Title
Loon vs. Power Master, Inc.
Case
G.R. No. 189404
Decision Date
Dec 11, 2013
Workers filed claims for unpaid wages and illegal dismissal; SC ruled in their favor, awarding backwages, salary differentials, and attorney's fees, citing employer's failure to prove just cause and payment.
unpaid wages
illegal dismissal
backwages
A

Case Summary (G.R. No. L-36081)

Factual Background

The petitioners were employed by Power Master, Inc. and Tri-C General Services and assigned as janitors and leadsmen in various Philippine Long Distance Telephone Company offices in Metro Manila. They filed a complaint for money claims alleging unpaid minimum wages, overtime, holiday and premium pays, service incentive leave, and thirteenth month pay, and alleged that respondents made them sign blank payroll sheets. On June 11, 2001, the petitioners amended their complaint to include illegal dismissal, alleging that respondents relieved them from service in retaliation for filing the original complaint. Respondents appeared sporadically before the Labor Arbiter, notably through Mr. Romulo Pacia, Jr. on April 19, 2001 and May 21, 2001, and through counsel at a preliminary mandatory conference on July 5, 2001, but did not file a position paper nor proffer evidence at the arbitral level.

Labor Arbiter Proceedings and Ruling

The Labor Arbiter ruled on March 15, 2002. The Labor Arbiter awarded the petitioners salary differential, service incentive leave, and thirteenth month pay, and granted attorneys fees pursuant to Article 111 of the Labor Code. The Labor Arbiter denied claims for backwages, overtime, holiday, and premium pays upon the petitioners’ failure to show that they rendered overtime or worked on holidays and rest days without compensation. The Labor Arbiter also found no proof of dismissal because the petitioners did not show notice of termination and were not barred from entering respondents’ premises.

NLRC Proceedings and Ruling

Both parties appealed to the NLRC. The respondents contested jurisdiction on the ground of lack of personal service and contended they had paid the claimed amounts, attaching photocopied and computerized payrolls, ATM deposit lists, and documents purporting to show dismissal for cause with due process. The petitioners moved to expunge the respondents’ unverified and belated supplemental appeal and to strike the attached payrolls as fabricated and bearing forged signatures. In a resolution dated November 27, 2003, the NLRC partially sustained the respondents. The NLRC affirmed awards of holiday pay and attorneys fees, found that the Labor Arbiter acquired jurisdiction by voluntary appearance, admitted the respondents’ documentary evidence filed for the first time on appeal, and vacated the Labor Arbiter’s awards of salary differential, thirteenth month pay, and service incentive leave, giving weight to respondents’ payrolls and ATM lists. The NLRC also found that the petitioners were validly dismissed for serious misconduct and willful disobedience for resisting transfers and failing to attend trainings.

Court of Appeals Ruling

The CA affirmed the NLRC in its decision dated June 5, 2009 and denied the petitioners’ motion for reconsideration by resolution dated August 28, 2009. The CA held that the petitioners were afforded substantive and procedural due process and that they deliberately failed to explain their side, resisted transfers, and violated company rules. The CA likewise upheld the NLRC’s assessment of the monetary claims based on the payrolls and ancillary documents admitted on appeal.

Issues Presented to the Supreme Court

The Supreme Court identified the core issues: whether the CA erred in not finding that the NLRC committed grave abuse in giving due course to the respondents’ appeal; whether the respondents perfected their appeal before the NLRC and whether the NLRC properly allowed and admitted the supplemental appeal; whether the respondents were estopped from submitting evidence for the first time on appeal; whether the petitioners were illegally dismissed and thus entitled to backwages; whether the petitioners were entitled to salary differential, overtime, holiday, premium, service incentive leave, and thirteenth month pays; and whether attorneys fees were proper.

Petitioners’ Contentions

The petitioners urged that the CA and NLRC committed grave abuse by admitting and crediting respondents’ documentary evidence presented for the first time on appeal, that respondents’ appeal was not perfected because the appeal bond was issued by a bonding company no longer accredited at the time of NLRC action, and that the supplemental appeal was unverified and belated. The petitioners reiterated their allegations that the respondents fabricated payrolls and forged signatures.

Respondents’ Position

Respondents contended that the petitioners raised the appeal bond issue for the first time on appeal and that the petitioners’ other arguments had been fully passed upon and found unmeritorious by the NLRC and the CA. Respondents maintained that they had paid wages and had valid cause and due process for termination.

Legal Analysis — Appeal Bond and Perfection of Appeal

The Court analyzed perfection of the respondents’ appeal under Paragraph 2, Article 223 of the Labor Code, which requires an appeal involving a monetary award to be perfected upon posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission. The respondents had posted a surety bond issued by Security Pacific Assurance Corporation on June 28, 2002, when Security Pacific was accredited. The NLRC later revoked Security Pacific’s accreditation on February 16, 2003. The Court held that the revocation operated prospectively and did not prejudice respondents who relied in good faith on existing accreditation, citing Del Rosario v. Philippine Journalists, Inc. Nevertheless, the respondents were required to post a new bond issued by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure, because a bond must remain effective until final disposition or satisfaction of the award.

Legal Analysis — Supplemental Appeal and Verification

The Court addressed the NLRC’s admission of the respondents’ supplemental appeal filed on January 3, 2003 and its rulings on verification. The CA had reasoned that verification is a formal, not jurisdictional, requirement and that the supplemental appeal was an addendum to a previously verified memorandum on appeal. The Supreme Court agreed that verification of a supplemental pleading is not jurisdictional, and that deviation from technicalities may be tolerated in favor of substantial due process. The Court nonetheless emphasized that liberality in labor procedure is qualified by two requirements: the party must adequately explain the delay in submission of evidence, and the party must sufficiently prove the allegations the evidence seeks to establish.

Legal Analysis — Admission of Evidence on Appeal and Grave Abuse Finding

Applying those controlling principles, the Court found grave abuse in the NLRC’s admission and reliance on respondents’ documentary evidence offered for the first time on appeal. The Court held that respondents failed to adequately explain their delay because they had voluntarily appeared before the Labor Arbiter and knew of the pendency of the proceedings yet chose not to participate or to present evidence at the arbitral level. The Court further held that respondents failed to sufficiently prove the authenticity of their payrolls and ATM lists because they offered photocopied and computerized documents instead of originals, despite petitioners’ allegation of forgery and the availability of specimen signatures. The Court invoked the presumption that willful suppression of evidence indicates that production would be adverse, citing the Rules of Court, Rule 131, Section 3(e). The NLRC also improperly took judicial notice that many persons use multiple signatures; the Court rejected that judicial notice in the face of contested claims of forgery and cited Rules of Court, Rule 129, Section 2.

Burden of Proof on Dismissal and Wage Claims

The Court reiterated that the employer bears the burden of proving just cause and due process in termination cases. Because respondents failed to discharge that burden, the Court reversed the NLRC and the CA’s findings that the petitioners were dismissed for just cause and had been afforded procedural due process. The Court also reversed the NLRC and CA on the monetary awards that the Labor Arbiter had granted and later vacated, holding that the burden of proving payment of salary differentials, service incentive leave, and thirteenth month pay rests with the employer because payrolls and related records are primarily in the employer’s custody. Thus, the petitioners were entitled to full backwages, salary differential, service incentive leave, holiday, and thirteenth month pays, computed

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