RURAL BANK OF SAN MIGUEL (BOHOL), INC., PETITIONER, VS. HON. NATIONAL LABOR RELATIONS COMMISSION, TEODORO BONIOR, CECILIA MENDEZ, NELIA QUISMUNDO, DEMETRIA ANUTA AND PRIMO ALMED…

Rural Bank of San Miguel versus National Labor Relations Commission

The Case

This is a special civil action for certiorari brought by the Rural Bank of San Miguel (Bohol), Inc. against the National Labor Relations Commission and five of its former employees — Teodoro Bonior, Cecilia Mendez, Nelia Quismundo, Demetria Anuta, and Primo Almedilla. The employees had sued the bank for illegal dismissal and for a bundle of money claims, including service incentive leave pay and unused vacation and sick leave pay. The case matters because it fixes who carries the burden of proof in money claims for unused leave, and it reminds every reviewee that the factual findings of a quasi-judicial agency are respected only when they rest on substantial evidence.

Procedural History

The complaint was filed with the Bohol Provincial Labor Office. After conciliation failed, the labor office endorsed it to the Regional Director of Region 7, who certified it to the Regional Arbitration Branch of the National Labor Relations Commission. Labor Arbiter Felix Gaudiel rendered a decision upholding the employees, but only on service incentive leave, vacation leave, and sick leave, and only for the three-year period counted back from the filing of the complaint. The bank appealed to the National Labor Relations Commission. The Commission issued a resolution that deleted the service incentive leave award but affirmed the grant of vacation and sick leave pay. The bank's motion for reconsideration was denied. The bank then came to the Supreme Court by petition for certiorari, again questioning the award for vacation and sick leave pay.

Facts

On July 19, 1982, the five former employees filed a complaint against the bank for illegal dismissal, nonpayment of service incentive leave pay, violations of wage orders and several presidential decrees, and nonpayment of unused vacation and sick leave pay. The bank answered that all the employees had voluntarily resigned, that it had complied with the wage laws, that Teodoro Bonior had already been paid his accrued vacation and sick leave, and that the other employees had already enjoyed their vacation and sick leave.

The case was certified to the Regional Arbitration Branch. No hearing was ever held: the scheduled hearings did not materialize because the employees and their counsel failed to appear, and no further hearings were set. The employees also failed to file the required position paper. Labor Arbiter Gaudiel nonetheless ruled for the employees on the leave claims, awarding service incentive leave pay and fifteen days each of vacation and sick leave pay for the three years from July 20, 1979 to February 28, 1982, for an aggregate of twelve thousand one hundred thirty-one pesos and seventy-three centavos. Claims before July 20, 1979 were declared barred by prescription.

On appeal, the Commission deleted the service incentive leave pay but affirmed the vacation and sick leave awards, reasoning that the bank had admitted the grant of such leaves by failing to deny it. After reconsideration was denied, the bank elevated the matter to the Supreme Court.

Issues

• Whether or not the bank's admission of a vacation and sick leave policy, coupled with its claim of prior payment and enjoyment, entitled the employees to payment for unused vacation and sick leave without proof of the number of unused days.
• Whether or not the labor arbiter and the Commission could award full vacation and sick leave pay for the entire period based only on the complaint and the bank's answer, without receiving evidence on the exact unused days.
• Whether or not the factual findings of the National Labor Relations Commission bind the Supreme Court when unsupported by substantial evidence.

Applicable Provisions

Article 221 of the Labor Code, as cited in the decision, provides:

In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process.

This provision required the labor authorities to ascertain the facts objectively rather than award leave pay on the bare pleadings.

Ruling

On the first issue, the Court held that the grant of vacation and sick leave may be conceded, not so much from the lack of a specific denial in the answer but from an express admission therein. That admission, however, did not make the complaint meritorious. The bank's allegations of prior payment and enjoyment raised a real issue, and the burden fell on the parties to sustain their respective contentions.

On the second issue, the Court held that the labor arbiter erred in ruling that the bank failed to disprove the claims, for the primary and antecedent burden of proving the claims rested in the first instance on the claimants, the employees. That burden was never discharged, since the employees failed to file their position paper and no hearing was held. The Court stressed that the complaint was for recovery of unused vacation and sick leave, so it was palpable and prejudicial error to grant complete payment for all leaves for the entire period without receiving evidence on the exact number of days not used or availed of. The complaint, the Court observed, was merely a printed form reciting names, personal circumstances, periods of employment, positions, and salaries. The labor authorities should have used every reasonable means to ascertain the facts speedily and objectively, without regard to technicalities, in the interest of due process and for accuracy in the monetary awards.

On the third issue, the Court acknowledged the settled rule that factual findings of quasi-judicial agencies which have acquired expertise are generally accorded respect, and at times finality, if supported by substantial evidence. Conversely, such findings unsupported by substantial and credible evidence do not bind the Court, especially if the conclusions are imprecise and confusing. The Court tried to ferret out the facts needed for a complete and accurate computation but could not, for lack of evidentiary data. It was this paucity of factual bases that conferred merit on the petition.

Doctrine

In money claims for unused vacation and sick leave, the primary and antecedent burden of proving the claim rests in the first instance on the claimant employees, not on the employer. An employer's admission that a leave policy exists, and its claim of prior payment and enjoyment, merely raise an issue; they do not relieve the employees of proving the exact number of unused leave days. The labor arbiter and the Commission must use every and all reasonable means to ascertain the facts speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process, as Article 221 of the Labor Code commands. Finally, the factual findings of a quasi-judicial agency are accorded respect and even finality only if supported by substantial evidence; findings unsupported by substantial and credible evidence do not bind the Supreme Court.

Disposition

The Court granted the petition, annulled and set aside the Commission's resolution insofar as it awarded sick leave and vacation leave pay, and affirmed the deletion of the service incentive leave pay.

Remember This

Memorize this line: the burden of proving unused leave credits rests first on the employee, and the labor tribunals must ascertain the facts, not merely accept the pleadings. Examiners use this case to test the burden of proof in money claims and the limits of the respect given to the factual findings of quasi-judicial agencies.