Rufina Patis Factory vs. Alusitain

R.A. 7641 may be applied retroactively to a labor contract only where the claimant for retirement benefits was still an employee of the employer at the time the statute took effect and had complied with the requirements for eligibility under the statute; absent proof of continued employment as of that date, no retirement benefits may be claimed under the law. A notarized affidavit of separation voluntarily executed by the claimant constitutes an admission against interest and prima facie evidence of the facts stated therein, and may be impugned only by evidence that is clear, convincing, and more than merely preponderant.

Juan Alusitain was hired as a laborer in March 1948 at the Rufina Patis Factory, a business owned and operated by Jesus Lucas, Sr., and he remained in that employment for close to forty-three years. Republic Act No. 7641, which amended Article 287 of the Labor Code by requiring retirement pay for qualified private-sector employees in the absence of any retirement plan in the establishment, took effect on January 7, 1993. The statute was enacted as a legislative response to Llora Motors vs. Drilon, where the Court had interpreted Article 287 as not itself imposing upon employers an obligation to establish a retirement scheme over and above that already provided by existing laws, thereby leaving employees in establishments without a collective bargaining agreement or voluntary retirement policy without a statutory source of retirement pay. The case therefore turns on whether an employee who had already severed his employment before the amendatory law took effect could nonetheless invoke it.

In March 1948, Juan Alusitain was hired as a laborer at the Rufina Patis Factory, a business owned and operated by Jesus Lucas, Sr. He worked there for close to forty-three years. On February 19, 1991, he tendered a letter of resignation as a laborer, effective February 20, 1991, in which he thanked the company for the experience he had gained; the letter was received on February 20, 1991 by Assistant Manager Jesus R. Lucas, Jr.

On May 22, 1991, Alusitain executed a duly notarized Affidavit of Separation from Employment and submitted it on even date to the Pensions Department of the Social Security System. In that affidavit he declared that he was sixty-three years old, that he had been separated from his last employer, Rufina Patis Factory, on February 20, 1991, that he had never again been re-employed, that he could not secure a certification of separation from his last employer because he had not reached the company's applicable age of retirement, and that he was executing the affidavit to attest to the truth of the foregoing facts and to support his retirement paper.

Republic Act No. 7641, amending Article 287 of the Labor Code by providing for retirement pay to qualified private-sector employees in the absence of any retirement plan in the establishment, took effect on January 7, 1993. Sometime in 1995, Alusitain claimed that he had retired from the company on January 31, 1995, having reached the age of sixty-five and by reason of poor health, and verbally demanded from Lucas the payment of his retirement benefits. By his computation he claimed entitlement to P86,710.00, representing one-half month salary of P1,885.00 multiplied by forty-seven years of service, although the product of those figures is P88,595.00. Lucas refused to pay, prompting Alusitain to make a written demand on September 20, 1995, which Lucas likewise rebuffed.

The parties advanced conflicting accounts of Alusitain's employment status after 1991. The petitioners maintained that he had resigned from the company on February 19, 1991, as evidenced by his letter of resignation and the Affidavit of Separation dated May 22, 1991. Alusitain, while admitting that he had tendered the letter of resignation and executed the affidavit, maintained that he continued working for the petitioners until January 1995, the date of his actual retirement due to illness and old age, and that he had merely accomplished the two documents in compliance with the requirements of the SSS in order to avail of his retirement benefits.

Executive Labor Arbiter Valentin C. Guanio credited Alusitain's position. He gave weight to Alusitain's sworn statement that he continued serving the company until January 1995 and to the sworn statement of Alusitain's eldest daughter, Gloria, that since elementary school she had brought food to her father at the factory and that the last time she did so was in January 1995. The Labor Arbiter found that the petitioners had failed to controvert these sworn declarations by submitting counter-affidavits, and concluded that the letter of resignation and the affidavit of separation had been executed in 1991 only for the purpose of securing an SSS pension, but that Alusitain nonetheless remained in the employ of the respondents until his actual retirement on January 31, 1995 — two years after R.A. 7641 took effect — at which time he was sixty-five years old and had served the company for forty-seven years.

