Sermona vs. Uy

Retraction affidavits are inherently unreliable and insufficient to overturn prior testimonies absent a showing of the circumstances and motives behind the retraction, and the burden of proving an employer-employee relationship by substantial evidence remains on the claimant even in labor cases where procedural rules are relaxed.

The petitioners are forty-six individuals who claimed to be laborers at Hacienda Lumboy, an agricultural land in Barangay Biao, Binalbagan, Negros Occidental, owned by respondent Manuel L. Uy. They were organized by Gerundo Dago-ob of the National Federation of Sugar Workers-Food and General Trades (the Federation), which assisted them in filing labor complaints. Uy, for his part, claimed to be a small planter who took possession of the hacienda from his brother in 2004, cultivating only approximately 10 hectares with about ten employees. The dispute centers on whether the petitioners were ever Uy's employees, a question complicated by the involvement of the Federation in organizing barangay residents and the absence of payrolls or payslips bearing the petitioners' names.

Gerardo G. Sermona and forty-five other individuals (collectively Sermona et al.) claimed to be laborers at Hacienda Lumboy, a 30-hectare agricultural land in Barangay Biao, Binalbagan, Negros Occidental, owned by Manuel L. Uy. They alleged that they were hired on different dates and worked during cultivation and milling seasons, paid either on pakyaw rates ranging from PHP 25.00 to PHP 35.00 per sack or at PHP 60.00 per day for various agricultural tasks. They insisted that Uy did not use payrolls, payslips, vouchers, or any document showing their work accomplishment or wages. On different occasions, they clamored for increased wages and benefits, but instead were told to look for other jobs and were no longer given work in the farm. They sought help from the National Federation of Sugar Workers-Food and General Trades, with coordinator Gerundo Dago-ob, and attempted to arrange a dialogue with Uy, who allegedly challenged them to file a case before the Department of Labor and Employment.

In October 2005, Sermona et al. and the Federation filed a case before the Department of Labor and Employment seeking money claims and improved wages, and in December 2005, they filed a case for illegal dismissal before the National Labor Relations Commission. Their claims were supported by a Joint Affidavit dated June 6, 2006 executed by alleged co-workers Joaquin B. Estopido, Romulo P. Dagat, Ana Marie Estopido, and Esperanza Mission, who stated that they were long-standing workers at Hacienda Lumboy and contemporaries of Sermona et al., and that Uy did not use payrolls or payslips and dismissed them for clamoring for reasonable wages.

Uy denied that Sermona et al. were his employees. He claimed to be a small planter who took possession of Hacienda Lumboy in 2004 from his brother, Juanito Uy, having previously been engaged in buying and selling scrap iron and surplus truck parts. He maintained that the hacienda was only 9.869 hectares, that he hired only about ten workers who earned above minimum wage, and that fifty employees would be surplusage for a ten-hectare parcel. He presented payrolls, certifications showing no production for crop years 2001 to 2002 and 2002 to 2003, and a Joint Affidavit dated May 29, 2006 executed by individuals he recognized as his employees — Roberto Paculares, Mercy Paculares, Herman Paculares, Teresita Grapa, Estelita Mabit, Arnel Sermona, Roberto Hermogenes, Pedrito Grapa, Wilcita Tuanda, and Hermie Paculares — who confirmed that they were Uy's only laborers, that Dago-ob organized residents and used signatures from an attendance sheet to file the labor complaint without their authorization, and that it would be inequitable for Uy to employ fifty laborers for the size of the property. Uy also presented the Affidavit of Nelida Titong, a small planter who sold standing cane crops to Uy, who clarified that Uy paid only the purchase price while her laborers cut and loaded the sugarcane.

The labor arbiter found that Sermona et al. were illegally dismissed, crediting their testimonial evidence and giving no credence to Uy's payrolls, which appeared old and lacked vital information such as rates of pay, days worked, deductions, and net pay. The NLRC reversed, lending credence to the payrolls and the Paculares Joint Affidavit, noting that the payrolls for workers' amelioration bonus did not include the names of Sermona et al., and finding that hiring forty-six workers for 9.869 hectares would have been excessive. The Court of Appeals upheld the NLRC, finding that bare assertions were insufficient, that the payrolls' lack of particular information was not discrediting given the pakyaw basis of payment, and that the Paculares Joint Affidavit solidified the argument that no employer-employee relationship existed.

On motion for reconsideration before the Court of Appeals, Sermona et al. presented new evidence: documents pertaining to a 24-hectare property allegedly land-grabbed by Uy's family from the Galvan family, and Sworn Statements dated October 26, 2012 from Roberto Paculares, Rene Paculares, and Teresita Grapa — individuals Uy recognized as his employees — retracting their prior testimony and claiming that Sermona et al. were indeed Uy's workers. The Court of Appeals denied the motion, holding that it merely rehashed prior arguments. Sermona et al. then elevated the case to the Supreme Court via a Petition for Review under Rule 45.

