Agabon Doctrine
Agabon Doctrine
Agabon Doctrine
SUPREME COURT
Manila
EN BANC
G.R. No. 80587 February 8, 1989
WENPHIL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND ROBERTO MALLARE, respondents.
Renato B. Valdecantos & Associates for petitioner.
The Solicitor General for public respondent.
Diego O. Untalan for private respondent.
GANCAYCO, J.:
Once again the dismissal of an employee without affording him due process is brought to the attention of this Court
by this petition.
Private respondent was hired by petitioner on January 18, 1984 as a crew member at its Cubao Branch. He thereafter
became the assistant head of the Backroom department of the same branch. At about 2:30 P.M. on May 20, 1985
private respondent had an altercation with a co-employee, Job Barrameda, as a result of which he and Barrameda
were suspended on the following morning and in the afternoon of the same day a memorandum was issued by the
Operations Manager advising private respondent of his dismissal from the service in accordance with their Personnel
Manual. The notice of dismissal was served on private respondent on May 25, 1985.
Thus private respondent filed a complaint against petitioner for unfair labor practice, illegal suspension and illegal
dismissal. After submitting their respective position papers to the Labor Arbiter and as the hearing could not be
conducted due to repeated absence of counsel for respondent, the case was submitted for resolution. Thereafter a
decision was rendered by the Labor Arbiter on December 3, 1986 dismissing the complaint for lack of merit.
Private respondent appealed to the National Labor Relations Commission (NLRC) wherein in due course a decision
was rendered on October 16, 1987 setting aside the appealed decision and ordering the reinstatement of private
respondent to his former position without loss of seniority and other related benefits and one (1) year backwages
without qualification and deduction.
Hence the herein petition for certiorari with preliminary injunction and/or restraining order wherein petitioner alleges
that the public respondent NLRC committed a grave abuse of discretion in rendering its decision contrary to the
evidence on record.
On December 2, 1987, the court issued a restraining order as prayed for in the petition enjoining the enforcement of
the decision dated October 16, 1987 of public respondent NLRC upon petitioner posting a bond of P20,000.00.
The theory of the petitioner is that on the aforesaid date, May 20, 1985, when private respondent and Barrameda had a
misunderstanding about tending the Salad Bar, private respondent slapped Barrameda's cap, stepped on his foot and
picked up the ice scooper and brandished it against the latter. Marijo B. Kolimlim who was a management trainee
tried to pacify private respondent but he defied her so Kolimlim reported the incident to the assistant manager, Delilah
C. Hermosura, who immediately asked private respondent to see her. Private respondent refused to see Hermosura and
it took the security guard to bring him to her. Private respondent then shouted and uttered profane words instead of
making an explanation before her. He stated the matter should be settled only by him and Barrameda. The following
day Kolimlim and Hermosura submitted a report on the incident and recommended the imposition of the appropriate
penalties on both. It was the store manager who issued a report meting out the penalty of suspension on the two until
further notice in the following morning. Later that day the Operations Manager issued a memorandum advising
Barrameda of one (1) week suspension and the dismissal of private respondent from the service.
The main thrust of the petition is that under the Personnel Manual of petitioner which had been read and understood
by private respondent, private respondent waived his right to the investigation. It is provided therein that INVESTIGATION
If the offense is punishable with a penalty higher than suspension for fifteen (15) days, upon the
request of the erring employee, there shall be convened an investigation board composed of the
following
1. The Parlor Manager or Supervisor on duty when the incident occurred.
2. The General Manager or the Assistant Manager.
The investigation board shall discuss the merits of the case and shall issue a ruling, which shall be final
and conclusive. (p. 3, Personnel Manual: Emphasis supplied).
From the foregoing it appears that an investigation shall only be conducted if the offense committed by the employee
is punishable with the penalty higher than suspension of fifteen (15) days and the erring employee requests for an
investigation of the incident. Petitioner alleges that private respondent not having asked for an investigation he is thus
deemed to have waived his right to the same. Petitioner avers that immediately after the incident when private
respondent was asked to see Hermosura, he was defiant and showed that he was not interested to avail of an
investigation.
The contention of petitioner is untenable. The incident happened on May 20, 1985 and right then and there as afore
repeated on the following day private respondent was suspended in the morning and was dismissed from the service
in the afternoon. He received an official notice of his termination four (4) days later.
The defiant attitude of private respondent immediately after the incident amounted to insubordination. Nevertheless
his refusal to explain his side under the circumstances cannot be considered as a waiver of his right to an
investigation.
Although in the Personnel Manual of the petitioner, it states that an erring employee must request for an investigation
it does not thereby mean that petitioner is thereby relieved of the duty to conduct an investigation before dismissing
private respondent. Indeed said provision of the Personnel Manual of petitioner which may effectively deprive its
employees of the right to due process is clearly against the law and hence null and void. The security of tenure of a
laborer or employee is enshrined in the Constitution, the Labor Code and other related laws. 1
Under Section 1, Rule XIV of the Implementing Regulations of the Labor Code, it is provided that "No worker shall
be dismissed except for just or authorized cause provided by law and after due process." Sections 2, 5, 6, and 7 of the
same rules require that before an employer may dismiss an employee the latter must be given a written notice stating
the particular act or omission constituting the grounds thereof; that the employee may answer the allegations within a
reasonable period; that the employer shall afford him ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires; and that it is only then that the employer may dismiss the employee
by notifying him of the decision in writing stating clearly the reasons therefor. Such dismissal is without prejudice to
the right of the employee to contest its validity in the Regional Branch of the NLRC.
