Cosue vs. Ferritz Integrated Development Corporation

An employee must first establish by substantial evidence the fact of dismissal before the employer’s burden to prove a valid cause arises; bare allegations of constructive dismissal, unsupported by evidence of demotion, diminution in pay, or unbearable discriminatory acts, cannot be given credence. Money claims alleged in the position paper may be considered even if not in the complaint, and attorney’s fees under Article 111 are recoverable for unlawfully withheld wages without proof of malice.

Petitioner Edward M. Cosue was a regular employee of respondent Ferritz Integrated Development Corporation (FIDC), holding janitor/maintenance work; respondent Melissa Tanya F. Germino was Head of FIDC’s Property Management Division and respondent Antonio A. Fernando was FIDC President. The labor dispute involves claims for illegal dismissal, underpayment of salaries and labor benefits, damages, and attorney’s fees under the Labor Code. FIDC is the employer and the individual respondents are its officers sued in connection with the employment dispute.

Petitioner Edward M. Cosue started working for respondent Ferritz Integrated Development Corporation (FIDC) on August 23, 1993 as a construction worker and subsequently became a regular employee performing janitor/maintenance work. Around 5 p.m. of July 10, 2014, respondent Melissa Tanya Germino, as Head of FIDC’s Property Management Division, asked petitioner to stay in the FIDC building to watch over the generator due to frequent power outage and to assist the guards on duty since they were newly hired; petitioner agreed.

According to petitioner, around 9 p.m. of July 10, 2014, he saw two security guards—the Officer-in-Charge and one Gomez—together with an unidentified man on their way to the electrical room, carrying a knapsack that did not look heavy. When they left the room, petitioner saw Gomez carrying the knapsack which appeared to contain something heavy. The next morning, petitioner borrowed the key to the electrical room and, together with fellow maintenance personnel Joel Alcallaga, looked for the electrical wires stored therein; the wires were no longer there. Petitioner was convinced that the two guards and their unidentified companion took the wires. At 1 p.m., Germino summoned him and verbally informed him that he was suspended from July 16, 2014 to August 13, 2014 on suspicion that he stole the electrical wires; from July 16 to August 13, 2014, he was no longer allowed to work.

Refuting petitioner’s version, respondents alleged that at 7 p.m. of July 10, 2014, Alcallaga’s bag was found to contain bundled wires when it was examined by security personnel, per routine, as he checked out from his shift; Alcallaga returned the wires to the electrical room shortly after he was interrogated. The following day, petitioner and Alcallaga obtained the keys to the electrical room after misrepresenting to the key custodian that they had been ordered by the head of the FIDC electrical staff to inspect the room. Thereafter, it was discovered that the electrical wires returned by Alcallaga were nowhere to be found. Following an investigation, Germino issued a memorandum of suspension to petitioner for obtaining the keys to the electrical room and entering without permission, and for leaving his post and joining Alcallaga in the electrical room; petitioner was suspended for 25 days from July 16, 2014 to August 13, 2014 pending further investigation. According to respondents, petitioner returned to FIDC on August 13, 2014 but was told to come back as Germino was on leave; when he came back on August 27, 2014, he spoke to Germino and they agreed that he would voluntarily resign. Petitioner did not file his resignation and eventually instituted his Complaint.

Respondents further averred that years ago, petitioner admitted to acting as messenger and depositing money in the bank for Rizza Alenzuela, the company accountant, who was later discovered to have stolen hundreds of thousands of pesos by collecting from tenants and depositing said collection to her account. Because petitioner was the son of their longest-staying employee who died due to an illness, he was given a second chance on condition that another offense would lead to the termination of his employment. Respondents alleged that there was no illegal dismissal because there was an agreement between FIDC and petitioner that the latter would just resign; as petitioner reneged on this agreement and chose to be absent, he should be considered absent without leave. As for petitioner’s money claims, FIDC averred that petitioner was entitled to receive only his latest unpaid salary, if any, and his pro-rata 13th month pay; respondents later conceded that there were underpayments which would have to be computed.

On October 9, 2014, petitioner filed a Complaint for actual illegal dismissal and underpayment of salaries, with prayer for moral and exemplary damages and attorney’s fees. In his Position Paper, petitioner additionally claimed underpayment of holiday pay, 13th month pay, and service incentive leave pay for the period covering three years backward from the filing of his complaint. The Labor Arbiter found no evidence of dismissal; petitioner was admittedly suspended from July 16, 2014 to August 13, 2014, and as of July 27, 2014, the date of dismissal alleged in his Complaint, he was still serving his preventive suspension. The Labor Arbiter also found that petitioner was not barred from the premises or categorically informed that he was already dismissed, and found no reason to conclude that he abandoned his job absent proof of a clear intention to sever the employer-employee relationship. An entry in the FIDC security logbook for August 27, 2014, which petitioner had not challenged, showed him informing security personnel that he came to FIDC because he was asked to report to the office. The CA found that petitioner was merely suspended for 25 days.

