---

SECOND DIVISION

G.R. No. 144619 November 11, 2005

C. PLANAS COMMERCIAL and/or MARCIAL COHU, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), ALFREDO OFIALDA, DIOLETO MORENTE and RUDY ALLAUIGAN, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari filed by C. Planas Commercial and/or Marcial Cohu, (petitioners) assailing the Decision of the Court of Appeals (CA) dated January 19, 2000¹ which affirmed in toto the decision of the National Labor Relations Commission (NLRC) and the Resolution dated August 15, 2000² denying petitioners’ motion for reconsideration.

On September 14, 1993, Dioleto Morente, Rudy Allauigan and Alfredo Ofialda (private respondents) together with 5 others³ filed a complaint for underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave pay and premium pay for holiday and rest day and night shift differential against petitioners with the Arbitration Branch of the NLRC. The case was docketed as NLRC Case No. 00-09-05804-93.⁴

In their position paper, private respondents alleged that petitioner Cohu, owner of C. Planas Commercial, is engaged in wholesale of plastic products and fruits of different kinds with more than 24 employees; that private respondents were hired by petitioners on January 14, 1990, May 14, 1990 and July 1, 1991, respectively, as helpers/laborers; that they were paid below the minimum wage law for the past 3 years; that they were required to work for more than 8 hours a day without overtime pay; that they never enjoyed holiday pay and did not have a rest day as they worked for 7 days a week; and they were not paid service incentive leave pay although they had been working for more than one year. Private respondent Ofialda asked for night shift differential as he had worked from 8 p.m. to 8 a.m. the following day for more than one year.

Petitioners filed their comment admitting that private respondents were their helpers who used to accompany the delivery trucks and helped in the loading and unloading of merchandise being distributed to clients; that they usually started their work from 10 a.m. to 6 p.m.; that private respondents stopped working with petitioners sometime in September 1993 as they were already working in other establishments/stalls in Divisoria; that they only worked for 6 days a week; that they were not entitled to holiday and service incentive leave pays for they were employed in a retail and service establishment regularly employing less than ten workers.

On December 6, 1994, a decision⁵ was rendered by the Labor Arbiter dismissing private respondents’ money claims for lack of factual and legal basis. He made the following findings:

The basic issue raised before us is whether or not complainants are entitled to the money claims.

The rule in this jurisdiction is that employers who are regularly employing not more than ten workers in retail establishments are exempt from the coverage of the minimum wage law.

In connection therewith and in consonance with Sec. 1, Rule 131 of the Rules of Court, it is incumbent upon the party to support affirmative allegation that an employer regularly employs more than ten (10) workers.

In the case at bar, complainants failed to substantiate their claim that the respondent establishment regularly employs twenty (sic) (24) workers.

Accordingly, we have no factual basis to grant salary differentials to complainants. In the same context, under Sec. 1 (b), Rule IV and Sec. 1(g), Rule V of the Implementing Rules of the Labor Code, complainants are not entitled to legal holiday pay and service incentive leave pay.

We also do not have sufficient factual basis to award overtime pay and premium pay for holiday and rest day because complainants failed to substantiate that they rendered overtime and during rest days.⁶

Private respondents filed their appeal with the NLRC which was opposed by petitioners. However, pending the appeal, private respondents Morente⁷ and Allauigan⁸ filed their respective motions to dismiss with release and quitclaim before the NLRC.

On September 30, 1997, the NLRC rendered its decision,⁹ the dispostive portion of which reads:

WHEREFORE, in view of all the foregoing considerations, the decision appealed from should be, as it is hereby, MODIFIED by directing the respondent to pay Alfredo Ofialda, Diolito Morente and Rudy Allauigan the total amount of Seventy-Five Thousand One Hundred Twenty Five Pesos (P75,125.00) representing their combined salary differentials, holiday pay, and service incentive leave pay.

The NLRC made the following ratiocinations:

… On claims for underpayment/non-payment of legally mandated wages and fringe benefits where exemption from coverage of the minimum wage law is put up as a defense, he who invokes such an exemption (usually the employer) has the burden of showing the basis for the exemption like for instance the fact of employing regularly less than ten workers.

In the instant case, complainants alleged that despite employing more than twenty-four (24) workers in his establishment, hence covered by the minimum wage law, nevertheless the individual respondent did not pay his workers the legal rates and benefits due them since their employment. By way of answer, respondents countered that they employ less than ten (10) persons, hence the money claims of complainants lack factual and legal basis.

