Guinto vs. Sto. Niño Long-Zeny Consignee

In illegal dismissal cases, the employer's failure to specifically deny the employee's material averments as to the circumstances of dismissal constitutes a deemed admission of the fact of dismissal under Section 11, Rule 8 of the Rules of Court, which applies suppletorily to NLRC proceedings pursuant to Section 3, Rule 1 of the 2011 NLRC Rules of Procedure, thereby shifting the burden to the employer to prove the validity of the dismissal.

Sto. Niño Long-Zeny Consignee (the Consignee) is a sole proprietorship engaged in the brokerage and trading of aquatic animals — including crabs, shrimps, prawns, milkfish, and tilapia — with its place of business at the Orani Fishport in Orani, Bataan. Angelo Salangsang is the declared owner of the Consignee, and his wife Zenaida Salangsang serves as its manager; in their own pleadings before the NLRC, respondents represented Zenaida as a co-owner. Petitioner Noel G. Guinto claimed to have been employed by respondents since August 1997, initially as a warehouseman and later as a "sizer" — one who selects, sorts, and arranges aquatic animals according to size — until his termination in November 2015. Respondents denied any employer-employee relationship, asserting that petitioner was merely a porter at the Orani Fishport who rendered services to various fishpond owners and was not under their employ.

Petitioner Noel G. Guinto claimed to have been employed by respondents since August 1997, initially as a warehouseman and later as a "sizer" at the Consignee's place of business at the Orani Fishport in Orani, Bataan. As a sizer, petitioner selected, sorted, and arranged aquatic animals according to their respective sizes; from time to time, respondents also directed him to clean the trays, office, and warehouse of the Consignee. To support his claim of regular employment, petitioner presented a Certification issued by Angelo Salangsang stating that petitioner had been employed as a warehouseman "from August 1997 up to present," along with a work schedule posted at respondents' premises, a Sinumpaang Salaysay of Rizalito G. Alfonso (a dispatcher of an adjacent establishment), payslips issued by respondents, and a Katunayan executed by five porters vouching that petitioner was respondents' employee and not a member of any porters' association at the Orani Fishport.

Respondents denied any employer-employee relationship, asserting that petitioner was merely a porter at the Orani Fishport who rendered services to various fishpond owners. They presented the joint affidavit of porters Romano Lopez and Godofredo Reyes attesting that petitioner was not their employee, the joint affidavit of petitioner's own father and brothers — Armando, Joel, and Sonny Guinto — who vouched that as porters/sizers they were not employees of fishpond owners, and the Consignee's applications for mayor's permit indicating only two regular employees. Respondents also characterized the Certification as an "accommodation document" executed at petitioner's request to support a purported application for employment abroad.

According to petitioner, on November 27, 2015, at the house of Zenaida Salangsang, the latter told him: "Wag ka [nang] papasok at lumayas ka." The following morning, petitioner received a text message from a certain "Nam-Nam," Zenaida's representative, stating: "Pare, wag ka [nang] papasok pati ang anak mo sabi ni Ate." Petitioner could not recall any reason or cause for his termination. Mediation between the parties proved unsuccessful, prompting petitioner to file a complaint for illegal dismissal with prayer for separation pay and attorney's fees, later amended to include claims for service incentive leave pay and 13th month pay.

The Labor Arbiter found petitioner to be a regular employee who was illegally dismissed, crediting the Certification issued by Angelo and discarding respondents' explanation that it was a mere accommodation document. On appeal, the NLRC affirmed the finding of regular employment — noting the element of control exercised by respondents over petitioner, who worked within their premises under their instruction and guidance, and occupied a position necessary or desirable in their trade — but reversed the finding of illegal dismissal, holding that petitioner had failed to adduce corroborating evidence of actual dismissal beyond his bare claims. The NLRC ordered reinstatement without backwages, awarded service incentive leave pay, deleted separation pay and 13th month pay, and granted 10% attorney's fees. The CA sustained the NLRC in all aspects, finding no grave abuse of discretion.

