Hubilla vs. HSY Marketing Ltd., Co.

When the evidence of the employer and the employee in a labor case is in equipoise, the scales of justice are tilted in favor of the employee, and the employee is deemed to have been illegally dismissed.

The respondents are entities engaged in manufacturing and selling goods under the brand Novo Jeans & Shirt & General Merchandise, comprising three corporations (LSG Manufacturing Corporation, Asia Consumer Value Trading, Inc., and Wantofree Oriental Trading, Inc.), one partnership (HSY Marketing Ltd., Co.), and three sole proprietorships (Fabulous Jeans and Shirt and General Merchandise owned by Alexander Arqueza, Unite General Merchandise owned by Rosario Q. Co, and Coen Fashion House & General Merchandise owned by Lucia Pun Ling Yeung). The petitioners were employees of these entities across various Novo Jeans branches. In May and June 2010, several employees aired grievances against their employers on Raffy Tulfo's radio program for alleged labor violations and were referred to the Department of Labor and Employment Camanava Regional Office.

Sometime in May and June 2010, several employees of Novo Jeans went to Raffy Tulfo's radio program to air their grievances against their employers for alleged labor violations. They were referred to the Department of Labor and Employment Camanava Regional Office. According to the employees, on June 7, 2010, they were not allowed to enter the Novo Jeans branches where they were employed. They claimed that while Novo Jeans sent them a show cause letter the next day, they had in truth already been dismissed from employment. They sent a demand letter on July 19, 2010 to amicably settle the case before the Department of Labor and Employment, but no settlement was reached. Upon learning that the Department of Labor and Employment was not the proper forum, they filed a notice of withdrawal and thereafter filed their complaint with the Labor Arbiter.

Novo Jeans, for its part, claimed that the employees voluntarily severed their employment and only later filed complaints with the Department of Labor and Employment. It alleged that the employees' notice of withdrawal was not actually granted by the Department of Labor and Employment but that the employees nonetheless filed their complaints before the Labor Arbiter. Novo Jeans presented "Sample Letters" of First Notices of Termination of Employment, which asked the employees to explain their sudden absence from work without proper authorization.

The Labor Arbiter dismissed the complaints, finding that the employees did not present evidence showing their employment was terminated or that they were prevented from reporting for work, and ruled that the employees voluntarily severed their employment since airing grievances on the radio program was "enough reason for them not to report for work." The National Labor Relations Commission reversed, applying the equipoise rule because the allegations of both parties were unsubstantiated, and awarded backwages, separation pay, and attorney's fees. The Court of Appeals in turn reversed the NLRC, finding that only Novo Jeans presented proof of its claims and that the equipoise rule was inapplicable. The Court of Appeals likewise held that Novo Jeans' counsel substantially complied with the verification requirement even though his personal knowledge was based on facts relayed by his clients.

• Grave Abuse of Discretion: Petitioners argued that the Court of Appeals erred in not finding grave abuse of discretion, since the Court of Appeals should not have used the special remedy of certiorari merely to re-evaluate the findings of a quasi-judicial body absent any finding of grave abuse of discretion.
• Defective Verification: Petitioners submitted that respondents' counsel would not have been privy to the antecedents of the case so as to have personal knowledge, and that the verification based on facts relayed by clients was invalid.
• Withheld Annexes: Petitioners alleged that respondents "deliberately withheld the Annexes of the Position Paper of the Petitioners submitted to the Labor Arbiter," rendering said Position Paper inauthentic.
• No Proof of Receipt of Notices: Petitioners asserted that the Court of Appeals had no factual basis to rule in respondents' favor since there was no evidence to prove that the Notices were sent to petitioners at their last known addresses; the evidence on record merely showed sample letters of the Notices.
• Equipoise Rule: Petitioners maintained that this was a situation where the employees allege they were prevented from entering their workplace and the employer alleges otherwise, and that if doubt exists between the evidence presented by the employer and that by the employees, the doubt must be resolved in favor of the employees, consistent with the Labor Code's policy to afford protection to labor.

