This Supreme Court decision emphasizes the importance of documented evidence, such as signed payslips, in disputes over unpaid Cost of Living Allowances (COLA). The Court ruled that while signatures on payrolls are ideal, signed payslips acknowledging full compensation can serve as substantial proof of payment, especially when supported by other evidence and regular business practices. This ruling provides clarity for employers and employees regarding acceptable forms of proof in wage-related disputes.

When Payslips Speak: Resolving COLA Disputes Through Payment Acknowledgments

This case revolves around a complaint filed by employees of KAR ASIA, Inc., alleging underpayment of COLA for December 1993 and December 1994. The employees claimed they did not receive the COLA mandated by Regional Tripartite and Wages Productivity Board (RTWPB) XI Wage Order No. 3. The company countered by presenting payrolls and affidavits, asserting that the COLA had been paid. The central legal question is whether the evidence presented by the company, particularly the payrolls and payslips, sufficiently proved that the employees had indeed received their COLA.

The Labor Arbiter initially ruled in favor of the company, but the National Labor Relations Commission (NLRC) reversed this decision, deleting the awards for moral damages, attorney’s fees, and litigation expenses. The Court of Appeals then reversed the NLRC decision, ordering the company to pay the COLA for December 1994. This prompted KAR ASIA, Inc., to elevate the case to the Supreme Court, arguing that the Court of Appeals had misapprehended the facts and exceeded its power of review.

The Supreme Court found merit in the company’s petition, scrutinizing the evidence presented for both the December 1993 and December 1994 COLA claims. For the December 1993 COLA, the Court noted that the payroll readily disclosed the signatures of the employees opposite their printed names and the numeric value of P654.00. The Court dismissed the employees’ claims that they were harassed into signing the payroll without receiving the cash equivalent, deeming these claims self-serving and unsubstantiated. Moreover, the Court pointed out that the claim for the December 1993 COLA had prescribed under Article 291 of the Labor Code, which requires that money claims be filed within three years from the time the cause of action accrued.

Article 291 of the Labor Code states:

All money claims arising from employer-employee relations shall be filed within three years from the time the cause of action accrued; otherwise they shall be barred forever.

The Court emphasized that the employees filed their complaint for underpayment of wage on September 24, 1997, meaning the action for the payment of the December 1993 COLA had already prescribed. Regarding the December 1994 COLA, the Court observed that while the employees initially alleged its non-payment, subsequent pleadings revealed that they primarily pursued the claim for the December 1993 COLA. However, even if the neglect in asserting the claim for the December 1994 COLA did not amount to abandonment, the Court found that the evidence to substantiate the claim was lacking.

The payrolls for December 1 to 15, 1994, and December 16 to 31, 1994, indicated an allowance of P327.00 for each period, totaling P654.00 for the entire month. While the numeric figures in the December 1994 payroll and the payslips for the same period were denominated merely as allowances, and those in the December 1993 payroll were specifically identified as COLA, the Court noted that they added up to the same figure, i.e., P654.00. The Court reasoned that whether designated as an allowance or COLA, it was unmistakable that they all represented the cost of living allowance for the given periods under RTWPB XI Wage Order No. 3.

The Court also considered the affidavits of Ermina Daray and Cristita Arana, who confirmed the truthfulness of the entries in the payrolls and affirmed that the employees had received their full compensation. It cited Rule 130, Section 43 of the Rules of Court, which states that entries in the payroll, being entries in the course of business, enjoy the presumption of regularity.

Rule 130, Section 43 of the Rules of Court states:

Entries in the course of business.– Entries made at, or near the time of the transactions to which they relate, by a person since deceased, or unable to testify, respecting facts of his own knowledge, or made by him in his professional capacity, or in the ordinary course of business or duty, when such entries were made in a public register or official book, are prima facie evidence of the facts stated therein.

