Jolo's Kiddie Carts vs. Caballa

A patent nullity in the lower tribunal's ruling — such as an unwarranted increase in monetary awards bereft of any factual or legal basis due to a computational error — excuses the prior filing of a motion for reconsideration before resort to certiorari, and where neither illegal dismissal nor abandonment is established, the proper remedy is reinstatement without backwages, with monetary claims awarded only to the extent supported by evidence.

Petitioners operated kiddie cart stalls in various SM mall branches and hired respondents Evelyn A. Caballa and Anthony M. Bautista, together with Jocelyn S. Colisao, as staff members assigned to man those stalls. Caballa was assigned to SM Bacoor, Bautista to SM Rosario, and Colisao to several SM branches, most recently SM North EDSA. The parties' dispute arose from respondents' claims of illegal dismissal and non-payment of statutory benefits, which were litigated before the National Labor Relations Commission and eventually elevated to the Court of Appeals on certiorari.

Petitioners Jolo's Kiddie Carts/Fun4Kids/Marlo U. Cabili operated kiddie cart stalls in various SM mall branches and hired Evelyn A. Caballa, Anthony M. Bautista, and Jocelyn S. Colisao as staff members. Caballa was assigned to SM Bacoor, Bautista to SM Rosario, and Colisao to several SM branches, most recently SM North EDSA. They were paid a daily salary reaching ₱330.00 for a six-day work week from 9:45 in the morning until 9:00 in the evening.

Respondents and Colisao claimed that they were never paid the monetary value of their unused service incentive leaves, 13th month pay, overtime pay, and premium pay for work during holidays. They further alleged that when petitioners discovered they had inquired from the Department of Labor and Employment about prevailing minimum wage rates, they were prohibited from reporting to their work assignments without any justification. Petitioners, for their part, denied dismissing respondents and Colisao, maintaining that the employees were the ones who abandoned their work. Petitioners likewise asserted that they paid respondents and Colisao their wages and other benefits in accordance with law and that the money claims were bereft of factual and legal bases.

Respondents and Colisao filed a complaint for illegal dismissal, underpayment of salaries and wages, 13th month pay, non-payment of overtime pay, holiday pay, and separation pay, damages, and attorney's fees before the NLRC in Manila. The Labor Arbiter dismissed the case against Colisao for failure to prosecute but ruled in favor of respondents, finding that they were dismissed without just cause or due process and that petitioners failed to prove abandonment. The LA ordered petitioners to pay separation pay, backwages, wage differential, 13th month pay, moral damages, and exemplary damages, totaling ₱598,594.74 including 10% attorney's fees.

Petitioners appealed to the NLRC, which modified the LA ruling. The NLRC found neither illegal dismissal nor abandonment, ordered reinstatement without backwages, deleted the awards for separation pay, backwages, moral damages, and exemplary damages, and affirmed the awards for wage differential and 13th month pay while adding holiday pay. However, the Computation of Monetary Award attached to the NLRC decision — which the NLRC itself stated would form part of its decision — contained a critical error: the amounts of ₱109,870.80 and ₱112,294.00, which clearly pertained to the deleted backwages, were carried over as wage differential awards, while the actual wage differential amounts of ₱75,156.12 and ₱74,480.12 were labeled as 13th month pay, and the correct 13th month pay amounts of ₱10,608.00 for both respondents were omitted entirely. This oversight resulted in an unwarranted increase in the monetary awards due to respondents. Dissatisfied, petitioners directly filed a petition for certiorari before the Court of Appeals without first moving for reconsideration before the NLRC. The CA dismissed the petition on that technical ground and denied the subsequent motion for reconsideration, prompting the present petition.

• Improper Venue: Petitioners insisted that since respondents worked in Cavite, they should have filed their complaint before Regional Arbitration Branch IV of the NLRC and not in Manila, pursuant to Section 1, Rule IV of the 2011 NLRC Rules of Procedure, and that the LA in Manila therefore lacked jurisdiction.
• Defective Verification: Petitioners asserted that respondents signed the Verification and Affidavit of Non-Forum Shopping attached to their Position Paper a day earlier than the date such pleading was filed by counsel, constituting a fatal infirmity necessitating dismissal of the complaint.
• NLRC Grave Abuse of Discretion: Petitioners sought a resolution on the merits of the NLRC's ruling, praying that the Court resolve the case rather than remand it to the CA.