• Contradictory Findings Justifying Factual Review: Petitioners argued that the findings of fact of the Court of Appeals and the labor arbiter are contradictory, and that the Court of Appeals committed grave abuse of discretion in appreciating facts and failed to notice relevant circumstances that would justify a different conclusion, thereby bringing the case within the recognized exceptions to the rule against raising questions of fact in a Rule 45 petition.
• Admissibility of New Evidence: Petitioners maintained that the new evidence — retraction affidavits and land documents — was first submitted before the Court of Appeals in their Motion for Reconsideration and Supplement, and that the Court of Appeals has authority to receive new evidence under Section 9 of Batas Pambansa Blg. 129, as amended.
• Retraction Affidavits as Proof of Employment: Petitioners argued that three of Uy's recognized employees — Roberto Paculares, Rene Paculares, and Teresita Grapa — retracted their prior testimony and confirmed in Sworn Statements that petitioners were Uy's workers who were dismissed for clamoring for correct wages and benefits, and that Uy managed approximately 40 hectares of land including 24 hectares allegedly occupied from the Galvan family.
• Fabrication of Payrolls: Petitioners insisted that Uy's payrolls were fabricated, pointing out that Teresita Grapa's signature appeared in the payrolls despite her claim that she could not write and only used thumbmarks, and that the payrolls lacked usual rate of pay, days worked, deductions, net pay columns, and SSS deductions.
• Authority of Gerardo Sermona: Petitioners contended that the Special Power of Attorney dated June 2, 2006, while not explicitly mentioning the Court of Appeals or Supreme Court petitions, clearly intended to include them since they were filed in relation to the labor complaint, and that denying the petition on this technicality would be contrary to the principle of full protection to labor.

• Improper Raising of Questions of Fact: Respondent argued that petitioners are raising questions of fact, which are not proper in a petition for review on certiorari under Rule 45, and that petitioners never alleged any exception that would apply to their case.
• Inadmissibility of New Evidence: Respondent contended that the new evidence and affidavits are inadmissible at this stage, should have been presented through a motion for new trial, and are not proper in a Rule 45 petition, further arguing that their authenticity and due execution are questionable since he was not given an opportunity to examine or object to them.
• Unreliability of Retractions: Respondent maintained that retractions are unreliable and easily obtained through intimidation or monetary consideration, and that the documents pertaining to the alleged land-grabbing are mere photocopies and irrelevant to the case.
• Defective Special Power of Attorney: Respondent argued that Gerardo Sermona was not duly authorized to file the petition, as the Special Power of Attorney's authority was limited to the labor case before the NLRC and did not cover the Petition for Certiorari before the Court of Appeals or the Petition for Review before the Supreme Court, and that the Special Power of Attorney suffered from defects under the 2004 Rules of Notarial Practice because thumbmarks were affixed without corresponding witness signatures.
• Improper Inclusion of Parties: Respondent pointed out that the petitions erroneously included Anecita Tuanda, who did not sign the complaint before the labor arbiter, and Patring Mohello and Gerom Garson, who did not sign the Special Power of Attorney.

• Propriety of Factual Review: Whether the present case falls under one of the exceptions to the rule against raising questions of fact in a petition for review on certiorari under Rule 45.
• Admissibility of New Evidence: Whether the evidence presented by petitioners in their Motion for Reconsideration and Supplement to Motion for Reconsideration before the Court of Appeals are admissible and ought to be considered by the Supreme Court.
• Authority to Represent: Whether Gerardo Sermona was sufficiently authorized to represent petitioners in this case.
• Employer-Employee Relationship: Whether an employer-employee relationship exists between petitioners and respondent Uy.

• Propriety of Factual Review: Yes. A review of factual findings was proper because the findings of the labor arbiter and the Court of Appeals are contradictory, which is a recognized exception to the rule against raising factual questions in a Rule 45 petition.
• Admissibility of New Evidence: Yes. The new evidence was first submitted before the Court of Appeals, which under Section 9 of Batas Pambansa Blg. 129, as amended, has authority to receive new evidence and resolve factual issues in Rule 65 petitions; thus, the evidence may be considered in the subsequent Rule 45 petition.
• Authority to Represent: Yes. The Special Power of Attorney, while not explicitly mentioning the appellate petitions, clearly intended to include them as part of pursuing the labor complaint to its conclusion, and denying the petition on this technicality would contravene the constitutional mandate of full protection to labor.
• Employer-Employee Relationship: No. Petitioners failed to present substantial evidence satisfying the four-fold test; the retraction affidavits were unreliable, the land-area documents were unauthenticated, and no competent proof of engagement, wage payment, or control was established.

