DIOSDADO DE VERA AND UNITED CMC TEXTILE

WORKERS UNION, Petitioners, v. NATIONAL LABOR

RELATIONS COMMISSION, CENTRAL TEXTILE MILLS,
INC., and/or AGUSTIN CABATINGAN, Respondents.
Romeo C . Lagman, for Petitioners.
Cruz, Durian, Agabin, Atienza, Alday & Tuason for
Private Respondents.
SYLLABUS
1. LABOR LAW; NATIONAL LABOR RELATIONS
COMMISSION; ITS FINDINGS OF FACTS ARE CONCLUSIVE
ON THE SUPREME COURT ABSENT A SHOWING OF
ARBITRARINESS. The findings of fact of the NLRC are
conclusive on this Court in the absence of a showing that
they were arrived at arbitrarily. The petitioner has failed to
show such arbitrariness. We therefore accept, on the basis
of the evidence of record, including the petitioners own
admission, that he had indeed committed a violation of
company rules by hitting Ocampo on the head. Assuming
the provocation, we nevertheless agree that the attack was
not justified. It is not correct to say that the company was
not itself prejudiced, for the peace in its premises was
disturbed and the discipline of the personnel affected. The
private respondent could not close its eyes to the incident at
the risk of further disregard of its rules, which it had a right
to enforce. The fact that Ocampo chose not to prefer
charges did not prevent the company from acting motu
proprio to investigate the incident.
2. ID.; LABOR RELATIONS; ALLEGED UNFAIR LABOR
PRACTICE, NOT SUPPORTED BY EVIDENCE; PENALTY OF
DISMISSAL, NOT COMMENSURATE WITH THE OFFENSE;
CASE AT BAR. We also sustain the finding that the private

respondent was not guilty of any unfair labor practice, no

evidence having been submitted to support the charge.
Going deeper into the record, however, we find that the
penalty of dismissal was not commensurate with the
offense, considering the other circumstances of this case.
We note, first of all, that the petitioner had been working
with the respondent company for fourteen years and was
apparently doing well except for the earlier-mentioned
offenses that had already been sufficiently punished. The
differences between De Vera and Ocampo have long since
been patched up and the two have decided to forget the
incident. To all appearances, the discipline of the company
has not deteriorated as a result of the quarrel between the
two employees. Given all these facts, we feel that a lighter
penalty than that meted out to De Vera would have been
more just, if not humane.
3. ID.; ID.; REINSTATEMENT OF THE EMPLOYEE, NOT
PRACTICAL IF THE RELATION BETWEEN THE PARTIES HAVE
ALREADY BEEN STRAINED; SEPARATION PAY MAY BE
GRANTED TAKING INTO ACCOUNT THE NATURE AND
DEGREE OF THE OFFENSE COMMITTED. Nevertheless,
since relations between the parties have already been
strained, we feel it is not practical anymore to reinstate the
petitioner, who is no longer welcome in the company. We
shall therefore sustain the penalty imposed, but with
modification. The modification is that the petitioner shall be
granted separation pay at the rate of one month salary for
every year of service, taking into account the nature and
degree of the offense he has committed, which is neither
serious nor depraved. This ruling is conformable to the case
of PLDT v. NLRC, (164 SCRA 671) where the Court said:
There should be no question that where it comes to such
valid but not iniquitous causes of failure to comply with work
standards, the grant of separation pay to the dismissed
employee may be both just and compassionate, particularly
if he has worked for some time with the company. For
example, a subordinate who has irreconcilable policy or

personal differences with his employer may be validly

dismissed for demonstrated loss of confidence, which is an
allowable ground. A working mother who has also to take
care of her child may also be removed because of her poor
attendance, this being another authorized ground. It is not
the employees fault if he does not have the necessary
aptitude for his work but on the other hand the company
cannot be required to maintain him just the same at the
expense of the efficiency of its operations. He too may be
validly replaced. Under these and similar circumstances,
however, the award to the employee of separation pay
would be sustainable under the social justice policy even if
the separation is for cause.
DECISION
CRUZ, J.:
Diosdado de Vera was employed as a mechanic in the
weaving department of the Central Textile Mills, the herein
private Respondent. He claims he was active in union
activities. In the course of his employment, he had been
administered disciplinary sanctions for various offenses,
including not wearing the ID tag in the company premises,
leaving his workplace without permission, habitual tardiness,
reporting for work under the influence of liquor, and
damaging property in the performance of his duties. The last
two offenses were each punished with 5 days suspension
and the others with written or oral warnings.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph
On October 2, 1984, the petitioner had a row with Jesus
Ocampo, a fellow worker, whom he hit in the head with a
stick. The protagonists were soon pacified. Ocampo saw fit
not to file any charge against De Vera with the company or

the police. Nevertheless, the private respondent, upon

learning of the incident, called for its investigation by a factfinding committee. This was composed of a company
representative as chairman and two union representatives.
In the investigation, De Vera claimed he had on the date in
question asked Ocampo for payment of a P100.00 loan he
had extended him, but the latter resented the dunning and
swore at him. That provoked his attack on Ocampo. Ocampo
himself never appeared before the investigators. Two
months later, the committee chairman, allegedly without
notice to the two union members, recommended De Veras
dismissal for violation of company rules. Acting on this
recommendation, the private respondent dismissed the
petitioner on December 10, 1984.
On October 15, 1985, the president of the CMC Textile
Workers Union filed on its behalf and of the petitioner a
complaint for illegal dismissal against the Central Textile
Mills, Inc. After hearing, the complaint was dismissed by
Labor Arbiter Emerson C. Tumanon in a decision dated May
22, 1989. 1 On appeal, the decision was affirmed in toto by
the NLRC in its resolution dated February 28, 1990. 2 The
petitioner then came to this Court alleging grave abuse of
discretion on the part of the public Respondent.
The findings of fact of the NLRC are conclusive on this Court
in the absence of a showing that they were arrived at
arbitrarily. The petitioner has failed to show such
arbitrariness. We therefore accept, on the basis of the
evidence of record, including the petitioners own admission,
that he had indeed committed a violation of company rules
by hitting Ocampo on the head.chanrobles virtual lawlibrary
Assuming the provocation, we nevertheless agree that the
attack was not justified. It is not correct to say that the
company was not itself prejudiced, for the peace in its
premises was disturbed and the discipline of the personnel

affected. The private respondent could not close its eyes to

the incident at the risk of further disregard of its rules, which
it had a right to enforce. The fact that Ocampo chose not to
prefer charges did not prevent the company from acting
motu proprio to investigate the incident.
We also sustain the finding that the private respondent was
not guilty of any unfair labor practice, no evidence having
been submitted to support the charge.
Going deeper into the record, however, we find that the
penalty of dismissal was not commensurate with the
offense, considering the other circumstances of this case.
We note, first of all, that the petitioner had been working
with the respondent company for fourteen years and was
apparently doing well except for the earlier-mentioned
offenses that had already been sufficiently punished. The
differences between De Vera and Ocampo have long since
been patched up and the two have decided to forget the
incident. To all appearances, the discipline of the company
has not deteriorated as a result of the quarrel between the
two employees.
Given all these facts, we feel that a lighter penalty than that
meted out to De Vera would have been more just, if not
humane.
Nevertheless, since relations between the parties have
already been strained, we feel it is not practical anymore to
reinstate the petitioner, who is no longer welcome in the
company. We shall therefore sustain the penalty imposed,
but with modification. The modification is that the petitioner
shall be granted separation pay at the rate of one month
salary for every year of service, taking into account the
nature and degree of the offense he has committed, which is
neither serious nor depraved. This ruling is conformable to
the case of PLDT v. NLRC, 3 where the Court
said:chanroblesvirtualawlibrary

There should be no question that where it comes to such

valid but not iniquitous causes of failure to comply with work
standards, the grant of separation pay to the dismissed
employee may be both just and compassionate, particularly
if he has worked for some time with the company. For
example, a subordinate who has irreconcilable policy or
personal differences with his employer may be validly
dismissed for demonstrated loss of confidence, which is an
allowable ground. A working mother who has also to take
care of her child may also be removed because of her poor
attendance, this being another authorized ground. It is not
the employees fault if he does not have the necessary
aptitude for his work but on the other hand the company
cannot be required to maintain him just the same at the
expense of the efficiency of its operations. He too may be
validly replaced. Under these and similar circumstances,
however, the award to the employee of separation pay
would be sustainable under the social justice policy even if
the separation is for cause.
But where the cause of the separation is more serious than
mere inefficiency, the generosity of the law must be more
discerning. There is no doubt it is compassionate to give
separation pay to a salesman if he is dismissed for his
inability to fill his quota but surely he does not deserve such
generosity if his offense is misappropriation of the receipts
of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is
doubtless subject to dismissal but may be allowed
separation pay since his conduct, while inept, is not
depraved. But if he was in fact not really sleeping but
sleeping with a prostitute during his tour of duty and in the
company premises, the situation is changed completely. This
is not only inefficiency but immorality and the grant of
separation pay would be entirely unjustified. (Emphasis
supplied)

The social justice policy mandates a compassionate attitude

toward the working class in its relations with management.
While in calling for the-protection of labor, the Constitution
does not condone wrongdoing by the employee, it
nevertheless urges a moderation of the sanctions that may
be applied to him in the light of the many disadvantages
that weigh heavily on him like an albatross hanging from his
neck. Management must look upon the working class with
sympathy, remembering that they are equal partners joined
in a common venture whose success should redound to their
mutual benefit. They should regard each other in a spirit of
amity and trust, not with closed hands but with open arms,
that they may endeavor better together.
WHEREFORE, the petition is partly GRANTED, and the
private respondent is DIRECTED to pay separation pay to
the petitioner as above indicated. It is so ordered.chanrobles
virtual lawlibrary
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ.,
concur.