• Probative Value of the Resignation Letter and Affidavit of Separation: Petitioners argued that the Court of Appeals erred in refusing to give weight and probative value to Alusitain's letter of resignation and Affidavit of Separation, choosing instead to credit his self-serving sworn statement and that of his daughter that he remained in the employ of the petitioners until January 31, 1995. They asserted that the Affidavit of Separation, being a public document, is entitled to full faith and credit upon its face and that proof is required to assail and controvert the same, citing Cacho vs. Court of Appeals and Arrieta vs. Llosa.
• Improper Retroactive Application of R.A. 7641: Petitioners further argued that the Court of Appeals erred in applying R.A. 7641 retroactively, since the law does not expressly provide for retroactive application and to do so would defeat the clear intent of Congress.
• Inapplicability of Oro Enterprises and Applicability of J.V. Angeles Construction: Petitioners insisted that Oro Enterprises, Inc. vs. NLRC is inapplicable and submitted that what controls is J.V. Angeles Construction Corp. vs. NLRC, where the Court held that before R.A. 7641 could be given retroactive effect, the claimant should still be an employee of the employer at the time the said law took effect.

• Continued Employment Until January 1995: Respondent maintained that although he had tendered his letter of resignation on February 19, 1991 and executed the Affidavit of Separation on May 22, 1991, he continued working for the petitioners until January 1995, the date of his actual retirement due to illness and old age.
• Purpose of the Documents: Respondent argued that he merely accomplished the letter of resignation and the affidavit of separation in compliance with the requirements of the SSS in order to avail of his retirement benefits, and that these documents did not reflect a genuine severance of his employment.

• Retroactive Application of R.A. 7641: Whether R.A. 7641 may be applied retroactively so as to entitle a claimant to retirement benefits reckoned from the commencement of his employment.
• Employment Status at the Time R.A. 7641 Took Effect: Whether Alusitain was still an employee of Rufina Patis Factory at the time R.A. 7641 took effect on January 7, 1993, as required for the retroactive application of the statute.
• Probative Value of the Resignation Letter and Affidavit of Separation: Whether the Court of Appeals erred in disregarding Alusitain's letter of resignation and his notarized Affidavit of Separation in favor of his subsequent sworn statement and that of his daughter.

• Retroactive Application of R.A. 7641: Qualified. R.A. 7641 may be given retroactive effect, but only where the claimant was still the employee of the employer at the time the statute took effect and had complied with the requirements for eligibility under the statute for such retirement benefits.
• Employment Status at the Time R.A. 7641 Took Effect: No. Alusitain failed to prove that he was still an employee of Rufina Patis Factory when R.A. 7641 took effect, his letter of resignation and notarized Affidavit of Separation being admissions against interest that he did not overcome with clear and convincing evidence.
• Probative Value of the Resignation Letter and Affidavit of Separation: No. The Court of Appeals erred in disregarding the resignation letter and the Affidavit of Separation, which are the best evidence of the facts in dispute and, the latter being a notarial document, are prima facie evidence of the facts stated therein.

• Retroactive Application of R.A. 7641: The Court began from its holding in Oro Enterprises, Inc. vs. NLRC that R.A. 7641, being social legislation enacted as a labor protection measure and a curative statute, can apply to labor contracts still existing at the time the statute took effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time the employment contracts started. That doctrine, however, was clarified in CJC Trading, Inc. vs. NLRC, which held that R.A. 7641 may be given retroactive effect only where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect, and (2) the claimant had complied with the requirements for eligibility under the statute for such retirement benefits. These twin requirements were reiterated in Philippine Scout Veterans Security and Investigation Agency vs. NLRC, Cabcaban vs. NLRC, J.V. Angeles Construction Corporation vs. NLRC, and Manuel L. Quezon University vs. NLRC. It was therefore incumbent upon Alusitain to prove that he was an employee of Rufina Patis Factory at the time R.A. 7641 took effect on January 7, 1993.