• Defect in Verification Not Fatal: Respondents argued that a defect in the verification will not necessarily cause the dismissal of the pleading and that they had sufficiently complied with the requirement when the affiant attested that the petition was based on facts relayed by his clients and on authentic records.
• Relevance of Annexes: Respondents pointed out that only relevant and pertinent documents should be attached to their pleadings before the courts; thus, the annexes of petitioners, not being relevant or pertinent, need not be attached.
• Court of Appeals Properly Reviewed NLRC Findings: Respondents contended that the Court of Appeals recognized that the issue concerned the alleged grave abuse of discretion of the NLRC and thoroughly discussed it, and that the Court of Appeals may review factual findings of the NLRC since a finding of grave abuse of discretion requires a re-examination of the sufficiency or absence of evidence.
• Estoppel on Receipt of Notices: Respondents maintained that the receipt of the Notices was admitted and recognized by the parties before the Labor Arbiter and was never raised as an issue until the NLRC found that the Notices were never received, and that petitioners were estopped from questioning the receipt of the Notices.
• Voluntary Termination: Respondents argued that the Labor Arbiter and the Court of Appeals did not err in finding that the termination of employment was voluntary since petitioners failed to present evidence of the fact of their dismissal.

• Review of Factual Findings: Whether the Court of Appeals may, in a petition for certiorari, review and re-assess the factual findings of the National Labor Relations Commission.
• Validity of Verification: Whether verification based on facts relayed to the affiant by his clients is valid.
• Illegal Dismissal: Whether petitioners were illegally dismissed by respondents.

• Review of Factual Findings: Yes, but only under exceptional circumstances. The Court of Appeals may review factual findings of the NLRC when the findings are arrived at arbitrarily or without substantial evidence, or when the Labor Arbiter and the NLRC make contradictory factual findings.
• Validity of Verification: No. Verification based on facts relayed by counsel's clients is invalid because the affiant must have personal knowledge of the facts alleged; a pleading with such defective verification is treated as an unsigned pleading.
• Illegal Dismissal: Yes. Petitioners were illegally dismissed because neither party presented substantial evidence to prove its allegations, placing the evidence in equipoise, which must be resolved in favor of labor.

• Review of Factual Findings: Factual findings of labor officials exercising quasi-judicial functions are accorded great respect and even finality when supported by substantial evidence, which is "the amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion." However, the Court of Appeals is not conclusively bound by the NLRC's findings. If the findings are arrived at arbitrarily or without resort to substantial evidence, the NLRC is deemed to have gravely abused its discretion, and the Court of Appeals may grant the petition for certiorari. The Court of Appeals may also review factual findings when the Labor Arbiter and the NLRC make contradictory findings, requiring re-examination of the records to determine which tribunal's findings were supported by evidence. In this case, the Labor Arbiter and the NLRC made contradictory factual findings, making it incumbent on the Court of Appeals to re-examine their findings. The Court of Appeals found that the NLRC's findings were not supported by substantial evidence and therefore rendered in grave abuse of discretion. However, contradictory factual findings between the NLRC and the Court of Appeals do not automatically justify Supreme Court review; they merely present a prima facie basis, and the need to review must still be pleaded, proved, and substantiated.

• Validity of Verification: Under Rule 7, Section 4 of the Rules of Court, a pleading is verified by an affidavit that the affiant has read the pleading and that the allegations are true and correct based on personal knowledge or on authentic records. A pleading with a verification based on "information and belief" or "knowledge, information and belief" is treated as an unsigned pleading. While verification is merely a formal, not jurisdictional, requirement, for it to be valid the affiant must have "ample knowledge to swear to the truth of the allegations." Facts relayed to counsel by the client are insufficient for counsel to swear to the truth of the allegations, because counsel would otherwise be able to disclaim liability for any misrepresentation by stating he was merely relaying facts he had no competency to attest to. The Rules require no less than personal knowledge. Here, respondents' counsel attested that the petition was "based upon facts relayed to me by my clients and upon authentic records," which was insufficient for valid verification. The petition should have been considered an unsigned pleading. Additionally, the certification against forum shopping was defective because it was signed by counsel rather than the litigants. While corporations and partnerships, as artificial entities unable to perform physical acts, may authorize counsel to sign through a Secretary's Certificate or Partnership Certification, sole proprietorships have no separate legal personality from their proprietors and cannot claim inability to perform physical acts as a justifiable reason. Respondents Arqueza, Co, and Yeung, as sole proprietors, submitted Special Powers of Attorney but gave no valid reason for authorizing counsel to sign on their behalf, rendering their certification against forum shopping invalid. Since the petition was unmeritorious, the defective verification and certification should have merited its outright dismissal.