LORLENE A. GONZALES, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, FIFTH DIVISION, CAGAYAN
DE ORO CITY, and ATENEO DE DAVAO UNIVERSITY,
respondents.
DECISION
BELLOSILLO, J.:
By way of certiorari under Rule 65 of the Rules of Court petitioner
seeks the nullification of the Decision of public respondent National Labor
Relations Commission, Fifth Division, which reversed and set aside that of
Executive Labor Arbiter Conchita J. Martinez.
Lorlene Gonzales, petitioner, has been a schoolteacher in the
Elementary Department of private respondent Ateneo de Davao University
(hereafter ATENEO) since 1974 assigned to teach Reading, Mathematics,

Language and Pilipino in the Grade VI class, while ATENEO is an

educational institution, a corporation duly organized under the laws of the
Philippines, with principal address at Jacinto St., Davao City.
Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade School
Headmaster, sent a letter dated 11 April 1991 informing petitioner Lorlene
A. Gonzales of the complaints of two (2) parents for alleged use of corporal
punishment on her students. Petitioner claimed that she was not informed of
the identity of the parents who allegedly complained of the corporal
punishment she purportedly inflicted in school-year 1990-1991. She
likewise claimed that she was not confronted about it by private respondent
ATENEO in 1991 and that it was only two (2) years after the complaints
were made that she discovered, through her students and their parents, that
ATENEO was soliciting complainants to lodge written complaints against
her.
On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J.,
demanding that she be formally informed of the complaint and be duly
investigated.
On 9 June 1993 petitioner was informed of the composition of an
investigative committee organized by Fr. Oscar Millar, S.J., to look into the
alleged use of corporal punishment by petitioner in disciplining her
students. It can be gleaned from the records that she was duly furnished
with the rules of procedure, informed of the schedule of the hearings, and
given copies of the affidavits executed by the students who testified against
her.
Petitioner refused to take part in the investigation unless the rules of
procedure laid down by the Committee be revised, contending that the same
were violative of her right to due process. Petitioner specifically objected to
the provision which stated: x x x 3) Counsel for Ms. Lorlene Gonzales shall
not directly participate in the investigation but will merely advise Ms.
Gonzales x x x (par. 3).[1]
But the Committee was steadfast in its resolve to adopt the
aforementioned rules. In its letter dated 9 August 1993, private respondent
informed petitioner that the rules of procedure to be applied were
substantially the same rules that were used in the investigation of a former
Ateneo employee and therefore we are under legal advice not to change
these rules."[2] Over the objection of petitioner the Committee commenced
with its investigation without petitioners participation. Out of the twenty -

two (22) invitations sent out by ATENEO to petitioners students and their
parents to shed light on the matter of corporal punishment allegedly
administered by her, eleven (11) appeared and testified before the
committee. The eleven (11) witnesses also executed written statements
denominated as affidavits.
On 10 November 1993 private respondent served a Notice of
Termination on petitioner pursuant to the findings and recommendation of
the Committee. Thereafter, petitioner received a letter from the president of
ATENEO demanding her voluntary resignation a week from receipt of the
letter, otherwise, she would be considered resigned from the service.
On 29 November 1993 petitioner filed a complaint before the Labor
Arbiter for illegal dismissal. After trial, Executive Labor Arbiter Conchita J.
Martinez found her dismissal illegal for lack of factual basis and ordered
ATENEO to award petitioner separation pay, back wages and 13th month
pay. In her decision, the Executive Labor Arbiter opined that although
petitioner was afforded procedural due process respondent institution failed
to establish substantial evidence as to the guilt of the complainant of the
offense charged"[3] thus x x x the complainant was afforded procedural due process. There is
convincing and sufficient evidence x x x showing respondent complied with
the notice and hearing requirement x x x x.[4]
After considering the evidence, arguments and counter-arguments of the
parties, this office finds that the respondent failed to establish substantial
evidence as to the guilt of complainant of the offense charged x x x x.[5]
Complainant has sufficiently established that she is a very good teacher. She
is equipped with the appropriate educational qualifications, trainings,
seminars and work experiences. Such fact was affirmed by her present and
former students, their parents, colleagues and the former headmaster of the
grade school x x x x[6]
As a matter of fact, six (6) out of the nine (9) students and their
parents/guardians have retracted and withdrawn their statements x x x x[7]
Both parties appealed to the NLRC which on 25 March 1996 reversed
the decision of the Executive Labor Arbiter by declaring petitioners
dismissal valid and legal but added that since ATENEO offered petitioner

her retirement benefits it was but proper that she be extended said
benefits. Petitioner now seeks the reversal of the decision; hence, this
petition.
The crux of the controversy is whether the NLRC committed grave
abuse of discretion in sustaining as valid and legal the dismissal of petitioner
by private respondent ATENEO.
The NLRC, in our view, appears to have skirted several important
issues raised by petitioner foremost of which is the absence of due
process. Upon being notified of her termination, she has the right to demand
compliance with the basic requirements of due process. Compliance entails
the twin requirements of procedural and substantial due process. Ample
opportunity must be afforded the employee to defend herself either
personally and/or with assistance of a representative; to know the nature of
her offense; and, to cross examine and confront face to face the witnesses
against her. Likewise, due process requires that the decision must be based
on established facts and on a sound legal foundation.
It is precisely to demand compliance with these requirements that
petitioner at the very onset of the investigation demanded the revision of the
rules laid down by the Investigative Committee. The adamant refusal of the
Committee to accede to this demand resulted in her failure to confront and
cross-examine her accusers. This is not harping at technicalities as
wrongfully pointed out by the NLRC but a serious violation of petitioner's
statutory and constitutional right to due process that ultimately vitiated the
investigation.
Moreover, the failure of ATENEO to refute the contention of petitioner
that the joint affidavits executed by the students and parents were "preprepared" raises serious doubts as to the probative value of this
evidence. As correctly pointed out by the Executive Labor Arbiter, there is
more reason to disregard it especially where the same was challenged and
has remained unexplained. Hearsay evidence, in the strict sense, has no
probative value whether objected to or not.
In the instant case, ATENEO failed to prove by substantial evidence
that petitioner had inflicted corporal punishment on her students. In Ang
Tibay v. CIR, the Court set the measure of evidence to be presented in an
administrative investigation when it said, substantial evidence is more than
mere scintilla. It means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. The evidence of private

respondent did not measure up to this standard. It relied solely on the

witnesses affidavits with questionable veracity. Moreover, the affidavit of
recantation executed by some students and their parents all the more
weakened the case of private respondent. Failure in this regard negates the
very existence of the ground for dismissal.
On the other hand, petitioner adequately proved, by means of affidavits,
letters of petition and manifesto made by her students and co-teachers, that
she was a competent and dedicated teacher having spent seventeen (17)
years of her life in the service of the very institution which is now seeking
her dismissal.
In view of the foregoing, the conclusion of the NLRC is
unwarranted. Employment is not merely a contractual relationship; it has
assumed the nature of property right. It may spell the difference whether or
not a family will have food on their table, roof over their heads and
education for their children. It is for this reason that the State has taken up
measures to protect employees from unjustified dismissals. It is also
because of this that the right to security of tenure is not only a statutory right
but, more so, a constitutional right.
WHEREFORE, the assailed Decision of public respondent National
Labor Relations Commission dated 25 March 1996 is REVERSED and SET
ASIDE, and the decision of Executive Labor Arbiter Conchita J. Martinez
declaring the dismissal of complainant Lorlene A. Gonzales illegal for lack
of factual basis and ordering respondent Ateneo de Davao University to pay
complainant separation pay, back wages and 13th month pay in the total
amount of TWO HUNDRED SIXTEEN THOUSAND NINE HUNDRED
THIRTY-EIGHT and 70/100 PESOS (P216,938.70) x x x [f]urther, ordering
respondent to pay 10% of the total monetary award as attorney's fees to
counsel for complainant x x x [d]ismissing all other claims for lack of
merit, is REINSTATED, AFFIRMED and ADOPTED herein as the
decision in the instant case.
SO ORDERED.
Republic of the Philippines SUPREME COURT Manila
EN BANC

G.R. No. 82511 March 3, 1992

GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION and IMELDA
SALAZAR, respondents.
Castillo, Laman, Tan & Pantaleon for petitioner.
Gerardo S. Alansalon for private respondent.

