FIRST DIVISION

 
 
PAULINO ALITEN, G.R. No. 168931
Petitioner,
Present:
 
PANGANIBAN, C.J., Chairperson,
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
U-NEED LUMBER & HARDWARE, Promulgated:
and COURT OF APPEALS,
Respondents. September 12, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 
DECISION
 
 
CALLEJO, SR., J.:
 
This is a petition for review on certiorari of the Amended Decision[1] of the
Court of Appeals (CA) in CA-G.R. SP No. 50682, upholding the legality of
Paulino Alitens dismissal from his employment with U-Need Lumber and
Hardware (U-Need). In the said decision, the appellate court deleted the award of
backwages, while private respondent Marcelino Tan, as proprietor of U-Need, was
ordered to pay petitioner P30,000.00 as nominal damages for non-compliance with
the two-notice rule under the Labor Code of the Philippines, as amended.

The Case for Petitioner

 
Petitioner, a native of Calanasan, Kalinga-Apayao, was employed
on January 3, 1988[2] as helper in U-Need, private respondents business
in Baguio City. On October 22, 1990, petitioner was promoted as regular driver.
Petitioner was registered as a member of the Social Security System (SSS).
 
 On April 30, 1992, petitioner asked permission from U-Need Manager
Virginia Tan for a 15-day leave of absence. He planned to go to his hometown to
visit his parents and vote for his uncle Elias Balot who was running for
congressman in the May 11, 1992 national and local elections. He needed a 15-day
leave because his hometown was a remote area; and considering the mountains and
rivers he had to cross, travel could be very difficult and could take roughly 12
days.[3] Petitioner signed a typewritten application for a one-week vacation leave
starting May 4, 1992,[4] a Monday, wherein he declared that should he fail to report
back for work at the end of his vacation, it is understood that he would be
automatically terminated by his employer. He signed the typewritten application
without reading its contents because he was being scolded by Virginia Tan, who
likewise forced him to sign.
 
Thereafter, he took some of his belongings from the lumbers bunkhouse and
left with his brother using a government vehicle.[5] When he left U-Need on May 4,
1992, he had an outstanding account. However, it was not in the sum of P1,750.00
as alleged by private respondent because as far as he knew, amounts had been
automatically deducted from his wages.[6]
 
It turned out that, as gleaned from the records of the Election
Registrar, Baguio City, he was a registered voter of Middle Rock
Quarry, Baguio City, not Calanasan.[7] He claimed that he only registered therein so
that he could cast his vote in Baguio should he fail to return to his domicile.
[8]
 When he reported for work on May 14, 1992, he was told that he had already
been dismissed from employment.
 
On May 27, 1992, petitioner filed a complaint for illegal dismissal against
U-Need, docketed as RAB-CAR-05-0087-92.[9] He filed an Amended
Complaint[10]claiming underpayment of wages, non-payment of holiday pay,
overtime pay, 13th month pay, and incentive pay. He prayed for reinstatement
without loss of seniority rights with payment of full backwages until actual
reinstatement, and damages.
 
Petitioner averred in his complaint that his employment records had been
tampered to reflect that he was first employed in October 1990. This was so
because his employer reported him for SSS coverage only in 1990. The payroll
was allegedly manipulated to make it appear that he was paid the mandated
minimum wage, when in reality he was paid only P40.00 a day in 1988, P55.00 a
day in 1989, P60.00 a day in 1990, P75.00 a day in 1991, and P90.00 a day in 1992
until his actual termination. He declared that rental payments for the use of the
hardwares bunkhouse were also deducted from his wages.
 
The Case for Private Respondent
 
Virginia Tan denied petitioners charges and maintained that he actually
commenced working as a helper on October 19, 1990. On May 2, 1992, a
Saturday, she berated him because she had caught him reading comics during
working hours. Petitioner did not sleep at the bunkhouse later that night; neither
did he report for work in the morning of the following 
Monday, May 4, 1992. He only returned to the lumberyard with his uncle in the
late afternoon of even date, and requested to be allowed to go on leave for one
week. She initially refused, but eventually granted his request. Co-employee Edwin
Tan, a nephew of private respondent, typed a certification for a one-week vacation
leave which petitioner signed. The certification states:
 
May 4, 1992
To whom it may concern:
This is to certify that I, Paulino Aliten, 24 years old, single, and a resident of U-
Need Lumber Bunkhouse, do hereby depose and say:
 
1.                  That Ive asked for [a] one week vacation from my employer.
2.                  That I still have a balance of P1,750.00.
3.                  That when I have extends [sic] my vacation its [sic] understood that Ill be
terminated. (automatically)
4.                  That I dont have any complain [sic] against my employer whatsoever.
 
(Sgd.)
Paulino Aliten[11]
 
 
 
Virginia admitted that this letter was typed by his husbands nephew, but
claimed it was petitioner who dictated its contents in English and Filipino.[12]
 
Virginia further claimed that after leaving the lumberyard on May 4, 1992,
petitioner never returned. Meanwhile, she and her husband were scheduled to leave
for the United States of America on May 21, 1992. Since petitioner had stated in
his certification that he should no longer be expected if he did not return after one
week, she reported petitioners failure to report to work to the Department of Labor
and Employment (DOLE) on May 14, 1992.[13] She likewise informed the DOLE
that petitioners services had been terminated due to absence without leave.[14] She
maintained that petitioners prolonged absence amounted to abandonment of work,
and this intention was evident from the fact that before he left, he informed her,
verbally and in writing, that he should no longer be expected if he failed to return
at the end of the period. She likewise averred that petitioner is a registered voter of
Precint No. 200, Barangay Middle Rock Quarry, Baguio City, with Voters
Affidavit No. 0879882;[15] thus, he could not have spent his week-long vacation
leave to vote in Calanasan as he claimed. Virginia further claimed that petitioner
was paid standard labor benefits, and that his first day of employment corresponds
to the date appearing on his SSS coverage, that is, October 22, 1990.
 
The Ruling of the Labor Arbiter
 
In its June 28, 1994 Decision,[16] the Labor Arbiter ruled as follows:
 
VIEWED FROM THIS LIGHT, judgment is hereby rendered with the
following dispositions:
 
1.                  That complainant was illegally dismissed. Consequently, the respondent
is hereby ordered to reinstate him to his former position without loss of
seniority rights with full backwages in the amount of P70,719.58.
 
2.                  That during the complainants employment from May 27, 1989 up to
September 30, 1990, he was underpaid in his wages, hence, respondent
must pay his wage differentials, all of which amounting to P16,255.16,
plus attorneys fees in the amount of P1,625.51; and
 
3.                  All other claims for damages are hereby denied.
 
SO ORDERED.
 