• Constructive Dismissal: Petitioner maintained that he was constructively dismissed because he reported to work immediately after his suspension but was not anymore allowed to work.
• Abandonment: Petitioner argued that mere absence or failure to report for work is not tantamount to abandonment; to be dismissed for abandonment, an employee must be shown to have been absent without a valid or justifiable reason and to have a clear intention to sever the employer-employee relationship, with the burden of proof on the employer.
• Backwages and Monetary Claims: Petitioner asked the NLRC to declare him illegally or constructively dismissed and entitled to full backwages from the time of illegal dismissal up to actual reinstatement, service incentive leave pay, underpaid 13th month pay, holiday pay, overtime pay, 13th month pay for 2014, moral and exemplary damages, and attorney’s fees; he also averred that FIDC failed to show proof of payment of his other monetary claims.

• No Illegal Dismissal: Respondents argued that there was no illegal dismissal because there was an agreement between FIDC and petitioner that the latter would just resign; when petitioner reneged and chose to be absent, he should be considered absent without leave.
• Suspension Pending Investigation: Respondents alleged that petitioner was suspended for 25 days from July 16 to August 13, 2014 pending further investigation after he obtained the keys to the electrical room by misrepresentation and entered without permission, and after he left his post and joined Alcallaga in the electrical room.
• Money Claims: Respondents averred that petitioner was entitled to receive only his latest unpaid salary, if any, and his pro-rata 13th month pay; they later conceded that there were underpayments which would have to be computed.

• Illegal/Constructive Dismissal: Whether petitioner was illegally or constructively dismissed by respondents.
• Abandonment: Whether petitioner’s failure to report for work after his suspension constituted abandonment of his employment.
• Backwages: Whether petitioner is entitled to full backwages from the time of alleged illegal dismissal up to actual reinstatement.
• Monetary Claims: Whether petitioner may recover underpayment of holiday pay, 13th month pay, service incentive leave pay, and pro-rata 13th month pay for 2014, even if not all were alleged in the Complaint.
• Moral and Exemplary Damages: Whether petitioner is entitled to moral and exemplary damages.
• Attorney’s Fees: Whether petitioner is entitled to attorney’s fees.

• Illegal/Constructive Dismissal: No. The LA, NLRC, and CA found no dismissal; on July 27, 2014 petitioner was still serving his suspension, and he presented no evidence that he was barred from work or subjected to demotion, diminution in pay, or unbearable discriminatory acts.
• Abandonment: No. Petitioner failed to establish dismissal; respondents did not raise abandonment, and report-to-work notices are required only where dismissal or the possibility of dismissal exists.
• Backwages: No. Since there was neither dismissal nor abandonment, reinstatement without backwages is proper; the employer should not bear the economic loss.
• Monetary Claims: Yes, in part. Claims alleged in the Position Paper may be considered; salary differentials are due, and holiday pay, 13th month pay, and service incentive leave pay differentials must be computed, including pro-rata 13th month pay for 2014 based on respondents’ admission.
• Moral and Exemplary Damages: No. Petitioner failed to establish dismissal, let alone bad faith, fraud, oppression, or a wanton, oppressive, or malevolent manner.
• Attorney’s Fees: Yes. Attorney’s fees at 10% of the total monetary award are proper because petitioner’s wages were unlawfully withheld under Article 111 of the Labor Code.