• Employment Status at the Time R.A. 7641 Took Effect: Although the factual findings of quasi-judicial agencies such as the NLRC are ordinarily accorded great weight and even finality, that rule yields where the agency arbitrarily disregarded the evidence before it or misapprehended evidence of such nature as to compel a contrary conclusion if properly appreciated. The basic rule in evidence is that the burden of proof rests on the party who makes the allegations — ei incumbit probatio, qui dicit, non qui negat — and a claimant who asserts a right granted by law must prove his claim by competent evidence, relying on the strength of his own evidence and not on the weakness of his opponent's. It was thus incumbent on Alusitain to prove that he retired on January 31, 1995 and not on February 20, 1991 as stated in his letter of resignation, and he utterly failed to discharge that onus. His letter of resignation and his May 22, 1991 Affidavit of Separation, which he admittedly voluntarily executed, constitute admissions against his own interest under Section 26, Rule 130 of the Rules of Court, and being admissions against interest they are the best evidence affording the greatest certainty of the facts in dispute, the rationale being the presumption that no man would declare anything against himself unless such declaration was true. The disserving quality of an admission is judged as of the time it is used or offered in evidence and not when it was made, so the documents remain admissions against interest notwithstanding that they facilitated the release of Alusitain's SSS benefits and were thus beneficial to him when executed. While admissions against interest may be refuted by the declarant, the Affidavit of Separation filed with the SSS is a notarial document and therefore prima facie evidence of the facts expressed therein; since notarial documents enjoy the presumption of regularity, the facts stated therein may be contradicted only by evidence that is clear, convincing, and more than merely preponderant. It is not enough for a declarant to impugn a notarial document he himself executed by merely executing a subsequent notarial document. Reyes vs. Zaballero is instructive: there, a creditor who had executed a notarial release of a real estate mortgage and then executed an affidavit on the same date stating that he had accepted payment under protest was held to have made a self-serving statement, and a contrary rule would undermine public confidence in the integrity of notarial documents. Dequito vs. Llamas likewise held that one who voluntarily executed an affidavit containing admissions and declarations against his own interest under the solemnity of an oath cannot be allowed to spurn them. The sworn statement of Alusitain's daughter did not cure the deficiency, for she did not state that her father worked for the factory until his alleged retirement on January 31, 1995; all she said was that the last time she brought him food at the factory was in January 1995, and to conclude from that fact that he was still employed at that time is a non sequitur. Finally, while Alusitain's subsequent sworn statement is in the nature of a retraction of his May 22, 1991 affidavit, a retraction does not necessarily negate the affidavit, for retractions are generally unreliable and looked upon with considerable disfavor by the courts as they can easily be fabricated; before accepting a retraction, the circumstances surrounding it and the possible motives for reversing the previous declaration must be examined, since those motives may not be in consonance with the truth. Alusitain's retraction was highly suspect: apart from his bare and self-serving allegations and his daughter's unreliable sworn statement, he showed not a scintilla of evidence that he was employed at the factory when R.A. 7641 took effect, and he produced no documentary evidence such as pay slips, income tax return, identification card, or any other independent evidence to substantiate his claim. While the NLRC and its Labor Arbiters are not bound by technical rules of procedure and evidence in the adjudication of cases, this should not be construed as a license to disregard fundamental rules on evidence in proving one's allegations. In fine, Alusitain having failed to prove that he was an employee of the petitioner at the time R.A. 7641 took effect, his claim for retirement benefits thereunder had to be disallowed.

• Probative Value of the Resignation Letter and Affidavit of Separation: The Court of Appeals, in affirming the NLRC and the Labor Arbiter, disregarded the resignation letter and the Affidavit of Separation and gave weight instead to the sworn statements of Alusitain and his daughter. That was reversible error. The two documents, voluntarily executed by Alusitain, are admissions against interest and the best evidence of the facts in dispute; the Affidavit of Separation is in addition a notarial document, hence prima facie evidence of the facts expressed therein and protected by the presumption of regularity. The subsequent notarial documents executed by Alusitain and his daughter fell short of the clear and convincing evidence required to contradict the facts stated in the earlier notarial document.