 
According to the Labor Arbiter, private respondent failed to prove that
petitioner abandoned his job. Petitioner was granted a one-week vacation leave
on May 4, 1992 to expire on May 11, 1992; as such, there was no factual basis for
Virginia Tans statement to the DOLE that petitioner had

been absent without leave from May 12 to May 13, 1992 and that he thereby
abandoned his job. Moreover, if petitioner had indeed abandoned his job, then he
should have been charged with abandonment.
 
 The Labor Arbiter further held that notice to the DOLE alone of the
termination of petitioners employment is insufficient because the law requires that
the employee himself must be notified of such intended termination. Since no
personal notice was given to petitioner, his dismissal was illegal and was done
without due process of law. The Labor Arbiter also ruled that Virginia Tan
tampered with complainants bio-data to make it appear that he was hired
on October 19, 1990.
 
The Ruling of the NLRC
 
Aggrieved, private respondent appealed to the NLRC, which, on February
21, 1995, rendered a Decision[17] reversing the Labor Arbiters ruling and
dismissing the complaint for lack of merit. The NLRC ruled that the evidence
submitted by Virginia Tan, particularly SSS Form E-1,[18] should be given more
credence, as it is an official document which incidentally corresponds with her
contention that complainant was employed only in October 1990, not in January
1988.
 
The NLRC also rejected petitioners monetary claims because the evidence
indicated that the complainant was not among the employees listed in the payrolls
submitted by Tan from 1988 until 1992. It was further proven that petitioner
received standard benefits under labor laws during the time of his
employment. The NLRC also held that petitioner was validly dismissed, since he
was considered to have abandoned his work.
 
Petitioner moved for the reconsideration of the NLRC decision, which the
labor tribunal denied in a Resolution[19] dated April 28, 1995.
 
Petitioner thus filed a petition for review before this Court. Pursuant to the
ruling St. Martin Funeral Homes v. National Labor Relations Commission,[20] the
case was referred to the Court of Appeals.[21]
 
The Case Before the Court of Appeals
 
On November 12, 2004, the appellate court granted the petition and reversed
the decision of the NLRC.[22] The CA upheld the legality of the petitioners
dismissal, claiming that his absences after the week-long leave were no longer
reasonable since he did not give prior notice of his intention to extend his leave.
According to the CA, the overt acts of the petitioner, coupled with his testimony
that he reappeared at the bunkhouse after the May 11, 1992 election only to gather
his remaining belongings, are factors which led it to conclude that petitioner
intended and actually severed his relations with U-Need.
 
The CA further ruled that even if the termination was due to abandonment,
notice of termination must be sent to the employee at his last known address. The
failure of U-Need to give notice to respondent was unjustified and constituted a
violation of the requirements of due process; as such, the termination of petitioners
employment was ineffectual. The dispositive portion of the CA decision reads:
 
WHEREFORE, under the premises, the petition is PARTLY
GRANTED and the assailed NLRC Decision is MODIFIED, in that while
petitioners dismissal due to abandonment is UPHELD, private respondent
is ORDERED to pay petitioner backwages from the time of his dismissal up to
the finality of this decision.
 
SO ORDERED.[23]
 
Petitioner moved for the partial reconsideration of the CAs decision. Private
respondent also filed a separate motion for reconsideration. On May 31, 2005, the
CA issued the assailed amended decision, declaring that respondent was not
entitled to backwages, but applying the ruling of this Court in Agabon, was entitled
to nominal damages. The fallo of the decision reads:
 
WHEREFORE, in view of the foregoing, the Motion for Partial
Reconsideration filed by petitioner is DENIED for want of merit, but partly
granting private respondents Motion for Reconsideration, the award of backwages
to petitioner is DELETED and in lieu thereof, and conformable to
the Agabon ruling (supra), private respondent is ORDERED to pay petitioner the
amount of P30,000.00 as nominal damages for non-compliance with the notice
requirement.
 
SO ORDERED.[24]
 
 
Hence, the petition before this Court, which raises the following issues: (a)
whether or not petitioner abandoned his job when he failed to report back for work
on May 12, 1992; and (b) assuming that he abandoned his job, whether or not
the Agabon ruling may be applied retroactively against petitioner.
 
The Ruling of the Court
 
The petition is meritorious.
 
On the first issue, we agree with petitioners contention that the appellate
court committed a serious error and misapprehended the facts when it ruled that he
abandoned his work instead of being illegally terminated by his employer.
Abandonment, as a just and valid ground for dismissal, requires the deliberate,
unjustified refusal of the employee to resume his employment. Mere absence or
failure to report for work is not

enough to amount to such abandonment. There must be a concurrence of the

intention to abandon and some overt acts from which an employee may be
deduced as having no more intention to work. The contemplation to discontinue
the employment must be shown by clear proof that it was deliberate and
unjustified, a fact that herein private respondent failed to evince.[25]
 
To reiterate, abandonment is a matter of intention and cannot lightly be
presumed from certain equivocal acts. There must be clear proof of deliberate and
unjustified intent to sever the employment relationship. Certainly, the operative act
is still the employees decisive act of putting an end to his employment.
[26]
 Additionally, it must be stressed that the burden of proving the existence of just
cause for dismissing an employee, such as abandonment, rests on the employer, a
burden private respondent failed to discharge.[27]
 
Jurisprudence is replete with rulings that for abandonment of work to exist,
it is essential that (1) the employee must have failed to report for work or must
have been absent without valid and justifiable reason; and (2) there must have been
an indisputable intention to sever the employer-employee relationship manifested
by some overt acts, with the second element as the more determinative factor.[28]
 
We hold that the above twin-requirements are not present in the case at bar.
Petitioners absence was not without justifiable reason. As admitted by
Virginia Tan, petitioner requested for a weeks vacation leave which she granted,
albeit reluctantly. The mere fact that petitioner failed to report for work right after
the end of his vacation leave is not enough reason to conclude that he had decided
to abandon his work. Besides, settled is the rule that the mere absence or failure to
report for work does not amount to abandonment.[29]
 
Private respondent cannot rely on its report to the DOLE because as held by
the Labor Arbiter:
 
 
 Respondent [herein private respondent] considered him dismissed as
of May 2, 1992. And, even if complainant had a valid application for leave, the
report was that, complainant was considered absent without leave from May 2,
1992 to May 13, 1992. Such kind of exaggeration, cannot aid the respondent in
any case, but can only lead to the inevitable conclusion that, the dismissal is
unjustified.[30]
 
 
Clearly, the notice requirement regarding monthly dismissals under Section
7, Rule XXIII, Book V of Department Order No. 9, series of 1997,[31] or the
Omnibus Rules Implementing Book V of the Labor Code was not followed.
 