• Certiorari — Motion for Reconsideration: Whether the CA erred in dismissing the petition for certiorari on the ground that petitioners failed to file a motion for reconsideration before the NLRC prior to elevating the case.
• Venue vs. Jurisdiction: Whether the NLRC gravely abused its discretion in ruling that petitioners waived the issue of improper venue and that the LA in Manila had jurisdiction over the complaint.
• Verification Requirement: Whether the NLRC gravely abused its discretion in ruling that respondents substantially complied with the verification requirement despite the date discrepancy.
• Illegal Dismissal: Whether the NLRC gravely abused its discretion in finding that respondents were not illegally dismissed.
• Abandonment: Whether the NLRC gravely abused its discretion in finding that respondents did not abandon their employment.
• Monetary Awards: Whether the NLRC's Computation of Monetary Award was proper, or whether it constituted grave abuse of discretion amounting to lack or excess of jurisdiction.

• Certiorari — Motion for Reconsideration: Yes, the CA erred. The NLRC's Computation of Monetary Award contained a patent nullity — an unwarranted increase in monetary awards bereft of any factual or legal basis — which falls within the recognized exception to the motion-for-reconsideration requirement, justifying direct recourse to the CA.
• Venue vs. Jurisdiction: No, the NLRC did not gravely abuse its discretion. Section 1, Rule IV of the 2011 NLRC Rules of Procedure speaks of venue, not jurisdiction, and petitioners waived the objection by failing to raise it before the first scheduled mandatory conference. Article 224 of the Labor Code grants LAs exclusive and original jurisdiction over termination disputes and money claims.
• Verification Requirement: No, the NLRC did not gravely abuse its discretion. Respondents substantially complied with the verification requirement, and strict compliance may be dispensed with to serve the ends of justice, particularly where the claims are meritorious.
• Illegal Dismissal: No grave abuse of discretion. Respondents failed to adduce substantial evidence that petitioners committed any overt or positive act operative of their dismissal, as there was no indication of how petitioners prevented them from reporting to their work stations.
• Abandonment: No grave abuse of discretion. Petitioners failed to prove unequivocal acts manifesting respondents' intent to sever the employment relationship; respondents' filing of a complaint for illegal dismissal negated any such intention.
• Monetary Awards: Yes, in part. The NLRC committed grave abuse of discretion in its Computation of Monetary Award by erroneously carrying over deleted backwages amounts as wage differential and omitting the correct 13th month pay figures, resulting in a patent nullity. The awards were corrected to reflect the LA's original computation.

• Certiorari — Motion for Reconsideration: As a rule, the filing of a motion for reconsideration is a condition sine qua non to the filing of a petition for certiorari, the rationale being to afford the lower tribunal an opportunity to rectify its errors before resort to the courts. However, a recognized exception applies when the assailed order is a patent nullity. Here, the NLRC's Computation of Monetary Award — which the NLRC itself stated would form part of its decision — mistakenly used the deleted backwages amounts (₱109,870.80 and ₱112,294.00) as wage differential, mislabeled the actual wage differential amounts (₱75,156.12 and ₱74,480.12) as 13th month pay, and omitted the correct 13th month pay amounts (₱10,608.00 for both respondents). This oversight resulted in an unwarranted increase in monetary awards bereft of any factual or legal basis, constituting a patent nullity. Petitioners were therefore justified in pursuing direct recourse to the CA without first moving for reconsideration. Because sufficient basis existed for resolving the merits, the Court dispensed with remand to prevent further delay.

• Venue vs. Jurisdiction: Petitioners' reliance on Section 1, Rule IV of the 2011 NLRC Rules of Procedure was misplaced because the provision speaks of venue, not jurisdiction. Paragraph (c) of the same provision explicitly provides that when venue is not objected to before the first scheduled mandatory conference, the issue is deemed waived. The NLRC correctly found that petitioners raised improper venue only in their position paper, well after the mandatory conference. Article 224 (formerly Article 217) of the Labor Code grants Labor Arbiters exclusive and original jurisdiction over termination disputes and money claims arising from employer-employee relations, confirming that the LA in Manila had jurisdiction regardless of venue.