• Retroactive Application of R.A. 7641 — The Twin Requirements — R.A. 7641, being social legislation and a curative statute, may apply to labor contracts still existing at the time it took effect, and its benefits may be reckoned retroactively to the time the employment contracts began. However, the law may be given retroactive effect only where two requisites concur: (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility under the statute for such retirement benefits. In this case, Alusitain failed to establish the first requisite, since the evidence showed he had severed his employment in 1991, two years before R.A. 7641 took effect on January 7, 1993; his claim for retirement benefits under the statute was accordingly disallowed.
• Admissions Against Interest — Under Section 26, Rule 130 of the Rules of Court, the act, declaration, or omission of a party as to a relevant fact may be given in evidence against him. The rationale rests on the presumption that no man would declare anything against himself unless such declaration was true, so that the declaration is presumed to correspond with the truth. The disserving quality of an admission is judged as of the time it is used or offered in evidence, not when it was made; thus, a document may be an admission against interest even if it was self-serving when executed, so long as it is against the declarant's present claim. The letter of resignation and the Affidavit of Separation executed by Alusitain were held to be admissions against his claim that he remained employed until January 31, 1995, and, as such, the best evidence affording the greatest certainty of the facts in dispute.
• Notarial Documents — Presumption of Regularity and the Clear and Convincing Evidence Standard — A notarial document is one duly acknowledged before a notary public and is a public document; it is prima facie evidence of the facts expressed therein and enjoys in its favor the presumption of regularity. To contradict the facts stated in a notarial document, the evidence must be clear, convincing, and more than merely preponderant. A declarant who seeks to impugn a notarial document that he himself executed cannot do so by the mere expedient of executing a subsequent notarial document. Applied here, Alusitain's Affidavit of Separation, being notarized, could not be overcome by his later sworn statement and his daughter's affidavit.
• Burden of Proof — Ei Incumbit Probatio Qui Dicit, Non Qui Negat — The burden of proof lies on the party who makes the allegations; one who claims a right granted by law must prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his opponent. It was therefore incumbent on Alusitain to prove that he retired on January 31, 1995 rather than on February 20, 1991 as stated in his resignation letter, and his failure to do so was fatal to his claim.
• Retraction — Retractions are generally unreliable and looked upon with considerable disfavor by the courts, as they can easily be fabricated. Before a retraction is accepted, the circumstances surrounding it and the possible motives for reversing the previous declaration must be examined, since those motives may not necessarily be in consonance with the truth; to automatically adopt them would open wide the doors to fraud. A retraction does not necessarily negate the affidavit retracted. Alusitain's retraction was held highly suspect absent any independent evidence of continued employment.
• Non-Binding Nature of Technical Rules in Labor Proceedings — Under Article 221 of the Labor Code, the rules of evidence prevailing in courts of law or equity are not controlling in proceedings before the NLRC and its Labor Arbiters, who are directed to use every and all reasonable means to ascertain the facts speedily and objectively and without regard to technicalities. This liberality, however, is not a license to disregard fundamental rules on evidence in proving one's allegations.

• "R.A. 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the laws enactment but retroactively to the time said employment contracts have started." — This passage, quoted from Oro Enterprises, Inc. vs. NLRC, states the general rule on the retroactive operation of R.A. 7641 and supplies the premise that the Court then qualifies with the twin requirements.
• "R.A. 7641 may be given retroactive effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility under the statute for such retirement benefits." — This is the canonical formulation of the twin requirements, drawn from CJC Trading, Inc. vs. NLRC and reiterated in subsequent cases; it is the ratio decidendi on which the denial of Alusitain's claim rests.
• "Since notarial documents have in their favor the presumption of regularity, to contradict the facts stated therein, there must be evidence that is clear, convincing and more than merely preponderant." — This passage fixes the evidentiary standard for impeaching a notarized document such as the Affidavit of Separation, and explains why Alusitain's subsequent sworn statement and his daughter's affidavit were insufficient.
• "For retractions are generally unreliable and looked upon with considerable disfavor by the courts as they can easily be fabricated. Thus, before accepting a retraction, it is necessary to examine the circumstances surrounding it and possible motives for reversing the previous declaration, as these motives may not necessarily be in consonance with the truth. To automatically adopt them hook, line and sinker would allow unscrupulous individuals to throw wide open the doors to fraud." — This passage articulates the Court's settled treatment of retractions and justifies the rejection of Alusitain's attempt to disown his 1991 affidavit of separation.