Petitioner insists that private respondent was afforded due process but he refused to avail of his right to the same; that
when the matter was brought to the labor arbiter he was able to submit his position papers although the hearing cannot
proceed due to the non-appearance of his counsel; and that the private respondent is guilty of serious misconduct in
threatening or coercing a co-employee which is a ground for dismissal under Article 283 of the Labor Code.
The failure of petitioner to give private respondent the benefit of a hearing before he was dismissed constitutes an
infringement of his constitutional right to due process of law and equal protection of the laws. 2 The standards of due
process in judicial as well as administrative proceedings have long been established. In its bare minimum due process
of law simply means giving notice and opportunity to be heard before judgment is rendered. 3
The claim of petitioner that a formal investigation was not necessary because the incident which gave rise to the
termination of private respondent was witnessed by his co- employees and supervisors is without merit. The basic
requirement of due process is that which hears before it condemns, which proceeds upon inquiry and renders
judgment only after trial. 4
However, it is a matter of fact that when the private respondent filed a complaint against petitioner he was afforded
the right to an investigation by the labor arbiter. He presented his position paper as did the petitioner. If no hearing
was had, it was the fault of private respondent as his counsel failed to appear at the scheduled hearings. The labor
arbiter concluded that the dismissal of private respondent was for just cause. He was found guilty of grave misconduct
and insubordination. This is borne by the sworn statements of witnesses. The Court is bound by this finding of the
labor arbiter.
By the same token, the conclusion of the public respondent NLRC on appeal that private respondent was not afforded
due process before he was dismissed is binding on this Court. Indeed, it is well taken and supported by the records.
However, it can not justify a ruling that private respondent should be reinstated with back wages as the public
respondent NLRC so decreed. Although belatedly, private respondent was afforded due process before the labor
arbiter wherein the just cause of his dismissal bad been established. With such finding, it would be arbitrary and unfair
to order his reinstatement with back wages.
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority
and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding three
(3) years without qualification or deduction, when it appears he was not afforded due process, although his dismissal
was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment,
should be re-examined. It will be highly prejudicial to the interests of the employer to impose on him the services of
an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it
will demoralize the rank and file if the undeserving, if not undesirable, remains in the service.
Thus in the present case, where the private respondent, who appears to be of violent temper, caused trouble during
office hours and even defied his superiors as they tried to pacify him, should not be rewarded with re-employment and
back wages. It may encourage him to do even worse and will render a mockery of the rules of discipline that
employees are required to observe. Under the circumstances the dismissal of the private respondent for just cause
should be maintained. He has no right to return to his former employer.
However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an
investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must
be for just or authorized cause and after due process. 5 Petitioner committed an infraction of the second requirement.
Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by
law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must
indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.
WHEREFORE, the petition is GRANTED. The questioned decision of the public respondent NLRC dated October
16, 1987 for the reinstatement with back wages of private respondent is REVERSED AND SET ASIDE, and the
decision of the labor arbiter dated December 3, 1986 dismissing the complaint is revived and affirmed, but with the
modification that petitioner is ordered to indemnify private respondent in the amount of P1,000.00. The restraining
order issued by this Court on December 2, 1987 is hereby made permanent and the bond posted by petitioner is
cancelled. This decision is immediately executory.
SO ORDERED.
Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Sarmiento, Grio-Aquino, Medialdea and
Regalado, JJ., concur.
Separate Opinions
administrative penalty for failure of petitioner to comply strictly with duly promulgated regulations implementing the
Labor Code, the amount if authorized, should form part of the public funds of the government.
Separate Opinions
MELENCIO-HERRERA, J., concurring and dissenting:
I, too, share the majority view that private respondent is not entitled to reinstatement and backwages for having been
terminated for cause.
Like Justice Cortes, however, it is my view that private respondent-employee has not been denied due process. But
even if petitioner-employer had failed to comply with the requirements of investigation and hearing, I believe with
Justice Padilla that it is not an indemnity that petitioner should be made to pay but rather separation pay in such
amount as may be justified under the circumstances of the case, not out of right, but to cushion the impact of his loss
of employment. in fact, this is the practice presently being followed by the National Labor Relations Commission.
PADILLA, J., concurring and dissenting:
I concur with the majority opinion that (1) the private respondent (employee) is not entitled to reinstatement and
backwages as it was clearly found by the Labor Arbiter that he was guilty of grave misconduct and insubordination
and (2) the petitioner (employer) failed to comply with the requirements of administrative due process in not having
given the employee, before his termination, the notice and hearing required by law.
I am of the view, however, that for the employer's omission he should be made to pay the separated employee a
separation pay (instead of indemnity) in the amount of P1,000.00.
"Indemnity" may connote The obligation of a person to make good any loss or damage another has incurred or may-incur by
acting at his request or for his benefit.
That which is given to a person to prevent his suffering a damage. (Shurdut Mill Supply Co. v. Central
Azucarera del Danao, 44037-R, December 19, 1979; Cited in Philippine Law Dictionary, 3rd Ed., F.B.
Moreno, p. 463)
while "separation pay" is pay given to an employee on the occasion of his separation from employment in order to
assuage even a little the effects of loss of employment.
CORTES, J., concurring and dissenting opinion:
I concur with the majority that a case for illegal dismissal has not been established. However, my reading of the case
reveals no denial of due process, hence there is no basis for the award of ONE THOUSAND PESOS (P1,000.00) as
indemnity in favor of private respondent. On the other hand, if the P1,000.00 is imposed as a sanction in the form of
administrative penalty for failure of petitioner to comply strictly with duly promulgated regulations implementing the
Labor Code, the amount if authorized, should form part of the public funds of the government.