ROMERO, J.:
For private respondent Imelda L. Salazar, it would seem that her
close association with Delfin Saldivar would mean the loss of her job.
In May 1982, private respondent was employed by Globe-Mackay
Cable and Radio Corporation (GMCR) as general systems analyst.
Also employed by petitioner as manager for technical operations'
support was Delfin Saldivar with whom private respondent was
allegedly very close.
Sometime in 1984, petitioner GMCR, prompted by reports that
company equipment and spare parts worth thousands of dollars
under the custody of Saldivar were missing, caused the investigation
of the latter's activities. The report dated September 25, 1984
prepared by the company's internal auditor, Mr. Agustin Maramara,
indicated that Saldivar had entered into a partnership styled Concave
Commercial and Industrial Company with Richard A. Yambao, owner
and manager of Elecon Engineering Services (Elecon), a supplier of
petitioner often recommended by Saldivar. The report also disclosed
that Saldivar had taken petitioner's missing Fedders airconditioning
unit for his own personal use without authorization and also connived
with Yambao to defraud petitioner of its property. The airconditioner
was recovered only after petitioner GMCR filed an action for replevin
against Saldivar. 1
It likewise appeared in the course of Maramara's investigation that
Imelda Salazar violated company reglations by involving herself in
transactions conflicting with the company's interests. Evidence
showed that she signed as a witness to the articles of partnership

between Yambao and Saldivar. It also appeared that she had full
knowledge of the loss and whereabouts of the Fedders airconditioner
but failed to inform her employer.
Consequently, in a letter dated October 8, 1984, petitioner company
placed private respondent Salazar under preventive suspension for
one (1) month, effective October 9, 1984, thus giving her thirty (30)
days within which to, explain her side. But instead of submitting an
explanations three (3) days later or on October 12, 1984 private
respondent filed a complaint against petitioner for illegal suspension,
which she subsequently amended to include illegal dismissal,
vacation and sick leave benefits, 13th month pay and damages, after
petitioner notified her in writing that effective November 8, 1984, she
was considered dismissed "in view of (her) inability to refute and
disprove these findings. 2
After due hearing, the Labor Arbiter in a decision dated July 16, 1985,
ordered petitioner company to reinstate private respondent to her
former or equivalent position and to pay her full backwages and other
benefits she would have received were it not for the illegal dismissal.
Petitioner was also ordered to pay private respondent moral damages
of P50,000.00. 3
On appeal, public respondent National Labor Relations, Commission
in the questioned resolution dated December 29, 1987 affirmed the
aforesaid decision with respect to the reinstatement of private
respondent but limited the backwages to a period of two (2) years
and deleted the award for moral damages. 4
Hence, this petition assailing the Labor Tribunal for having committed
grave abuse of discretion in holding that the suspension and
subsequent dismissal of private respondent were illegal and in
ordering her reinstatement with two (2) years' backwages.
On the matter of preventive suspension, we find for petitioner GMCR.
The inestigative findings of Mr. Maramara, which pointed to Delfin
Saldivar's acts in conflict with his position as technical operations
manager, necessitated immediate and decisive action on any
employee closely, associated with Saldivar. The suspension of
Salazar was further impelled by th.e discovery of the missing Fedders

airconditioning unit inside the apartment private respondent shared

with Saldivar. Under such circumstances, preventive suspension was
the proper remedial recourse available to the company pending
Salazar's investigation. By itself, preventive suspension does, not
signify that the company has adjudged the employee guilty of the
charges she was asked to answer and explain. Such disciplinary
measure is resorted to for the protection of the company's property
pending investigation any alleged malfeasance or misfeasance
committed by the employee. 5
Thus, it is not correct to conclude that petitioner GMCR had violated
Salazar's right to due process when she was promptly suspended. If
at all, the fault, lay with private respondent when she ignored
petitioner's memorandum of October 8, 1984 "giving her ample
opportunity to present (her) side to the Management." Instead, she
went directly to the Labor Department and filed her complaint for
illegal suspension without giving her employer a chance to evaluate
her side of the controversy.
But while we agree with the propriety of Salazar's preventive
suspension, we hold that her eventual separation from employment
was not for cause.
What is the remedy in law to rectify an unlawful dismissal so as to
"make whole" the victim who has not merely lost her job which, under
settled Jurisprudence, is a property right of which a person is not to
be deprived without due process, but also the compensation that
should have accrued to her during the period when she was
unemployed?
Art. 279 of the Labor Code, as amended, 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. 6 (Emphasis

supplied)
Corollary thereto are the following provisions of the Implementing
Rules and Regulations of the Labor Code:
Sec. 2. Security of Tenure. In cases of regular employments, the
employer shall not terminate the services of an employee except for a
just cause as provided in the Labor Code or when authorized by
existing laws.
Sec. 3. Reinstatement. An employee who is unjustly dismissed
from work shall by entitled to reinstatement without loss of seniority
rights and to backwages." 7 (Emphasis supplied)
Before proceeding any furthers, it needs must be recalled that the
present Constitution has gone further than the 1973 Charter in
guaranteeing vital social and economic rights to marginalized groups
of society, including labor. Given the pro-poor orientation of several
articulate Commissioners of the Constitutional Commission of 1986, it
was not surprising that a whole new Article emerged on Social
Justice and Human Rights designed, among other things, to "protect
and enhance the right of all the people to human dignity, reduce
social, economic and political inequalities, and remove cultural
inequities by equitably diffusing wealth and political power for the
common good." 8 Proof of the priority accorded to labor is that it
leads the other areas of concern in the Article on Social Justice, viz.,
Labor ranks ahead of such topics as Agrarian and Natural Resources
Reform, Urban Land Roform and Housing, Health, Women, Role and
Rights of Poople's Organizations and Human Rights. 9
The opening paragraphs on Labor states
The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and
equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work, and
a living wage. They shall also participate in policy and decision-

making processes affecting their rights and benefits is may be

provided by law. 10 (Emphasis supplied)
Compare this with the sole.provision on Labor in the 1973
Constitution under the Article an Declaration of Principles and State
Policies that provides:
Sec. 9. The state shall afford protection to labor, promote full
employment and equality in employment, ensure equal work
opportunities regardless of sex, race, or creed, and regulate the
relations between workers and employers. The State shall ensure the
rights of workers to self-organization, collective baegaining, security
of tenure, and just and humane conditions of work. The State may
provide for compulsory arbitration. 11
To be sure, both Charters recognize "security of tenure" as one of the
rights of labor which the State is mandated to protect. But there is no
gainsaying the fact that the intent of the framers of the present
Constitution was to give primacy to the rights of labor and afford the
sector "full protection," at least greater protection than heretofore
accorded them, regardless of the geographical location of the
workers and whether they are organized or not.
It was then CONCOM Commissioner, now Justice Hilario G. Davide,
Jr., who substantially contributed to the present formulation of the
protection to labor provision and proposed that the same be
incorporated in the Article on Social Justice and not just in the Article
on Declaration of Principles and State Policies "in the light of the
special importance that we are giving now to social justice and the
necessity of emphasizing the scope and role of social justice in
national development." 12
If we have taken pains to delve into the background of the labor
provisions in our Constitution and the Labor Code, it is but to stress
that the right of an employee not to be dismissed from his job except
for a just or authorized cause provided by law has assumed greater
importance under the 1987 Constitution with the singular prominence
labor enjoys under the article on Social Justice. And this transcendent
policy has been translated into law in the Labor Code. Under its
terms, where a case of unlawful or unauthorized dismissal has been

proved by the aggrieved employee, or on the other hand, the

employer whose duty it is to prove the lawfulness or justness of his
act of dismissal has failed to do so, then the remedies provided in
Article 279 should find, application. Consonant with this liberalized
stance vis-a-vis labor, the legislature even went further by enacting
Republic Act No. 6715 which took effect on March 2, 1989 that
amended said Article to remove any possible ambiguity that
jurisprudence may have generated which watered down the
constitutional intent to grant to labor "full protection." 13
To go back to the instant case, there being no evidence to show an
authorized, much less a legal, cause for the dismissal of private
respondent, she had every right, not only to be entitled to
reinstatement, but ay well, to full backwages." 14
The intendment of the law in prescribing the twin remedies of
reinstatement and payment of backwages is, in the former, to restore
the dismissed employee to her status before she lost her job, for the
dictionary meaning of the word "reinstate" is "to restore to a state,
conditione positions etc. from which one had been removed" 15 and in
the latter, to give her back the income lost during the period of
unemployment. Both remedies, looking to the past, would perforce
make her "whole."
Sadly, the avowed intent of the law has at times been thwarted when
reinstatement has not been forthcoming and the hapless dismissed
employee finds himself on the outside looking in.
Over time, the following reasons have been advanced by the Court
for denying reinstatement under the facts of the case and the law
applicable thereto; that reinstatement can no longer be effected in
view of the long passage of time (22 years of litigation) or because of
the realities of the situation; 16 or that it would be "inimical to the
employer's interest; " 17 or that reinstatement may no longer be
feasible; 18 or, that it will not serve the best interests of the parties
involved; 19 or that the company would be prejudiced by the workers'
continued employment; 20 or that it will not serve any prudent purpose
as when supervening facts have transpired which make execution on
that score unjust or inequitable 21 or, to an increasing extent, due to
the resultant atmosphere of "antipathy and antagonism" or "strained