Stated differently, against complainants’ charge of underpayment in wages and non-payment of fringe benefits legally granted to them, the respondents raised the defense of exemption from coverage of the minimum wage law and in support thereof alleged that they regularly employed less than ten (10) workers to serve as basis for their exemption under the law, they (respondents) must prove that they employed less than ten workers, instead of more than twenty-four (24) workers as alleged by the complainants.

However, apart from their allegation, respondents presented no evidence to show the number of workers they employed regularly. This failure is fatal to respondents’ defense. This in turn brings us to the question of whether the complainants were underpaid and unpaid of legal holiday pay and service incentive leave pay due them.

Stated earlier are the different amounts that each complainant was receiving by way of salary on certain periods of their employment with respondents, which amounts according to complainants are "way below the minimum wage then prevailing." Considering that respondents failed to present the payrolls or vouchers which could prove otherwise, the money claims deserve favorable consideration.

Taking note of the 3 year prescription, the period covered is from September 14, 1990 to September 14, 1993 when the instant case was filed, and based on a 6-day work per week, the underpayment (salary differential), legal holiday pay, and service incentive leave pay due to complainants, as computed, are as follows:

	Salary Diff.	Holiday Pay	SILP
1. A. OFIALDA	P14,934.00	P2,362.00	P1,180.00
2. D. MORENTE	23,964.00	3,258.00	1,730.00
3. R. ALLAUIGAN	22,609.00	3,258.00	1,730.00

With respect to the other claims, i.e., overtime pay and premium pay for holiday and rest day, We find no reason to disturb the Labor Arbiter’s ruling thereon, that there is no sufficient factual basis to award the claims because complainants failed to substantiate that they rendered overtime and during rest days. These claims, unlike claims for underpayment and non-payment of fringe benefits mandated by law, need to be proven by the claimants.¹⁰

Petitioners filed a petition for certiorari¹¹ with prayer for temporary restraining order and preliminary injunction before this Court on November 26, 1997. Respondents were required to file their Comment but only public respondent NLRC, through the Solicitor General, complied therewith. In a Resolution dated June 28, 1999,¹² the petition was referred to the CA pursuant to our ruling in St. Martin Funeral Homes vs. NLRC.

On January 19, 2000,¹³ the CA denied the petition for lack of merit and affirmed in toto the NLRC decision. It said:

Having claimed exemption from the coverage of the minimum wage laws or order, it was incumbent upon petitioner to prove such claim. Apart from simply denying private respondents’ allegation that it employs more than 24 workers in its business, petitioner failed to adduce evidence to prove that it is, indeed, a "retail establishment" which employs less than ten (10) employees. Its failure to present records of its workers and their respective wages gives rise to the presumption that these are adverse to its claims. Indeed, it is hard to believe that petitioner does not keep such records. More so, considering private respondents claim that petitioner "employs more than twenty four (24) employees and engaged in both wholesale and retail business of fruits by volume on CONTAINER BASIS, not by price of fruit, but by container size retail, involving millions of pesos capital, fruits coming from China, Australia and the United States" (p. 170, Rollo).

Needless to say, the inclusion of respondents Morente and Allauigan in the NLRC award is in order. In its decision, public respondent awarded ₱75,125.00, representing the combined salary differentials, holiday pay and service incentive leave pay of all three (3) private respondents. Of this, ₱28,952.00 is earmarked for respondent Morente, and ₱27,597.00 for respondent Allauigan, both of whom executed quitclaims after receiving ₱3,000.00 and ₱6,000.00 respectively, from petitioner.

On this score, the Court quotes with approval the arguments advanced by the Solicitor General thus:

While a compromise agreement or amicable settlement is not against public policy per se it must be shown however that it was "voluntarily entered into and represents a reasonable settlement, and the consideration for the quitclaim is credible and reasonable" (Santiago v. NLRC, 198 SCRA 111 [1991]). For the law usually looks with disfavor upon quitclaims and releases executed by employees usually resulting from a compromise with their employers. (Velasco v. DOLE, 200 SCRA 201 [1991]). This is so because the employers and the employees obviously do not stand on equal footing. Driven against the wall by the employer, the employee is in no position to resist the money offered. (Lopez Sugar Corp v. FFW-PLU, 189 SCRA 179 [1990]).