• Finality of Regular Employment Status: Petitioner maintained that because respondents did not question the findings of the CA and the NLRC that he was a regular employee, such findings had already attained finality and could no longer be questioned on appeal.
• Illegal Dismissal via Deemed Admission: Petitioner argued that respondents failed to specifically deny and rebut his allegations as to his dismissal from work, and that under Section 11, Rule 8 of the Rules of Court, respondents' silence on the matter constituted an admission that he was actually dismissed on November 27, 2015, citing Fernandez vs. Kalookan Slaughterhouse Incorporated.
• Backwages and Separation Pay: Petitioner asserted entitlement to full backwages given his illegal dismissal, and to separation pay in lieu of reinstatement on the ground of evident strained relations between the parties.
• Monetary Claims: Petitioner claimed entitlement to service incentive leave pay, 13th month pay, moral and exemplary damages, and attorney's fees, arguing that PD 851 includes within its coverage those paid on a piece-rate basis such as himself.
• Solidary Liability: Petitioner argued that Angelo and Zenaida should be held solidarily liable with the Consignee for the monetary awards, considering their presumed knowledge of pertinent labor laws and their assent to his illegal dismissal.

• Procedural Impropriety: Respondents countered that the present petition was outside the scope of an appeal under Rule 45 of the Rules of Court.
• Failure to Prove Dismissal: Respondents argued that the NLRC correctly found that petitioner had failed to first establish by substantial evidence the fact of his dismissal from work, which was fatal to his cause.
• Filing Complaint Does Not Prove Dismissal: Respondents characterized as non sequitur the reasoning that an employee would not have filed a complaint for illegal dismissal if he had not really been dismissed, asserting that such pretext could never validly take the place of evidence from both employer and employee.

• Illegal Dismissal: Whether the CA erred in not finding grave abuse of discretion on the part of the NLRC when it held that petitioner was not illegally dismissed.
• 13th Month Pay: Whether the CA erred in not finding grave abuse of discretion on the part of the NLRC when it denied petitioner's claim for 13th month pay.
• Separation Pay: Whether the CA erred in not finding grave abuse of discretion on the part of the NLRC when it denied separation pay in lieu of reinstatement.

• Illegal Dismissal: Yes. The CA erred in sustaining the NLRC's dismissal of the illegal dismissal complaint. Respondents were deemed to have admitted the fact of dismissal by failing to specifically deny petitioner's allegations, and no just or valid cause was shown for the termination.
• 13th Month Pay: No. The CA correctly sustained the NLRC's denial of 13th month pay. Petitioner alleged in his Complaint that he was paid on a commission basis, which falls under the exemption in Section 3(e) of the Rules and Regulations Implementing PD 851, and he could not change his theory of the case on appeal.
• Separation Pay: No. The CA correctly sustained the NLRC's denial of separation pay in lieu of reinstatement. Petitioner failed to prove the existence of strained relations between him and respondents, and illegal dismissal alone does not justify a finding of strained relations.

• Illegal Dismissal: The Court reviewed the conflicting factual findings of the LA versus the NLRC, an exception to the general rule that only questions of law may be raised under Rule 45. The rule in illegal dismissal cases is that the burden of proving the validity of dismissal is on the employer, but the fact of dismissal, if disputed, must be duly proven by the complainant. However, Section 3, Rule 1 of the 2011 NLRC Rules of Procedure allows the suppletory application of the Rules of Court, and Section 11, Rule 8 of the Rules of Court provides that material averments in the complaint shall be deemed admitted when not specifically denied. Applying this principle, the Court found that respondents did not specifically deny petitioner's allegations that on November 27, 2015, Zenaida told him to leave and stop coming to work, and that the following morning, Zenaida's representative sent a text message to the same effect. Respondents' defense centered solely on denying the existence of an employer-employee relationship, not on denying the act of dismissal itself. Thus, respondents were deemed to have admitted the fact of dismissal. Since the NLRC's finding of regular employment had already attained finality — respondents having failed to assail it before the CA — and since respondents presented no just or valid cause for the dismissal, petitioner was illegally dismissed and entitled to full backwages under Article 294 of the Labor Code.

