Proof of Payment of Wages to Employees Done Through Electronic Payroll or Bank Credit
In labor disputes concerning unpaid monetary claims, the burden of proof regarding payment obligations rests firmly on the employer (Pigcaulan vs. Security and Credit Investigation, Inc., G.R. No. 173648, January 16, 2012). An established legal rule dictates that one who pleads payment has the obligation to prove it. To successfully discharge this burden in labor cases, the employer must present substantial evidence demonstrating that the financial obligations due to employees have been settled. While traditional proof often involves signed payroll sheets or vouchers showing employee receipt, the modern practice of automatic salary crediting (ATM payroll) introduces novel evidentiary challenges that necessitate a stricter standard of proof from the employer. Thus, when relying on automatic bank crediting to substantiate payment, employers must provide evidence that the payroll advisory was actually transmitted to and received by the bank; mere presentation of internal payroll records is insufficient.
The Minimum Evidentiary Requirement in Bank Crediting
The prevailing judicial standard recognizes that proving payment through an existing bank crediting arrangement requires substantial evidence that establishes the successful execution of the transaction.
Hence, in the case of Philippine Airlines, Inc. vs. Ahmee, G.R. No. 221065, April 7, 2025 (“PAL Case”), the Supreme Court enunciated thatthe standard stems from understanding the multi-stage nature of electronic payroll: (1) the employer prepares the payroll reflecting employee names, accounts, and amounts; (2) the employer submits the corresponding payroll or crediting advisory to the bank; and (3) the bank credits the funds to the employees’ accounts.
In the context of this arrangement, the employer’s obligation is not merely the preparation of internal records, but the final step of ensuring the transfer occurs. Therefore, as stated in the PAL Case, to prove payment of salaries and benefits, the employer must submit evidence that it transmitted a copy of the payroll or advisory to the bank, and that such was duly received by the latter.
Insufficiency of Internal Payroll Records
In the PAL Case, it was held that Internal payroll records prepared by the employer alone, even if indicating the amounts due, are insufficient to prove payment via bank crediting because there was no indication of transmittal or corresponding advisory to the bank for the subsequent crediting of the amounts to the employees’ respective bank accounts.
Similarly, reliance on general payroll sheets or vouchers fails when they do not show receipt of payment by the employee, the date, and the period covered. For instance, where an employer failed to cover all periods for which an employee claimed non-payment of benefits (such as holiday pay, service incentive leave pay, and 13th month pay) through submitted payroll sheets, payment could not be considered proven (Pro Maximum Security Agency, Inc. vs. Padojinog, G.R. No. 210184, February 05, 2014).
Proof of Transmission and Receipt: The Concrete Requirement
As mandated in the PAL Case, the minimum requirement to prove payment in an electronic bank crediting system is the submission by the employer of the payroll or bank advisory, or the acknowledgment receipt issued by the bank.
This necessary documentation confirms that the funds or instructions for crediting were successfully transferred from the employer to the financial institution. Only when the employer submits valid proof of receipt by the crediting bank does the evidentiary burden shift to the employee to prove that their bank accounts were not actually credited with the amounts in dispute Without evidence showing the transmission and acknowledgment of the payroll instructions to the bank, the employer is unable to bridge the gap between internal record-keeping and actual wage disbursement, thus failing to prove payment by the required standard of substantial evidence.
The transition to automated payroll necessitates that employers employing bank crediting adapt their evidentiary practices in labor disputes. Given that the burden of proving payment rests on the employer, it cannot rely solely on internal payroll sheets detailing employee compensation. The submission of the payroll or advisory itself, coupled with the corresponding acknowledgment from the bank demonstrating the successful transmission and receipt of the crediting instruction, is the minimum requirement to constitute substantial evidence of payment. This strict legal requirement safeguards employee rights by ensuring that the payment process is fully traceable and verifiable, treating the electronic instruction just as meticulously as a physically signed payroll receipt.
About Nicolas and De Vega Law Offices
Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.