• Propriety of Factual Review: The existence of an employer-employee relationship is a question of fact, and as a rule, the Supreme Court does not review factual findings in Rule 45 petitions. However, the rule admits of exceptions, including when the findings of fact of the antecedent deciding bodies are conflicting, when there is a misapprehension of facts, or when the findings are contradicted by the evidence on record. Here, the labor arbiter found illegal dismissal while the Court of Appeals found no employer-employee relationship, constituting contradictory findings. Coupled with the new evidence presented by petitioners, the Court found a review of the factual findings proper in the exercise of its equity jurisdiction.

• Admissibility of New Evidence: The new evidence was not first submitted in the Rule 45 petition but in the Petition for Certiorari before the Court of Appeals. Under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902, the Court of Appeals has the power to try cases, conduct hearings, receive evidence, and perform any act necessary to resolve factual issues in cases within its original and appellate jurisdiction. Although submitted in a motion for reconsideration, the evidence was presented to the Court of Appeals where parties are not precluded from presenting new evidence. Thus, respondent's contention that the evidence cannot be considered in the Rule 45 petition was rejected.

• Authority to Represent: The Special Power of Attorney dated June 2, 2006 authorized Gerardo Sermona to pursue the labor complaint until its conclusion, to sign any and all documents necessary in pursuit of the case, and to do and perform all acts requisite or necessary to carry into effect that authority, with full power of substitution and revocation. While it did not explicitly mention the Petition for Certiorari before the Court of Appeals or the Petition for Review before the Supreme Court, the clear intent was to include these petitions, as they are filed in relation to the illegal dismissal case. Denying the petition on the basis of a technicality in word usage would be contrary to the principle of affording full protection to labor and the constitutional mandate of a compassionate attitude toward the working class.

• Employer-Employee Relationship: While procedural rules may be relaxed in labor cases, parties must still satisfy the quantum of substantial evidence — that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The burden of proof is on petitioners as the ones alleging the existence of an employer-employee relationship. The four-fold test applies: (1) selection and engagement of the employee, (2) payment of wages, (3) power of dismissal, and (4) the employer's power to control the employee's conduct, with the control element being the most important index. Petitioners presented retraction affidavits from Roberto Paculares, Rene Paculares, and Teresita Grapa, but retractions are looked upon with disfavor because they can easily be secured through intimidation or monetary consideration and are exceedingly unreliable. The Sworn Statements were uniform in language, did not specify what testimony was being retracted, and failed to explain why the affiants initially testified against petitioners. Rene Paculares was not even an affiant in the Paculares Joint Affidavit, so his statement was not a retraction at all. Teresita Grapa's claim that she did not sign any paper for Uy, despite her signature appearing in the Paculares Joint Affidavit and payrolls, raised an allegation of forgery, which is never presumed and must be proved by clear, positive, and convincing evidence. As to the land-area documents, the Order of Transfer of Homestead Rights, Tax Declaration, Testimony for Homestead Application, and Official Receipts merely showed the rights of the Galvan-Saguns over a property without showing that Uy occupied or used it for sugar production. The only document indicating Uy's occupation — the Handwritten Statement of Editha Galvan-Sagun — was not verified, certified, authenticated, or notarized, and showed no evidence of having been received by the Department of Environment and Natural Resources. Petitioners also presented contradictory evidence: the Estopido Joint Affidavit stated the affiants were co-workers at Hacienda Lumboy, but petitioners later stated in their Memorandum that the affiants were workers of the adjacent Montespina sugar lands. Fraud alleged against Uy's payrolls was not proved, as fraud is never presumed and must be established by clear and convincing evidence. Petitioners thus failed to satisfy the four-fold test by substantial evidence.

• Four-Fold Test for Employer-Employee Relationship — The existence of an employer-employee relationship is determined by four elements: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to control the employee's conduct. The control element is the most important index of the relationship. The Court applied this test and found that petitioners failed to present substantial evidence establishing any of the four elements, particularly the element of control.

• Substantial Evidence in Labor Cases — Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. While rules of procedure and evidence are relaxed in labor cases, the quantum of proof must still be satisfied; the relaxation of rules does not mean a complete dispensation of proof. The burden is on the party alleging the existence of an employer-employee relationship to prove it by substantial evidence.

• Unreliability of Retractions — Retractions of testimonies previously given are looked upon with disfavor because they can easily be secured from poor and ignorant witnesses through intimidation or monetary consideration, and there is always the probability that they may later be repudiated. Before accepting a retraction, courts must examine the circumstances surrounding it and the possible motives of the witness. A comparison of the prior and subsequent testimonies must be made, and the general rules of evidence must still be applied. The same rule applies in labor cases.