• Illegal Dismissal: In illegal dismissal cases, the burden of proof is on the employer to prove that the employee was dismissed for a valid cause and was afforded due process. Respondents alleged there was no dismissal and presented "Sample Letters" of First Notices of Termination of Employment. However, no evidence was presented proving that each and every petitioner received a copy of the Notices—there were no receiving copies or acknowledgement receipts. While petitioners admitted the Notices may have been sent, they never admitted to receiving any of them. The lack of evidence of receipt suggested the Notices were an afterthought. There was likewise no proof of abandonment, which requires two elements: (1) the employee failed to report for work or was absent without valid or justifiable reason, and (2) there was a clear intention to sever the employer-employee relationship manifested by some overt act. Abandonment is a matter of intent and cannot be presumed from equivocal acts; mere absence from work, even after a notice to return, is insufficient. Respondents presented no proof that petitioners intended to abandon their employment. Where both parties have not presented substantial evidence to prove their allegations, the evidence is in equipoise, and the scales of justice are tilted in favor of labor. Petitioners were therefore considered to have been illegally dismissed. The Court noted that had petitioners substantially proven their dismissal, it would have been invalid not only for lack of just cause but also for being unconstitutional, as dismissing employees merely for complaining about their employer in a radio show violates their right to freedom of expression. However, absent sufficient proof that the dismissal was meant to suppress constitutional rights, the Court limited its conclusions to illegal dismissal under the Labor Code.

• Equipoise Rule in Labor Cases — When the evidence of the employer and the employee is in equipoise, i.e., neither party has presented substantial evidence to prove its allegations, the scales of justice are tilted in favor of the employee, and the employee is deemed to have been illegally dismissed. This is in line with the State policy to afford greater protection to labor. The Court applied this rule because respondents failed to prove receipt of termination notices or abandonment, and petitioners failed to prove actual dismissal, leaving the evidence equally balanced.

• Substantial Evidence in Labor Cases — Substantial evidence is "the amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion." Factual findings of labor officials exercising quasi-judicial functions are accorded great respect and even finality when supported by substantial evidence, but may be examined by courts when arrived at arbitrarily or in disregard of the evidence on record.

• Two Elements of Abandonment — To constitute abandonment, the employer must prove: (1) the employee failed to report for work or was absent without valid or justifiable reason, and (2) there was a clear intention on the part of the employee to sever the employer-employee relationship manifested by some overt act. Both elements must concur; absent this concurrence, there can be no abandonment. Abandonment is essentially a matter of intent and cannot be presumed from equivocal acts; mere absence from work, even after a notice to return, is insufficient.

• Verification Requirements — A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations are true and correct based on personal knowledge or on authentic records. Verification based on "information and belief" renders the pleading an unsigned pleading. Verification is a formal, not jurisdictional, requirement, and courts may order its correction. However, the affiant must have ample knowledge to swear to the truth of the allegations; facts merely relayed by a client to counsel are insufficient.

• Certification Against Forum Shopping by Artificial Entities — The certification against forum shopping must be signed by the litigant, not counsel. Corporations and partnerships, as artificial entities unable to perform physical acts, may authorize counsel to sign through a Secretary's Certificate or Partnership Certification. Sole proprietorships, having no separate legal personality from their proprietors, cannot claim inability to perform physical acts as a justifiable reason to delegate signing to counsel. A defect in the certification against forum shopping is generally not curable unless there are substantial merits to the case.