• Illegal/Constructive Dismissal: In Rule 45 petitions, only errors of law are generally reviewed; factual findings of labor officials supported by substantial evidence are respected and final, especially when upheld by the CA. The LA, NLRC, and CA all found no dismissal. Petitioner himself alleged suspension from July 16 to August 13, 2014 pending investigation; on July 27, 2014, the date of alleged dismissal in his Complaint, he was still serving suspension, so his employment was not terminated. His claim that he was not allowed to report after suspension was unsubstantiated; he showed no evidence that he was barred from the premises. The unchallenged FIDC security logbook entry for August 27, 2014 showed him informing security personnel that he came because he was asked to report to the office; evidence not objected to is deemed admitted and may be considered. Constructive dismissal requires cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as where there is demotion in rank or diminution in pay, or clear discrimination, insensibility, or disdain so unbearable that the employee is foreclosed from continuing employment. Records show no demotion, diminution, or such acts. Respondents’ decision to give petitioner a graceful exit by allowing resignation is within their discretion. The burden was on petitioner to prove dismissal by clear, positive, and convincing evidence; the employer’s burden to prove valid cause arises only after the employee establishes dismissal. Bare allegations of constructive dismissal, uncorroborated by evidence, cannot be given credence.
• Abandonment: Petitioner failed to establish that he was dismissed. Respondents did not take the position that he abandoned his job; they were waiting for him to tender resignation per their agreement, so they did not consider his absence abandonment and did not send a notice of abandonment or return-to-work order. Under Nightowl Watchman & Security Agency, Inc. vs. Nestor Lumahan and Dee Jay’s Inn and Cafe and/or Melinda Ferraris vs. Ma. Lorina Raneses, the CA should first determine whether dismissal occurred; if no dismissal, abandonment as a defense is misplaced. Report-to-work notices are required only in situations involving dismissal or the possibility of dismissal; they cannot be required where dismissal or the possibility of dismissal does not exist.
• Backwages: Since there was neither dismissal nor abandonment, the CA correctly sustained reinstatement without backwages. Under Danilo Leonardo vs. National Labor Relations Commission and Reynaldo’s Marketing Corporation, et al., where the employee’s failure to work was occasioned neither by abandonment nor by termination, the burden of economic loss is not shifted to the employer; each party bears its own loss.
• Monetary Claims: Although not specified in the pro forma Complaint, petitioner alleged underpayment of holiday pay, 13th month pay, and service incentive leave pay in his Position Paper; respondents addressed the issue in their Rejoinder and stated that underpayments should be computed. The labor tribunals were not precluded; a cause of action should be ascertained from both the complaint and the position paper. Petitioner was found to have been paid salaries below the minimum wage rates and was awarded salary differentials of ₱8,819.01 for the period October 9, 2011 to July 27, 2014. Holiday pay, 13th month pay, and service incentive leave pay are computed based on salary; underpayment necessarily exists if these benefits were computed and paid based on salaries below minimum wage rates. As to 2014 13th month pay, it was not alleged in the Complaint or Position Paper and was first raised in the partial appeal, but respondents admitted in their Position Paper that petitioner was entitled to his pro-rata 13th month pay for 2014; withholding it despite the admission would violate substantial justice. Admission against interest and estoppel apply, and technical rules may be relaxed in labor cases. The Labor Arbiter was directed to determine underpayments and compute the differentials.
• Moral and Exemplary Damages: Under San Miguel Corporation vs. Eduardo L. Teodosio, moral damages are recoverable where the dismissal is attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs, or public policy; exemplary damages are proper when the dismissal was effected in a wanton, oppressive, or malevolent manner and public policy requires suppression. Petitioner failed to establish dismissal, let alone bad faith or an oppressive or malevolent manner; he cannot claim moral and exemplary damages.
• Attorney’s Fees: Petitioner is entitled to attorney’s fees at 10% of the total monetary award. Article 111 of the Labor Code provides that in cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to 10% of the amount of wages recovered. Petitioner was underpaid wages; attorney’s fees may be recovered by an employee whose wages were unlawfully withheld. No showing of malice or bad faith is required; only a showing that lawful wages were not paid accordingly.

• Substantial Evidence and Finality of Labor Factual Findings — Substantial evidence is “that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.” In Rule 45 petitions, only errors of law are generally reviewed; factual findings of labor officials supported by substantial evidence are respected and final, especially when affirmed by the CA. The SC applied this by refusing to re-examine conflicting evidence and affirming the common finding that petitioner was not dismissed.
• Constructive Dismissal — Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as where there is demotion in rank or diminution in pay and other benefits; it may also exist where clear discrimination, insensibility, or disdain by an employer becomes so unbearable that the employee is foreclosed from continued employment. The SC found no demotion, diminution, or such acts; the bare allegation unsupported by evidence failed.
• Burden of Proof in Illegal Dismissal — The employee must first establish by substantial evidence the fact of dismissal; only then does the employer bear the burden to prove that termination was for a valid or authorized cause. The SC applied this because petitioner presented only bare allegations and no evidence of dismissal.
• Abandonment and Report-to-Work Notices — Abandonment requires absence without valid or justifiable reason and a clear intention to sever the employer-employee relationship; the employer bears the burden of proof. Report-to-work notices are required only where dismissal or the possibility of dismissal exists. The SC found no dismissal and no abandonment, and respondents did not raise abandonment.
• Reinstatement Without Backwages — Where the employee’s failure to work was occasioned neither by abandonment nor by termination, the burden of economic loss is not shifted to the employer; each party bears its own loss. The SC applied this to affirm reinstatement without backwages.
• Liberal Construction of Labor Pleadings — A cause of action should be ascertained not from the complaint alone but from both the complaint and the position paper; technical rules of procedure may be relaxed in labor cases to serve substantial justice. The SC applied this to consider underpayment claims alleged in the Position Paper.
• Admission Against Interest and Estoppel — Respondents admitted in their Position Paper that petitioner was entitled to his pro-rata 13th month pay for 2014; the SC held that withholding the benefit despite this admission would violate substantial justice, applying admission against interest and estoppel.
• Attorney’s Fees for Unlawful Withholding of Wages — Under Article 111 of the Labor Code, in cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to 10% of the amount of wages recovered; no showing of malice or bad faith is required, only that lawful wages were not paid. The SC applied this to award 10% of the total monetary award.