Thus, Fuentes v. NLRC, 167 SCRA 767 (1988) enunciates:

In the absence of any showing that the compromise settlement and the quitclaims and releases entered into and made by the employees were free, fair and reasonable- especially as to the amount or consideration given by the employer in exchange therefore, the fact that they executed the same and received their monetary benefits thereunder does not militate against them. The Law does not consider as valid any agreement to receive less compensation than what a worker is entitled to receive.

In the case at bar, it will be noticed that the vouchers dated September 13, 1995 and September 20, 1996 (pp. 194 and 197, NLRC Record), submitted by petitioners (pp. 191-192, Record), show that private respondent Allauigan was only paid ₱6,000.00 and Morente, ₱3,000.00 --- when they are legally entitled to receive ₱28,952.00 and ₱27,597.00, respectively. Under the circumstances, subject compromise settlements cannot be considered valid and binding upon the NLRC as they do not represent fair and reasonable settlements, nor do they demonstrate voluntariness on the part of private respondents Morente and Allauigan. These employees should still be paid the full amounts of their salary differentials, holiday pay and service incentive leave pay less the amounts they had already received under the compromise settlements with petitioners (pp. 174-175, Rollo).

Parenthetically, the Court notes that petitioner availed itself of this remedy without first seeking a reconsideration of the assailed decision. As a general rule, certiorari will not lie unless an inferior court, has through a motion for reconsideration, a chance to correct the errors imputed to it. While the rule admits of exceptions, petitioner has not shown any reason for this Court not to apply said rule, which would have justified outright dismissal of the petition were it not for the Court’s desire to resolve the case not on a technicality but on the merits.¹⁴

Petitioners’ motion for reconsideration was denied in a Resolution dated August 15, 2000.¹⁵

Hence, the instant petition for review on certiorari filed by petitioners.

Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic products and fruits to the customers for personal use, thus exempted from the application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria Market and the level of its business activity requires and sustains only less than ten employees at a time. Petitioners contend that private respondents were paid over and above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that private respondents’ claim for underpayment has no factual and legal basis. Petitioners claim that since private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to prove such allegation which private respondents failed to do.

Petitioners also contend that the CA erred in applying strictly the rules of evidence against them by holding that it was incumbent upon them to prove that their company is exempted from the minimum wage law. They contend that they could not present records of their workers and their respective wages because by the very nature of their business, the system of management is very loose and informal, thus salaries and wages are paid by merely handing the money to the worker without the latter being required to sign anything as proof of receipt. Thus, it would be unreasonable to insist upon petitioner to present documents that they do not possess or keep in the first place.

We are not persuaded.

R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all workers and employees in the private sector. Section 4 of the Act provides for exemption from the coverage, thus:

Sec. 4.

. . .

(c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another, including family drivers.

Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act.

Clearly, for a retail/service establishment to be exempted from the coverage of the minimum wage law, it must be shown that the establishment is regularly employing not more than ten (10) workers and had applied for exemptions with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Petitioners’ main defense in controverting private respondents’ claim for underpayment of wages is that they are exempted from the application of the minimum wage law, thus the burden of proving¹⁶ such exemption rests on petitioners. Petitioners had not shown any evidence to show that they had applied for such exemption and if they had applied, the same was granted.

In Murillo vs. Sun Valley Realty, Inc.¹⁷ where the respondents claim that petitioners therein are not entitled to service incentive leave pay inasmuch as establishment employing less than ten (10) employees are exempted by the Labor Code and the Implementing Rules from paying service incentive leave pay, we held:

…..the clear policy of the Labor Code is to include all establishments, except a few classes, under the coverage of the provision granting service incentive leave to workers. Private respondents' claim is that they fell within the exception. Hence, it was incumbent upon them to prove that they belonged to a class excepted by law from the general rule. Specifically, it was the duty of respondents, not of petitioners, to prove that there were less than ten (10) employees in the company. Having failed to discharge its task, private respondents must be deemed to be covered by the general rule, notwithstanding the failure of petitioners to allege the exact number of employees of the corporation. In other words, petitioners must be deemed entitled to service incentive leave.¹⁸

Moreover, in C. Planas Commercial vs. NLRC,¹⁹ where herein petitioners are also involved in a case filed by one of its employees, we ruled:

Petitioners invoke the exemption provided by law for retail establishments which employ not more than ten (10) workers to justify their non-liability for the salary differentials in question. They insist that PLANAS is a retail establishment leasing a very small and cramped stall in the Divisoria market which cannot accommodate more than ten (10) workers in the conduct of its business.