We reject private respondents reliance on the certification signed by petitioner to
prove that the latter had effectively abandoned his job. Petitioner merely requested
for a 15-day vacation leave; however, Edwin Tan, Virginia Tans nephew-in-law,
specifically indicated in the typewritten certification that in case petitioner failed to
report to work after his vacation leave, his employment would be deemed
automatically terminated. Private respondent failed to explain why petitioner
would make such a declaration; there is likewise no showing that the consequence
of the issuance of the certification was explained to petitioner. Incidentally, Edwin
Tan was not presented by private respondent to testify on the certification.
Indeed, it is incredible that petitioner would agree to the automatic termination of
his employment if he failed to return after his week-long vacation, considering that
he very well knew that he would not be able to return for work within one-week
from May 4, 1992. The declaration attributed to petitioner in the certification is
belied by Virginia Tans own report to the DOLE where it appears that the
employment of petitioner was terminated effective May 13, 1992, after an absence
without leave on May 2, 1992.[32] However, the records show that petitioner did not
take a leave of absence on that day, and in fact even received his salary. Since
petitioners one-week vacation expired on May 12, 1992, he was absent only
on May 13, 1992 when Tan submitted her report to the DOLE.
 
Petitioners filing of the complaint for illegal dismissal on May 27, 1992, or
approximately two days after his return from his hometown,[33] likewise negates the
private respondents charge of abandonment. It is highly inconsistent for an
employee to abandon his employment and thereafter file a complaint for illegal
dismissal.[34]Abandonment is not compatible with constructive dismissal.
 
In fine, we find that petitioner did not abandon his job but was illegally
dismissed by private respondent.
 
 Since petitioner was illegally dismissed from work, the Agabon ruling
cannot find application in the case at bar. Considering that petitioners employment
has been terminated without just or valid cause, private respondent violated his
right to security of tenure and constitutional right to due process for not serving
him with the requisite written notices of such termination.
 

 
To effectuate a valid dismissal of an employee, the law requires not only the
existence of a just and valid cause but likewise prescribes the employer to give the
employee the opportunity to be heard and to defend himself. Procedurally, if the
dismissal is based on a just cause under Article 282 of the Labor Code, the
employer must give the employee two written notices and a hearing or opportunity
to be heard is requested by the employee before terminating the employment. The
notices must consist of the following: 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.[35]
 
Under Article 279 of the Labor Code, an employee who is unjustly
dismissed is entitled to reinstatement, without loss of seniority rights and other
privileges, and to the payment of his full backwages, inclusive of allowances, and
other benefits or their monetary equivalent, computed from the time his
compensation was withheld up to the time of his actual reinstatement.[36]
 
However, the state of affairs obtaining in this case do not justify the
reinstatement of petitioner. Discernible resentment and animosity caused a severe
strain in the relationship between him and the private respondent. A more equitable
disposition would be an award of separation pay equivalent to at least one month
pay, or one month pay for every year of service, whichever is higher (with a
fraction of at least six months being considered as one whole year), in addition to
his full backwages, allowances and other benefits.[37]

 
IN VIEW WHEREOF, the instant petition is GRANTED. The Amended
Decision dated May 31, 2005 of the Court of Appeals in CA-G.R. SP No. 50682
is REVERSED and SET ASIDE. The Court hereby renders judgment declaring
petitioner Paulino Aliten to have been illegally dismissed, and thus, entitled to full
backwages and other privileges, and separation pay in lieu of reinstatement at the
rate of one months salary for every year of service with a fraction of six months of
service considered as one year. Let the records of this case be REMANDED to the
National Labor Relations Commission for determination of the backwages and
other benefits and separation pay.
 
Costs against the private respondent.
 
SO ORDERED.
 
SECOND DIVISION
 
PENTAGON STEEL G.R. No. 174141
CORPORATION,  
Petitioner,
Present:
 
 
 
QUISUMBING, J., Chairperson,
  *
YNARES-SANTIAGO,
- versus - **
CHICO-NAZARIO,
  ***
LEONARDO-DE CASTRO, and
 
BRION, JJ.
 
 
 
 
COURT OF APPEALS, NATIONAL
Promulgated:
LABOR RELATIONS COMMISSION
and PERFECTO BALOGO,  

Respondents.  

June 26, 2009

x-------------------------------------------------------------------------------------- 
x
 

DECISION
 

BRION, J.:
 
 Before this Court is the Petition for Review on Certiorari[1] under Rule 45 of
the Rules of Court filed by Pentagon Steel Corporation (the petitioner). It seeks to
set aside:
 

(a)              the Decision of the Court of Appeals (CA) dated June 28,

2006[2] modifying the Decision of the National Labor Relations 
Commission (NLRC) dated January 31, 2005;[3] and

(b)             the Resolution of the CA dated August 15, 2006,[4] denying the

motion for reconsideration that the petitioner subsequently filed.
 

THE FACTUAL ANTECEDENTS

The petitioner, a corporation engaged in the manufacture of G.I. wire and nails,
employed respondent Perfecto Balogo (the respondent) since September 1,
1979 in its wire drawing department. The petitioner alleged that the respondent
absented himself from work on August 7, 2002 without giving prior notice of his
absence. As a result, the petitioner sent him a letter by registered mail
dated August 12, 2002, written in Filipino, requiring an explanation for his
absence. The petitioner sent another letter to the respondent on August 21, 2002,
also by registered mail, informing him that he had been absent without official
leave (AWOL) from August 7, 2002 to August 21, 2002.Other letters were sent to
the respondent by registered mail, all pointing out his absences; however, the
respondent failed to respond. Thus, the petitioner considered him on AWOL
from August 7, 2002.[5]

On September 13, 2002, the respondent filed a complaint with the

Arbitration Branch of the NLRC for underpayment/nonpayment of salaries and
wages, overtime pay, holiday pay, service incentive leave, 13th month pay,
separation pay, and ECOLA. The respondent alleged that on August 6, 2002, he
contracted flu associated with diarrhea and suffered loose bowel movement due
to the infection. The respondent maintained that his illness had prevented him
from reporting for work for ten (10) days.When the respondent finally reported
for work on August 17, 2002, the petitioner refused to take him back despite the
medical certificate he submitted. On August 19, 2002, the respondent again
reported for work, exhibiting a note from his doctor indicating that he was fit to
work. The petitioner, however, did not allow him to resume work on the same
date. Subsequently, the respondent again reported for work on August 21 and 23,
2002 and October 10 and 18, 2002, to no avail. He was thus driven to file a
complaint against the petitioner.[6]

During the conciliation proceedings on October 9, 2002, the respondent

presented the medical certificate covering his period of absence. The petitioner
required him, however, to submit himself to the company physician to determine
whether he was fit to return to work in accordance with existing
policies. On October 22, 2002, still during the conciliation proceedings, the
respondent presented a medical certificate issued by the company physician;
according to the petitioner, the respondent refused to return to work and insisted
that he be paid his separation pay. The petitioner refused the respondents
demand for separation pay for lack of basis.