Footnotes
1 Section 18, Article II, and Section 3, Article XIII of the 1987 Constitution; Articles 280 and 283 of
the Labor Code; and the Implementing Rules of the Labor Code.
The parties were required to submit their position papers, on the basis of which the Labor Arbiter defined the issues as
follows:[5]
Whether or not there is a valid ground for the dismissal of the complainant.
Whether or not complainant is entitled to his monetary claims for underpayment of wages,
nonpayment of salaries, 13th month pay for 1991 and overtime pay.
Whether or not Respondent is guilty of unfair labor practice.
Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner to have
been illegally dismissed. He ruled that private respondent failed to establish that it had retrenched its security section
to prevent or minimize losses to its business; that private respondent failed to accord due process to petitioner; that
private respondent failed to use reasonable standards in selecting employees whose employment would be terminated;
that private respondent had not shown that petitioner and other employees in the security section were so inefficient
so as to justify their replacement by a security agency, or that "cost-saving devices [such as] secret video cameras (to
monitor and prevent shoplifting) and secret code tags on the merchandise" could not have been employed; instead, the
day after petitioners dismissal, private respondent employed a safety and security supervisor with duties and
functions similar to those of petitioner.
Accordingly, the Labor Arbiter ordered:[6]
WHEREFORE, above premises considered, judgment is hereby decreed:
(a)......Finding the dismissal of the complainant to be illegal and concomitantly,
Respondent is ordered to pay complainant full backwages without qualification or
deduction in the amount of P74,740.00 from the time of his dismissal until
reinstatement (computed till promulgation only) based on his monthly salary
of P4,040.00/month at the time of his termination but limited to (3) three years;
(b)......Ordering the Respondent to immediately reinstate the complainant to his former
position as security section head or to a reasonably equivalent supervisorial position in
charges of security without loss of seniority rights, privileges and benefits. This order is
immediately executory even pending appeal;
(c)......Ordering the Respondent to pay complainant unpaid wages in the amount
of P2,020.73 and proportionate 13th month pay in the amount of P3,198.30;
(d)......Ordering the Respondent to pay complainant the amount of P7,995.91,
representing 10% attorneys fees based on the total judgment award of P79,959.12.
All other claims of the complainant whether monetary or otherwise is hereby dismissed
for lack of merit.
SO ORDERED.
Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of the
Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every year of service,
unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for reconsideration, but his motion was
denied.
The NLRC held that the phase-out of private respondents security section and the hiring of an independent security
agency constituted an exercise by private respondent of "[a] legitimate business decision whose wisdom we do not
intend to inquire into and for which we cannot substitute our judgment"; that the distinction made by the Labor
Arbiter between "retrenchment" and the employment of "cost-saving devices" under Art. 283 of the Labor Code was
insignificant because the company official who wrote the dismissal letter apparently used the term "retrenchment" in
its "plain and ordinary sense: to layoff or remove from ones job, regardless of the reason therefor"; that the rule of
"reasonable criteria" in the selection of the employees to be retrenched did not apply because all positions in the
security section had been abolished; and that the appointment of a safety and security supervisor referred to by
petitioner to prove bad faith on private respondents part was of no moment because the position had long been in
existence and was separate from petitioners position as head of the Security Checkers Section.
Hence this petition. Petitioner raises the following issue:
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT
TO REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL
OF THE EMPLOYEES CLASSED UNDER THE LATTER?[7]
Petitioner contends that abolition of private respondents Security Checkers Section and the employment of an
independent security agency do not fall under any of the authorized causes for dismissal under Art. 283 of the Labor
Code.
Petitioner Laid Off for Cause
Petitioners contention has no merit. Art. 283 provides:
Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operations of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one
(1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.
In De Ocampo v. National Labor Relations Commission,[8] this Court upheld the termination of employment of three
mechanics in a transportation company and their replacement by a company rendering maintenance and repair
services. It held:
In contracting the services of Gemac Machineries, as part of the companys cost-saving program, the
services rendered by the mechanics became redundant and superfluous, and therefore properly
terminable. The company merely exercised its business judgment or management prerogative. And in
the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary
manner, the court will not interfere with the exercise of such prerogative.[9]
In Asian Alcohol Corporation v. National Labor Relations Commission,[10] the Court likewise upheld the termination
of employment of water pump tenders and their replacement by independent contractors. It ruled that an employers
good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of
an independent contractor to replace the services of the terminated employees to promote economy and efficiency.
Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of promoting
efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate
determination of whether services should be performed by its personnel or contracted to outside agencies . . . [While
there] should be mutual consultation, eventually deference is to be paid to what management
decides."[11] Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.[12]
In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990.[13] Such an assertion is not a sufficient basis for concluding that the
termination of petitioners employment was not a bona fide decision of management to obtain reasonable return from
its investment, which is a right guaranteed to employers under the Constitution.[14] Indeed, that the phase-out of the
security section constituted a "legitimate business decision" is a factual finding of an administrative agency which
must be accorded respect and even finality by this Court since nothing can be found in the record which fairly detracts
from such finding.[15]
Accordingly, we hold that the termination of petitioners services was for an authorized cause, i.e., redundancy.
Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the rate of one month pay
for every year of service.
