FACILITIES AND SUPPLEMENTS:

Facilities shall include articles or services for the benefit of the employee or his family but
shall not include tools of the trade or articles or services primarily for the benefit of the
employer or necessary to the conduct of the employer’s business.

Value of facilities - the fair and reasonable value of board, lodging and other facilities
customarily furnished by an employer to his employees both in agricultural and non-
agricultural enterprises.

Supplements means extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages.
Mayon Hotel & Restaurant vs. Adana, [G. R. No. 157634, May 16, 2005]  The respondents
were required to eat in the hotel and restaurant so that they will not go home and there is no
interruption in the services of Mayon Hotel & Restaurant. HELD: As ruled in Mabeza, food or
snacks or other convenience provided by the employers are deemed as supplements if they
are granted for the convenience of the employer. The criterion in making a distinction
between a supplement and a facility does not so much lie in the kind (food, lodging) but the
purpose. Considering, therefore, that hotel workers are required to work different shifts and
are expected to be available at various odd hours, their ready availability is a necessary
matter in the operations of a small hotel, such as petitioners’ business. The deduction of the
cost of meals from respondents’ wages, therefore, should be removed.

Legal requirements must be complied with before deducting facilities from wages.
Mabeza vs. NLRC, [G.R. No. 118506, April 18, 1997 (271 SCRA 670)] 
FACTS:  Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991,
an inspection was made by the Department of Labor and Employment (DOLE) at Hotel
Supreme and the DOLE inspectors discovered several violations by the hotel management.
Immediately, the owner of the hotel, Peter Ng, directed his employees to execute an affidavit
which would purport that they have no complaints whatsoever against Hotel Supreme. But
Mabeza refused to certify said affidavit with the fiscal’s office so this led to her dismissal. She
sued Peter Ng and one of her complaints against him is underpayment because her wage
was less than the minimum wage. Peter Ng argued that the reason for such low payment
was because she was being given free lodging, water, electricity, and water consumption by
the hotel.  HELD: The employer simply cannot deduct the value from the employee's wages
without satisfying the following:  (a) proof that such facilities are customarily furnished by the
trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the
employee; and (c) the facilities are charged at fair and reasonable value.  Consequently, as
held in Mayon Hotel & Restaurant, even granting that meals and snacks were provided by
the hotel to its employees and indeed constituted facilities, such facilities could not be
deducted without compliance with certain legal requirements. The records are clear that
petitioners failed to comply with these requirements. There was no proof of respondents’
written authorization. Indeed, the Labor Arbiter found that while the respondents admitted
that they were given meals and merienda, the quality of food served to them was not what
was provided for in the Facility Evaluation Orders and it was only when they filed the cases
that they came to know of this supposed Facility Evaluation Orders. Considering the failure
to comply with the above-mentioned legal requirements, the Labor Arbiter therefore erred
when he ruled that the cost of the meals actually provided to respondents should be
deducted as part of their salaries, on the ground that respondents have availed themselves
of the food given by petitioners. The law is clear that mere availment is not sufficient to allow
deductions from employees’ wages.
Voluntary acceptance of facilities required.
In order that the cost of facilities furnished by the employer may be charged against an
employee, his acceptance of such facilities must be voluntary. (Section 7, Rule VII, Book III,
Rules to Implement the Labor Code).

Distinction between “facilities” and “supplements”

The benefit or privilege given to the employee which constitutes an extra remuneration over
and above his basic or ordinary earning or wage, is supplement; and when said benefit or
privilege is part of the laborer’s basic wage, it is a facility. The criterion is not so much with
the kind of the benefit or item (food, lodging, bonus or sick leave) given but its purpose.
Thus, free meals supplied by the ship operator to crew members, out of necessity, cannot be
considered as facilities but supplements which could not be reduced having been given not
as part of wages but as a necessary matter in the maintenance of the health and efficiency
of the crew personnel during the voyage.

Rule on deductibility of “facilities” or “supplements” from wages

Facilities - may be charged to or deducted from wages. 
Supplements - may not be so charged. 
State Marine Cooperation and Royal Line, Inc. vs. Cebu Seamen’s Association, Inc., [G. R.
No. L-12444, Feb. 28, 1963]Thus, when meals are freely given to crew members of a vessel
while they were on the high seas, not as part of their wages but as a necessary matter in the
maintenance of the health and efficiency of the crew personnel during the voyage, the
deductions made therefrom for the meals should be returned to them, and the operator of
the coastwise vessels affected should continue giving the same benefit.
Cebu Autobus Company vs. United Cebu Autobus Employees Association, [G. R. No. L-
9742, Oct. 27, 1955]Where the company used to pay to its drivers and conductors, who were
assigned outside of the city limits, aside from their regular salary, a certain percentage of
their daily wage, as allowance for food, the company should continue granting the said
privilege. 

GRATUITY AND ALLOWANCES

Gratuity is a gift freely given by the employer in appreciation of certain favors or services
rendered.  It is not part of wages since, strictly speaking, it is not intended as compensation
for actual work.  It is further not demandable as a matter of right.

Allowances are not part of wages; and are not included in the computation of the amount of
retirement and other benefits