On January 20, 2003, the respondent formally amended his complaint to

include his claim of illegal dismissal.[7]

The Labor Arbiter Ruling

On October 27, 2003, the labor arbiter rendered his decision dismissing the
illegal dismissal charge, but directed the petitioner to pay the complainant his SIL
and 13th month pay in the amount of Five Thousand One Hundred Sixty-Six Pesos
and 66/100 (P5,166.66).[8]

In dismissing the respondents claim of illegal dismissal, the labor arbiter

found that no dismissal took place; thus, the petitioner never carried the burden
of proving the legality of a dismissal. The labor arbiter noted that the respondents
allegation that he reported for work is not reliable for lack of corroborating
evidence, as the respondent in fact failed to respond to the petitioners
memoranda. Thus, the decision was confined to the directive to pay service
incentive leave and 13th month pay.

The NLRC Ruling

The respondent appealed the labor arbiters decision to the NLRC

on November 14, 2003, specifically questioning the ruling that no illegal dismissal
took place. On January 31, 2005, the NLRC Third Division vacated and set aside
the decision of the labor arbiter.[9] The decision directed the company to pay the
respondent separation pay, backwages, 13th month pay, and service incentive
leave.[10]

The NLRC ruled that the petitioners defense of abandonment has no legal basis
since there was no clear intent on the respondents part to sever the employer-
employee relationship. The NLRC found it difficult to accept the petitioners
allegation that the respondent absented himself for unknown reasons; this kind
of action is inconsistent with the respondents twenty-three (23) years of service
and lack of derogatory record during these years. As a consequence, the NLRC
held that the respondent was illegally dismissed. Together with this conclusion,
however, the NLRC also considered the strained relationship existing between the
parties and, for this reason,awarded separation pay in lieu of  reinstatement, in
addition to backwages. On March 31, 2005, the NLRC denied the petitioners
motion for reconsideration.

The CA Ruling

 
 On May 6, 2006, the petitioner filed a special civil action
for certiorari[11]  with the CA,  alleging grave abuse of discretion on the part of the
NLRC in ruling that illegal dismissal took place, and in awarding the respondent
separation pay and backwages.

In a Decision dated June 28, 2006, the CA affirmed the NLRCs finding that
the dismissal was illegal, but modified the challenged decision by adding
reinstatement and the payment of full backwages, inclusive of allowances and
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
[12]

The CA held that the respondent was constructively dismissed when the
petitioner repeatedly refused to accept the respondent back to work despite the
valid medical reason that justified his absence from work. The CA concluded that
the respondent complied with the petitioners directive to submit a written
explanation when the former presented the medical certificate to explain his
absences.

The CA also disregarded the petitioners charge of abandonment against the

respondent. The appellate court ruled that the petitioner failed to prove a clear
and deliberate intent on the respondents part to discontinue working with no
intention of returning. The CA took note of the respondents eagerness to return
to work when he obtained a note from his doctor about his fitness to return to
work. The CA also ruled that the respondents filing of a complaint for illegal
dismissal with a prayer for reinstatement manifested his desire to return to his
job, thus negating the petitioners charge of abandonment.

The CA, however, disagreed with the NLRCs application of the doctrine of
strained relations, citing jurisprudence that the doctrine should be strictly applied
in order not to deprive an illegally dismissed employee of his right to
reinstatement. The CA also held that to deny the respondent the benefits due
from his long service with the company would be very harsh since his long service
would not be amply compensated by giving him only separation pay.

Petitioner moved for reconsideration of the decision, but the CA denied the
motion for lack of merit in the Resolution dated August 15, 2006.[13]

 
In this present petition, the petitioner imputes grave abuse of discretion
against the CA:
 
1)    in basing its decision on the proceedings that transpired when the parties
were negotiating for a compromise agreement during the preliminary
conference of the case;
 
2)    in declaring that respondent was illegally dismissed by the petitioner; and
 
3)    in ordering that respondent be reinstated to his former position with
backwages.
 
 
 
 
THE COURTS RULING
 
We do not find the petition meritorious.
 
Before going into the substantive merits of the controversy, we shall first
resolve the propriety of the CAs consideration of the proceedings that transpired
during the mandatory preliminary conference of the case.
 
 
Statements and/or agreements made
at conciliation proceedings are
privileged and cannot be used as
evidence
 
 
The petitioner contends that the CA cannot use the parties actions and/or
agreements during the negotiation for a compromise agreement as basis for the
conclusion that the respondent was illegally dismissed because an offer of
compromise is not admissible in evidence under Section 27, Rule 130 of the Rules
of Court.[14]
 
We agree with the petitioner, but for a different reason. The correct reason for
the CAs error in considering the actions and agreements during the conciliation
proceedings before the labor arbiter is Article 233 of the Labor Code which states
that [i]nformation and statements made at conciliation proceedings shall be treated
as privileged communication and shall not be used as evidence in the
Commission. Conciliators and similar officials shall not testify in any court or body
regarding any matters taken up at conciliation proceedings conducted by
them. This was the provision we cited in Nissan Motors Philippines, Inc. v.
Secretary of Labor[15] when we pointedly disallowed the award made by the public
respondent Secretary; the award was based on the information NCMB
Administrator Olalia secured from the confidential position given him by the
company during conciliation.
 
In the present case, we find that the CA did indeed consider the statements
the parties made during conciliation; thus, the CA erred by considering excluded
materials in arriving at its conclusion. The reasons behind the exclusion are two-
fold.
 
 First, since the law favors the settlement of controversies out of court, a
person is entitled to buy his or her peace without danger of being prejudiced in case
his or her efforts fail; hence, any communication made toward that end will be
regarded as privileged.[16] Indeed, if every offer to buy peace could be used as
evidence against a person who presents it, many settlements would be prevented
and unnecessary litigation would result, since no prudent person would dare offer or
entertain a compromise if his or her compromise position could be exploited as a
confession of weakness.[17]
 
Second, offers for compromise are irrelevant because they are not intended as
admissions by the parties making them.[18] A true offer of compromise does not, in
legal contemplation, involve an admission on the part of a defendant that he or she
is legally liable, or on the part of a plaintiff, that his or her claim is groundless or
even doubtful, since it is made with a view to avoid controversy and save the
expense of litigation. It is the distinguishing mark of an offer of compromise that it
is made tentatively, hypothetically, and in contemplation of mutual concessions.[19]
 
While we agree with the petitioner that the CA should not have considered
the agreements and/or statements made by the parties during the conciliation
proceedings, the CAs conclusion on illegal dismissal, however, was not grounded
solely on the parties statements during conciliation, but was amply supported by
other evidence on record, which we discuss below. Based on these other pieces of
evidence, the respondent was illegally dismissed; hence, our ruling regarding the
statement made during conciliation has no effect at all on our final conclusion.
 