relations" or "irretrievable estrangement" between the employer and

the employee. 22
In lieu of reinstatement, the Court has variously ordered the payment
of backwages and separation pay 23 or solely separation pay. 24
In the case at bar, the law is on the side of private respondent. In the
first place the wording of the Labor Code is clear and unambiguous:
"An employee who is unjustly dismissed from work shall be entitled to
reinstatement. . . . and to his full backwages. . . ." 25 Under the
principlesof statutory construction, if a statute is clears plain and free
from ambiguity, it must be given its literal meaning and applied
without attempted interpretation. This plain-meaning rule or verba
legis derived from the maxim index animi sermo est (speech is the
index of intention) rests on the valid presumption that the words
employed by, the legislature in a statute correctly express its intent or
will and preclude the court from construing it differently. 26 The
legislature is presumed to know the meaning of the words, to:have
used words advisedly, and to have expressed its intent by the use of
such words as are found in the statute. 27 Verba legis non est
recedendum, or from the words of a statute there should be no
departure. Neither does the provision admit of any qualification. If in
the wisdom of the Court, there may be a ground or grounds for nonapplication of the above-cited provision, this should be by way of
exception, such as when the reinstatement may be inadmissible due
to ensuing strained relations between the employer and the
employee.
In such cases, it should be proved that the employee concerned
occupies a position where he enjoys the trust and confidence of his
employer; and that it is likely that if reinstated, an atmosphere of
antipathy and antagonism may be generated as to adversely affect
the efficiency and productivity of the employee concerned.
A few examples, will suffice to illustrate the Court's application of the
above principles: where the employee is a Vice-President for
Marketing and as such, enjoys the full trust and confidence of top
management; 28 or is the Officer-In-Charge of the extension office of
the bank where he works; 29 or is an organizer of a union who was in
a position to sabotage the union's efforts to organize the workers in

commercial and industrial establishments; 30 or is a warehouseman of

a non-profit organization whose primary purpose is to facilitate and
maximize voluntary gifts. by foreign individuals and organizations to
the Philippines; 31 or is a manager of its Energy Equipment Sales. 32
Obviously, the principle of "strained relations" cannot be applied
indiscriminately. Otherwisey reinstatement can never be possible
simply because some hostility is invariably engendered between the
parties as a result of litigation. That is human nature. 33
Besides, no strained relations should arise from a valid and legal act
of asserting one's right; otherwise an employee who shall assert his
right could be easily separated from the service, by merely paying his
separation pay on the pretext that his relationship with his employer
had already become strained. 34
Here, it has not been proved that the position of private respondent
as systems analyst is one that may be characterized as a position of
trust and confidence such that if reinstated, it may well lead to
strained relations between employer and employee. Hence, this does
not constitute an exception to the general rule mandating
reinstatement for an employee who has been unlawfully dismissed.
On the other hand, has she betrayed any confidence reposed in her
by engaging in transactions that may have created conflict of interest
situations? Petitioner GMCR points out that as a matter of company
policy, it prohibits its employees from involving themselves with any
company that has business dealings with GMCR. Consequently,
when private respondent Salazar signed as a witness to the
partnership papers of Concave (a supplier of Ultra which in turn is
also a supplier of GMCR), she was deemed to have placed. herself in
an untenable position as far as petitioner was concerned.
However, on close scrutiny, we agree with public respondent that
such a circumstance did not create a conflict of interests situation. As
a systems analyst, Salazar was very far removed from operations
involving the procurement of supplies. Salazar's duties revolved
around the development of systems and analysis of designs on a
continuing basis. In other words, Salazar did not occupy a position of
trust relative to the approval and purchase of supplies and company

assets.
In the instant case, petitioner has predicated its dismissal of Salazar
on loss of confidence. As we have held countless times, while loss of
confidence or breach of trust is a valid ground for terminations it must
rest an some basis which must be convincingly established. 35 An
employee who not be dismissed on mere presumptions and
suppositions. Petitioner's allegation that since Salazar and Saldivar
lived together in the same apartment, it "presumed reasonably that
complainant's sympathy would be with Saldivar" and its averment that
Saldivar's investigation although unverified, was probably true, do not
pass this Court's test. 36 While we should not condone the acts of
disloyalty of an employee, neither should we dismiss him on the basis
of suspicion derived from speculative inferences.
To rely on the Maramara report as a basis for Salazar's dismissal
would be most inequitous because the bulk of the findings centered
principally oh her friend's alleged thievery and anomalous
transactions as technical operations' support manager. Said report
merely insinuated that in view of Salazar's special relationship with
Saldivar, Salazar might have had direct knowledge of Saldivar's
questionable activities. Direct evidence implicating private respondent
is wanting from the records.
It is also worth emphasizing that the Maramara report came out after
Saldivar had already resigned from GMCR on May 31, 1984. Since
Saldivar did not have the opportunity to refute management's
findings, the report remained obviously one-sided. Since the main
evidence obtained by petitioner dealt principally on the alleged
culpability of Saldivar, without his having had a chance to voice his
side in view of his prior resignation, stringent examination should
have been carried out to ascertain whether or not there existed
independent legal grounds to hold Salatar answerable as well and,
thereby, justify her dismissal. Finding none, from the records, we find
her to have been unlawfully dismissed.
WHEREFORE, the assailed resolution of public respondent National
Labor Relations Commission dated December 29, 1987 is hereby
AFFIRMED. Petitioner GMCR is ordered to REINSTATE private
respondent Imelda Salazar and to pay her backwages equivalent to

her salary for a period of two (2) years only.

This decision is immediately executory.
SO ORDERED.
Paras, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr. and
Nocon, JJ., concur.
Cruz, J., concurs in the result.
Gutierrez, Jr., Feliciano and Padilla, JJ., took no part
Republic of the Philippines SUPREME COURT Manila
EN BANC
G.R. No. 80609 August 23, 1988
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs. THE NATIONAL LABOR RELATIONS COMMISSION and
MARILYN ABUCAY, respondents.
Nicanor G. Nuevas for petitioner.

CRUZ, J.:
The only issue presented in the case at bar is the legality of the
award of financial assistance to an employee who had been
dismissed for cause as found by the public respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance
Telephone Company, was accused by two complainants of having
demanded and received from them the total amount of P3,800.00 in
consideration of her promise to facilitate approval of their applications
for telephone installation. 1 Investigated and heard, she was found
guilty as charged and accordingly separated from the service. 2 She
went to the Ministry of Labor and Employment claiming she had been
illegally removed. After consideration of the evidence and arguments

of the parties, the company was sustained and the complaint was
dismissed for lack of merit. Nevertheless, the dispositive portion of
labor arbiter's decision declared:
WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez
are not totally blameless in the light of the fact that the deal happened
outhide the premises of respondent company and that their act of
giving P3,800.00 without any receipt is tantamount to corruption of
public officers, complainant must be given one month pay for every
year of service as financial assistance. 3
Both the petitioner and the private respondent appealed to the
National Labor Relations Board, which upheld the said decision in
toto and dismissed the appeals. 4 The private respondent took no
further action, thereby impliedly accepting the validity of her
dismissal. The petitioner, however, is now before us to question the
affirmance of the above- quoted award as having been made with
grave abuse of discretion.
In its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in
complainant's favor, We find the same to be equitable, taking into
consideration her long years of service to the company whereby she
had undoubtedly contributed to the success of respondent. While we
do not in any way approve of complainants (private respondent) mal
feasance, for which she is to suffer the penalty of dismissal, it is for
reasons of equity and compassion that we resolve to uphold the
award of financial assistance in her favor. 5
The position of the petitioner is simply stated: It is conceded that an
employee illegally dismissed is entitled to reinstatement and
backwages as required by the labor laws. However, an employee
dismissed for cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all because his dismissal
is in accordance with law. In the case of the private respondent, she
has been awarded financial assistance equivalent to ten months pay
corresponding to her 10 year service in the company despite her
removal for cause. She is, therefore, in effect rewarded rather than

punished for her dishonesty, and without any legal authorization or

justification. The award is made on the ground of equity and
compassion, which cannot be a substitute for law. Moreover, such
award puts a premium on dishonesty and encourages instead of
deterring corruption.
For its part, the public respondent claims that the employee is
sufficiently punished with her dismissal. The grant of financial
assistance is not intended as a reward for her offense but merely to
help her for the loss of her employment after working faithfully with
the company for ten years. In support of this position, the Solicitor
General cites the cases of Firestone Tire and Rubber Company of the
Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao,
7
where the employees were dismissed for cause but were
nevertheless allowed separation pay on grounds of social and
compassionate justice. As the Court put it in the Firestone case:
In view of the foregoing, We rule that Firestone had valid grounds to
dispense with the services of Lariosa and that the NLRC acted with
grave abuse of discretion in ordering his reinstatement. However,
considering that Lariosa had worked with the company for eleven
years with no known previous bad record, the ends of social and
compassionate justice would be served if he is paid full separation
pay but not reinstatement without backwages by the NLRC.
In the said case, the employee was validly dismissed for theft but the
NLRC nevertheless awarded him full separation pay for his 11 years
of service with the company. In Soco, the employee was also legally
separated for unauthorized use of a company vehicle and refusal to
attend the grievance proceedings but he was just the same granted
one-half month separation pay for every year of his 18-year service.
Similar action was taken in Filipro, Inc. v. NLRC, 8 where the
employee was validly dismissed for preferring certain dealers in
violation of company policy but was allowed separation pay for his 2
years of service. In Metro Drug Corporation v. NLRC, 9 the employee
was validly removed for loss of confidence because of her failure to
account for certain funds but she was awarded separation pay
equivalent to one-half month's salary for every year of her service of
15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of