• Verification Requirement: The NLRC correctly ruled that respondents substantially complied with the verification requirement. Pursuant to the guidelines in Fernandez vs. Villegas, non-compliance with verification does not necessarily render a pleading fatally defective; the court may act on the pleading where strict compliance may be dispensed with to serve the ends of justice. Verification is deemed substantially complied with when one with ample knowledge swears to the truth of the allegations and the matters alleged are made in good faith. Similarly, the rules on forum shopping should not be interpreted with such absolute literalness as to subvert their objective of promoting the orderly administration of justice. The date discrepancy in the verification was not fatal, and respondents' meritorious claims justified dispensation with strict compliance.

• Illegal Dismissal: In illegal dismissal cases, the employer bears the burden of proving that termination was for a valid or authorized cause — but only after the employees first establish by substantial evidence that they were indeed dismissed. If there is no dismissal, there can be no question of legality or illegality. Here, respondents failed to prove their allegation that petitioners dismissed them, as there was no indication of how petitioners prevented them from reporting to their work stations or that petitioners committed any overt act suggesting termination. The NLRC therefore did not gravely abuse its discretion in finding no illegal dismissal.

• Abandonment: Abandonment requires two concurrent elements: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, the second being the more determinative factor. Petitioners failed to prove unequivocal acts manifesting respondents' intent to abandon. Respondents' failure to report may have stemmed from their mistaken belief that they had already been dismissed, which should not lead to the conclusion that they chose to abandon their work. Moreover, the filing of a complaint for illegal dismissal negates any intention to sever the employment relationship. Abandonment is a matter of intention and cannot be lightly inferred from equivocal acts. Where neither dismissal nor abandonment is established, the proper remedy is reinstatement without backwages.

• Monetary Awards: The NLRC properly awarded holiday pay, wage differential, and 13th month pay because petitioners failed to show that payment had been made. The burden of proving payment of monetary claims rests on the employer, as the pertinent payrolls and records are in the employer's custody and absolute control. Attorney's fees of 10% were properly awarded under Article 111(a) of the Labor Code for unlawful withholding of wages. However, the NLRC's Computation of Monetary Award contained a patent nullity: it erroneously carried over the deleted backwages amounts as wage differential and omitted the correct 13th month pay figures. The awards were corrected to reflect the LA's original computation — Caballa: ₱15,623.00 holiday pay, ₱75,156.12 wage differential, ₱10,608.00 13th month pay; Bautista: ₱15,623.00 holiday pay, ₱74,480.12 wage differential, ₱10,608.00 13th month pay — each plus 10% attorney's fees and 6% legal interest per annum from finality until fully paid.

• Motion for Reconsideration as Condition Sine Qua Non to Certiorari — The filing of a motion for reconsideration before the lower tribunal is an indispensable requisite before resort to certiorari, the rationale being to afford the tribunal an opportunity to rectify its errors. However, exceptions exist, including when the assailed order is a patent nullity. In this case, the NLRC's erroneous Computation of Monetary Award — which carried over deleted backwages amounts as wage differential and omitted correct 13th month pay figures, resulting in an unwarranted increase bereft of factual or legal basis — constituted a patent nullity excusing the prior filing of a motion for reconsideration.

• Grave Abuse of Discretion in Labor Cases — Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner tantamount to lack of jurisdiction; it must be so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined. In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence. If the NLRC's ruling has basis in the evidence and applicable law, no grave abuse exists.

• Burden of Proof in Illegal Dismissal — The employer bears the burden of proving that termination was for a valid or authorized cause, but only after the employee first establishes by substantial evidence that dismissal occurred. If there is no dismissal, there can be no question of legality or illegality. The evidence to prove dismissal must be clear, positive, and convincing. Where the employer denies dismissal, the employee bears the burden of proving the fact of dismissal.

• Abandonment of Employment — Abandonment is the deliberate and unjustified refusal of an employee to resume employment, constituting neglect of duty and a just cause for termination under Article 282(b) [now Article 296] of the Labor Code. Two elements must concur: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, the second being the more determinative factor and manifested by overt acts. The employer bears the burden of proof. Filing a complaint for illegal dismissal negates intent to abandon.

• Reinstatement Without Backwages — Where there was neither dismissal by the employer nor abandonment by the employee, the proper remedy is reinstatement to the former position or a substantially equivalent one, but without the award of backwages.

• Burden of Proving Payment of Monetary Claims — In labor cases, the burden of proving payment of monetary claims rests on the employer, because the pertinent personnel files, payrolls, records, remittances, and similar documents showing payment are in the employer's custody and absolute control, not the worker's.