We are unconvinced. The records disclose de los Reyes' clear entitlement to salary differentials. Well-settled is the rule that factual findings of labor officials who are deemed to have acquired expertise in matters within their jurisdiction are generally accorded not only respect but even finality and bind this Court when supported by substantial evidence or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. Thus, as long as their decisions are devoid of any unfairness or arbitratriness in the process of their deduction from the evidence proferred by the parties before them, all that is left is our stamp of finality by affirming the factual findings made by them. In this case, the award of salary differentials by the NLRC in favor of de los Reyes was made pursuant to RA 6727 otherwise known as the Wage Rationalization Act, and the Rules Implementing Wage Order Nos. NCR-01 and NCR-01-A and Wage Order Nos. NCR-02 and NCR-02-A.

Petitioners claim exemption under the aforestated law. However, the best proof that they could have adduced was their approved application for exemption in accordance with applicable guidelines issued by the Commission. Section 4, subpar. (c) of RA 6727 categorically provides:

Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board. In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act (emphasis supplied).

Extant in the records is the fact that petitioners had persistently raised the matter of their exemption from any liability for underpayment without substantiating it by showing compliance with the aforecited provision of law. It bears stressing that the NLRC affirmed the Labor Arbiter’s award of salary differentials due to underpayment on the ground that de los Reyes' claim therefor was not even denied or rebutted by petitioners.

More importantly, NLRC correctly upheld the Labor Arbiter's finding that PLANAS employed around thirty (30) workers. We have every reason to believe that petitioners need at least thirty (30) persons to conduct their business considering that Manager Cohu did not submit any employment record to prove otherwise. As employer, Manager Cohu ought to be the keeper of the employment records of all his workers. Thus, it was well within his means to refute any monetary claim alleged to be unpaid. His inability to produce the payrolls from their files without any satisfactory explanation can be interpreted no less as suppression of vital evidence adverse to PLANAS.

Petitioners aver that the CA erred in ruling that private respondents Morente and Allauigan are still entitled to monetary awards despite the latter’s execution of release and quitclaims because the settlement was not voluntarily entered into by private respondents. Petitioners insist that both private respondents Morente and Allauigan voluntarily entered into an amicable settlement with them on September 17 and 18, 1995, respectively; that they were the ones who initiated the talks for settlement and who pegged the amount; that they both voluntarily appeared before the Labor Arbiter to move for the dismissal of their case insofar as their claims are concerned as well as submitted to the Labor Arbiter their respective quitclaims and releases which were duly subscribed before the Labor Arbiter and duly notarized.

We find merit in petitioners’ argument.

It has been held that not all quitclaims are per se invalid or against public policy, except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In these cases, the law will step in to annul the questionable transactions.²⁰ Such quitclaim and release agreements are regarded as ineffective to bar the workers from claiming the full measure of their legal rights.²¹

We find these two instances not present in private respondents Allauigan and Morente’s case. They failed to refute petitioners’ allegation that the settlement was voluntarily made as they had not filed any pleadings before the CA. Notably, we have required private respondents to file their comment on the instant petition, however, they failed to do so. They were then required to show cause why they should not be disciplinarily dealt with or held in contempt.²² However, they still failed to file their comment, thus, they were imposed a fine of ₱1,000.00²³ which was subsequently increased to ₱2,000.00 as there was still no compliance. In a Resolution dated July 22, 2002, the Court ordered the National Bureau of Investigation to arrest and detain private respondents and the private respondents to file their comment.²⁴ As private respondents could not be located at their given address and they are not known in their locality, the order of arrest and commitment was returned unserved,²⁵ thus the Court required the Office of the Solicitor General to file the comment in behalf of all the respondents.²⁶ The Court finds such inaction on the part of private respondents Allauigan and Morente an indication that they already relented in their claims and gives credence to petitioners’ claim that they had voluntarily executed the release and quitclaim and the motion to dismiss.