the employee was justified because he had instigated labor unrest

among the workers and had serious differences with them, among
other grounds, but he was still granted three months separation pay
corresponding to his 3-year service. In New Frontier Mines, Inc. v.
NLRC, 11 the employee's 3- year service was held validly terminated
for lack of confidence and abandonment of work but he was
nonetheless granted three months separation pay. And in San Miguel
Corporation v. Deputy Minister of Labor and Employment, et al ., 12
full separation pay for 6, 10, and 16 years service, respectively, was
also allowed three employees who had been dismissed after they
were found guilty of misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for
cause as defined therein is not entitled to separation pay. 13 The
cases above cited constitute the exception, based upon
considerations of equity. Equity has been defined as justice outside
law, 14 being ethical rather than jural and belonging to the sphere of
morals than of law. 15 It is grounded on the precepts of conscience
and not on any sanction of positive law. 16 Hence, it cannot prevail
against the expressed provision of the labor laws allowing dismissal
of employees for cause and without any provision for separation pay.
Strictly speaking, however, it is not correct to say that there is no
express justification for the grant of separation pay to lawfully
dismissed employees other than the abstract consideration of equity.
The reason is that our Constitution is replete with positive commands
for the promotion of social justice, and particularly the protection of
the rights of the workers. The enhancement of their welfare is one of
the primary concerns of the present charter. In fact, instead of
confining itself to the general commitment to the cause of labor in
Article II on the Declaration of Principles of State Policies, the new
Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub- topic for labor.
Article XIII expressly recognizes the vital role of labor, hand in hand
with management, in the advancement of the national economy and
the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more
than sufficient basis to justify the award of separation pay in proper
cases even if the dismissal be for cause.

The Court notes, however, that where the exception has been
applied, the decisions have not been consistent as to the justification
for the grant of separation pay and the amount or rate of such award.
Thus, the employees dismissed for theft in the Firestone case and for
animosities with fellow workers in the Engineering Equipment case
were both awarded separation pay notnvithstanding that the first
cause was certainly more serious than the second. No less curiously,
the employee in the Soco case was allowed only one-half month pay
for every year of his 18 years of service, but in Filipro the award was
two months separation pay for 2 years service. In Firestone, the
emplovee was allowed full separation pay corresponding to his 11
years of service, but in Metro, the employee was granted only onehalf month separation pay for every year of her 15year service. It
would seem then that length of service is not necessarily a criterion
for the grant of separation pay and neither apparently is the reason
for the dismissal.
The Court feels that distinctions are in order. We note that heretofore
the separation pay, when it was considered warranted, was required
regardless of the nature or degree of the ground proved, be it mere
inefficiency or something graver like immorality or dishonesty. The
benediction of compassion was made to cover a multitude of sins, as
it were, and to justify the helping hand to the validly dismissed
employee whatever the reason for his dismissal. This policy should
be re-examined. It is time we rationalized the exception, to make it
fair to both labor and management, especially to labor.
There should be no question that where it comes to such valid but not
iniquitous causes as failure to comply with work standards, the grant
of separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the
company. For example, a subordinate who has irreconcilable policy
or personal differences with his employer may be validly dismissed
for demonstrated loss of confidence, which is an allowable ground. A
working mother who has to be frequently absent because she has
also to take care of her child may also be removed because of her
poor attendance, this being another authorized ground. It is not the
employee's fault if he does not have the necessary aptitude for his
work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its

operations. He too may be validly replaced. Under these and similar

circumstances, however, the award to the employee of separation
pay would be sustainable under the social justice policy even if the
separation is for cause.
But where the cause of the separation is more serious than mere
inefficiency, the generosity of the law must be more discerning. There
is no doubt it is compassionate to give separation pay to a salesman
if he is dismissed for his inability to fill his quota but surely he does
not deserve such generosity if his offense is misappropriation of the
receipts of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is doubtless
subject to dismissal but may be allowed separation pay since his
conduct, while inept, is not depraved. But if he was in fact not really
sleeping but sleeping with a prostitute during his tour of duty and in
the company premises, the situation is changed completely. This is
not only inefficiency but immorality and the grant of separation pay
would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the employee
is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character. Where the reason for the
valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the
effect, of rewarding rather than punishing the erring employee for his
offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong he
has committed. Of course it has. Indeed, if the employee who steals
from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his
next employment because he thinks he can expect a like leniency if
he is again found out. This kind of misplaced compassion is not going
to do labor in general any good as it will encourage the infiltration of
its ranks by those who do not deserve the protection and concern of

the Constitution.
The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the underprivileged. At
best it may mitigate the penalty but it certainly will not condone the
offense. Compassion for the poor is an imperative of every humane
society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be refuge
of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so
only if their hands are clean and their motives blameless and not
simply because they happen to be poor. This great policy of our
Constitution is not meant for the protection of those who have proved
they are not worthy of it, like the workers who have tainted the cause
of labor with the blemishes of their own character.
Applying the above considerations, we hold that the grant of
separation pay in the case at bar is unjustified. The private
respondent has been dismissed for dishonesty, as found by the labor
arbiter and affirmed by the NLRC and as she herself has impliedly
admitted. The fact that she has worked with the PLDT for more than a
decade, if it is to be considered at all, should be taken against her as
it reflects a regrettable lack of loyalty that she should have
strengthened instead of betraying during all of her 10 years of service
with the company. If regarded as a justification for moderating the
penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of
labor to cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due under the
circumstances of each case, should be computed at the rate of one
month salary for every year of service, assuming the length of such
service is deemed material. This is without prejudice to the
application of special agreements between the employer and the
employee stipulating a higher rate of computation and providing for
more benefits to the discharged employee. 17
WHEREFORE, the petition is GRANTED. The challenged resolution
of September 22,1987, is AFFIRMED in toto except for the grant of
separation pay in the form of financial assistance, which is hereby

DISALLOWED. The temporary restraining order dated March 23,

1988, is LIFTED. It is so ordered.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,
Gancayco, Bidin, Sarmiento, Cortes and Medialdea, JJ., concur.

Separate Opinions

FERNAN, C.J., dissenting:

The majority opinion itself declares that the reason for granting
separation pay to lawfully dismissed employees is that "our
Constitution is replete with positive commands for the promotion of
social justice, and particularly the protection of the rights of the
workers." 1
It is my firm belief that providing a rigid mathematical formula for
determining the amounts of such separation pay will not be in
keeping with these constitutional directives. By computing the
allowable financial assistance on the formula suggested, we shall be
closing our eyes to the spirit underlying these constitutional mandates
that "those who have less in life should have more in law." It cannot
be denied that a low salaried employee who is separated from work
would suffer more hardship than a well-compensated one. Yet, if we
follow the formula suggested, we would in effect be favoring the latter
instead of the former, as it would be the low- salaried employee who
would encounter difficulty finding another job.
I am in accord with the opinion of Justice Sarmiento that we should
not rationalize compassion and that of Justice Padilla that the awards
of financial assistance should be left to the discretion of the National
Labor Relations Commission as may be warranted by the
"environmental facts" of the case.
PADILIA, J., separate opinion

I concur in the decision penned by Mr. Justice Cruz when it disallows

separation pay, as financial assistance, to the private respondent,
since the ground for termination of employment is dishonesty in the
performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if
found due under the circumstances of each case, should be
computed at the rate of one month salary for every year of service,
assuming the length of such service is deemed material." (p.11,
Decision). It is my considered view that, except for terminations
based on dishonesty and serious misconduct involving moral
turpitude-where no separation pay should be allowed--in other cases,
the grant of separation pay, i.e. the amount thereof, as financial
assistance to the terminated employee, should be left to the judgment
of the administrative agency concemed which is the NLRC. It is in
such cases- where the termination of employment is for a valid cause
without, however, involving dishonesty or serious misconduct
involving moral turpitude-that the Constitutional policy of affording
protection to labor should be allowed full play; and this is achieved by
leaving to the NLRC the primary jurisdiction and judgment to
determine the amount of separation pay that should be awarded to
the terminated employee in accordance with the "environmental
facts" of each case.
It is further my view that the Court should not, as a rule, disturb or
alter the amount of separation pay awarded by the NLRC in such
cases of valid termination of employment but with the financial
assistance, in the absence of a demonstrated grave abuse of
discretion on the part of the NLRC.
GRIO AQUINO, J., dissent:
We should not rationalize compassion. I vote to affirm the grant of
financial assistance.

