Supreme Court Affirms CA Ruling: Payroll Records Alone Do Not Prove Payment Without Employee Acknowledgment

In a landmark ruling that reiterates the fundamental principles of labor law and employer accountability, the Supreme Court of the Philippines has ruled that payroll listings and pay registers alone are insufficient to prove that an employee has been paid — unless these documents are supported by proof of actual receipt.

In G.R. Nos. 221065 & 221164, the High Court, through a decision penned by Chief Justice Alexander G. Gesmundo, affirmed the Court of Appeals’ (CA) reversal of a National Labor Relations Commission (NLRC) ruling in favor of Philippine Airlines, Inc. (PAL).

The Case in Brief

The case stems from a labor complaint filed by 18 former pilots of PAL who joined a strike in 1998. The pilots alleged illegal dismissal, unfair labor practices, and non-payment of monetary benefits, including salaries, allowances, 13th month pay, and bonuses.

PAL, in defense, presented payroll documents and 13th month pay registers in an attempt to prove that payments were duly made. The Labor Arbiter and the NLRC sided with PAL and dismissed the claims.

However, the Court of Appeals ruled otherwise — and the Supreme Court agreed.

Why Payroll Listings Are Not Enough

According to the Supreme Court:

“Payroll records and vouchers, to be considered strong proof of payment, must clearly show that the employee actually received the money and when such payment was made.”

This means employers must do more than submit internal records; they need to provide external proof — such as:

• Signed acknowledgment receipts,

• Confirmations from banks that salaries were credited to the employee’s accounts, or

• Other clear indicators that the employees actually received payment.

In PAL’s case, such supporting documentation was not presented. As a result, the Court ruled that the burden of proof — which lies with the employer in labor standards cases — was not met.

What Happens Next?

The Court remanded the case to the NLRC for a detailed computation of the exact monetary benefits due to each of the 18 pilots.

This decision is a timely reminder to all employers: compliance with labor laws involves not only paying employees what is due but also maintaining proper documentation that can withstand legal scrutiny.

Key Takeaway for Employers and HR Teams

If salary payments are made through bank transfers, make sure to keep:

• Bank remittance records,

• Receipts acknowledged by the employee, or

• Statements confirming receipt of funds.

  
  

Payroll and internal pay sheets alone do not constitute sufficient proof in disputes involving monetary claims.

In any labor dispute, the employer bears the burden of proving payment — not the other way around.

Need Help With Labor Law Compliance?

At Aureada CPA Law Firm, our team of labor lawyers and CPAs is equipped to help you:

• Strengthen internal HR and payroll systems,

• Ensure compliance with DOLE regulations, and

• Defend against or proactively prevent labor disputes.

Contact us today for a consultation or audit of your employment practices.