• Oro Enterprises, Inc. vs. NLRC, 238 SCRA 105 (1994) — The leading ruling that R.A. 7641 should be given retroactive effect and may apply to labor contracts still existing at the time the statute took effect; quoted by the Court as the starting point of the analysis, later clarified by the twin requirements.
• CJC Trading, Inc. vs. NLRC, 246 SCRA 724 (1995) — The source of the twin requirements for the retroactive application of R.A. 7641; the controlling precedent on which the denial of the claim was anchored.
• J.V. Angeles Construction Corporation vs. NLRC, 305 SCRA 734 (1999) — Reiterated the twin requirements; cited by the petitioners as the controlling authority and relied upon by the Court in holding that the claimant must still be an employee when the law took effect.
• Philippine Scout Veterans Security and Investigation Agency vs. NLRC, 271 SCRA 209 (1997), Cabcaban vs. NLRC, 277 SCRA 671 (1997), and Manuel L. Quezon University vs. NLRC, 367 SCRA 488 (2001) — Subsequent reiterations of the twin requirements, cited to show the settled character of the doctrine.
• Llora Motors vs. Drilon, 179 SCRA 175 (1989) — The decision interpreting Article 287 of the Labor Code as not itself a source of retirement benefits absent a collective bargaining agreement or voluntary company policy; R.A. 7641 was enacted as the legislature's reaction to it, supplying the statutory backdrop of the case.
• Reyes vs. Zaballero, 89 Phil. 39 (1951) — Held that a creditor's affidavit stating he had accepted payment under protest, executed after he had notarially released a real estate mortgage, was self-serving evidence; cited as instructive on the insufficiency of a subsequent document to impugn a prior notarial document.
• Dequito vs. Llamas, 66 SCRA 504 (1975) — Held that one who voluntarily executed an affidavit containing admissions and declarations against his own interest under oath cannot be allowed to spurn them; cited to reinforce the binding effect of the Affidavit of Separation.
• Mac Adams Metal Engineering Workers Union-Independent vs. Mac Adams Metal Engineering, G.R. No. 141615, October 24, 2003 — Cited for the rule that the factual findings and conclusions of quasi-judicial agencies such as the NLRC are accorded great weight and even finality on appeal, unless the agency arbitrarily disregarded the evidence or misapprehended evidence of such nature as to compel a contrary conclusion.
• Stolt-Nielsen Marine Services, Inc. vs. NLRC, 300 SCRA 713 (1998) and Jimenez vs. NLRC, 256 SCRA 84 (1996) — Cited for the rule that the burden of proof rests on the party making the allegations.
• Noda vs. Cruz-Arnaldo, 151 SCRA 227 (1987) — Cited for the principle that an admission against interest is the best evidence affording the greatest certainty of the facts in dispute.
• Fernandez vs. Fernandez, 363 SCRA 811 (2001) and Alcantara-Daus vs. Hermoso, G.R. No. 149750, June 16, 2003 — Cited for the rule that a notarial document is prima facie evidence of the facts stated therein and may be contradicted only by clear and convincing evidence.
• Cacho vs. Court of Appeals, 269 SCRA 159 (1997) and Arrieta vs. Llosa, 282 SCRA 248 (1997) — Cited by the petitioners for the proposition that a public document is entitled to full faith and credit upon its face and requires proof to be controverted.
• Asuncion vs. NLRC, 362 SCRA 56 (2001), IBM Philippines, Inc. vs. NLRC, 305 SCRA 592 (1999), and Jarcia Machine Shop and Auto Supply, Inc. vs. NLRC, 266 SCRA 97 (1997) — Cited for the rule that the relaxation of technical rules in labor proceedings does not authorize disregard of the fundamental rules on evidence.

• Article 287, Labor Code of the Philippines, as amended by Republic Act No. 7641 (1993) — Provides that in the absence of a retirement plan or agreement providing for retirement benefits, an employee who has reached the age of sixty years or more but not beyond sixty-five years, and who has served at least five years in the establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half month salary for every year of service, a fraction of at least six months being considered as one whole year. The provision was the statutory basis of Alusitain's claim, but the Court held it could not benefit him because he had failed to prove that he was still an employee when the amendatory law took effect, a condition for its retroactive application.
• Section 26, Rule 130, Rules of Court — Provides that the act, declaration, or omission of a party as to a relevant fact may be given in evidence against him. The Court applied this provision to Alusitain's letter of resignation and Affidavit of Separation, holding them to be admissions against his own interest that belied his claim of continued employment until January 31, 1995.
• Section 1, Rule 131, Rules of Court — Governs the burden of proof, which rests upon the party who alleges the affirmative of an issue. The Court invoked it, together with the maxim ei incumbit probatio, qui dicit, non qui negat, to place upon Alusitain the burden of proving that he retired on January 31, 1995 rather than on February 20, 1991.
• Article 221, Labor Code of the Philippines, as amended — Provides that in proceedings before the NLRC or any Labor Arbiter, the rules of evidence prevailing in courts of law or equity shall not be controlling, and that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts speedily and objectively and without regard to technicalities of law or procedure. The Court held that this liberality should not be construed as a license to disregard fundamental rules on evidence in proving one's allegations.

• Justice Vitug (Chairman)
• Justice Sandoval-Gutierrez
• Justice Corona