• "When the evidence in labor cases is in equipoise, doubt is resolved in favor of the employee." — This is the opening line of the decision, stating the controlling principle that governs the case and articulating the equipoise rule in its canonical formulation.

• "Facts relayed to the counsel by the client would be insufficient for counsel to swear to the truth of the allegations in a pleading. Otherwise, counsel would be able to disclaim liability for any misrepresentation by the simple expediency of stating that he or she was merely relaying facts with which he or she had no competency to attest to." — This passage defines the rationale for requiring personal knowledge in verification and establishes the limitation on counsel's authority to verify pleadings on behalf of clients.

• "Where both parties in a labor case have not presented substantial evidence to prove their allegations, the evidence is considered to be in equipoise. In such a case, the scales of justice are tilted in favor of labor." — This is the ratio decidendi for the illegal dismissal finding, stating the equipoise rule as applied to the facts of the case.

• "Property rights may prescribe. Human rights do not." — This passage articulates the constitutional dimension of the case, emphasizing the primacy of laborers' human rights over employers' property rights, drawn from Philippine Blooming Mills Employment Organization vs. Philippine Blooming Mills Co.

• Norkis Trading Corporation vs. Buenavista, 697 Phil. 74 (2012) — Cited for the proposition that factual findings of labor officials exercising quasi-judicial functions are accorded great respect and even finality when supported by substantial evidence, and for the definition of substantial evidence.
• Altres vs. Empleo, 594 Phil. 246 (2008) — Cited as the controlling authority on the rules governing compliance with verification and certification against forum shopping requirements, setting forth the six-point capsule of jurisprudential pronouncements on defective verification and certification.
• Hun Hyung Park vs. Eung Won Choi, 544 Phil. 431 (2007) — Cited for the principle that verification may be based on personal knowledge or authentic records or both, and that the choice among these modes depends on the nature of the allegations being attested to, not the pleader's whim.
• Philippine Blooming Mills Employment Organization vs. Philippine Blooming Mills Co., 151-A Phil. 656 (1973) — Cited for the principle that a laborer does not lose the right to freedom of expression upon employment, and that human rights of laborers are given primacy over property rights of employers.
• MZR Industries vs. Colambot, 716 Phil. 617 (2013) — Cited for the two-element test of abandonment in labor cases, requiring both unjustified absence and a clear intention to sever the employer-employee relationship.

• Rule 7, Section 4, Rules of Court — Defines verification: a pleading is verified by an affidavit that the affiant has read the pleading and that the allegations are true and correct based on personal knowledge or on authentic records. A verification based on "information and belief" or "knowledge, information and belief" is treated as an unsigned pleading. Applied to hold that respondents' counsel's verification based on facts relayed by clients was invalid.
• Rule 65, Section 1, Rules of Court — Governs petitions for certiorari, requiring a verified petition accompanied by relevant and pertinent documents and a sworn certification of non-forum shopping. Applied to assess the procedural validity of respondents' petition before the Court of Appeals.
• Article 297 [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, and other analogous causes. Applied to determine that petitioners were not dismissed under any valid cause.
• Article 294 [279], Labor Code — Provides that an employee found to have been illegally dismissed is entitled to reinstatement without loss of seniority rights and other privileges. Applied in the dispositive portion directing reinstatement.
• Article III, Section 4, 1987 Constitution — Provides that no law shall be passed abridging the freedom of speech, of expression, or of the press. Cited in the discussion of employees' constitutional right to air grievances in a public forum.
• Article II, Section 18, 1987 Constitution — States the policy of the State to afford full protection to labor. Cited as the constitutional basis for the equipoise rule.
• Article 183, Revised Penal Code — Penalizes perjury in solemn affirmations. Cited to explain the policy behind verification, as litigants risk perjury if they sign a verification despite knowledge that the allegations are not true.

Presbitero J. Velasco, Jr. (Associate Justice, Chairperson), Lucas P. Bersamin (Associate Justice), Samuel R. Martires (Associate Justice), and Alexander G. Gesmundo (Associate Justice) concurred. No separate concurring opinions were written.