Separate Opinions

FERNAN, C.J., dissenting:

The majority opinion itself declares that the reason for granting
separation pay to lawfully dismissed employees is that "our
Constitution is replete with positive commands for the promotion of
social justice, and particularly the protection of the rights of the
workers." 1
It is my firm belief that providing a rigid mathematical formula for
determining the amounts of such separation pay will not be in
keeping with these constitutional directives. By computing the
allowable financial assistance on the formula suggested, we shall be
closing our eyes to the spirit underlying these constitutional mandates
that "those who have less in life should have more in law." It cannot
be denied that a low salaried employee who is separated from work
would suffer more hardship than a well-compensated one. Yet, if we
follow the formula suggested, we would in effect be favoring the latter
instead of the former, as it would be the low- salaried employee who
would encounter difficulty finding another job.
I am in accord with the opinion of Justice Sarmiento that we should
not rationalize compassion and that of Justice Padilla that the awards
of financial assistance should be left to the discretion of the National
Labor Relations Commission as may be warranted by the
"environmental facts" of the case.
PADILIA, J., separate opinion
I concur in the decision penned by Mr. Justice Cruz when it disallows
separation pay, as financial assistance, to the private respondent,
since the ground for termination of employment is dishonesty in the
performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if
found due under the circumstances of each case, should be
computed at the rate of one month salary for every year of service,
assuming the length of such service is deemed material." (p.11,
Decision). It is my considered view that, except for terminations
based on dishonesty and serious misconduct involving moral
turpitude-where no separation pay should be allowed--in other cases,
the grant of separation pay, i.e. the amount thereof, as financial

assistance to the terminated employee, should be left to the judgment

of the administrative agency concemed which is the NLRC. It is in
such cases- where the termination of employment is for a valid cause
without, however, involving dishonesty or serious misconduct
involving moral turpitude-that the Constitutional policy of affording
protection to labor should be allowed full play; and this is achieved by
leaving to the NLRC the primary jurisdiction and judgment to
determine the amount of separation pay that should be awarded to
the terminated employee in accordance with the "environmental
facts" of each case.
It is further my view that the Court should not, as a rule, disturb or
alter the amount of separation pay awarded by the NLRC in such
cases of valid termination of employment but with the financial
assistance, in the absence of a demonstrated grave abuse of
discretion on the part of the NLRC.
GRIO AQUINO, J., dissent:
We should not rationalize compassion. I vote to affirm the grant of
financial assistance.
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN,
FERNANDO L. BUSTAMANTE, MARIO D. SUMONOD, and
SABU J. LAMARAN, petitioners, vs. NATIONAL LABOR
RELATIONS
COMMISSION,
FIFTH
DIVISION
and EVERGREEN FARMS, INC., respondents.
RESOLUTION
PADILLA, J.:
On 15 March 1996, the Court (First Division) promulgated a
decision in this case, the dispositive part of which states:
"WHEREFORE, the resolution of the National Labor Relations
Commission dated 3 May 1993 is modified in that its deletion of
the award for backwages in favor of petitioners, is SET
ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is
AFFIRMED with the modification that backwages shall be paid to
petitioners from the time of their illegal dismissal on 25 June 1990

up to the date of their reinstatement. If reinstatement s no longer

feasible, a one-month salary shall be paid the petitioners as ordered
in the labor arbiter's decision, in addition to the adjudged
backwages.
Private respondent now moves to reconsider the decision on
grounds that (a) petitioners are not entitled to recover backwages
because they were not actually dismissed but their probationary
employment was not converted to permanent employment; and (b)
assuming that petitioners are entitled to backwages, computation
thereof should not start from cessation of work up to actual
reinstatement, and that salary earned elsewhere (during the period of
illegal dismissal) should be deducted from the award of such
backwages.
There is no compelling reason to reconsider the decision of the
Court (First Division) dated 15 March 1996. However, we here clarify
the computation of backwages due an employee on account of his
illegal dismissal from employment.
This court has, over the years, applied different methods in the
computation of backwages. The first labor relations law governing the
award of backwages was Republic Act No. 875, the Industrial Peace
Act, approved on 17 June 1953. Sections 5 and 15 thereof provided
thus:
"Sec. 5. Unfair Labor Practice Cases.(c) x x x. If, after investigation, the Court shall be of the opinion
that any person named in the complaint has engaged in or is
engaging in any unfair labor practice, then the Court shall state its
findings of fact and shall issue and cause to be served on such
person an order requiring such person to cease and desist from
such unfair labor practice and take such affirmative action as will
effectuate the policies of this Act, including (but not limited to)
reinstatement of employees with or without back-pay and
including rights of the employees prior to dismissal including
seniority. x x x (underscoring supplied)
Sec. 15. Violation of Duty to Bargain Collectively. - x x x. Any
employee whose work has stopped as a consequence of such
lockout shall be entitled to back-pay. (underscoring supplied)"

In accordance with these provisions, backpay (the same as

backwages) could be awarded where, in the opinion of the Court of
Industrial Relations (CIR) such was necessary to effectuate the
policies of the Industrial Peace Act.[1] Only in one case was backpay
a matter of right, and that was, when an employer had declared a
lockout without having first bargained collectively with his employees
in accordance with the provisions of the Act.
As the CIR was given wide discretion to grant or disallow
payment of backpay (backwages) to an employee, it also had the
implied power of mitigating (reducing) the backpay where backpay
was allowed.[2] Thus, in the exercise of its jurisdiction, the CIR
increased or diminished the award of backpay, depending on several
circumstances, among them, the good faith of the employer,[3] the
employee's employment in other establishments during the period of
illegal dismissal, or the probability that the employee could have
realized net earnings from outside employment if he had exercised
due diligence to search for outside employment.[4] In labor cases
decided during the effectivity of R.A. No. 875, this Court
acknowledged and upheld the CIR's authority to deduct any amount
from the employee's backwages,[5] including the discretion to reduce
such award of backwages by whatever earnings were obtained by the
employee elsewhere during the period of his illegal dismissal.[6] In
the case of Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers'
Union,[7] this Court restated the guidelines for deternination of total
backwages, thus:
"First. To be deducted from the backwages accruing to each of the
laborers to be reinstated is the total amount of earnings obtained by
him from other employment(s) from the date of dismissal to the
date of reinstatement. Should the laborer decide that it is
preferable not to return to work, the deduction should be made up
to the time judgment becomes final. And these, for the reason that
employees should not be permitted to enrich themselves at the
expense of their employer. Besides, there is the 'law's abhorrence
for the double competition'.
Second. Likewise, in mitigation of the damages that the dismissed
respondents are entitled to, account should be taken of whether in
the exercise of due diligence respondents might have obtained
income from suitable remunerative employment. We are prompted

to give out this last reminder because it is really unjust that a

discharged employee should, with folded arms, remain inactive in
the expectation that a windfall would come to him. A countrary
view would breed idleness; it is conductive to lack of initiative on
the part of a laborer. Both bear the stamp of underdesirability."
From this ruling came the burden of disposing of an illegal
dismissal case on its merits of determining whether or not the
computation of the award of backwages is correct. In order not to
unduly delay the disposition of illegal dismissal cases, this Court
found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et
al.[8] to rule that a fixed amount of backwages without further
qualifications should be awarded to an illegally dismissed employee
(hereinafter the Mercury Drug rule). This ruling was grounded upon
considerations
of
expediency
in
the
execution
of
the decision. Former Justice Claudio Teehankee approved of this
formula expressing that such method of computation is a "realistic,
reasonable and mutually beneficial solution" and "thus obviates the
twin evils of idleness on the part of the employees and attrition and
undue delay in satisfying the award on the part of the employer".[9]
However, Justice Teehankee dissented from the majority view that
the employee in said case should be awarded backwages only for a
period of 1 year, 11 months and 15 days which represented the
remainder of the prescriptive period after deducting the period
corresponding to the delay incurred by the employee in filing the
complaint for unfair labor practice and reinstatement. Justice
Teehankee opined that:
" an award of back wages equivalent to three years (where the
case is not terminated sooner) should serve as the base figure for
such awards without deduction, subject to deduction where there
are mitigating circumstances in favor of the employer but subject
to increase by way of exemplary damages where there are
aggravating circumstances (e.g. oppression or dilatory appeals) on
the employer's part."[10]
The proposal on the three-year backwages was subsequently
adopted in later cases, among them, Feati University Club (PAFLU)
v. Feati University (No. L-31503, 15 August 1974, 58 SCRA 395),
Luzon Stevedoring Corporation v. CIR (No. L-34300, 22 November
1974, 61 SCRA 154), Danao Development Corporation v. NLRC

(Nos. L-40706 and L-40707, 16 February 1978, 81 SCRA 487),

Associated Anglo-American Tobacco Corporation v. Lazaro (No.
63779, 27 October 1983, 125 SCRA (463), Philippine National Oil
Company - Energy Development Corporation v. Leogardo (G.R.
No. 58494, 5 July 1989, 175 SCRA 26).
Then came Presidential Decree No. 442 (the Labor Code of the
Philippines) which was signed into law on 1 May 1974 and which took
effect on 1 November 1974. Its posture on the award of backwages,
as amended, was expressed as follows:
"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 to his back wages
computed from the time his compensation was was withheld from
him up to the time of his reinstatement. (underscoring supplied)."
Under the abovequoted provision, it became mandatory to award
backwages to illegally dismissed regular employees. The law
specifically declared that the award of backwages was to be
computed from the time compensation was withheld from the
employee up to the time of his reinstatement. This nothwithstanding,
the rule generally applied by the Court after the promulgation of the
Mercury Drug case,[11] and during the effectivity of P.D. No.
442 was still the Mercury Drug rule. A survey of cases from
1974 until 1989, when the amendatory law to P.D. No. 442, namely,
R.A. No. 6715 took effect, supports this conclusion.
In the case of New Manila Candy Workers Union (NaconwaPaflu) v. CIR (1978),[12] or after the Labor Code (P.D. No. 442) had
taken effect, the Court still followed the Mercury Drug rule to avoid
the necessity of a hearing on earnings obtained elsewhere by the
employee during the period of illegal dismissal. In an even later case
(1987)[13] the Court declared that the general principle is that an
employee is entitled to receive as backwages all the amounts he may
have received from the date of his dismissal up to the time of his
reinstatement. However, in compliance with the jurisprudential policy
of fixing the amount of backwages to a just and reasonable level, the
award of backwages equivalent to three (3) years, without

qualification or deduction, was nonetheless followed in said case.