The CA found that the subject compromise agreements are not valid considering that they did not represent the fair and reasonable settlements, i.e., that private respondent Allauigan was only paid ₱6,000.00 and Morente, ₱3,000.00 --- when they are legally entitled to receive ₱28,952.00 and ₱27,597.00, respectively.

We do not agree. It bears stressing that at the time of the execution of the release and quitclaim, the case filed by private respondents against petitioners was already dismissed by the Labor Arbiter and it was pending appeal before the NLRC. Private respondents could have executed the release and quitclaim because of a possibility that their appeal with the NLRC may not be successful. Since there was yet no decision rendered by the NLRC when the quitclaims were executed, it could not be said that the amount of the settlement is unconscionable. In any event, no deception has been established that would justify the annulment of private respondents quitclaims.²⁷ In Mercer vs. NLRC,²⁸ we held that:

In Samaniego v. NLRC, we ruled that: "A quitclaim executed in favor of a company by an employee amounts to a valid and binding compromise agreement between them."

Recently, we held that in the absence of any showing that petitioner was "coerced or tricked" into signing the above-quoted Quitclaim and Release or that the consideration thereof was very low, she is bound by the conditions thereof.

As computed by the NLRC, private respondent Alfredo Ofialda is entitled to the payment of ₱14,934.00 as salary differential, ₱2,362.00 as legal holiday pay and ₱1,180.00 as service incentive leave pay, all in the total amount of ₱18,476.00.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated January 19, 2000 and its Resolution dated August 15, 2000 are AFFIRMED with MODIFICATION that petitioners are ordered to pay private respondent Alfredo Ofialda the total amount of ₱18,476.00 and the monetary awards in favor of private respondents Rudy Allauigan and Dioleto Morente are hereby DELETED.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Associate Justice

ROMEO J. CALLEJO, SR. Associate Justice

DANTE O. TINGA Associate Justice

(On leave)

MINITA V. CHICO-NAZARIO Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO

Acting Chief Justice

Footnotes

¹ Acting Chief Justice.

** On leave.

Penned by Justice Artemio G. Tuquero, concurred in by Justices Ramon U. Mabutas, Jr. and Mercedes Gozo-Dadole, Ninth Division; Rollo, pp. 115-122.

² Penned by Justice Ramon U. Mabutas, Jr., concurred in by Justices Mercedes Gozo-Dadole and Elvi John S. Asuncion, Special Former Ninth Division; Rollo, p. 131.

³ Jonel Patron, Rogelio Amar, Jaime Vili, Junny Villamor and Roger Ofialda subsequently amicably settled their claims.

⁴ Rollo, pp. 24-34.

⁵ Id., at pp. 36-40; penned by Labor Arbiter Geobel A. Bartolabac.

⁶ Id., at pp. 39-40.

⁷ Id., at p. 51.

⁸ Id., at p. 52.

⁹ Id., at pp. 54-62; penned by Commissioner Victoriano R. Calaycay, concurred in by Commissioners Raul T. Aquino and Rogelio I. Rayala; NLRC Case No. 008537-95

¹⁰ Id., at pp. 58-62.

¹¹ Docketed as G.R. No. 131348.

¹² Id., at p. 97.

¹³ Id., at pp. 115-122.

¹⁴ Id., at pp. 119-121.

¹⁵ Id., at p. 131.

¹⁶ Section 1 of Rule 131 of the Rules on Evidence

Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the mount of evidence required by law.

¹⁷ No. L-67272, June 30, 1988, 163 SCRA 271.

¹⁸ Id., at p. 277.

¹⁹ G.R. No. 121696, February 11, 1999, 303 SCRA 49.

²⁰ Unicane Workers Union-CLUP vs. National Labor Relations Commission, G.R. No. 107545, September 9, 1996, 261 SCRA 573, 585-586.

²¹ JGB and Associates, Inc. vs. National Labor Relations Commission, G.R. No. 109390, March 7, 1996, 254 SCRA 457, 465.

²² Resolution dated February 5, 2001; Rollo, p. 141.

²³ Resolution dated September 12, 2001.

²⁴ Rollo, pp.160-161.

²⁵ Id., at p. 168.

²⁶ Id., at p. 175-176.

²⁷ Veloso vs. Department of Labor and Employment, G.R. No. 87297, August 5, 1991, 200 SCRA 201, 205.

²⁸ G.R. No. 105606, March 16, 1995, 242 SCRA 376.

The Lawphil Project - Arellano Law Foundation

---