The Supreme Court has ruled that employers must prove salary payments made through banks by showing that payroll records were submitted to and received by the bank.

In a decision dated 7 April 2025, and penned by Chief Justice Alexander G. Gesmundo, the high court’s First Division upheld a Court of Appeals ruling that Philippine Airlines, Inc. (PAL) failed to sufficiently prove payment of salaries and 13th month pay to its former employees.

The ruling said the Payroll Listing and 13th Month Pay Payroll Register presented by PAL were not enough, as they did not provide proof of actual receipt of payment by the employees.

The case stemmed from a 1998 strike by 49 PAL pilots, who later filed a complaint with the National Labor Relations Commission (NLRC) against PAL.

The employees claimed illegal dismissal, unfair labor practice, and non-payment of various monetary benefits such as salaries, allowances, and bonuses.

The Labor Arbiter dismissed the claims of illegal dismissal and unfair labor practice. For the monetary claims, PAL presented payroll documents to prove payment, which were accepted by both the Labor Arbiter and the NLRC.

The CA, though, reversed the ruling, stating that the documents were not sufficient proof of payment.

The high bench upheld the CA’s decision, emphasizing that payroll records and vouchers can only be considered strong proof of payment if they clearly show that the employees actually received the money and when the payment was made.

For bank-based salary payments, the SC noted there were three stages: preparing the payroll, submitting this to the bank, and crediting the salaries to the employees’ bank accounts.

To prove payment, employers must show evidence of the second stage: that they transmitted a copy of the payroll or advisory to the bank, and that the bank received it.

In PAL’s situation, the documents indicated payroll preparation but did not show submission to or receipt by the bank, failing to demonstrate actual payment.

The case was returned by the SC to the NLRC to determine the exact amount owed to the former employees.