In a more direct approach to the rule on the award of backwages,
this Court declared in the 1990 case of Medado v. Court of
Appeals[14] that "any decision or order granting backwages in excess
of three (3) years is null and void as to the excess".
In sum, during the effectivity of P.D. 442, the Court enforced the
Mercury Drug rule and, in effect, qualified the provision under P.D.
No. 442 by limiting the award of backwages to three (3) years.
On 21 march 1989, Republic Act No. 6715 took effect, amending
the Labor Code. Article 279 thereof states in part:
"ART. 279. Security of Tenure.- . . . An employee who 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." (underscoring
supplied)
In accordance with the above provision, an illegally dismissed
employee is entitled to his full backwages from the time his
compensation was withheld from him (which , as a rule, is from the
time of his illegal dismissal) up to the time of his actual
reinstatement. It is true that this Court had ruled in the case of Pines
City Educational Center vs. NLRC (G.R. No. 96779, 10 November
1993, 227 SCRA 655) that "in ascertaining the total amount of
backwages payable to them (employees), we go back to the rule prior
to the Mercury Drug rule that the total amount derived from
employment elsewhere by the employee from the date of dismissal
up to the date of reinstatement, if any, should be deducted
therefrom."[15] The rationale for such ruling was that, the eraning
derived elsewhere by the dismissed employee while litigating the
legality of his dismissal, should be deducted from the full amount of
backwages which the law grants him upon reinstatement, so as not to
unduly or unjustly enrich the employee at the expense of the
employer.
The Court deems it appropriate, however, to reconsider such
earlier ruling on the computation of backwages as enunciated in said

Pines City Educational Center case, by now holding that conformably

with the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or reduced by
the earnings derived by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is that the employee,
while litigating the legality (illegality) of his dismissal, must still earn a
living to support himself and family, while full backwages have to be
paid by the employer as part of the price or penalty he has to pay for
illegally dismissing his employee. The clear legislative intent of the
amendment in Rep. Act No. 6715 is to give more benefits to workers
than was previously given them under the Mercury Drug rule or the
"deduction of earnings elsewhere" rule. Thus, a closer adherence to
the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned
employee during the period of his illegal dismissal.[16] In other words,
the provision calling for "full backwages" to illegally dismissed
employees is clear, plain and free from ambiguity and, therefore,
must be applied without attempted or strained interpretation. Index
animi sermo est.[17]
Therefore, in accordance with R.A No. 6715, petitioners are
entitled to their full backwages, inclusive of allowances and other
benefits or their monetary equivalent, from the time their actual
compensation was with held from them up to the time of their actual
reinstatement.
As to reinstatement of petitioners, this Court has already ruled
that since reinstatement is no longer feasible, because the company
would be unjustly prejudiced by the continued employment of
petitioners who at present are overage, a separation pay equal to
one-month salary granted to them in the Labor Arbiter's decision was
in order and, therefore, affirmed in the Court's decision of 15 March
1996. Furthermore, since reinstatement in this case is no longer
feasible, the amount of backwages shall be computed from the time
of their illegal termination on 25 June 1990 up to the time of finality of
this decision.[18]
ACCORDINGLY,
private
respondent's
Reconsideration, dated 10 April 1996, is DENIED.

Motion

for

SO ORDERED.
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO,
DANILO C. BALANAG, FERDINAND DELLA, EDWARD A.
ABELLERA, ALEXANDER ABANAG, DOMINGO ASIA,
FRANCISCO
BAYUGA,
ARTHUR
M.
ORIBELLO,
BUENAVENTURA DE GUZMAN, JR., ROBERT A.
ORDOO, BERNARD V. JULARBAL, IGNACIO C.
ALINGBAS and LEODEL N. SORIANO, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD
DIVISION), and BENGUET ELECTRIC COOPERATIVE,
INC. (BENECO) respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari seeking to annul the decision
promulgated by the National Labor Relations Commission (NLRC) on
July 2, 1992 in NLRC CA No. L-000384-92,[1] and its resolution
dated September 24, 1992 denying petitioners motion for
reconsideration.
The factual background of this case, as summarized by the
Labor Arbiter, is as follows:
Fifteen (15) in all, these are consolidated cases for illegal dismissal,
underpayment of wages and claim for indemnity pay against a common
respondent, the Benguet Electric Cooperative, Inc., (BENECO for short)
represented by its Acting General Manager, Gerardo P. Versoza.
Complainants services as meter readers were contracted for hardly a
months duration, or from October 8 to 31, 1990. Their employment
contracts, couched in identical terms, read:
You are hereby appointed as METER READER (APPRENTICE) under
BENECO-NEA Management with compensation at the rate of SIXTY-SIX
PESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day from
October 08 to 31, 1990.
x

x. (Annex B, Complainants Joint Position Paper)

The said term notwithstanding, the complainants were allowed to work

beyond October 31, 1990, or until January 2, 1991. On January 3, 1991,
they were each served their identical notices of termination dated December
29, 1990. The same read:
Please be informed that effective at the close of office hours of December
31, 1990, your services with the BENECO will be terminated. Your
termination has nothing to do with your performance. Rather, it is because
we have to retrench on personnel as we are already overstaffed.
x

x. (Annex C, CJPP)

On the same date, the complainants filed separate complaints for illegal
dismissal. And following the amendment of said complaints, they submitted
their joint position paper on April 4, 1991. Respondent filed its position
paper on April 2, 1991.
It is the contention of the complainants that they were not apprentices but
regular employees whose services were illegally and unjustly terminated in a
manner that was whimsical and capricious. On the other hand, the
respondent invokes Article 283 of the Labor Code in defense of the
questioned dismissal.[2]
On October 18, 1991, the Labor Arbiter rendered a decision, the
dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered:
1.
Dismissing the complaints for illegal dismissal filed by the
complainants for lack of merit. However in view of the offer of the
respondent to enter into another temporary employment contract with the
complainants, the respondent is directed to so extend such contract to each
complainant, with the exception of Jaime Viernes, and to pay each the
amount of P2,590.50, which represents a months salary, as indemnity for its
failure to give complainants the 30-day notice mandated under Article 283
of the Labor Code; or, at the option of the complainants, to pay each
financial assistance in the amount of P5,000.00 and the P2,590.50 abovementioned.
2.

Respondent is also ordered:

A.
To pay complainants the amount representing underpayment of
their wages:
a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera,
Francisco Bayuga, Arthur Oribello, Buenaventura de Guzman, Jr., Robert
Ordoo, Bernard Jularbal and Leodel Soriano, P1,994.25 each;
b)

Bernard Bustillo and Domingo Asia, P1,838.50 each; and

c) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25

each.
B.
To extend to complainant Jaime Viernes an appointment as regular
employee for the position of meter reader, the job he held prior to his
termination, and to pay him P2,590.50 as indemnity, plus the underpayment
of his wages as above stated.
C.

To pay P7,000.00 as and for attorneys fees.

No damages.
SO ORDERED.[3]
Aggrieved by the Labor Arbiters decision, the complainants and
the respondent filed their respective appeals to the NLRC.
On July 2, 1992, the NLRC modified its judgment, to wit:
WHEREFORE, premises considered, judgment is hereby rendered
modifying the appealed decision by declaring complainants dismissal
illegal, thus ordering their reinstatement to their former position as meter
readers or to any equivalent position with payment of backwages limited to
one year and deleting the award of indemnity and attorneys fees. The
award of underpayment of wages is hereby AFFIRMED.
SO ORDERED.[4]
On August 27, 1992, complainants filed a Motion for Clarification
and Partial Reconsideration.[5] On September 24, 1992, the NLRC
issued a resolution denying the complainants motion for
reconsideration.[6]

Hence, complainants filed herein petition.

Private respondent BENECO filed its Comment; the Office of the
Solicitor General (OSG) filed a Manifestation and Motion in Lieu of
Comment; public respondent NLRC filed its own Comment; and
petitioners filed their Manifestation and Motion In Lieu of
Consolidated Reply. Public respondent NLRC, herein petitioners,
and private respondent filed their respective memoranda, and the
OSG, its Manifestation in 1994.
Pursuant to our ruling in Rural Bank of Alaminos Employees
Union vs. NLRC,[7] to wit:
in the decision in the case of St. Martin Funeral Homes vs. National Labor
Relations Commission, G.R. No. 130866, promulgated on September 16,
1998, this Court pronounced that petitions for certiorari relating to NLRC
decisions must be filed directly with the Court of Appeals, and labor cases
pending before this Court should be referred to the appellate court for proper
disposition. However, in cases where the Memoranda of both parties have
been filed with this Court prior to the promulgation of the St. Martin
decision, the Court generally opts to take the case itself for its final
disposition.[8]
and considering that the parties have filed their respective
memoranda as of 1994, we opt to resolve the issues raised in the
present petition.
The parties raised the following issues:
1.
Whether the respondent NLRC committed grave abuse of discretion in
ordering the reinstatement of petitioners to their former position as meter
readers on probationary status in spite of its finding that they are regular
employees under Article 280 of the Labor Code.
2.
Whether the respondent NLRC committed grave abuse of discretion in
limiting the backwages of petitioners to one year only in spite of its finding
that they were illegally dismissed, which is contrary to the mandate of full
backwages until actual reinstatement but not to exceed three years.
3.
Whether the respondent NLRC committed grave abuse of discretion in
deleting the award of indemnity pay which had become final because it was
not appealed and in deleting the award of attorneys fees because of the

absence of a trial-type hearing.

