Agabon v.

NLRC

This petition for review seeks to reverse the decision[1] of the Court of Appeals dated
January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor
Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of

selling and installing ornamental and construction materials. It employed petitioners
Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January
2, 1992[2] until February 23, 1999 when they were dismissed for abandonment of
work.

Petitioners then filed a complaint for illegal dismissal and payment of money
claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision declaring
the dismissals illegal and ordered private respondent to pay the monetary claims. The
dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the

complainants illegal. Accordingly, respondent is hereby ordered to pay
them their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 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 13th month 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 13th 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 13 th 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.