Agapito vs. Aeroplus Multi-Services, Inc.

While technical rules of procedure are not strictly applied in labor cases, evidence submitted for the first time on appeal before the NLRC may only be admitted if the submitting party adequately explains the delay and sufficiently proves the allegations sought to be proven; absent any justification for belated submission, the admission of such evidence violates due process and fair play. Based on the untainted evidence on record, an employee verbally told by management that he was terminated and ordered out of the office was illegally dismissed, entitling him to backwages, separation pay in lieu of reinstatement, monetary benefits, damages, and attorney's fees.

Respondent Aeroplus Multi-Services, Inc. is a corporation engaged in janitorial and manpower services. It hired petitioner Marlon Butial Agapito in February 2004 as a housekeeper with a daily wage of ₱466.00, subject to a monthly deduction of ₱200.00 as cash bond. The dispute arose from the termination of petitioner's employment after more than ten years of service, following an altercation with his immediate supervisor during a company meeting and the subsequent filing of an insubordination charge. The case traversed the National Labor Relations Commission and the Court of Appeals before reaching the Supreme Court via a Petition for Review on Certiorari, with the central question being whether the NLRC gravely abused its discretion in admitting belatedly submitted evidence and whether petitioner was illegally dismissed.

Respondent Aeroplus Multi-Services, Inc. is a corporation engaged in janitorial and manpower services. It hired petitioner Marlon Butial Agapito in February 2004 as a housekeeper with a daily wage of ₱466.00, subject to a monthly deduction of ₱200.00 as cash bond.

On December 30, 2014, Aeroplus conducted a meeting with its employees. During the open forum, petitioner asked his immediate supervisor George Constantino why the treatment of employees was unfair, noting that others were not required to submit written explanations even when late, while petitioner and his group were required to do so even for a 30-minute tardiness. Constantino retorted accusing petitioner of spying on co-workers, criticized his work performance, called him a complainer, and told him to leave if he did not like the rules. Petitioner explained that he was merely raising a valid concern. On January 5, 2015, petitioner reported the incident to Aeroplus' personnel office. Constantino found out about the report and issued petitioner a letter memorandum for insubordination. On February 13, 2015, Aeroplus suspended petitioner until March 3, 2015.

When petitioner reported for work on March 3, 2015, Aeroplus' OIC-Personnel Darrel Mendoza told him, "Wala na tiwala sayo ang Management kaya tanggal ka na!" When asked to explain, Mendoza merely responded, "Basta tanggal ka na!" and ordered him to get out of the office. Petitioner thereafter filed a complaint with the NLRC for illegal dismissal, illegal suspension, and money claims.

Before the Labor Arbiter, petitioner alleged that he was suspended and subsequently dismissed without just cause and due process, that Aeroplus had no grounds under Article 282 of the Labor Code for termination, that the twin notice requirement was not complied with, and that he was entitled to separation pay, 13th month pay, service incentive leave pay, reimbursement of cash bond, attorney's fees, and moral and exemplary damages. Aeroplus countered that the complaint was factually baseless, that petitioner had a long history of absences and insubordination resulting in loss of trust and confidence, that it never issued a written notice of termination but only a notice of violation with warning, and that his monetary claims were baseless. Notably, Aeroplus did not submit any controverting affidavits from Constantino or Mendoza before the Labor Arbiter, and even manifested that it was not filing a reply to petitioner's position paper.

The Labor Arbiter found Aeroplus liable for illegal dismissal, crediting petitioner's categorical and detailed account of the verbal termination by Mendoza, and noting that Aeroplus failed to adduce substantial evidence to justify loss of trust and confidence. On appeal, however, the NLRC reversed, giving credence to sworn statements of Mendoza and Constantino — submitted for the first time on appeal — which denied the utterances attributed to them. The Court of Appeals affirmed.

• Due Process and Fair Play: Petitioner faulted the Court of Appeals for ignoring that he was verbally dismissed without just cause and in violation of his right to due process. He asserted that although strict adherence to technical rules is not required in labor cases, the requirements of equity and due process must still be complied with.
• Improper Admission of Belated Evidence: Petitioner argued that the belated and unjustified submission of the respective Sinumpaang Salaysay of Constantino and Mendoza should not have been allowed by the NLRC, aside from the fact that the same are utterly self-serving.
• Entitlement to Monetary Benefits: Petitioner maintained that as he was illegally dismissed, he is entitled to the monetary benefits granted by the Labor Arbiter.