Sanctions for Violations of the Notice Requirement
Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes the employer
must serve "a written notice on the workers and the Department of Labor and Employment at least one (1) month
before the intended date thereof." In the case at bar, petitioner was given a notice of termination on October 11, 1991.
On the same day, his services were terminated. He was thus denied his right to be given written notice before the
termination of his employment, and the question is the appropriate sanction for the violation of petitioners right.
To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC,[16] workers in a garment factory
were temporarily laid off due to the cancellation of orders and a garment embargo. The Labor Arbiter found that the
workers had been illegally dismissed and ordered the company to pay separation pay and backwages. The NLRC, on
the other hand, found that this was a case of retrenchment due to business losses and ordered the payment of
separation pay without backwages. This Court sustained the NLRCs finding. However, as the company did not
comply with the 30-day written notice in Art. 283 of the Labor Code, the Court ordered the employer to pay the
workers P2,000.00 each as indemnity.
The decision followed the ruling in several cases involving dismissals which, although based on any of the just causes
under Art. 282,[17] were effected without notice and hearing to the employee as required by the implementing rules.
[18]
As this Court said: "It is now settled that where the dismissal of one employee is in fact for a just and valid cause
and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin requirements
of notice and opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for noncompliance with the requirements of, or for failure to observe, due process."[19]
The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just cause
or the termination of employment is for an authorized cause, the dismissal or termination is illegal if effected without
notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC.[20] In announcing the
change, this Court said:[21]
The Court holds that the policy of ordering the reinstatement to the service of an employee without
loss of seniority and the payment of his wages during the period of his separation until his actual
reinstatement but not exceeding three (3) years without qualification or deduction, when it appears he
was not afforded due process, although his dismissal was found to be for just and authorized cause in
an appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be
highly prejudicial to the interests of the employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it
will demoralize the rank and file if the undeserving, if not undesirable, remains in the service.
....
However, the petitioner must nevertheless be held to account for failure to extend to private respondent
his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The
dismissal of an employee must be for just or authorized cause and after due process. Petitioner
committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure
to give a formal notice and conduct an investigation as required by law before dismissing petitioner
from employment. Considering the circumstances of this case petitioner must indemnify the private
respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and
the gravity of the omission committed by the employer.
The fines imposed for violations of the notice requirement have varied
from P1,000.00[22] to P2,000.00[23] to P5,000.00[24] to P10,000.00.[25]
Need for Reexamining the Wenphil Doctrine
Today, we once again consider the question of appropriate sanctions for violations of the notice requirement in light of
our experience during the last decade or so with the Wenphil doctrine. The number of cases involving dismissals
without the requisite notice to the employee, although effected for just or authorized causes, suggests that the
imposition of fine for violation of the notice requirement has not been effective in deterring violations of the notice
requirement. Justice Panganiban finds the monetary sanctions "too insignificant, too niggardly, and sometimes even
too late." On the other hand, Justice Puno says there has in effect been fostered a policy of "dismiss now, pay later"
which moneyed employers find more convenient to comply with than the requirement to serve a 30-day written notice
(in the case of termination of employment for an authorized cause under Arts. 283-284) or to give notice and hearing
(in the case of dismissals for just causes under Art. 282).
For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even though there
are just or authorized causes for such dismissal or layoff. Consequently, in their view, the employee concerned should
be reinstated and paid backwages.
Validity of Petitioners Layoff Not Affected by Lack of Notice
We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of fine for
an employers disregard of the notice requirement. We do not agree, however, that disregard of this requirement by an
employer renders the dismissal or termination of employment null and void. Such a stance is actually a reversion to
the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid backwages when it is shown that
he has not been given notice and hearing although his dismissal or layoff is later found to be for a just or authorized
cause. Such rule was abandoned in Wenphil because it is really unjust to require an employer to keep in his service
one who is guilty, for example, of an attempt on the life of the employer or the latters family, or when the employer is
precisely retrenching in order to prevent losses.
The need is for a rule which, while recognizing the employees right to notice before he is dismissed or laid off, at the
same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to
terminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a
fine on an employer who is found to have dismissed an employee for cause without prior notice is deemed ineffective
in deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are
just or valid grounds for such dismissal or if the termination is for an authorized cause. That would be to uphold the
right of the employee but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the
payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was
for a just cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his
dismissal is ineffectual.
For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a laborsaving device, but the employer did not give him and the DOLE a 30-day written notice of termination in advance,
then the termination of his employment should be considered ineffectual and he should be paid backwages. However,
the termination of his employment should not be considered void but he should simply be paid separation pay as
provided in Art. 283 in addition to backwages.
Justice Puno argues that an employers failure to comply with the notice requirement constitutes a denial of the
employees right to due process. Prescinding from this premise, he quotes the statement of Chief Justice Concepcion
in Vda. de Cuaycong v. Vda. de Sengbengco[26] that "acts of Congress, as well as of the Executive, can deny due
process only under the pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same
sanction, any statutory provision to the contrary notwithstanding." Justice Puno concludes that the dismissal of an
employee without notice and hearing, even if for a just cause, as provided in Art. 282, or for an authorized cause, as
provided in Arts. 283-284, is a nullity. Hence, even if just or authorized causes exist, the employee should be
reinstated with full back pay. On the other hand, Justice Panganiban quotes from the statement in People v.
Bocar[27] that "[w]here the denial of the fundamental right of due process is apparent, a decision rendered in disregard
of that right is void for lack of jurisdiction."
