stating that a party who alleges payment as a defense bears the burden of proving it. Building on this principle, the Court underscored that in labor cases, this burden falls squarely on the employer, referencing numerous prior decisions, including *Far East Bank and Trust Company v. Querimit*. The rationale behind this rule is that employers have custody and absolute control over pertinent personnel files, payrolls, records, and remittances.

The Court further clarified the nuances of obligation and payment. **To discharge means to extinguish an obligation**. In contract law, this occurs when parties fulfill their contractual obligations or when an event, conduct, or operation of law releases the parties from performing. A party claiming that an obligation has been extinguished must prove the facts or acts that led to the extinction.

“The fact of underpayment does not shift the burden of evidence to the plaintiff-herein respondent because partial payment does not extinguish the obligation. Only when the debtor introduces evidence that the obligation has been extinguished does the burden of evidence shift to the creditor who is then under a duty of producing evidence to show why payment does not extinguish the obligation.”

The Supreme Court also emphasized the **solidary liability** of recruitment agencies like G & M (Phil.), Inc., for the unpaid wages of employees they deploy overseas. Citing *Royal Crown Internationale v. NLRC*, the Court reiterated that recruitment agencies voluntarily assume solidary liability when they apply for licenses to operate. This liability extends to all claims filed by recruited workers arising from service agreements or employment contracts.

Despite affirming the lower courts’ rulings, the Supreme Court found a minor error in the computation of Batomalaque’s salary differential. While Batomalaque claimed underpayment for 12 months, his initial complaint seemed to suggest only seven months of underpayment. Given his entitlement to US$370.00 per month (equivalent to 1,200 Saudi Riyals) and his claim that he received 900 Saudi Riyals for the first four months and 700 Saudi Riyals for the next eight months, the Court calculated the correct differential as 5,200 Saudi Riyals instead of the initially awarded 5,500 Saudi Riyals. The Supreme Court ultimately affirmed the Court of Appeals’ decision with a slight adjustment to the monetary award.

FAQs

What was the key issue in this case?	The key issue was determining who bears the burden of proof in a wage dispute: the employer to prove full payment or the employee to prove underpayment.
What did the Supreme Court decide about the burden of proof?	The Supreme Court held that the employer bears the burden of proving full payment of wages. The employer has the responsibility of proving payment and providing records.
Why does the employer bear the burden of proof in wage disputes?	The employer bears the burden of proof because they have control over the records needed to show payment, such as payrolls and payslips, ensuring the accountability for employee compensation.
What is solidary liability in the context of overseas employment?	Solidary liability means the recruitment agency and the foreign employer are jointly responsible for any violations of the employment contract, making the agency liable for unpaid wages.
How did the Supreme Court modify the Court of Appeals’ decision?	The Supreme Court adjusted the monetary award from 5,500 Saudi Riyals to 5,200 Saudi Riyals to accurately reflect the total underpayment of salaries for the twelve-month period.
What evidence can an employer use to prove payment of wages?	Employers can use various documents such as payroll records, payslips, vouchers, and bank statements to prove that wages were paid in full to their employees.
Does partial payment extinguish the obligation to pay the full wage?	No, partial payment does not extinguish the obligation to pay the full wage. The employer remains liable for the remaining balance until full payment is made.
What should an employee do if they believe they are being underpaid?	An employee who believes they are being underpaid should document their wages, any discrepancies, and consult with a labor lawyer or relevant government agency to explore legal options.

This case clarifies that employers must substantiate their claim of wage payments with concrete evidence, protecting employees from potential exploitation. This ruling reinforces the importance of meticulous record-keeping and adherence to labor standards in overseas employment arrangements.

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: G & M (PHIL.), INC. VS. WILLIE BATOMALAQUE, G.R. NO. 151849, June 23, 2005