CARE MAINTENANCE SPECIALIST, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND ROSELA SABANDAL, RESPONDENTS.

Care Maintenance Specialist versus National Labor Relations Commission

The Case

This is a labor case in which Care Maintenance Specialist, Incorporated, the employer, asks the Supreme Court to overturn the National Labor Relations Commission and to set aside a finding that its utility worker, Rosela Sabandal, was illegally dismissed. The employer insists that she resigned voluntarily and signed a Release and Quitclaim, and that she is therefore entitled to nothing. The worker says she was made to sign a paper she never read, and that the paper turned out to be a resignation letter. The case matters because it gathers in one place the rules on the validity of quitclaims, the meaning of resignation, and the burden of proof in illegal dismissal cases — three staples of every labor examination.

Procedural History

Rosela Sabandal filed a complaint for illegal dismissal and non-payment of thirteenth month pay before the National Labor Relations Commission. The Labor Arbiter, Quintin Cueto the Third, ruled in her favor, finding that she had been illegally dismissed and ordering the employer and its president, Josephine Melad, jointly and severally liable for backwages, separation pay, and thirteenth month pay in the total amount of 134,148 pesos and 33 centavos, while denying damages for lack of merit.

The employer appealed to the National Labor Relations Commission. The Commission dismissed the appeal for lack of merit, but absolved Josephine Melad from personal liability. It held that the employer failed to prove that the resignation was voluntary, and it gave no weight to the Release and Quitclaim. The employer's motion for reconsideration was denied. The employer then came to the Supreme Court by a petition for certiorari under Rule 65, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Commission.

Facts

Rosela Sabandal had been a utility worker of Care Maintenance Specialist since January 2010, assigned to companies with which her employer had service contracts. In March 2010 she was accused of consuming a cake without permission at the call center where she was assigned. On the twenty-second of March she was told not to report to her assignment but to the employer's office, where she was made to write an explanation for a whole day. When she submitted it, she was directed to sign a piece of paper she had no opportunity to read or understand. After she signed, she was told that it was a resignation letter. She protested.

The employer told a different story. It said that on the sixteenth of March, while assigned to Tiger Philippines Corporation, Sabandal was caught on camera loitering and talking to the security guard for more than an hour, and that the client company verbally asked for her immediate relief. The employer says it informed her of the charges so she could air her side, and that upon receiving the violation notice she asked for a graceful exit so she could keep a good employment record, promising to file a resignation letter and agreeing to sign a Release and Quitclaim. The employer adds that the quitclaim was executed before a notary public and so carries a presumption of regularity.

What is not disputed is the chronology that the Commission found telling: the quitclaim was executed on the nineteenth of March, but she was notified of the alleged camera infraction only on the twentieth of March. She never submitted a resignation letter. Instead, on the twenty-second of June 2010, she filed her complaint for illegal dismissal.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion amounting to lack or excess of jurisdiction in declaring that Rosela Sabandal was illegally dismissed.
• Whether or not the National Labor Relations Commission committed grave abuse of discretion amounting to lack or excess of jurisdiction in awarding her backwages and separation pay.

Applicable Provisions

The decision does not quote a statute verbatim; it applies settled doctrine on quitclaims, resignation, and the burden of proof, which the Court states in its own words as follows:

The law generally looks with disfavor on quitclaims and releases by employees who have been pressured into signing them by unscrupulous employers seeking to evade legal responsibilities and frustrate just claims of employees.

This is the starting point: a quitclaim is presumed suspect, and the employer must overcome that presumption.

In exceptional cases, courts accept the validity of quitclaims executed by employees if the employer is able to prove that: (1) the employee executed a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. The burden of proving that the quitclaim was voluntarily entered into rests on the employer.

These four requisites, and the burden placed on the employer, decide the first issue.

Resignation is the voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment. It must be with the intention of relinquishing the position, accompanied by an act of abandonment. The act of filing a complaint for illegal dismissal shortly after leaving the company is difficult to reconcile with voluntary resignation.

This defines resignation and supplies the test of voluntariness.

Moreover, the burden of proof in illegal dismissal cases, is on the employer. The employer's case succeeds on the strength of his evidence and not on the weakness of the employee's.

This fixes who must fail when the evidence is evenly balanced.

Ruling

On the first issue, the Court found no merit in the petition and held that the Commission did not gravely abuse its discretion in finding an illegal dismissal. The employer failed to prove that the quitclaim met the four requisites. First, voluntariness was not shown: Sabandal stated that she was directed to sign a paper she had no opportunity to read or understand, which belied the claim that she signed knowingly and voluntarily. Second, the consideration was not credible or reasonable: the Labor Arbiter found it unbelievable that she would resign in exchange for nothing, given the hard times she faced. Third, her conduct contradicted resignation: filing a complaint for illegal dismissal shortly after leaving is difficult to reconcile with a voluntary relinquishment of employment.

The Court also relied on the chronology: she was notified of the alleged infraction only on the twentieth of March, yet she had already executed the quitclaim on the nineteenth. And on the burden of proof, the Court held that the employer's case must succeed on the strength of its own evidence, not on the weakness of the employee's, and that the employer failed to accomplish this.

On the second issue, because the dismissal was illegal, the awards of backwages and separation pay stood. The Court noted that its review of Commission decisions under Rule 65 is confined only to issues of lack or excess of jurisdiction and grave abuse of discretion, and finding neither, it affirmed.

Doctrine

• Quitclaims and releases by employees are frowned upon as contrary to public policy, because employer and employee do not stand on equal footing; the law deems the employee not to have waived any right.
• A quitclaim is valid only in exceptional cases, where the employer proves all four requisites: voluntariness, absence of fraud or deceit, a credible and reasonable consideration, and that the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law.
• The burden of proving the voluntariness of a quitclaim rests on the employer.
• Resignation requires the intention to relinquish the position, accompanied by an act of abandonment; the filing of a complaint for illegal dismissal shortly after leaving is difficult to reconcile with voluntary resignation.
• In illegal dismissal cases the burden of proof is on the employer, whose case succeeds on the strength of its own evidence and not on the weakness of the employee's.
• Judicial review of National Labor Relations Commission decisions under Rule 65 is confined to lack or excess of jurisdiction and grave abuse of discretion.

Disposition

The petition was dismissed for lack of merit, and the Commission's decision and resolution were affirmed; Rosela Sabandal prevailed, and the awards of backwages, separation pay, and thirteenth month pay stood.

Remember This

Memorize the four requisites of a valid quitclaim and the single sentence that the burden of proving voluntariness rests on the employer. Examiners use this case whenever a resignation letter or quitclaim is offered to defeat a claim for illegal dismissal, and whenever they test the Rule 65 standard of grave abuse of discretion in labor cases.