Violation of Notice Requirement Not a Denial of Due Process
The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the State, which
is not the case here. There are three reasons why, on the other hand, violation by the employer of the notice
requirement cannot be considered a denial of due process resulting in the nullity of the employees dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply
to the exercise of private power, such as the termination of employment under the Labor Code. This is plain from the
text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property without due
process of law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what
are considered civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before the power of organized
society are brought to bear upon the individual. This is obviously not the case of termination of employment under
Art. 283. Here the employee is not faced with an aspect of the adversary system. The purpose for requiring a 30-day
written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against
him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE
an opportunity to determine whether economic causes do exist justifying the termination of his employment.
Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to comply with
Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage. Then that is the time we
speak of notice and hearing as the essence of procedural due process. Thus, compliance by the employer with the
notice requirement before he dismisses an employee does not foreclose the right of the latter to question the legality of
his dismissal. As Art. 277(b) provides, "Any decision taken by the employer shall be without prejudice to the right of
the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission."
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact
that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either party to the
employer-employee relationship the right to terminate their relationship by giving notice to the other one month in
advance. In lieu of notice, an employee could be laid off by paying him a mesada equivalent to his salary for one
month.[28] This provision was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on
June 12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On
June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice or the payment of
compensation at the rate of one-half month for every year of service.[29]
The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of which was to
give the employer the opportunity to find a replacement or substitute, and the employee the equal opportunity to look
for another job or source of employment. Where the termination of employment was for a just cause, no notice was
required to be given to the employee. [30] It was only on September 4, 1981 that notice was required to be given even
where the dismissal or termination of an employee was for cause. This was made in the rules issued by the then
Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much
later when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on
March 2, 1989. It cannot be that the former regime denied due process to the employee. Otherwise, there should now
likewise be a rule that, in case an employee leaves his job without cause and without prior notice to his employer, his
act should be void instead of simply making him liable for damages.
The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process
Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This is also
the case in termination of employment for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience
by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful breach of
trust of the employer, commission of crime against the employer or the latters immediate family or duly authorized
representatives, or other analogous cases).
Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by
employees before the grievance committees manned by impartial judges of the company." The grievance machinery
is, however, different because it is established by agreement of the employer and the employees and composed of
representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of Appeals,[31] which
Justice Puno cites, it was held that "Since the right of [an employee] to his labor is in itself a property and that the
labor agreement between him and [his employer] is the law between the parties, his summary and arbitrary dismissal
amounted to deprivation of his property without due process of law." But here we are dealing with dismissals and
layoffs by employers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v.
Araneta University Foundation,[32] although a professor was dismissed without a hearing by his university, his
dismissal for having made homosexual advances on a student was sustained, it appearing that in the NLRC, the
employee was fully heard in his defense.
Lack of Notice Only Makes Termination Ineffectual
Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed
before a right granted to a party can be exercised. Others are simply an application of the Justinian precept, embodied
in the Civil Code,[33] to act with justice, give everyone his due, and observe honesty and good faith toward ones
fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure either of the employer or
the employee to live up to this precept is to make him liable in damages, not to render his act (dismissal or
resignation, as the case may be) void. The measure of damages is the amount of wages the employee should have
received were it not for the termination of his employment without prior notice. If warranted, nominal and moral
damages may also be awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers failure to comply with the notice
requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination
of employment which makes the termination of employment merely ineffectual. It is similar to the failure to observe
the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code[34] in rescinding a contract for the sale of
immovable property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal
obligations, nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power
even though the vendee defaults in the payment of the price, except by bringing an action in court or giving notice of
rescission by means of a notarial demand.[35] Consequently, a notice of rescission given in the letter of an attorney has
no legal effect, and the vendee can make payment even after the due date since no valid notice of rescission has been
given.[36]
Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the
dismissal of an employee illegal. This is clear from Art. 279 which provides:
Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.[37]
Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and, therefore,
the employee should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban do, that even if
the termination is for a just or authorized cause the employee concerned should be reinstated and paid backwages
would be to amend Art. 279 by adding another ground for considering a dismissal illegal. What is more, it would
ignore the fact that under Art. 285, if it is the employee who fails to give a written notice to the employer that he is
leaving the service of the latter, at least one month in advance, his failure to comply with the legal requirement does
not result in making his resignation void but only in making him liable for damages.[38] This disparity in legal
treatment, which would result from the adoption of the theory of the minority cannot simply be explained by invoking
President Ramon Magsaysays motto that "he who has less in life should have more in law." That would be a
misapplication of this noble phrase originally from Professor Thomas Reed Powell of the Harvard Law School.
Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,[39] in support of his view that an illegal dismissal results
not only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case actually
involved a dismissal for an alleged loss of trust and confidence which, as found by the Court, was not proven. The
dismissal was, therefore, illegal, not because there was a denial of due process, but because the dismissal was without
cause. The statement that the failure of management to comply with the notice requirement "taints the dismissal with
illegality" was merely a dictum thrown in as additional grounds for holding the dismissal to be illegal.
Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the payment of
backwages for the period when the employee is considered not to have been effectively dismissed or his employment
terminated. The sanction is not the payment alone of nominal damages as Justice Vitug contends.
Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal
The refusal to look beyond the validity of the initial action taken by the employer to terminate employment either for
an authorized or just cause can result in an injustice to the employer. For not giving notice and hearing before
dismissing an employee, who is otherwise guilty of, say, theft, or even of an attempt against the life of the employer,
an employer will be forced to keep in his employ such guilty employee. This is unjust.