• 13th Month Pay: Under Section 3(e) of the Rules and Regulations Implementing PD 851, employers of those paid on purely commission, boundary, or task basis are exempted from paying 13th month pay. Petitioner alleged in his Complaint that he was paid on a commission basis. In the present petition, he attempted to change his theory, alleging instead that he was paid on a piece-rate basis to qualify for 13th month pay under PD 851. The Court held that petitioner could not be allowed to change his theory of the case on appeal, as points of law, theories, issues, and arguments not brought to the attention of the trial court are barred by estoppel and cannot be raised for the first time on appeal.

• Separation Pay: The doctrine of strained relations permits separation pay in lieu of reinstatement when reinstatement is no longer desirable or viable, liberating the employee from an oppressive work environment and releasing the employer from maintaining a worker it could no longer trust. However, the doctrine cannot be applied indiscriminately because every labor dispute almost invariably results in strained relations; strained relations must be demonstrated as a fact and should not be based on impression alone. Petitioner failed to prove the existence of strained relations before the lower tribunals. Illegal dismissal alone does not justify a finding of strained relations. Accordingly, the prayer for separation pay in lieu of reinstatement was denied, and reinstatement was the proper remedy.

• Deemed Admission in Illegal Dismissal Cases — In illegal dismissal cases, when the employer fails to specifically deny the complainant employee's material averments as to the circumstances of his dismissal, the employer is deemed to have admitted the fact of dismissal and must then discharge the burden of proving that the dismissal was valid. This doctrine operates through the suppletory application of Section 11, Rule 8 of the Rules of Court to NLRC proceedings pursuant to Section 3, Rule 1 of the 2011 NLRC Rules of Procedure. The Court applied this doctrine because respondents raised only the defense of absence of employer-employee relationship and did not specifically deny that Zenaida and her representative told petitioner to leave and stop going to work.

• Doctrine of Strained Relations — Under the doctrine of strained relations, payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. It liberates the employee from an oppressive work environment and releases the employer from maintaining a worker it could no longer trust. However, the doctrine cannot be applied indiscriminately since every labor dispute almost invariably results in strained relations; strained relations must be demonstrated as a fact and should not be used recklessly or based on impression alone. The Court denied separation pay because petitioner failed to prove strained relations, and illegal dismissal alone does not justify such a finding.

• Prohibition Against Changing Theory on Appeal — Points of law, theories, issues, and arguments not brought to the attention of the trial court are barred by estoppel and cannot be considered by a reviewing court, as these cannot be raised for the first time on appeal. The Court applied this principle to bar petitioner from shifting his claim from commission-based pay (as alleged in his Complaint) to piece-rate pay (as argued in his petition) to qualify for 13th month pay under PD 851.

• Solidary Liability of Sole Proprietorship Owners — A sole proprietorship has no juridical personality to defend a lawsuit, and the owner is liable for the entirety of the monetary awards. Where the owner's spouse is represented as a co-owner in the parties' own pleadings, both are held solidarily liable. The Court found the Consignee to be a sole proprietorship with Angelo as declared owner, making Angelo personally liable; and because respondents' own Memorandum of Appeal represented Zenaida as a co-owner through Angelo's affidavit, Zenaida was also held solidarily liable.

• "Thus, in illegal dismissal cases, it follows that when the employer fails to specifically deny the complainant employee's material averments as to the circumstances of his dismissal, the employer is deemed to have admitted the fact of dismissal and must then discharge his burden of proving that the dismissal of the employee was valid." — This passage articulates the ratio decidendi of the case, establishing the doctrinal rule that an employer's failure to specifically deny allegations of dismissal constitutes a deemed admission, shifting the burden to the employer to prove the validity of the dismissal.