4.
Whether the mandate of immediately executory on the reinstatement
aspect even pending appeal as provided in the decision of Labor Arbiters
equally applies in the decision of the National Labor Relations Commission
even pending appeal, by means of a motion for reconsideration of the order
reinstating a dismissed employee or pending appeal because the case is
elevated on certiorari before the Supreme Court.[9]
We find the petition partly meritorious.
As to the first issue: We sustain petitioners claim that they
should be reinstated to their former position as meter readers, not on
a probationary status, but as regular employees.
Reinstatement means restoration to a state or condition from
which one had been removed or separated.[10] In case of
probationary employment, Article 281 of the Labor Code requires the
employer to make known to his employee at the time of the latters
engagement of the reasonable standards under which he may qualify
as a regular employee.
A review of the records shows that petitioners have never been
probationary employees. There is nothing in the letter of
appointment, to indicate that their employment as meter readers was
on a probationary basis. It was not shown that petitioners were
informed by the private respondent, at the time of the latters
employment, of the reasonable standards under which they could
qualify as regular employees. Instead, petitioners were initially
engaged to perform their job for a limited duration, their employment
being fixed for a definite period, from October 8 to 31, 1990.
Private respondents reliance on the case of Brent School, Inc.
vs. Zamora,[11] wherein we held as follows:
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of the
employees right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has

singled out: agreements entered into precisely to circumvent security of

tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter.[12]
is misplaced.
The principle we have enunciated in Brent applies only with
respect to fixed term employments. While it is true that petitioners
were initially employed on a fixed term basis as their employment
contracts were only for October 8 to 31, 1990, after October 31, 1990,
they were allowed to continue working in the same capacity as meter
readers without the benefit of a new contract or agreement or without
the term of their employment being fixed anew. After October 31,
1990, the employment of petitioners is no longer on a fixed term
basis. The complexion of the employment relationship of petitioners
and private respondent is thereby totally changed. Petitioners have
attained the status of regular employees.
Under Article 280 of the Labor Code, a regular employee is one
who is engaged to perform activities which are necessary or desirable
in the usual business or trade of the employer, or a casual employee
who has rendered at least one year of service, whether continuous or
broken, with respect to the activity in which he is employed.
In De Leon vs. NLRC,[13] and Abasolo vs. NLRC,[14] we laid
down the test in determining regular employment, to wit:
The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test
is whether the former is usually necessary or desirable in the usual business
or trade of the employer. The connection can be determined by considering
the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also if the employee has been
performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing

need for its performance as sufficient evidence of the necessity if not

indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such
activity exists.[15]
Clearly therefrom, there are two separate instances whereby it
can be determined that an employment is regular: (1) The particular
activity performed by the employee is necessary or desirable in the
usual business or trade of the employer; or (2) if the employee has
been performing the job for at least a year.
Herein petitioners fall under the first category. They were
engaged to perform activities that are necessary to the usual
business of private respondent. We agree with the labor arbiters
pronouncement that the job of a meter reader is necessary to the
business of private respondent because unless a meter reader
records the electric consumption of the subscribing public, there
could not be a valid basis for billing the customers of private
respondent. The fact that the petitioners were allowed to continue
working after the expiration of their employment contract is evidence
of the necessity and desirability of their service to private
respondents business. In addition, during the preliminary hearing of
the case on February 4, 1991, private respondent even offered to
enter into another temporary employment contract with
petitioners. This only proves private respondents need for the
services of herein petitioners. With the continuation of their
employment beyond the original term, petitioners have become fullfledged regular employees. The fact alone that petitioners have
rendered service for a period of less than six months does not make
their employment status as probationary.
Since petitioners are already regular employees at the time of
their illegal dismissal from employment, they are entitled to be
reinstated to their former position as regular employees, not merely
probationary.
As to the second issue, Article 279 of the Labor Code, as
amended by R.A. No. 6715, which took effect on March 21, 1989,
provides that an illegally dismissed employee is entitled to 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. Since

petitioners were employed on October 8, 1990, the amended
provisions of Article 279 of the Labor Code shall apply to the present
case. Hence, it was patently erroneous, tantamount to grave abuse
of discretion on the part of the public respondent in limiting to one
year the backwages awarded to petitioners.
With respect to the third issue, an employer becomes liable to
pay indemnity to an employee who has been dismissed if, in effecting
such dismissal, the employer fails to comply with the requirements of
due process.[16] The indemnity is in the form of nominal damages
intended not to penalize the employer but to vindicate or recognize
the employees right to procedural due process which was violated by
the employer.[17] Under Article 2221 of the Civil Code, nominal
damages are 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.
We do not agree with the ruling of the NLRC that indemnity is
incompatible with the award of backwages. These two awards are
based on different considerations. Backwages are granted on
grounds of equity to workers for earnings lost due to their illegal
dismissal from work.[18] On the other hand, the award of indemnity,
as we have earlier held, is meant to vindicate or recognize the right of
an employee to due process which has been violated by the
employer.
In the present case, the private respondent, in effecting the
dismissal of petitioners from their employment, failed to comply with
the provisions of Article 283 of the Labor Code which requires an
employer to serve a notice of dismissal upon the employees sought
to be terminated and to the Department of Labor, at least one month
before the intended date of termination. Petitioners were served
notice on January 3, 1991 terminating their services, effective
December 29, 1990, or retroactively, in contravention of Article
283. This renders the private respondent liable to pay indemnity to
petitioners.
Thus, we find that the NLRC committed grave abuse of
discretion in deleting the award of indemnity. In Del Val vs.
NLRC,[19] we held that the award of indemnity ranges from

P1,000.00 to P10,000.00 depending on the particular circumstances

of each case. In the present case, the amount of indemnity awarded
by the labor arbiter is P2,590.50, which is equivalent to petitioners
one-month salary. We find no cogent reason to modify said award,
for being just and reasonable.
As to the award of attorneys fees, the same is justified by the
provisions of Article 111 of the Labor Code, to wit:
Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the
culpable party may be assessed attorneys fees equivalent to ten percent of
the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of the wages, attorneys fees
which exceed ten percent of the amount of wages recovered.
As to the last issue, Article 223 of the Labor Code is plain and
clear that the decision of the NLRC shall be final and executory after
ten (10) calendar days from receipt thereof by the parties. In
addition, Section 2(b), Rule VIII of the New Rules of Procedure of the
NLRC provides that should there be a motion for reconsideration
entertained pursuant to Section 14, Rule VII of these Rules, the
decision shall be executory after ten calendar days from receipt of the
resolution on such motion.
We find nothing inconsistent or contradictory between Article 223
of the Labor Code and Section 2(b), Rule VIII, of the NLRC Rules of
Procedure. The aforecited provision of the NLRC Rules of Procedure
merely provides for situations where a motion for reconsideration is
filed. Since the Rules allow the filing of a motion for reconsideration
of a decision of the NLRC, it simply follows that the ten-day period
provided under Article 223 of the Labor Code should be reckoned
from the date of receipt by the parties of the resolution on such
motion. In the case at bar, petitioners received the resolution of the
NLRC denying their motion for reconsideration on October 22,
1992. Hence, it is on November 2, 1992 that the questioned decision
became executory.
WHEREFORE, the petition is partially GRANTED. The decision
of the National Labor Relations Commission dated July 2, 1992 is
MODIFIED. Private respondent Benguet Electric Cooperative, Inc.

(BENECO) is hereby ordered to reinstate petitioners to their former or

substantially equivalent position as regular employees, without loss of
seniority rights and other privileges appurtenant thereto, with full
backwages from the time of their dismissal until they are actually
reinstated. The amount of P2,590.50 awarded by the labor arbiter as
indemnity to petitioners is REINSTATED. Private respondent is also
ordered to pay attorneys fees in the amount of ten percent (10%) of
the total monetary award due to the petitioners. In all other respects
the assailed decision and resolution are AFFIRMED.
Costs against private respondent BENECO.
SO ORDERED.
EN BANC
JENNY M. AGABON and
VIRGILIO C. AGABON,
Petitioners,

G.R. No. 158693

Present:
Davide, Jr., C.J.,
Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-

- versus -

Gutierrez,
Carpio,
AustriaMartinez,
Corona,
CarpioMorales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario,
and
Garcia, JJ.

NATIONAL LABOR RELATIONS

COMMISSION (NLRC), RIVIERA

HOME IMPROVEMENTS, INC.
Promulgated:
and VICENTE ANGELES,
Respondents.
November 17, 2004
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
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 NLRCNCR 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.
2.

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 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 employeremployee 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 selfdestruction 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 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.