It is true the Constitution regards labor as "a primary social economic force."[40] But so does it declare that it
"recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to
needed investment."[41] The Constitution bids the State to "afford full protection to labor."[42] But it is equally true that
"the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the
employer."[43] And it is oppression to compel the employer to continue in employment one who is guilty or to force the
employer to remain in operation when it is not economically in his interest to do so.
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of
employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even
though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in
accordance with Art. 283, to wit:
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least
one month for every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six
months shall be considered one (1) whole year.
If the employees separation is without cause, instead of being given separation pay, he should be reinstated. In either
case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been laid off
without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed
for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not be reinstated.
However, he must be paid backwages from the time his employment was terminated until it is determined that the
termination of employment is for a just cause because the failure to hear him before he is dismissed renders the
termination of his employment without legal effect.
WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is
MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay equivalent
to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th month pay and, in
addition, full backwages from the time his employment was terminated on October 11, 1991 up to the time the
decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for computation of the
separation pay, backwages, and other monetary awards to petitioner.
SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes, and De Leon, Jr.,
JJ., concur.
Bellosillo, J., see separate opinion.
Puno, J., see dissenting opinion.
Vitug, J., see separate opinion.
Panganiban, J., see separate opinion.
Ynares-Santiago, J., joins the dissenting opinion of J. Puno.
[1]
[17]
Termination by employer. - An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative
in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
[18]
Bk. VI, Rule 1, of the Omnibus Rules and Regulations to Implement the Labor Code provides in pertinent parts:
In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may dissolve it,
advising the other party thereof one month in advance.
The factory or shop clerk shall be entitled, in such case, to the salary due for said month.
[29]
Section 1. In cases of employment without a definite period, in a commercial, industrial, or agricultural establishment
or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without
just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in
the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for
every year of service of the employee, whichever is longer, a fraction of at least six months being considered as one
whole year.
The employer, upon whom no such notice was served in case of termination of employment without just cause may
hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of employment without just cause shall
be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or
wages corresponding to the required period of notice.
[30]
Abe v. Foster Wheeler Corp., 110 Phil. 198 (1960); Malate Taxicab and Garage, Inc. v. CIR, 99 Phil. 41 (1956)
[31]
71 SCRA 470, 480 (1976)
[32]
77 SCRA 321 (1977)
[33]
Civil Code, Art. 19.
[34]
Art. 1191: "The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him. . . ."
Art. 1592: "In the sale of immovable property, even though it may have been stipulated that upon failure to pay the
price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially
or by a notarial act. After the demand, the court may not grant him a new term."
[35]
De la Cruz v. Legaspi, 98 Phil. 43 (1955); Taguba v. Vda. de Leon, 132 SCRA 722 (1984)
[36]
See Maximo v. Fabian, G.R. No. L-8015, December 23, 1955, (unpub.), 98 Phil. 989.
[37]
Emphasis added.
[38]
Termination by employee. - (a) An employee may terminate without just cause the employee-employer relationship by
serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice
was served may hold the employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice on the employer for any of the
following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his representative against the person of the employee or any
of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
[39]
210 SCRA 277 (1992)
[40]
Art. II, 18.
[41]
Id., 20.
[42]
Art. XIII, 3.
[43]
Manila Trading and Supply Co. v. Zulueta, 69 Phil. 485, 487 (1940) (per Laurel, J.) Accord, Villanueva v. NLRC,
293 SCRA 259 (1998); DI Security and General Services, Inc. v. NLRC, 264 SCRA 458 (1996); Flores v. NLRC, 256
SCRA 735 (1996); San Miguel Corporation v. NLRC, 218 SCRA 293 (1993); Colgate Palmolive Philippines, Inc. v.
Ople, 163 SCRA 323 (1988)
EN BANC
JENNY M. AGABON and
VIRGILIO C. AGABON,
Petitioners,
- versus -
Jenny M. Agabon
Virgilio C. Agabon
P56, 231.93
56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service
from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service incentive
leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days
and Virgilio Agabons 13thmonth pay differential amounting to TWO THOUSAND ONE HUNDRED
FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE
THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon,
and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT &
93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas,
OIC, Research and Computation Unit, NCR.
SO ORDERED.[4]
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their
work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter
were also denied for lack of evidence.[5]
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of
Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only
insofar as it dismissed petitioners money claims. Private respondents are ordered to pay petitioners
holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive
leave pay for said years, and to pay the balance of petitioner Virgilio Agabons 13th month pay for 1998
in the amount of P2,150.00.
SO ORDERED.[6]
Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7]
Petitioners assert that they were dismissed because the private respondent refused to give them assignments
unless they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not
agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members.
Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.[8]
Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their
work.[9] In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to
report for work. Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in
June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice
installation work. However, petitioners did not report for work because they had subcontracted to perform installation
work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this
was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.[10]
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but
even finality if the findings are supported by substantial evidence. This is especially so when such findings were
affirmed by the Court of Appeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter are
conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned
findings.[12]
Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a
just cause. They had abandoned their employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the
employer to give the employee the opportunity to be heard and to defend himself. [13] Article 282 of the Labor Code
enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latters representative in connection with the employees work;
(b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the
employee against the person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. [14] It is a form
of neglect of duty, hence, a just cause for termination of employment by the employer. [15] For a valid finding of
abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more
intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and
unjustified.[16]
In February 1999, petitioners were frequently absent having subcontracted for an installation work for another
company. Subcontracting for another company clearly showed the intention to sever the employer-employee
relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for
work because they were working for another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to
sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the
penalty that should be meted out to him.[17]
In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave
or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his
job. We should apply that rule with more reason here where petitioners were absent because they were already
working in another company.