• Forgery is Never Presumed — The party alleging forgery has the burden to prove it by clear, positive, and convincing evidence. The mere denial of signatures cannot automatically invalidate a document, as forgery is never presumed.

• Exceptions to the Rule Against Factual Review in Rule 45 Petitions — While only questions of law may be raised in a Rule 45 petition, the Court may review factual findings in ten recognized instances, including: (1) when the conclusion is grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals went beyond the issues and its findings are contrary to the admissions of both parties; (7) when the Court of Appeals' findings are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence; (9) when the facts set forth in the petition are not disputed by the respondents; and (10) when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record.

• "While rules on procedure may be relaxed in labor cases, patties are still required to satisfy the quantum of proof required." — This passage articulates the principle that procedural liberality in labor cases does not dispense with the evidentiary burden, a central ratio decidendi of the decision.

• "Recantations are frowned upon by the courts. A recantation of a testimony is exceedingly unreliable, for there is always the probability that such recantation may later on be itself repudiated." — This formulation of the doctrine on retractions, citing People vs. Ceniza y Casas, defines the controlling rule applied to the retraction affidavits in this case.

• "While the Constitution is committed to the policy of social justice and the protection of the working class. It should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights which are entitled to respect and enforcement in the interest of simple fair play." — This passage, citing Javier vs. Fly Ace Corp., balances the constitutional protection of labor against the requirement that claims must be supported by substantial evidence, a principle frequently cited in subsequent jurisprudence.

• Spouses Miano vs. Manila Electric Co., 800 Phil. 118 (2016) — Cited for the rule that only questions of law may be raised in a Rule 45 petition and for the enumerated exceptions allowing factual review, including when findings of fact are conflicting.
• Fuji Television Network, Inc. vs. Espiritu, 749 Phil. 388 (2014) — Cited for the parameters of judicial review under Rule 45 in labor cases, specifically that the Court reviews whether the Court of Appeals correctly determined the presence or absence of grave abuse of discretion in the NLRC decision.
• Javier vs. Fly Ace Corp., 682 Phil. 359 (2012) — Cited for the substantial evidence standard in labor cases, the four-fold test for employer-employee relationship, the rule that forgery is never presumed, and the principle that not every labor dispute is automatically decided in favor of labor.
• Reano vs. Court of Appeals, 247-A Phil. 605 (1988) — Cited for the doctrine that retractions are looked upon with disfavor and the rule for comparing prior and subsequent testimonies.
• Philippine National Bank vs. Gregorio, 818 Phil. 321 (2017) — Cited for the application of the retraction doctrine in labor cases, holding that an affidavit of retraction does not automatically vitiate prior testimony.
• Maralit vs. Philippine National Bank, 613 Phil. 270 (2009) — Cited for the authority of the Court of Appeals to receive new evidence in a special civil action for certiorari under Section 9 of Batas Pambansa Blg. 129, as amended.
• BMG Records (Phils.), Inc. vs. Aparecio, 559 Phil. 80 (2007) — Cited for the rule that fraud is never presumed and must be proved by clear and convincing evidence, not mere preponderance.

• Section 9, Batas Pambansa Blg. 129, as amended by Republic Act No. 7902 — Empowers the Court of Appeals to try cases, conduct hearings, receive evidence, and perform any act necessary to resolve factual issues in cases within its original and appellate jurisdiction. Applied to uphold the admissibility of new evidence submitted before the Court of Appeals in a Rule 65 petition.
• Rule 45, Rules of Court — Governs petitions for review on certiorari before the Supreme Court, limiting review to questions of law. Applied to determine the scope of review and the recognized exceptions allowing factual review.
• Article 223, Labor Code — Provides that NLRC decisions are final and executory after ten calendar days and may only be reviewed through a petition for certiorari under Rule 65. Applied to delineate the limited scope of review in labor cases.
• Section 10, Rule VII, New Rules of Procedure of the NLRC (2011) — Allows relaxation of rules of procedure and evidence in labor cases. Applied to emphasize that while procedural liberality is afforded, the quantum of substantial evidence must still be satisfied.
• Article II, Section 18 and Article XIII, Section 3, 1987 Constitution — Affirm labor as a primary social economic force and mandate full protection to labor. Applied to justify relaxing procedural technicalities such as the scope of the Special Power of Attorney in favor of petitioners.
• Paragraph (b), Section 1, Rule IV, 2004 Rules of Notarial Practice — Requires that when signatures are affixed by thumbmarks, there must be corresponding signatures of witnesses. Raised by respondent to challenge the Special Power of Attorney but not sustained by the Court as a ground to deny the petition.

Lazaro-Javier, J., M. Lopez, J., and J. Lopez, J. concurred. Kho, Jr., J. was on leave.