Agabon v NLRC

G.R No. 158693

DOCTRINE: (Wenphil or Belated Due Process Rule and the abandonment of the Serrano Doctrine)

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. 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. 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.

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, 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.

FACTS:

→ 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 when they were dismissed for abandonment
of work.
→ Petitioner’s filed a case for illegal dismissal and payment of money claims.
→ Employee’s (Petitioner) Contention:
▪ they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a
"pakyaw" basis
▪ They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members
→ private respondent did not comply with the twin requirements of notice and hearing. Employer’s (Respondent) Contention:
▪ that petitioners were not dismissed but had abandoned their work.
▪ employer sent two letters to the last known addresses of the petitioners advising them to report for work.
▪ 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

LABOR ARBITER
→ Declared the dismissals illegal and ordered private respondent to pay the monetary claims.
NLRC
→ Reversed LA decision. Petitioners had abandoned their work, and were not entitled to backwages and separation pay. Other
monetary claims denied for lack of evidence.
CA
→ Petitioner’s dismissal was not illegal because they had abandoned their employment, but ordered the payment of money claims

ISSUES :

1. WON Petitioners were illegally dismissed?

2. WON Respondents followed due process for terminating employees?
3. WON Respondents should pay Petitioners for holiday pay, SIL, and 13 th month (money claims) – YES

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HELD:

1. NO

→ Laws applicable:Article 282 of the Labor Code (just causes for termination by the employer):

✓ serious misconduct or willful disobedience by the employee of the lawful orders of his employer
✓ gross and habitual neglect by the employee of his duties
✓ fraud or willful breach by the employee of the trust reposed in him by his employer
✓ commission of a crime or offense by the employee against the person of his employer or any immediate member of his family
✓ other causes analogous to the foregoing

→ Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty,
hence, a just cause for termination of employment by the employer.
→ For a valid finding of abandonment, these two factors should be present:

✓ the failure to report for work or absence without valid or justifiable reason
✓ a clear intention to sever employer-employee relationship, 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.
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.

→ In Sandoval Shipyard v. Clave, 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.

2. NO

→ After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal
were observed.
→ Laws applicable: Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code (procedure for terminating
an employee)

Standards of due process: requirements of notice. – In all cases of termination of employment, the following standards of due
process shall be substantially observed:

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 employee's 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.
→ From the above rules, four possible situations may be derived:

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 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
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 employee's last known address. Thus,
respondent should be held liable for non-compliance with the procedural requirements of due process.

Relevant Jurisprudence

1. Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice.

2. Wenphil v NLRC – 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 (Wenphil or Belated Due
Process Law)

3. Serrano v NLRC - 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. 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. Payment of
backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed.
→ 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.

3. YES

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 are not in the possession of the worker but in the custody and absolute control
of the employer.

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. 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.

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