The law imposes many obligations on the employer such as providing just compensation to workers,
observance of the procedural requirements of notice and hearing in the termination of employment. On the other
hand, the law also recognizes the right of the employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct[19] and loyalty. The employer may not be compelled to continue
to employ such persons whose continuance in the service will patently be inimical to his interests.[20]
After establishing that the terminations were for a just and valid cause, we now determine if the procedures for
dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules
Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of employment,
the following standards of due process shall be substantially observed:
I.
For termination of employment based on just causes as defined in Article 282 of the
Code:
(a)
A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to explain his side;
(b)
A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence
or rebut the evidence presented against him; and
(c)
A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employees last known
address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees.
A termination for an authorized cause requires payment of separation pay. When the termination of employment is
declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer
possible where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and
due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid
up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did
not follow the notice requirements and instead argued that sending notices to the last known addresses would have
been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice requirements to the employees last known address. [21] Thus, it
should be held liable for non-compliance with the procedural requirements of due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various
rulings on employment termination in the light of Serrano v. National Labor Relations Commission.[22]
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In
the 1989 case of Wenphil Corp. v. National Labor Relations Commission,[23] we reversed this long-standing rule and
held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and
backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under
Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried
to pacify him. We concluded that reinstating the employee and awarding backwages may encourage him to do even
worse and will render a mockery of the rules of discipline that employees are required to observe. [24] We further held
that:
Under the circumstances, the dismissal of the private respondent for just cause should be
maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as above
discussed. The dismissal of an employee must be for just or authorized cause and after due process.
Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for
its failure to give a formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner must indemnify the
private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.[25]
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the
due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the
employee. This became known as the Wenphil or Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the
violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of
due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full
backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized
cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases
involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for
violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full
backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to dismiss now and pay later by imposing full
backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor
Code which states:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the justified or authorized causes provided
by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was
unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted
us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights
based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed
fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the
deepest notions of what is fair and right and just. [26] It is a constitutional restraint on the legislative as well as on the
executive and judicial powers of the government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid
and authorized causes of employment termination under the Labor Code; and procedural,i.e., the manner of
dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as
amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by
Department Order Nos. 9 and 10.[27] Breaches of these due process requirements violate the Labor Code.
Therefore statutory due process should be differentiated from failure to comply with constitutional due process.
Constitutional due process protects the individual from the government and assures him of his rights in
criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing
Rules protects employees from being unjustly terminated without just cause after notice and hearing.
In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the
employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned.
The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the
gravity of the omission committed by the employer.
In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due
process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just
cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorneys
fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations
Commission,[30] which opinion he reiterated in Serrano, stated:
C.
Where there is just cause for dismissal but due process has not been properly observed
by an employer, it would not be right to order either the reinstatement of the dismissed employee or the
payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in
terminating the services of the employee, the employer must be deemed to have opted or, in any case,
should be made liable, for the payment of separation pay. It might be pointed out that the notice to be
given and the hearing to be conducted generally constitute the two-part due process requirement of law
to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in
certain situations where to undertake the above steps would be no more than a useless formality and
where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of
separation pay, nominal damages to the employee. x x x.[31]
After carefully analyzing the consequences of the divergent doctrines in the law on employment termination,
we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and
hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for
just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed
in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees,
but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying
with statutory due process may have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded
by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal
but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught
stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or
where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal
would not serve public interest. It could also discourage investments that can generate employment in the local
economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers.
The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the
right, as in this case.[32] Certainly, an employer should not be compelled to pay employees for work not actually
performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance
or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights
of the laborer authorizes neither oppression nor self-destruction of the employer.[33]
It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which,
if the requirements of due process were complied with, would undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social
Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As
the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the
greatest good to the greatest number.[34]
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related
cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and
circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and
dispense justice with an even hand in every case:
We have repeatedly stressed that social justice or any justice for that matter is for the
deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of
reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to give preference to the poor simply
because they are poor, or reject the rich simply because they are rich, for justice must always be served
for the poor and the rich alike, according to the mandate of the law.[35]
Justice in every case should only be for the deserving party. It should not be presumed that every case of
illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully
respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and
management need each other to foster productivity and economic growth; hence, the need to weigh and balance the
rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for
the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be
imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts
of each case, taking into special consideration the gravity of the due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.[37]
As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay
indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the
employer fails to comply with the requirements of due process. The Court, after considering the circumstances
therein, fixed the indemnity at P2,590.50, which was equivalent to the employees one month salary. This indemnity
is intended not to penalize the employer but to vindicate or recognize the employees right to statutory due process
which was violated by the employer.[39]
The violation of the petitioners right to statutory due process by the private respondent warrants the payment of
indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances. [40] Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers
from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or
recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday
pay, service incentive leave pay and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for
petitioners holiday pay, service incentive leave pay and 13th month pay without deductions.
As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege
non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee
to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and
other similar documents which will show that overtime, differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the worker but in the custody and absolute control of the
employer.[41]
In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it
could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners.
But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the
benefit in the years disputed.[42] Allegations by private respondent that it does not operate during holidays and that it
allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment.
Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th month pay,
we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional
income in the form of the 13th month pay to employees not already receiving the same [43] so as to further protect the
level of real wages from the ravages of world-wide inflation.[44] Clearly, as additional income, the 13th month pay is
included in the definition of wage under Article 97(f) of the Labor Code, to wit:
(f)
Wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task,
piece , or commission basis, or other method of calculating the same, which is payable by an employer
to an employee under a written or unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered and includes the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the
employee
from which an employer is prohibited under Article 113[45] of the same Code from making any deductions without the
employees knowledge and consent. In the instant case, private respondent failed to show that the deduction of the
SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay was authorized by the latter.
The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one
of his money claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the
private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the
amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of
Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated
January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon abandoned their
work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996
to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and
the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each
of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process.
No costs.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
LEONARDO A. QUISUMBING
Associate Justice
ANTONIO T. CARPIO
Associate Justice
ARTEMIO V. PANGANIBAN
Associate Justice
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
RENATO C. CORONA
Associate Justice
DANTE O. TINGA
Associate Justice
CONCHITA CARPIO-MORALES
Associate Justice
ADOLFO S. AZCUNA
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
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.
HILARIO G. DAVIDE, JR.
Chief Justice
[1]
Penned by Associate Justice Marina L. Buzon and concurred in by Associate Justices Josefina Guevara-Salonga and
Danilo B. Pine.
[2]
Rollo, p. 41.
[3]
Id., pp. 13-14.
[4]
Id., p. 92.
[5]
Id., p. 131.
[6]
Id., p. 173.
[7]
Id., p. 20.
[8]
Id., pp. 21-23.
[9]
Id., p. 45.
[10]
Id., pp. 42-43.
[11]
Rosario v. Victory Ricemill, G.R. No. 147572, 19 February 2003, 397 SCRA 760, 767.
[12]
Reyes v. Maxims Tea House, G.R. No. 140853, 27 February 2003, 398 SCRA 288, 298.
Santos v. San Miguel Corporation, G.R. No. 149416, 14 March 2003, 399 SCRA 172, 182.
[14]
Columbus Philippine Bus Corporation v. NLRC, 417 Phil. 81, 100 (2001).
[15]
De Paul/King Philip Customs Tailor v. NLRC, 364 Phil. 91, 102 (1999).
[16]
Sta. Catalina College v. NLRC, G.R. No. 144483, 19 November 2003.
[17]
Cosmos Bottling Corporation v. NLRC, G.R. No. 111155, 23 October 1997, 281 SCRA 146, 153-154.
[18]
G.R. No. L-49875, 21 November 1979, 94 SCRA 472, 478.
[19]
Judy Philippines, Inc. v. NLRC, 352 Phil. 593, 606 (1998).
[20]
Philippine-Singapore Transport Services, Inc. v. NLRC, 343 Phil. 284, 291 (1997).
[21]
See Stolt-Nielsen Marine Services, Inc. v. NLRC, G.R. No. 128395, 29 December 1998, 300 SCRA 713, 720.
[22]
G.R. No. 117040, 27 January 2000, 323 SCRA 445.
[23]
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
[24]
Id. at 76.
[25]
Id.
[26]
Solesbee v. Balkcom, 339 U.S. 9, 16 (1950) (Frankfurter, J., dissenting). Due process is violated if a practice or
rule offends some principle of justice so rooted in the traditions and conscience of our people as to be ranked as
fundamental; Snyder v. Massachusetts, 291 U.S. 97, 105 (1934).
[27]
Department Order No. 9 took effect on 21 June 1997. Department Order No. 10 took effect on 22 June 1997.
[28]
G.R. No. 115394, 27 September 1995, 248 SCRA 535.
[29]
G.R. No. 122666, 19 June 1997, 274 SCRA 386.
[30]
G.R. No. 114313, 29 July 1996, 259 SCRA 699, 700.
[31]
Serrano, supra, Vitug, J., Separate (Concurring and Dissenting) Opinion, 323 SCRA 524, 529-530 (2000).
[32]
Capili v. NLRC, G.R. No. 117378, 26 March 1997, 270 SCRA 488, 495.
[33]
Filipro, Inc. v. NLRC, G.R. No. L-70546, 16 October 1986, 145 SCRA 123.
[34]
Calalang v. Williams, 70 Phil. 726, 735 (1940).
[35]
Gelos v. Court of Appeals, G.R. No. 86186, 8 May 1992, 208 SCRA 608, 616.
[36]
G.R. No. 112100, 27 May 1994, 232 SCRA 613, 618.
[37]
Art. 2221, Civil Code.
[38]
G.R. No. 108405. April 4, 2003 citing Kwikway Engineering Works v. NLRC, G.R. No. 85014, 22 March 1991,
195 SCRA 526, 532; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432, 443; and Sampaguita
Garments Corporation v. NLRC, G.R. No. 102406, 17 June 1994, 233 SCRA 260, 265.
[39]
Id. citing Better Buildings, Inc. v. NLRC, G.R. No. 109714, 15 December 1997, 283 SCRA 242, 251; Iran
v. NLRC, G.R. No. 121927, 22 April 1998, 289 SCRA 433, 442.
[40]
Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003.
[41]
Villar v. NLRC, G.R. No. 130935, 11 May 2000.
[42]
Rollo, pp. 60-71.
[43]
UST Faculty Union v. NLRC, G.R. No. 90445, 2 October 1990.
[44]
Whereas clauses, P.D. No. 851.
[45]
Art. 113. Wage deduction. - No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees except:
(a)
In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b)
For union dues, in cases where the right of the worker or his union to check off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c)
In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment.
[13]