Burden of proof is on the employee to prove his entitlement thereto; failing in which, the latter should not be paid the same.

Thus, the SC held in the following case:

Madrio vs. Atlas Fertilizer Corporation
G.R. No. 241445, August 14, 2019

Burden of proof; Benefits incurred not in the course of business; Retirement benefits


Petitioner Rey Ben P. Madrio (Madrio) was formerly the Area Sales Manager of AFC until he tendered his resignation, which, however, was not shown to have been approved by the company. At that time, he also requested for the payment of several monetary benefits, but the same remained unheeded.

Feeling aggrieved, Madrio, filed a  complaint against AFC for the payment of several monetary benefits. Among others, Madrio claimed that he was entitled to separation benefits in the amount of P158,400.009 pursuant to AFC’s retirement/separation policy. As proof, Madrio attached an unsigned and unauthenticated typewritten copy of the Retirement Plan and Policy on Separation from Employment to his position paper, as well as copies of his pay slips to show his monthly pay.

For its part, AFC categorically denied that the Retirement Plan is the retirement/separation policy it had for its employees. It argued that it would be unreasonable for it  to pay separation benefits to an employee who was solely responsible in causing the company a  whopping financial loss of P43,023,550. attributed to his gross negligence in the handling of uncollected receivables from Richfield Agri-Supply (RAS).

In this regard, AFC averred that the disciplinary proceeding for Madrio’s gross negligence was only deferred out of humane considerations and in light of Madrio’s years of service. It further stressed that Madrio was given the chance to redeem himself by assisting AFC to recover said amount from the defaulting customer, i.e., RAS, but he just unceremoniously left the company without obtaining any clearance or permission from the management.

LA Ruling:

The LA ruled in favor of Madrio, and accordingly, ordered AFC to pay him the total amount of P273,200.00 representing his monetary claims, inclusive of separation benefits in the amount of P158,400.00. AFC was likewise ordered to issue Madrio’s Certificate of Employment.

The LA held that Madrio’s entitlement to separation benefits, among others, was already admitted by AFC itself as evinced by the tenor of its March 20, 2016 reply-letter received during conciliation proceedings. Considering that AFC introduced the reply-letter as its own evidence, and without qualification, it was estopped from assailing the contents thereof.

In this relation, the LA further pointed out that AFC, as the employer, had complete control over all the records of its employees. As such, it had the burden to prove payment or settlement when there was an allegation of non-payment of monetary claims. However, since AFC failed to do so, the claims are deemed admitted.

Dissatisfied, AFC appealed to the NLRC.

NLRC Ruling:

On appeal, AFC argued that the LA’s award of separation benefits was unwarranted as nothing in the March 20, 2016 reply-letter could be construed as automatically warranting Madrio’s entitlement to the same. All it indicated was that Madrio’s possible benefits were being processed.

AFC also reiterated its objection to the admissibility of the unsigned and unauthenticated Retirement Plan submitted by Madrio. Moreover, even assuming the admissibility of the same, Madrio was still not entitled to separation pay since he did not meet the minimum age requirement and had a derogatory record, i.e., the P43,023,550.21 loss that the company incurred.

The NLRC affirmed with modification the LA’s ruling by reducing the amount of the separation benefits from P158,400.00 to P84,150.00, among others.

The NLRC held that contrary to AFC’s arguments, it already tacitly admitted Madrio’s entitlement to separation benefits based on its March 20, 2016 reply-letter received during conciliation. Furthermore, while Madrio was not eligible for normal or optional retirement benefits, he was entitled to separation benefits under Section 4, Article IV of the Retirement Plan which covers an employee who “voluntarily resigns from the Company without any derogatory record.”

Aggrieved, AFC sought partial reconsideration which the NLRC denied. Thus, it filed a petition for certiorari before the CA.

CA Ruling:

The CA partially set aside the NLRC ruling insofar as the award of separation benefits to Madrio was concerned.

According to the CA, the NLRC erred in considering the Retirement Plan as evidence to support Madrio’s claim for separation benefits. Being unsigned and unauthenticated, there was no way to verify the truth of its contents, and thus, it should have been rejected as evidence.

