JESUS B. SALAYAO, ALBERTO GONDRAN, GELO MONDOY, ALBERTO MENDOZA, PAQUITO NIANGAR, AURELIO RITAGA, SILVESTRE SERGIO ABELADA, HENRY GALLEGO, AND ANTONIO ARAGON, PETITIONERS, VS. T…

Salayao versus United Dockhandlers

The Case

This is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, brought by nine port workers against United Dockhandlers, Inc., their former employer, and against the National Labor Relations Commission as public respondent. The petitioners assail the Commission's decision and resolution on grounds of grave abuse of discretion amounting to lack or excess of jurisdiction. The case matters because it fixes two working rules every labor lawyer must carry into the examination room: the burden of proving payment of money claims rests on the employer, and the reckoning point for retirement and separation benefits is the date of original employment, not the date of a later absorption by another entity.

Procedural History

The petitioners filed a complaint for non-payment of retirement benefits and other money claims before the arbitration branch of the National Labor Relations Commission. On February 28, 2011, Labor Arbiter Edgardo M. Madriaga rendered judgment in favor of the petitioners, directing United Dockhandlers to pay separation or retirement pay computed from the dates the workers were originally hired, plus attorney's fees.

United Dockhandlers appealed to the National Labor Relations Commission. The petitioners moved to dismiss the appeal as filed out of time. On January 20, 2012, the Commission affirmed the Labor Arbiter's decision but modified it, reckoning the workers' employment from October 1, 2001 for purposes of computing the award. The petitioners' motion for reconsideration was denied in a resolution dated July 25, 2012. The petitioners then came to the Supreme Court by petition for certiorari under Rule 65.

Facts

On various occasions between 1973 and 1979, the petitioners were hired by United Dockhandlers, Inc., an arrastre and stevedoring company operating in several piers of the Manila North Harbor. On April 15, 2000, the petitioners were absorbed by the Philippine Ports Authority after it took over the arrastre and stevedoring services in the North Harbor.

On November 19, 2009, the Philippine Ports Authority entered into a contract with Manila North Harbor Port, Inc. for the development, management, operation and maintenance of the Manila North Harbor. Section 6.01 of that agreement provided for the absorption of port labor, and it stated that the absorbed laborers shall be considered as new hirees governed by new employment contracts. On March 25, 2010, Manila North Harbor Port, Inc. wrote the accredited labor union that it was willing to pay past services benefits equivalent to twenty-six days per year of service, without prejudice to the workers' claims against their previous employers then pending before the National Labor Relations Commission. A memorandum of agreement followed on March 30, 2010, under which the company would advance payment of past service benefits to all absorbed employees.

In April 2010, thirty-nine port workers, including the petitioners, filed individual applications for optional retirement with United Dockhandlers. United Dockhandlers denied all of them, prompting the complaint for non-payment of retirement benefits and other money claims. The petitioners invoked the collective bargaining agreement between United Dockhandlers and their union, which stipulated a uniform one month for every year of service for either separation pay or retirement pay. United Dockhandlers defended on the ground that the memorandum of agreement had transferred the workers' claims to Manila North Harbor Port, Inc., and that in any event the benefits could accrue only from October 1, 2001.

Issues

• Whether or not the appeal of United Dockhandlers to the National Labor Relations Commission was filed out of time, and whether or not the Commission committed grave abuse of discretion in entertaining it.
• Whether or not the reckoning of the petitioners' employment for computing separation pay should be October 1, 2001 rather than the dates of their original employment.
• Whether or not the Commission gravely erred in applying liberal construction of the Labor Code in favor of the employer and against the workers.
• Whether or not the Commission gravely erred in not granting the writ of execution on the ground that the Labor Arbiter's decision had already become final and executory.

Applicable Provisions

Section 6.01 of the contract between the Philippine Ports Authority and Manila North Harbor Port, Inc. provides:

Section 6.01 – Absorption of Port labor – Subject to the consent of the port of labor/workers at the Manila North Harbor and/or their respective unions, the CONTRACTOR shall absorb the existing port labor as may be determined by the Joint Committee taking into consideration the list of port labor/workers set out in the Contract Documents. The absorbed laborers shall be considered as new hirees and their employment with the CONTRACTOR shall be governed by new employment contracts.

This clause is the source of the employer's theory that the workers' service began anew, a theory the Court rejects as a basis for cutting off the petitioners' prior service with United Dockhandlers.

Ruling

On the first issue, the Court acknowledged that there were two conflicting certifications from the Office of the Postmaster on the date United Dockhandlers received the Labor Arbiter's decision, and that the Labor Arbiter had inadvertently sent the copy to the former address of the employer's counsel despite a notice of change of address. The service was therefore improper. Invoking the principle that litigations must be decided on their merits and not on technicality, and that labor officials are enjoined to use every reasonable means to ascertain the facts speedily and objectively without technicalities of law or procedure, all in the interest of due process, the Court chose to decide the petition on the merits rather than on the timeliness of the appeal.

On the second issue, the Court held that the resolution of the controversy hinges on the reckoning period for the computation of separation and retirement pay. The Commission had relied on its earlier decision in another case, but the Court found that reliance misplaced, because that ruling rested on documentary proof and a tacit admission that the claims there had been paid by the Philippine Ports Authority, while this case involves different parties and different evidence. The Court then restated the rule on the burden of proof:

It is settled that as a general rule, a party who alleges payment as a defense has the burden of proving it.

The Court explained that the personnel files, payrolls, records and remittances that would show payment are not in the possession of the worker but in the custody and absolute control of the employer. Only when the debtor introduces evidence that the obligation has been extinguished does the burden shift to the creditor. Here, United Dockhandlers presented no evidence that the petitioners had received their benefits; the memorandum of agreement and the checks and receipts did not show that these particular petitioners were paid. The employer therefore failed to discharge its burden, and the Court sustained the Labor Arbiter's computation accruing from the dates of original employment.

On the third and fourth issues, the Court found that the Commission's rulings amounted to grave abuse of discretion, defined as capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, or exercise of power in an arbitrary or despotic manner by reason of passion, prejudice or personal hostility, so patent and gross as to amount to an evasion of a positive duty.

Doctrine

One who pleads payment has the burden of proving it. In money claims, the employer bears the burden of showing with legal certainty that the obligation has been discharged, because the payrolls and personnel records are in the employer's custody and absolute control. Only after the debtor introduces evidence of extinguishment does the burden shift to the creditor. Any doubt arising from the evaluation of evidence as between employer and employee must be resolved in favor of the employee. Consequently, a worker's separation and retirement benefits are computed from the date of original employment, and a later absorption by another entity does not erase prior service for purposes of the employer's liability.

Disposition

The petition was granted; the Commission's decision and resolution were annulled and set aside, and the Labor Arbiter's decision of February 28, 2011 was reinstated.

Remember This

Memorize the line: the burden of proving payment of monetary claims rests on the employer, not on the worker to prove non-payment. Examiners use this case to test the burden of proof in money claims and the reckoning of service for retirement benefits after a change of employer.