 
Respondent did not abandon his job
 
The rule is that the burden of proof lies with the employer to show that the
dismissal was for a just cause.[20] In the present case, the petitioner claims that there
was no illegal dismissal since the respondent abandoned his job. The petitioner
points out that it wrote the respondent various memoranda requiring him to explain
why he incurred absences without leave, and requiring him as well to report for
work; the respondent, however, never bothered to reply in writing.
 
In evaluating a charge of abandonment, the jurisprudential rule is that
abandonment is a matter of intention that cannot be lightly presumed from
equivocal acts.[21]To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable reason, and (2) a
clear intent, manifested through overt acts, to sever the employer-employee
relationship. The employer bears the burden of showing a deliberate and unjustified
refusal by the employee to resume his employment without any intention of
returning.[22]
 

We agree with the CA that the petitioner failed to prove the charge of
abandonment.
First, the respondent had a valid reason for absenting himself from work. The
respondent presented a medical certificate from his doctor attesting to the fact that
he was sick with flu associated with diarrhea or loose bowel movement which
prevented him from reporting for work for 10 days. The petitioner never effectively
refuted the respondents reason for his absence. We thus concur with the CAs view
that the respondent submitted a valid reason for his absence and thereby
substantially complied with the petitioners requirement of a written explanation. We
quote with approval the following discussion in the CAs decision:
 
In his case, Balogo should be judged as having fully complied with the
petitioners directive by his presenting of the medical certificate to justify or
explain his absences because the medical certificate already constituted the
required written explanation. Another written explanation from him would be
superfluous and even redundant if the facts already appearing in the medical
certificate would inevitably be stated again in that other written explanation.
 
Why the petitioner persistently refused to accept Balogo back despite his
presentation of the medical certificate and the doctors note about his fitness to
work was not credibly explained by the petitioner. The refusal is indicative of the
 petitioners ill motive towards him, using the lack of written explanation as a
clever ruse to terminate Balogos employment.
 
Second, there was no clear intention on the respondents part to sever the
employer-employee relationship. Considering that intention is a mental state, the
petitioner must show that the respondents overt acts point unerringly to his intent
not to work anymore.[23] In this case, we see no reason to depart from the unanimous
factual findings of the NLRC and the CA that the respondents actions after his
absence from work for ten (10) days due to illness showed his willingness to return
to work. Both tribunals found that after the respondent presented his medical
certificate to the petitioner to explain his absence, he even went back to his doctor
for a certification that he was already fit to return to work. These findings of fact we
duly accept as findings that we must not only respect, but consider as final, since
they are supported by substantial evidence.[24]
 
In addition, the respondents filing of the amended complaint for illegal
dismissal on January 20, 2003 strongly speaks against the petitioners charge of
abandonment, for it is illogical for an employee to abandon his employment and,
thereafter, file a complaint for illegal dismissal.
 
That abandonment is negated finds support in a long line of cases where the
immediate filing of a complaint for illegal dismissal was coupled with a prayer for
reinstatement; the filing of the complaint for illegal dismissal is proof enough of the
desire to return to work.[25] The prayer for reinstatement, as in this case, speaks
against any intent to sever the employer-employee relationship.[26]
 
We additionally take note of the undisputed fact that the respondent had been
in the petitioners employ for 23 years. Prior to his dismissal, the respondents service
record was unblemished having had no record of infraction of company rules. As
the NLRC correctly held, we find it difficult to accept the petitioners allegation that
the respondent absented himself for unjustifiable reasons with the intent to abandon
his job. To our mind, abandonment after the respondents long years of service and
the consequent surrender of benefits earned from years of hard work are highly
unlikely. Under the given facts, no basis in reason exists for the petitioners theory
that the respondent abandoned his job.
 
 
 
 
 
 
Respondent was constructively dismissed
 
 
The above conclusion necessarily leads us to sustain the NLRCs finding, as
affirmed by the CA, that the respondent was dismissed without just cause. Again,
we quote with approval the CAs disquisition:
 
 
That Balogo was dismissed in contravention of the letter and spirit of the
Constitution and the Labor Code on the security of tenure guaranteed to him as
employee is clear for us. A dismissal need not be expressed orally or in writing,
for it can also be implied. When the employer continuously refuses to accept the
employee back despite his having a valid reason for his absence from work,
illegal dismissal results because the employee is thus prevented from returning to
work under the faade of a violation of a company directive.
 
 

A dismissal effected through the fig leaf of an alleged violation of a

company directive is no less than an actual illegal dismissal that jurisprudence has
labeled as a constructive dismissal. Hyatt Taxi Services, Inc. v. Catinoy[27] describes
this type of company action when it ruled that [c]onstructive dismissal does not
always involve forthright dismissal or diminution in rank, compensation, benefit
and privileges there may be constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued
employment.
 

The respondents situation is no different from what Hyatt defined, given

the result of the petitioners action and the attendant insensibility and disdain the
employer exhibited. We significantly note that by reporting for work repeatedly,
the respondent manifested his willingness to comply with the petitioners rules
and regulations and his desire to continue working for the latter. The petitioner,
however, barred him from resuming his work under the pretext that he had
violated a company directive. This is a clear manifestation of the petitioners lack
of respect and consideration for the respondent who had long served the
company without blemish, but who had to absent himself because of illness. The
petitioners actions, under these circumstances, constitute constructive dismissal.
[28]

 
The respondents illegal dismissal carries the legal consequence defined under
Article 279 of the Labor Code: the illegally dismissed employee is entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him up to the time of
his actual reinstatement.[29] The imposition of this legal consequence is a matter of
law that allows no discretion on the part of the decision maker, except only to the
extent recognized by the law itself as expressed in jurisprudence.
 
 
Respondent is entitled to reinstatement not
separation pay
 
 
As the CA correctly ruled, the NLRC erred when it awarded separation pay
instead of reinstatement. The circumstances in this case do not warrant an exception
to the rule that reinstatement is the consequence of an illegal dismissal.
 
 First. The existence of strained relations between the parties was not clearly
established. We have consistently ruled that the doctrine of strained
relations cannot be used recklessly or applied loosely to deprive an illegally
dismissed employee of his means of livelihood and deny him reinstatement. Since
the application of this doctrine will result in the deprivation of employment despite
the absence of just cause, the implementation of the doctrine of strained relationship
must be supplemented by the rule that the existence of a strained relationship is for
the employer to clearly establish and prove in the manner it is called upon to prove
the existence of a just cause; the degree of hostility attendant to a litigation is not,
by itself, sufficient proof of the existence of strained relations that would rule out
the possibility of reinstatement.[30]Indeed, labor disputes almost always result in
strained relations, and the phrase cannot be given an overarching interpretation;
otherwise, an unjustly dismissed employee can never be reinstated.[31]
 
In the present case, we find no evidentiary support for the conclusion that
strained relations existed between the parties. To be sure, the petitioner did not raise
the defense of strained relationship with the respondent before the labor
arbiter. Consequently, this issue factual in nature was not the subject of evidence on
the part of both the petitioner and the respondent. There thus exists no competent
evidence on which to base the conclusion that the relationship between the
petitioner and the respondent has reached the point where their relationship is now
best severed.[32] We agree with the CAs specific finding that the conflict, if any,
occasioned by the respondents filing of an illegal dismissal case, does not merit the
severance of the employee-employer relationship between the parties.
 