• No Illegal Dismissal: Aeroplus countered that there was no illegal dismissal to speak of, considering the Sinumpaang Salaysay of Constantino and Mendoza belying petitioner's claims. It asserted that it had adduced substantial evidence to support its defense that petitioner was never dismissed.
• Liberality of Procedural Rules: Aeroplus argued that resort to technicalities resulting in the dismissal of cases is disfavored because litigations should be decided on the merits and not on mere technicalities, and that technical rules of procedure should not be applied to a labor case where the result would be detrimental to either party.

• Admissibility of Belatedly Submitted Evidence: Whether the NLRC committed grave abuse of discretion in admitting and according weight to the sworn statements of Constantino and Mendoza submitted for the first time on appeal without any justification for the delay.
• Illegal Dismissal: Whether petitioner was illegally dismissed from employment based on the remaining untainted evidence on record.
• Monetary Awards and Damages: Whether petitioner is entitled to backwages, separation pay, service incentive leave pay, 13th month pay, reimbursement of cash bond, moral and exemplary damages, and attorney's fees.

• Admissibility of Belatedly Submitted Evidence: Yes, the NLRC committed reversible error. The liberal policy on procedural rules in labor cases is qualified by two requirements: the party must adequately explain any delay in the submission of evidence and must sufficiently prove the allegations sought to be proven. Aeroplus offered no explanation for the delayed submission.
• Illegal Dismissal: Yes, petitioner was illegally dismissed. The untainted evidence on record — particularly the categorical account of the verbal dismissal by Mendoza — established termination without just cause and without due process.
• Monetary Awards and Damages: Yes, petitioner is entitled to full backwages, separation pay in lieu of reinstatement, service incentive leave pay, 13th month pay, reimbursement of illegally deducted cash bond with legal interest, moral and exemplary damages of ₱20,000.00 each, and attorney's fees of 10% of the total monetary award.

• Admissibility of Belatedly Submitted Evidence: While strict adherence to technical rules is not required in labor cases, this liberal policy must still conform to the basic principles of fair play, justice, and due process. In Wilgen Loon vs. Power Master, Inc., the Court ordained that the liberality of procedural rules is qualified by two requirements: (1) a party should adequately explain any delay in the submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven. Here, Aeroplus submitted the sworn statements of Mendoza and Constantino for the first time on appeal without asking for leave or presenting any explanation for the belated submission. Worse, Aeroplus had kept mum before the Labor Arbiter and even manifested that it was not filing a reply to petitioner's position paper. The delayed submission sans any valid justification was repugnant to the basic tenets of justice, fair play, and due process. Moreover, the affidavits contained a plain denial of petitioner's prompt, positive, and detailed narrative and were simply self-serving, hence devoid of probative weight. The Court relied on MORESCO II vs. Cagalawan, where a belatedly submitted letter-request without valid explanation cast doubt on its credibility, as it could have been fabricated for the purpose of appeal.

• Illegal Dismissal: In illegal dismissal cases, before the employer bears the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of dismissal. Here, as found by the Labor Arbiter, petitioner categorically recounted the circumstances surrounding the termination. The words spoken by Mendoza — "Wala na tiwala sayo ang Management kaya tanggal ka na!" and "Basta tanggal ka na!" — immediately followed by an unequivocal order for petitioner to get out of the office, constituted an outright termination without just cause and due process. With the belatedly submitted affidavits stricken from the record, no substantial evidence remained to rebut petitioner's account. Aeroplus failed to comply with the twin notice requirement and failed to adduce substantial evidence of any just cause under Article 282 of the Labor Code.