• “Constructive dismissal exists where there is cessation of work, because "continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay" and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.” — This defines constructive dismissal; the SC used it to reject petitioner’s claim because no demotion, diminution, or unbearable acts appeared.
• “In illegal dismissal cases, while the employer bears the burden to prove that the termination was for a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service.” — This allocates the burden of proof; the SC used it because petitioner failed to prove dismissal.
• “Report to work notices are required, as an aspect of procedural due process, only in situations involving the dismissal, or the possibility of dismissal, of the employee. Verily, report-to-work notices could not be required when dismissal, or the possibility of dismissal, of the employee does not exist.” — This explains why no report-to-work notice was required; the SC cited Nightowl.
• “In a case where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss.” — This supports reinstatement without backwages.

• Jomar S. Verdadero vs. Barney Autolines Group of Companies Transport, Inc., et al., 693 Phil. 646, 656 (2012) — Relied on for the definition and requisites of constructive dismissal; the SC applied it to reject petitioner’s claim.
• Nightowl Watchman & Security Agency, Inc. vs. Nestor Lumahan, G.R. No. 212096, October 14, 2015, 772 SCRA 638, 650-655 — Relied on for the rule that the CA should first determine whether dismissal occurred and that report-to-work notices are not required absent dismissal or possibility of dismissal.
• Dee Jay’s Inn and Cafe and/or Melinda Ferraris vs. Ma. Lorina Raneses, G.R. No. I 91825, October 5, 2016 — Reiterated Nightowl and the rule that the employee must first establish dismissal; cited in the SC’s burden-of-proof analysis.
• Danilo Leonardo vs. National Labor Relations Commission and Reynaldo’s Marketing Corporation, et al., 389 Phil. 118 (2000) — Relied on for reinstatement without backwages where the employee’s failure to work was occasioned neither by abandonment nor termination.
• San Miguel Corporation vs. Eduardo L. Teodosio, G.R. No. 163033, October 2, 2009, 602 SCRA 197-219 — Relied on for the rules on moral and exemplary damages and for attorney’s fees in cases of unlawful withholding of wages.
• Our Haus Realty Development Corp. vs. Parian, et al., 740 Phil. 699, 708 (2014) — Relied on for the rule that a cause of action is ascertained from both the complaint and the position paper.
• MZR Industries, et al. vs. Colambot, 716 Phil. 617, 626 (2013) — Cited for the rule that the employee must first prove dismissal by substantial evidence before the employer’s burden arises.
• Iligan Cement Corp. vs. IEWU-SPFL, et al., 604 Phil. 345, 347 (2009) — Cited for the relaxation of technical rules of procedure in labor cases to serve substantial justice.

• Rule 45, Rules of Court — The SC applied it as the governing petition for review and reiterated that only errors of law are generally reviewed, not questions of fact.
• Rule 65, Rules of Court — Petitioner instituted a certiorari proceeding before the CA under Rule 65; the CA’s affirmance of the NLRC was reviewed by the SC.
• Article 111, Labor Code — The SC applied it to award attorney’s fees equivalent to 10% of the total monetary award because petitioner’s wages were unlawfully withheld.
• Labor Code provisions on holiday pay, 13th month pay, service incentive leave pay, and minimum wage — The SC applied these labor standards in holding that holiday pay, 13th month pay, and service incentive leave pay are computed based on salary, so underpayment exists if they were computed and paid based on salaries below minimum wage rates.