• "Besides, the doctrine of strained relations cannot be applied indiscriminately since every labor dispute almost invariably results in 'strained relations;' otherwise, reinstatement can never be possible simply because some hostility is engendered between the parties as a result of their disagreement. That is human nature. Strained relations must be demonstrated as a fact." — This passage defines the limitations of the doctrine of strained relations, clarifying that the doctrine requires factual demonstration and cannot be presumed from the mere existence of a labor dispute.

• "As a matter of fairness, petitioner cannot now be allowed to change his theory of the case on appeal before the Court. After all, it is settled that '[p]oints of law, theories, issues, and arguments not brought to the attention of the trial court are barred by estoppel and cannot be considered by a reviewing court, as these cannot be raised for the first time on appeal.'" — This passage states the rule against changing theories on appeal, which barred petitioner from recharacterizing his commission-based pay as piece-rate pay to claim 13th month pay.

• Fernandez vs. Kalookan Slaughterhouse Incorporated, G.R. No. 225075, June 19, 2019 — Controlling precedent on deemed admission of dismissal. The Court relied on Fernandez to hold that an employer's failure to specifically deny the employee's allegations as to the circumstances of dismissal constitutes an admission by silence under Section 11, Rule 8 of the Rules of Court.
• Pu-od vs. Ablaze Builders, Inc., 820 Phil. 1239 (2017), citing Borja vs. Miñoza, 812 Phil. 133 (2017) — Followed for the proposition that where there is neither dismissal by the employer nor abandonment by the employee, the proper remedy is reinstatement without backwages. The CA relied on this case, but the Supreme Court distinguished it because dismissal was in fact established by deemed admission.
• Rodriguez vs. Sintron Systems, Inc., G.R. No. 240254, July 24, 2019 — Followed for the formulation of the doctrine of strained relations, including the requirement that strained relations must be demonstrated as a fact and cannot be applied indiscriminately.
• Cariño vs. Maine Marine Phils., Inc., G.R. No. 231111, October 17, 2018 — Cited for the exception to the rule that only questions of law may be raised in Rule 45 petitions, specifically where the LA and NLRC come up with conflicting findings.
• Masonic Contractor, Inc. vs. Madjos, 620 Phil. 737 (2009) — Cited within Fernandez for the principle that an allegation not specifically denied is deemed admitted under Section 11, Rule 8 of the Rules of Court.

• Article 294 [279], Labor Code of the Philippines — Provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent. Applied to award petitioner full backwages upon the finding of illegal dismissal.
• Section 11, Rule 8, Rules of Court — Provides that material averments in the complaint, other than those as to the amount of unliquidated damages, shall be deemed admitted when not specifically denied. Applied suppletorily to NLRC proceedings to establish respondents' deemed admission of the fact of dismissal.
• Section 3, Rule 1, 2011 NLRC Rules of Procedure — Provides for the suppletory application of the Rules of Court to proceedings before the LA and the NLRC. Served as the bridge allowing Section 11, Rule 8 of the Rules of Court to operate in the labor context.
• Section 3(e), Rules and Regulations Implementing PD 851 — Exempts employers of those paid on purely commission, boundary, or task basis from the payment of 13th month pay. Applied to deny petitioner's 13th month pay claim because he alleged in his Complaint that he was paid on a commission basis.
• Article 111, Labor Code of the Philippines — Authorizes attorney's fees equivalent to ten percent of the amount of wages recovered in cases of unlawful withholding of wages. Applied to award petitioner 10% attorney's fees.
• Article 2208, Civil Code of the Philippines — Provides for the recovery of attorney's fees and expenses of litigation in specified instances, including when the defendant's act or omission has compelled the plaintiff to litigate to protect his interest, and in actions for recovery of wages. Applied in conjunction with Article 111 of the Labor Code to support the attorney's fees award.

Gesmundo, C.J. (Chairperson), Caguioa, Gaerlan, and Dimaampao, JJ., concurred. No separate concurring opinions were written.