• Monetary Awards and Damages: An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges, or in lieu thereof, separation pay equivalent to one month pay for every year of service, and full backwages inclusive of allowances and other benefits computed from the time compensation was withheld up to actual reinstatement or finality of the decision. Reinstatement was no longer viable due to strained relations, as correctly found by the Labor Arbiter; hence, separation pay was awarded as an alternative. Aeroplus was also liable for service incentive leave pay and 13th month pay reckoned three years back from March 3, 2015, having failed to prove prior payment. The monthly ₱200.00 cash bond deduction was illegal under Articles 112 and 113 of the Labor Code, which prohibit employer interference with the disposal of wages and unauthorized wage deductions; petitioner was entitled to reimbursement from February 2004 to February 2015 plus 6% legal interest. Moral and exemplary damages of ₱20,000.00 each were warranted because the dismissal was effected in a spiteful and wanton manner. Attorney's fees of 10% of the total monetary award were justified because petitioner was forced to litigate to protect his rights; although represented by the PAO, the award was not precluded and shall be received by PAO as a trust fund pursuant to Our Haus Realty Development Corporation vs. Parian and Republic Act No. 9406.

• Liberality of Procedural Rules in Labor Cases — While technical rules of procedure are not strictly applied in labor cases, the liberal policy must conform to basic principles of fair play, justice, and due process. The liberality is qualified by two requirements: (1) a party should adequately explain any delay in the submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven. The liberal application of rules before quasi-judicial agencies cannot be used to perpetuate injustice or as a license to disregard procedural rules. In this case, Aeroplus' belated submission of controverting affidavits on appeal without any justification violated these requirements, rendering the evidence inadmissible.

• Burden of Proof in Illegal Dismissal Cases — Before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of dismissal. If there is no dismissal, there can be no question as to its legality or illegality. Here, petitioner discharged this burden through his categorical and detailed account of the verbal termination by Mendoza, which remained unrebutted after the belatedly submitted affidavits were excluded.

• Consequences of Illegal Dismissal — An illegally dismissed employee is entitled to: (a) reinstatement without loss of seniority rights and other privileges, or in lieu thereof, separation pay equivalent to one month pay for every year of service, with a fraction of at least six months considered as one whole year, from the time of illegal dismissal up to finality of the judgment; and (b) full backwages inclusive of allowances and other benefits or their monetary equivalent computed from the time compensation was withheld up to actual reinstatement or finality of the decision. Where reinstatement is no longer viable due to strained relations, separation pay is awarded as an alternative, in addition to backwages.

• Entitlement to Moral and Exemplary Damages in Illegal Dismissal — A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs, or public policy. Exemplary damages may be awarded if the dismissal is effected in a wanton, oppressive, or malevolent manner. Mere illegality of dismissal is insufficient; the employer's bad faith or oppressive manner must be proved by clear and convincing evidence. Here, the spiteful and wanton manner of dismissal — a verbal termination without explanation or process — satisfied the requisites.

• Illegal Wage Deductions — Under Articles 112 and 113 of the Labor Code, an employer cannot interfere with the freedom of any employee to dispose of wages, nor make any deduction except in three enumerated instances: insurance premiums with employee consent, union dues with check-off authorization, and deductions authorized by law or regulations issued by the Secretary of Labor. An employer's unilateral deduction of a monthly cash bond from wages falls outside these exceptions and is unlawful.

• Attorney's Fees Despite PAO Representation — An employee represented by the Public Attorney's Office remains entitled to attorney's fees, which shall be received by PAO as a trust fund for the special allowances of its officials and lawyers, pursuant to Republic Act No. 9406 and the Administrative Code of 1987. The award is not precluded by PAO representation, as it serves as recompense against the employer who unjustifiably deprived the employee of a source of income.

• "But this liberal policy must still conform to the basic principles of fair play, justice, and due process. In Wilgen Loon, et al. v. Power Master, Inc., et al., the Court ordained that 'the liberality of procedural rules is qualified by two requirements: (1) a party should adequately explain any delay in the submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven.'" — This passage articulates the controlling doctrine on the admissibility of evidence belatedly submitted in labor proceedings, setting the two-part test that governs when liberal procedural rules may be invoked.