• Substantial Compliance with Verification — Verification is a formal, not jurisdictional, requirement intended to secure assurance that matters alleged are true and correct. Non-compliance does not necessarily render a pleading fatally defective; courts may order correction or act on the pleading where strict compliance may be dispensed with to serve the ends of justice. Verification is deemed substantially complied with when one with ample knowledge swears to the truth of the allegations in good faith.

• "Clearly, such an increase is a patent nullity as it is bereft of any factual and/or legal basis." — This passage establishes the ratio decidendi for excusing the motion-for-reconsideration requirement: the NLRC's computational error produced an unwarranted increase in monetary awards that constituted a patent nullity, a recognized exception to the condition sine qua non rule.

• "In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a valid or authorized cause. But before the employer must bear the burden of proving that the dismissal was legal, the employees must first establish by substantial evidence that indeed they were dismissed." — This formulation, quoted from Claudia's Kitchen, Inc. vs. Tanguin, articulates the sequential burden of proof in illegal dismissal cases and is frequently cited in subsequent labor jurisprudence.

• "To constitute abandonment, however, there must be a clear and deliberate intent to discontinue one's employment without any intention of returning. In this regard, two elements must concur: (1) failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts." — This passage defines the canonical two-element test for abandonment in labor cases, drawn from Tan Brothers Corporation of Basilan City vs. Escudero.

• "Abandonment of position is a matter of intention and cannot be lightly inferred, much less legally presumed, from certain equivocal acts." — This statement underscores the evidentiary standard for abandonment, reinforcing that intention is the determinative factor and that the filing of an illegal dismissal complaint negates any intent to sever the employment relationship.

• Fernandez vs. Villegas, G.R. No. 200191, August 20, 2014 — Followed. The Court applied the six-point guidelines on verification and certification against forum shopping set forth in this case to hold that respondents' substantial compliance with the verification requirement was sufficient and that strict compliance could be dispensed with to serve the ends of justice.
• Claudia's Kitchen, Inc. vs. Tanguin, G.R. No. 221096, June 28, 2017 — Followed. The Court relied on this case for the sequential burden-of-proof framework in illegal dismissal cases — employees must first prove dismissal by substantial evidence before the employer's burden to prove validity attaches — and for the discussion of abandonment.
• Tan Brothers Corporation of Basilan City vs. Escudero — Followed. Cited within Claudia's Kitchen for the two-element test of abandonment: (1) absence without valid reason and (2) clear intent to sever the employment relationship, the second being the more determinative factor.
• Nacar vs. Gallery Frames, 716 Phil. 267 (2013) — Followed. Applied for the rule that all monetary awards shall earn legal interest at six percent per annum from finality of the decision until fully paid.
• G & M (Phil.), Inc. vs. Batomalaque, 499 Phil. 724 (2005) — Followed. Applied for the doctrine that the burden of proving payment of monetary claims in labor cases rests on the employer, as the relevant records are in the employer's custody and control.
• Mallo vs. Southeast Asian College, Inc., 771 Phil. 410 (2015) — Followed. Applied for the principle that filing a complaint for illegal dismissal negates intent to abandon employment, and that reinstatement without backwages is proper where neither dismissal nor abandonment is established.

• Section 1, Rule IV, 2011 NLRC Rules of Procedure — Governs venue of labor complaints. The Court clarified that this provision speaks of venue, not jurisdiction, and that paragraph (c) deems the venue objection waived if not raised before the first scheduled mandatory conference. Petitioners raised the issue only in their position paper, well after the mandatory conference, and thus waived it.
• Article 224 (formerly Article 217), Labor Code — Grants Labor Arbiters exclusive and original jurisdiction over termination disputes and money claims arising from employer-employee relations. Applied to confirm that the LA in Manila had jurisdiction over respondents' complaint regardless of venue.
• Article 282(b) [now Article 296], Labor Code — Defines abandonment as a just cause for termination of employment. The Court applied the two-element test derived from jurisprudence interpreting this provision to find that petitioners failed to prove abandonment.
• Article 111(a), Labor Code — Authorizes assessment of attorney's fees equivalent to ten percent (10%) of the amount of wages recovered in cases of unlawful withholding of wages. Applied to sustain the award of attorney's fees to respondents.

Carpio (Chairperson), Peralta, Bersamin, and Caguioa concurred. No separate concurring opinions were noted.