WILGEN LOON, JERRY ARCILLA, ALBERT PEREYE, ARNOLD PEREYE, EDGARDO OBOSE, ARNEL MALARAS, PATROCINO TOETIN, EVELYN LEONARDO, ELMER GLOCENDA, RUFO CUNAMAY, ROLANDO SAJOL, ROLANDO A…

Loon versus Power Master, Incorporated

The Case

This is a labor case brought by twenty-nine janitors and leadsmen against their employers, Power Master, Incorporated and Tri-C General Services, along with the corporate officers, the spouses Homer and Carina Alumisin. The employees filed a complaint for money claims and later amended it to include illegal dismissal, alleging they were fired in retaliation for filing their original complaint. The case matters because it clarifies the strict requirements for admitting evidence for the first time on appeal before the National Labor Relations Commission, and it reaffirms the employer's heavy burden of proof in both illegal dismissal and money claim cases.

Procedural History

The case began before the Labor Arbiter, who partially ruled in favor of the employees, awarding salary differential, service incentive leave, and thirteenth month pay, but denying claims for backwages, overtime, holiday, and premium pays. Both parties appealed to the National Labor Relations Commission. The NLRC reversed the Labor Arbiter in part, allowing the employers to submit evidence for the first time on appeal and ruling that the employees were lawfully dismissed. The employees then filed a petition for certiorari with the Court of Appeals under Rule 65 of the Rules of Court, but the Court of Appeals affirmed the NLRC's ruling. The employees elevated the case to the Supreme Court via a petition for review on certiorari under Rule 45.

Facts

The employers assigned the employees as janitors and leadsmen in various offices of the Philippine Long Distance Telephone Company in Metro Manila. The employees filed a complaint for unpaid wages, alleging they were not paid minimum wages, overtime, holiday, premium, service incentive leave, and thirteenth month pays, and that they were made to sign blank payroll sheets. They later amended the complaint to include illegal dismissal, claiming they were relieved from service in retaliation for filing the original complaint.

The employers did not participate in the proceedings before the Labor Arbiter, except for a few appearances by counsel, and they never filed a position paper or presented evidence in their defense. On appeal to the NLRC, however, they attached photocopied and computerized payroll sheets and other documents to their memorandum on appeal and to an unverified supplemental appeal, claiming these proved payment of wages and valid dismissal. The employees objected, arguing the supplemental appeal was unverified, belatedly filed, and that the attached documents bore forged signatures.

Issues

• Whether or not the employers perfected their appeal before the National Labor Relations Commission despite the subsequent revocation of their bonding company's accreditation.
• Whether or not the National Labor Relations Commission properly allowed the employers' unverified supplemental appeal.
• Whether or not the employers were estopped from submitting pieces of evidence for the first time on appeal.
• Whether or not the employees were illegally dismissed and thus entitled to backwages.
• Whether or not the employees are entitled to salary differential, overtime, holiday, premium, service incentive leave, and thirteenth month pays.
• Whether or not the employees are entitled to attorney's fees.

Applicable Provisions

Article 223 of the Labor Code, on appeal from Labor Arbiter decisions, provides:

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

This provision governs whether the employers perfected their appeal, since the bond must come from an accredited company at the time of posting.

Article 111 of the Labor Code, on attorney's fees, provides:

In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney's fees which exceed ten percent of the amount of wages recovered.

This provision supports the award of attorney's fees in favor of the employees for the unlawful withholding of their wages.

Ruling

On the first issue, the Court held that the employers perfected their appeal. Although the bonding company's accreditation was later revoked, the revocation has prospective application only. The employers relied in good faith on the company's then subsisting accreditation. However, the Court directed the employers to post a new bond from an accredited company, citing the NLRC rule that a bond must remain valid until the case is finally decided.

On the second issue, the Court ruled that the NLRC properly gave due course to the supplemental appeal. Neither the laws nor the rules require verification of a supplemental appeal, and verification is merely a formal, not jurisdictional, requirement. The supplemental appeal was also timely filed, as the NLRC had extended the deadline upon the employers' motion.

On the third issue, the Court reversed the NLRC and the Court of Appeals. While evidence may be admitted for the first time on appeal in labor cases, this liberality is qualified by two requirements: the party must adequately explain the delay in submitting evidence, and the party must sufficiently prove the allegations sought to be proven. The employers failed both requirements. They claimed ignorance of the proceedings despite counsel's appearances, and they presented only photocopied documents despite allegations of forgery, failing to produce the originals for inspection.

On the fourth issue, the Court held that the employees were illegally dismissed. The burden of proving just and valid cause for dismissal rests on the employer, and the employers failed to discharge this burden. The Court quoted the applicable rule on the employer's burden:

The employer's cause can only succeed on the strength of its own evidence and not on the weakness of the employee's evidence.

On the fifth issue, the Court awarded salary differential, service incentive leave, holiday, and thirteenth month pays, since the burden of proving payment of these money claims rests on the employer. However, the Court denied overtime and premium pays for holidays and rest days, because the burden of proving entitlement to these rests on the employee, and the employees failed to show they actually rendered overtime or holiday work.

On the sixth issue, the Court awarded attorney's fees equivalent to ten percent of the withheld wages, pursuant to Article 111 of the Labor Code, since this was an action for unlawful withholding of wages.

Doctrine

• The revocation of a bonding company's accreditation is prospective in application, so an appeal perfected with a bond from a then-accredited company is valid.
• Verification of a supplemental appeal is a formal, not jurisdictional, requirement, and its absence does not invalidate the pleading.
• Evidence may be admitted for the first time on appeal before the NLRC only if the party adequately explains the delay in its submission and sufficiently proves the allegations sought to be proven.
• In illegal dismissal cases, the burden of proving just and valid cause for dismissal rests on the employer; failure to discharge this burden results in a finding that the dismissal is unjustified.
• In money claim cases, the burden rests on the employer to prove payment, since the pertinent records are in the employer's custody and control.
• In claims for overtime and premium pays, the burden rests on the employee to prove entitlement, since these are not incurred in the normal course of business.

Disposition

The Supreme Court reversed and set aside the decisions of the Court of Appeals and the NLRC, and remanded the case to the Labor Arbiter solely for the computation of the employees' full backwages, salary differential, service incentive leave, holiday, thirteenth month pays, and attorney's fees, with the employers directed to post a satisfactory bond.

Remember This

Remember the two-part test for admitting evidence for the first time on appeal in labor cases: adequate explanation of delay plus sufficient proof of the allegations. Examiners like to use this case to test the allocation of burden of proof in labor cases, especially the distinction between money claims, where the employer must prove payment, and overtime claims, where the employee must prove entitlement.