Second. The records disclose that respondent has been in the petitioners
employ for 23 years and has no previous record of inefficiency or infraction of
company rules prior to his illegal dismissal from service. We significantly note that
payment of separation pay in lieu of respondents reinstatement will work injustice
to the latter when considered with his long and devoted years in the petitioners
service. Separation pay may take into account the respondents past years of service,
but will deprive the respondent of compensation for the future productive years that
his security of tenure protects. We take note, too, that the respondent, after 23 years
of service, shall in a few years retire; any separation pay paid at this point cannot
equal the retirement pay due the respondent upon retirement.
 
For all these reasons, we uphold the CA ruling that the respondent should be
reinstated to his former position or to a substantially equivalent position without
loss of seniority rights.
WHEREFORE, premises considered, we hereby DENY the petition, and,
consequently, AFFIRM the Decision of the Court of Appeals dated June 28,
2006 and its Resolution dated August 15, 2006 in CA-G.R. SP No. 89587.
 
SO ORDERED.

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
 
 
JOSAN, JPS, SANTIAGO CARGO G.R. No. 190794
MOVERS, and MARY GRACE S.  
PARUNGAO,* Present:
Petitioners,  
  CARPIO, J., Chairperson,
  VILLARAMA,*
versus PEREZ,
  SERENO, and
  REYES, JJ.
EDUARDO RAMOS ADUNA,  
Respondent. Promulgated:
February 22, 2012
 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

SERENO, J.:

Before the Court is a Petition filed under Rule 45 of the Rules of Court,
assailing the 21 October 2009 Decision and 16 December 2009 Resolution of the
Court of Appeals (CA).[1] The Petition involves a Complaint for illegal dismissal
and nonpayment of employment benefits filed by respondent Eduardo Ramos
Aduna (Aduna) against petitioners
JO-SAN Trucking Corporation, Santiago Cargo Movers, Inc., JPS Santiago Cargo
Movers, Inc., and Mary Grace S. Parungao (Parungao).

Facts

Petitioners are engaged in the trucking business under the sole proprietorship
of Parungao,[2] their president-manager. Sometime in January 2001, petitioners
hired Aduna as a delivery truck driver. He was tasked to make deliveries of various
ingredients used in the production of poultry feeds. His payment was on a per trip
basis, the amount of which depended on the length of the trip or the distance to the
point of destination.

The factual circumstances surrounding the case are contentious.

Petitioners narrate that on the morning of 5 December 2005, Parungao told

Aduna to come to work later in the day to make deliveries. When he reported for
work a little before 5 p.m. that afternoon, Parungao noticed that he was drunk. She
then advised him not to make deliveries anymore on account of his inebriated
condition. Allegedly, respondent reacted discourteously by hurling invectives at
her. He purportedly uttered, Hindi lang sa inyo makakapagtrabaho dahil
maraming kompanya, after which he threw out the keys of the vehicles assigned to
him and stormed out of the office. On his way out, he met a co-employee,
Raymond dela Cruz (Dela Cruz). The two had a confrontation within company
premises, which eventually led to respondents punching Dela Cruz several times.

Aduna did not report for work until about 50 days from the date of the
incident. On 24 January 2006, when he returned to the office, he allegedly
informed a certain Maria Agnes del Castillo that he no longer wished to continue
working with petitioners. He then purportedly asked for a certificate of
employment, which he would use in applying for a new job. Thus, petitioners posit
that they did not terminate him as it was actually respondent who had refused to
work. He no longer worked for petitioners thereafter.

Respondent, on the other hand, denies being drunk when he went to work.
According to him, he only had a bottle of beer early that day. He also rejects the
allegation that he hurled invectives at Parungao, as he had never been instructed to
cease carrying out his delivery assignments in the first place. He also denies
punching Dela Cruz, explaining that they simply had a misunderstanding.
Supposedly, Dela Cruz was just displeased with how the new driver, whom Aduna
had recommended, was being treated favorably by petitioners. Respondent then
alludes to the police blotter of Dela Cruz, who only mentioned being elbowed by
Aduna. Respondent then narrates that after the incident of 5 December 2005, he
was told to lie low until further notice in order to set an example to other
employees. Despite his objections, he eventually acceded to the instruction.

Thereafter, respondent claims that he was no longer given any delivery

assignments and was even prevented from entering company premises. He argues
that petitioner voluntarily issued to him a Certificate of Employment without his
asking, and that he was told to look for work for the time being. He thus contends
that he did not abandon his job. Consequently, he filed a Complaint for illegal
dismissal and nonpayment of overtime, holiday, 13th month, and service incentive
leave pays.

Findings of the Labor Arbiter

The labor arbiter (LA) ruled that there was no basis to hold petitioners liable for
illegal dismissal. Indeed, he found that the confrontation between respondent and
Dela Cruz, which happened within company premises, was tantamount to a just
cause for dismissal. However, he also found that there was no evidence to show
that respondent had been terminated verbally or in writing. The LA gave credence
to the assertion of petitioner that it was Aduna who was no longer interested in
returning to work; respondent was already contemplating finding another job, as
evidenced by his request for the issuance of a certificate of employment.
Consequently, the LA ruled that respondents failure to report for work may be
considered abandonment, which in turn is a valid ground for dismissal.[3]

Findings of the National Labor Relations Commission

The National Labor Relations Commission (NLRC) reversed the LAs finding and
ruled that respondent had been illegally dismissed. According to the NLRC, there
was no showing that petitioners exerted efforts to question the absences of
respondent. They did not require him to return to work, which could have enabled
them to determine with certainty whether he really wanted to cease working for
them. The NLRC pronounced that it must be clearly established that there was
deliberate and unjustified refusal on the part of the employee to return to work
through a manifestation of a clear intention to abandon his employment.