• "Verily, the delayed submission of the supposed controverting affidavits of Constantino and Mendoza for the first time on appeal, sans any valid justification is repugnant to the basic tenets of justice, fair play, and due process. More so since these affidavits containing a plain denial of the otherwise prompt, positive, and detailed narrative of petitioner are simply self-serving, hence, devoid of any probative weight." — This is the ratio decidendi on why the NLRC's admission of the belatedly submitted affidavits constituted reversible error, applying the two-part test to the facts.

• "In illegal dismissal cases, before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. Obviously, if there is no dismissal, then there can be no question as to its legality or illegality." — This states the canonical formulation of the burden of proof framework in illegal dismissal cases, frequently cited in subsequent labor jurisprudence.

• Wilgen Loon vs. Power Master, Inc. — Controlling precedent establishing the two-part qualification for the liberal application of procedural rules in labor cases: adequate explanation for delay and sufficient proof of allegations. Applied directly to hold that Aeroplus' belated submission of affidavits without justification was improper.
• MORESCO II vs. Cagalawan, 694 Phil. 268 (2012) — Followed. Held that while labor tribunals may receive evidence on appeal, any delay must be adequately explained and the evidence must adequately prove the allegations. The Court found the factual parallel — belated submission of documentary evidence without justification — directly applicable.
• Gimalay vs. Court of Appeals — Followed. Discussed the consequences of illegal dismissal, including entitlement to reinstatement, backwages, and separation pay in lieu of reinstatement.
• Leus vs. St. Scholastica's College Westgrove, 752 Phil. 186 (2015) — Followed. Provided the ground rules for awarding moral and exemplary damages in illegal dismissal cases, requiring proof of bad faith, fraud, or oppressive conduct beyond mere illegality of dismissal.
• Our Haus Realty Development Corporation vs. Parian, 740 Phil. 699 (2014) — Followed. Established that attorney's fees awarded to a PAO-represented employee shall be received by PAO as a trust fund for special allowances of its officials and lawyers.
• Alva vs. High Capacity Security Force, Inc., 820 Phil. 677 (2017) — Followed. Held that the award of attorney's fees is not precluded by PAO representation, as it serves as recompense against the employer who unjustifiably deprived the employee of income.
• Nacar vs. Gallery Frames, 716 Phil. 267 — Followed. Applied for the imposition of 6% legal interest on monetary awards from finality of decision until fully paid.

• Article 282, Labor Code — Enumerates the just causes for termination by employer: serious misconduct or willful disobedience, gross and habitual neglect of duties, fraud or willful breach of trust, commission of a crime or offense against the employer, and analogous causes. Applied to determine whether Aeroplus had just cause for dismissal; the Court found no substantial evidence supporting any ground.
• Article 279, Labor Code — Provides security of tenure and mandates that an unjustly dismissed employee is entitled to reinstatement without loss of seniority rights and full backwages inclusive of allowances and other benefits. Applied to determine the relief due to petitioner as an illegally dismissed employee.
• Article 111, Labor Code — Authorizes the award of attorney's fees in cases where the employee was forced to litigate to protect rights and interests. Applied to justify the 10% attorney's fees award.
• Article 112, Labor Code — Prohibits employers from limiting or interfering with the freedom of employees to dispose of their wages. Applied to invalidate Aeroplus' monthly cash bond deduction.
• Article 113, Labor Code — Limits permissible wage deductions to three instances: insurance premiums with employee consent, union dues with check-off authorization, and deductions authorized by law or regulations issued by the Secretary of Labor. Applied to hold that the cash bond deduction was unauthorized.
• Article 128, Labor Code — Confers visitorial and enforcement powers on the Secretary of Labor or duly authorized representatives. Applied in the dispositive portion, ordering the Labor Arbiter to notify DOLE officials to investigate Aeroplus' unlawful wage deduction practice.
• Republic Act No. 9406 — Reorganized and strengthened the PAO, amending the Administrative Code of 1987. Section 16-D provides that attorney's fees and contingent fees imposed upon the adversary of PAO clients shall be deposited in the National Treasury as a trust fund for special allowances of PAO officials and lawyers. Applied to direct that the attorney's fees award be received by PAO as a trust fund.

Leonen (Chairperson), M. Lopez, J. Lopez, and Kho, Jr., JJ., concurred.