The The Court emphasized that it was incumbent upon the employees to adduce clear and convincing evidence to support their claim, but their bare assertions without corroboration were insufficient to overcome the disputable presumption. The Court of Appeals had observed that the December 1994 payrolls contained only the signatures of the paymaster and the president and that the payrolls presented were only copies of the approved payment, not copies disclosing actual payment. The Supreme Court disagreed, noting that while the signatures of the employees were missing from the payrolls, the payslips for the same period bore the signatures of the employees plus a certification that they received the full compensation for the services rendered.

While ideally, the signatures of the employees should appear in the payroll as evidence of actual payment, the absence of such signatures does not necessarily lead to the conclusion that the December 1994 COLA was not received. The Court stated that while ordinarily a payslip is only a statement of the gross monthly income of the employee, the employee’s signature therein, coupled with an acknowledgment of full compensation, alters the legal complexion of the document. The payslip becomes a substantial proof of actual payment. The Court also noted that there is no hard-and-fast rule requiring that the employee’s signature in the payroll is the only acceptable proof of payment.

By implication, the employees, in signing the payslips with their acknowledgment of full compensation, unqualifiedly admitted the receipt thereof, including the COLA for December 1994. The Supreme Court ultimately reversed the decision of the Court of Appeals and affirmed the decision of the NLRC, which had dismissed the employees’ claims of unpaid COLA for December 1993 and December 1994 and deleted the awards for moral damages, attorney’s fees, and litigation expenses for lack of sufficient basis.

FAQs

What was the key issue in this case?	The key issue was whether the company sufficiently proved that it paid the employees their Cost of Living Allowance (COLA) for December 1993 and December 1994. The court examined the evidence presented, including payrolls and payslips, to determine if the employees’ claims of underpayment were valid.
Why was the claim for the December 1993 COLA denied?	The claim for the December 1993 COLA was denied primarily because it had already prescribed under Article 291 of the Labor Code, which requires that money claims be filed within three years from the time the cause of action accrued. The employees filed their complaint more than three years after the alleged underpayment.
What evidence did the company present to prove payment of COLA?	The company presented payrolls for December 1993 and December 1994, as well as payslips for the same periods. Additionally, the company submitted affidavits from its cashiers, who affirmed that the employees had received their full compensation.
What is the significance of the employees signing the payslips?	The employees’ signatures on the payslips, coupled with an acknowledgment of full compensation, were considered substantial proof of actual payment. The Court reasoned that by signing the payslips, the employees unqualifiedly admitted the receipt of their full compensation, including the COLA for December 1994.
Why did the Court disagree with the Court of Appeals’ assessment of the payrolls?	The Court disagreed with the Court of Appeals’ assessment that the payrolls were insufficient because they lacked the employees’ signatures. The Supreme Court emphasized that the signed payslips served as alternative proof of payment, and that there is no strict requirement for the employee’s signature to be on the payroll itself.
What is the presumption of regularity in entries in the course of business?	Under Rule 130, Section 43 of the Rules of Court, entries made in the course of business are presumed to be regular. This means that entries in the payroll are considered prima facie evidence of the facts stated therein, unless proven otherwise by clear and convincing evidence.
What is the implication for employers based on this ruling?	This ruling implies that employers should maintain accurate and well-documented payroll records, including payslips signed by employees, to serve as proof of payment in case of wage-related disputes. Properly documenting payments can help protect employers from unfounded claims.
What is the implication for employees based on this ruling?	For employees, this ruling underscores the importance of carefully reviewing and understanding payslips before signing them. Signing a payslip that acknowledges full compensation may be used as evidence against future claims of underpayment, so it is essential to verify the accuracy of the information before signing.

This case highlights the importance of maintaining thorough and accurate records in employment-related matters. Employers should ensure that all payments are properly documented, and employees should carefully review and understand all documents before signing them. The court’s decision reinforces the principle that substantial evidence, such as signed payslips, can serve as valid proof of payment in wage disputes, promoting fairness and clarity in employer-employee relations.

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: KAR ASIA, INC. VS. MARIO CORONA, G.R. No. 154985, August 24, 2004