In this regard, the CA held that while the NLRC is not bound by technical rules of procedure, the evidence presented must at least have a modicum of admissibility for it to have probative value, which was not the case here. Consequently, it ruled that Madrio was not entitled to separation benefits under AFC’s Retirement Plan given that there was no substantial evidence to prove the same.

Hence, the petition before the Supreme Court (SC).


Whether or not in admitting documentary evidence in labor cases some proof of authenticity or reliability is required other than mere unsigned document

Whether or not an unsigned copy of retirement/separation policy not denied, without submission of “true” copy, and contains technical, verbose and comprehensive contents bear some proof of authenticity and reliability

Whether or not when it comes to benefits not incurred in the normal course of business burden is on the employee to prove his entitlement thereto

SC Ruling:

The SC denied the petition.

According to the SC, contrary to the CA’s holding, the circumstances of this case show that there is actually some proof of authenticity or reliability that the copy of the Retirement Plan attached to Madrio’s position paper reflects AFC’s retirement/separation policy. This is because: (a) AFC never denied having an existing company policy wherein separation benefits are given to its qualified employees; ( b) AFC, which is presumed to have custody of the relevant documents covering its company policies, never submitted the “true” copy of its Retirement Plan despite being given the opportunity to do so; and ( c) as Madrio pointed out, the “eight (8)-page [ copy of the Retirement Plan] is too technical, verbose and comprehensive to be simply attributed as a  fake.”

Hence, these circumstances lend “some proof of authenticity or reliability” to the document presented by Madrio, and as such, the NLRC did not err in lending credence to the same.

Nevertheless, this does not mean that Madrio is automatically entitled to the claimed separation benefits. Proving the existence of AFC’s retirement/separation policy, as well as its pertinent terms and conditions, is separate and distinct matter from proving the fact that these terms and conditions have been complied with.

The separation benefits under the AFC’s company policy is not the separation pay contemplated under the labor code, but rather, a special benefit given by the company only to upstanding employees who have satisfied the following conditions: 1. The employee must voluntarily resign from the company; 2. The employee must not have a derogatory record; and 3. The employee must meet the minimum number of years in his credited service.

In light of these special conditions, it is fairly apparent that the separation benefits under the Retirement Plan are not in the nature of benefits incurred in the normal course of AFC’s business, such as salary differentials, service incentive leave pay, or holiday pay. As such, the burden is on the employee to prove his entitlement thereto; failing in which, the latter should not be paid the same.

In this case, Madrio only submitted a copy of the Retirement Plan as proof of his entitlement to the separation benefits claimed. However, by and of itself, the said document only proves what the retirement/separation policy of AFC is. It does not, in any way, demonstrate that the conditions for entitlement had already been met by the employee.

Most glaring of all is the failure of Madrio to at least, prima facie show that he had no derogatory record before voluntarily resigning from the company. As indicated in AFC’s March 20, 2016 reply-letter, AFC was still dealing with the P43,023,550.21 financial loss from the RAS account based on Madrio’s alleged gross negligence at the time he abruptly “resigned” from the company. While the records do not show that Madrio was disciplined for such infraction, AFC claims that “due to Madrio’s unceremonious resignation, [it] was no longer able to conduct disciplinary proceedings and/or administrative hearings in relation to [Madrio’s] non-feasance. It might even [be] safe to say that [Madrio] resigned just to pre-empt [AFC] from instituting disciplinary proceedings against him.”

As such, it cannot be said that Madrio has no derogatory record with the company. Hence, unless proven otherwise, Madrio is not qualified to claim separation benefits from AFC.

Moreover, Madrio’s claim for separation benefits appears to be premature. It is undisputed that Madrio left the company while his separation benefits were still being processed and yet to be approved by the Retirement Committee pursuant to the “company’s normal operating procedure.” This is clear from the March 20, 2016 reply-letter which -contrary to the findings of the labor tribunals -was not an admission of liability but, quite the contrary, an assertion that Madrio’s claim for separation benefits was still subject to a contingency.

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