Petitioners were found to have failed to discharge this burden. They relied
heavily on the information allegedly given by their company secretary that Aduna
was no longer interested in the job. The NLRC took note of the absence of an
affidavit from the secretary confirming the actual statement relayed to her by
respondent. On the contrary, the commission viewed the request for a certificate of
employment as respondents way of ascertaining his actual status after he was not
recalled for some time. The NLRC admitted as fact that petitioners told respondent
to lie low and to wait for further notice; however, no such notice was given to him.
He was simply eased out of his job. The Commission reasoned that it was difficult
to believe that a worker would forgo his job simply by abandoning it, without any
alternative source of income or prospect of another employment. Thus, according
to the NLRC, the continued and prolonged unemployment was unreasonable,
inconvenient, prejudicial to respondent, and can be equated with constructive
dismissal.[4]

Findings of the Court of Appeals

The CA affirmed the Decision and the Resolution of the NLRC. It ruled that
respondents failure to come to work for 50 days was not indicative of his intention
to discontinue employment. According to the appellate court, he did not report for
work, as he was told to lie low and to wait for further notice. It reasoned that, if
indeed he had been absent for such a long period of time, it was implausible for
petitioners not to even exert any effort to call his attention, considering that
habitual absenteeism is a just cause for dismissal. Neither was there any order from
petitioners requiring him to return to work. It pointed out that a company is
expected to call the attention of an employee to any undesirable act or omission
within a reasonable time. Failure of petitioners to take any disciplinary action
against respondent for his alleged absences undermined their claim that these
absences were overt acts of abandonment.[5] The court also held that Adunas
request for a certificate of employment did not, ipso facto, equate with
abandonment. The CA ruled that petitioners failed to establish that respondent had
a clear intention to abandon his work. Consequently, it found that he had been
illegally dismissed. The CA later on denied petitioners Motion for
Reconsideration. Hence this Petition for Review on Certiorari.

Issue

The sole issue in this case is whether respondent was illegally dismissed.

Discussion

We rule in the affirmative.

Abandonment is a matter of intention and cannot lightly be presumed from

certain equivocal acts, especially during times of hardship.[6] Thus, we have ruled
in a series of cases that there are two elements that must concur in order for an act
to constitute abandonment: (1) failure to report for work or absence without valid
or justifiable reason; and (2) a clear intention to sever the employer-employee
relationship.[7] The second element is the more determinative factor, which must be
manifested by some overt acts.[8] Mere absence or failure to report for work does
not, ipso facto, amount to abandonment of work.[9] To prove abandonment, the
employer must show that the employee deliberately and unjustifiably refused to
resume his employment without any intention of returning.[10]

The NLRC and the CA found that the true reason why respondent did not
report for work for about 50 days was that he had been told by petitioners to lie
low. This is a finding of fact, which we shall no longer disturb. Thus, when
respondent realized that he was no longer going to receive work assignments, he
wasted no time in filing a case for illegal dismissal against petitioners. Employees
who take steps to protest their dismissal cannot logically be said to have abandoned
their work.[11] A charge of abandonment is totally inconsistent with the immediate
filing of a complaint for illegal dismissal.[12] The filing thereof is proof enough of
ones desire to return to work, thus negating any suggestion of abandonment.[13]

Respondent must therefore be deemed to have been constructively

dismissed. There is constructive dismissal when continued employment is rendered
impossible, unreasonable, or unlikely.[14] In this case, although Aduna agreed to lie
low because of the incident, it became clear that petitioners no longer had the
intention to give him future assignments. In fact, they already deemed the issuance
of the Certificate of Employment as a sign of abandonment of work. The continued
failure of petitioners to offer him a new assignment makes the former liable for
constructive dismissal.[15] Clearly, the instruction to temporarily lie low was meant
to be for a permanent cessation from work. With the absence of any proof of dire
exigency that would justify the failure to give further assignments, the only logical
conclusion is that respondent was constructively dismissed.[16]

In an illegal dismissal case, the onus probandi rests on the employer, who

has to prove that the dismissal of an employee was for a valid cause. [17] Since
petitioners based their defense on abandonment by respondent, it is likewise
incumbent upon them, as employers, to prove that he clearly, voluntarily, and
intentionally abandoned his work.[18] As previously discussed, it is clear from the
evidence on record that petitioners failed to discharge this burden.[19] As we have
consistently affirmed, if the evidence presented by the employer and the employee
are in equipoise, the scales of justice must be tilted in favor of the latter.
[20]
 Accordingly, the finding of illegal dismissal must be upheld.[21]

Article 279 of the Labor Code provides that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges; to his full back wages, inclusive of allowances; and to
other applicable benefits or their monetary equivalent computed from the time
compensation was withheld up to the time of actual reinstatement. [22] However, in
recognition of the strained relations between petitioners and respondent, the former
are instead liable to give separation pay as found by the CA.

WHEREFORE the Petition is DENIED. The 21 October 2009 Decision

and 16 December 2009 Resolution of the Court of Appeals in CA-G.R. SP No.
108996 are hereby AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 188711               July 8, 2013

TAN BROTHERS CORPORATION OF BASILAN CITY THROUGH ITS OWNER/MANAGER,

MAURO F. TAN,PETITIONERS, 
vs.
EDNA R. ESCUDERO, RESPONDENT.

DECISION
PEREZ, J.:

The elements of abandonment of employment as a defense against a charge of illegal dismissal are
primarily at issue in this Rule 45 Petition for Review on Certiorari which seeks the reversal of the 16
February 2009 Decision1rendered by the Twenty First Division of the Court of Appeals (CA),
Mindanao Station, in CA-G.R. SP No. 01028-MIN,2 the decretal portion of which states:

WHEREFORE, premises considered, the instant petition is DENIED. The assailed Resolutions of
public respondent National Labor Relations Commission (NLRC), 5th Division, Cagayan De Oro
City, in NLRC CA No. M-008350-2005 (RAB IX 09-00255-2004), promulgated on November 30,
2005 and January 31, 2006, respectively, are hereby AFFIRMED. Costs against petitioner,

SO ORDERED.3

The Facts

In July 1991, respondent Edna R. Escudero (Escudero) was hired as bookkeeper by petitioner Tan
Brothers Corporation of Basilan City (Tan Brothers), a corporation primarily engaged in the real
estate business. On 1 September 2004, Escudero filed against Tan Brothers a complaint for illegal
dismissal, underpayment of wages, cost of living allowance and 13th month pay which was docketed
before the arbitral level of the Regional Arbitration Branch No. IX of the National Labor Relations
Commission (NLRC) as NLRC Case No. RAB-09-09-00255-2004. In support of the complaint,
Escudero alleged in her position paper that, starting July 2003, her monthly salary of P2,500.00 was
not paid on time by Tan Brothers. After having the corporation’s office remodeled in the early part of
2004, Tan Brothers allegedly rented out the office space Escudero used to occupy and ceased
giving her further assignments. Eventually constrained to stop reporting for work because of her dire
financial condition, Escudero claimed that Tan Brothers "shrewdly maneuvered" her illegal dismissal
from employment.4

In its position paper, on the other hand, Tan Brothers averred that Escudero was paid a daily wage
of P155.00, and she abandoned her employment when she stopped reporting for work in July 2003.
Aside from taking with her most of the corporation’s payrolls, vouchers and other material
documents evidencing due payment of wages and labor standard benefits, Tan Brothers maintained
that, without its knowledge and consent, Escudero appropriated for herself an Olivetti typewriter
worth P15,000.00. With Escudero’s refusal to heed its demands for the return of the typewriter, Tan
Brothers asseverated that it was left with no choice but to lodge a complaint with the barangay
authorities of Seaside, Isabela City on 6 September 2004. In support of its claim of due payment of
its employees’ wages and benefits, Tan Brothers submitted copies of its remaining vouchers and
payrolls from 24 December 1997 to 31 July 2000 which were prepared by Escudero and the result of
the inspection conducted by the Department of Labor and Employment (DOLE) Regional Office No.
9 that cleared it of violations of labor standard laws.5

On 24 November 2004, Labor Arbiter Joselito B. De Leon rendered a decision, finding Tan Brothers
guilty of constructively dismissing Escudero from employment. Rejecting Tan Brothers’ claim that
Escudero resigned from and/or abandoned her employment, the Labor Arbiter ruled that the former
circumvented the substantive and procedural requirements of due process when it withheld the
latter’s salaries and stopped utilizing her services despite her presence at work. Also brushed aside
was Tan Brother’s claim regarding the typewriter allegedly taken by Escudero on the ground that the
cause of action relative thereto, if any, pertained to the regular courts. While giving credence to the
pieces of documentary evidence adduced by Tan Brothers to prove due payment of wages and labor
standard benefits to its employees, the Labor Arbiter ruled that, as a consequence of her
constructive dismissal, Escudero was entitled to separation pay in the sum of P48,508.80 and
backwages in the sum of P68,720.80 or a total of P117,229.60 in monetary awards.6

On appeal, the Labor Arbiter’s decision was affirmed in toto in the 30 November 2005 Resolution
issued by the Fifth Division of the NLRC in NLRC CA No. M-008350-2005. Echoing the Labor
Arbiter’s conclusion that Escudero was constructively dismissed, the NLRC further ruled that Tan
Brother’s claim of loss of the typewriter, having been made after said employee’s institution of the
case a quo, was retaliatory and a mere afterthought. 7 Its motion for reconsideration of the foregoing
resolution8 denied for lack of merit in the NLRC’s Resolution dated 31 January 2006, 9 Tan Brothers
filed the Rule 65 petition for certiorari docketed before the CA as CA-G.R. SP No. 01028-MIN. In
support of its petition, Tan Brothers faulted the NLRC with grave abuse of discretion for not finding
that Escudero abandoned her employment despite her admission that she unilaterally stopped
reporting for work. On the theory that abandonment is a serious misconduct which constituted a just
cause for termination of employment under Article 282 of the Labor Code of the Philippines, it was,
likewise, argued that the award of backwages and separation pay in favor of Escudero were bereft of
legal basis.10

On 16 February 2009, the CA rendered the herein assailed decision, denying Tan Brothers’ petition
and affirming the NLRC’s resolution of its appeal. Finding that Escudero was constructively
dismissed when Tan Brothers stopped paying her salaries and giving her work assignments, the CA
ruled out abandonment absent any showing that the former intended to sever the employer-
employee relationship with the latter. Considered not established by an employee’s mere absence or
failure to report to work, abandonment was likewise held to be contradicted by the filing of an action
for illegal dismissal. The CA also gave a short shrift to Tan Brothers’ claim that Escudero took its
typewriter and corporate records for lack of showing that the latter was confronted with and was
given an opportunity to refute the charges against her. 11 Tan Brothers’ motion for reconsideration of
the decision12 was denied for lack of merit in the CA’s 26 June 2009 Resolution. 13 Hence, this
petition.14

The Issues

Tan Brothers essentially argues that Escudero abandoned her employment and that the same was
not negated by the filing of her complaint for illegal dismissal more than one year after she stopped
reporting for work.15

The Court’s Ruling

The petition is bereft of merit.

At the outset, it bears stressing that, in petitions for review on certiorari like the one at bench, the
scope of this Court’s judicial review of decisions of the CA is generally confined only to errors of
law16 and does not extend to a reevaluation of the sufficiency of the evidence upon which the proper
labor tribunal has based its determination.17Whether Escudero has abandoned her job or was
illegally dismissed are questions of fact better left for determination by quasi-judicial
agencies18 which have acquired expertise because their jurisdiction is confined to specific
matters.19 Corollarily, the rule is settled that the factual findings of the Labor Arbiter and the NLRC,
especially when affirmed by the CA, are accorded not only great respect but also finality, and are
deemed binding upon this Court so long as they are supported by substantial evidence. 20 Time and
again, we have reiterated the dictum that the Supreme Court is not a trier of facts and this applies
with greater force in labor cases.21
As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of
an employee to resume his employment. 22 It constitutes neglect of duty and is a just cause for
termination of employment under paragraph (b) of Article 282 of the Labor Code. 23 To constitute
abandonment, however, there must be a clear and deliberate intent to discontinue one's employment
without any intention of returning. In this regard, two elements must concur: (1) failure to report for
work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-
employee relationship, with the second element as the more determinative factor and being
manifested by some overt acts.24 Otherwise stated, absence must be accompanied by overt acts
unerringly pointing to the fact that the employee simply does not want to work anymore. 25 It has been
ruled that the employer has the burden of proof to show a deliberate and unjustified refusal of the
employee to resume his employment without any intention of returning. 26 1âwphi1

Repeating its defense of abandonment, Tan Brothers argues that Escudero unilaterally stopped
reporting for work in July 2003. In addition to the latter’s prolonged absence from work, Tan Brothers
calls our attention to Escudero’s supposed appropriation of the corporation’s typewriter and records
which supposedly evinced her intention to sever the parties’ employer-employee relations. It is
argued that, having committed the foregoing infraction to get even with her employer, it would have
been unthinkable for Escudero to plan on further reporting for work. Considering that the complaint
did not pray for reinstatement and was filed only on 1 September 2004 or more than one year after
Escudero’s supposed last attendance at work, Tan Brothers also fault the CA for applying the rule
that abandonment is negated by the employee’s filing of a complaint for illegal dismissal. Ultimately,
Tan Brothers maintains that the award of backwages and separation pay should have been
disallowed in view of Escudero’s abandonment of her employment. 27

On the theory that the same is proof enough of the desire to return to work, 28 the immediate filing of a
complaint for illegal dismissal – more so when it includes a prayer for reinstatement – has been held
to be totally inconsistent with a charge of abandonment. 29 While it is true that Escudero’s complaint
prayed for separation pay in lieu of reinstatement, Tan Brothers loses sight of the fact, however, that
it had the burden of proving its own allegation that Escudero had abandoned her employment in July
2003. As allegation is not evidence, the rule has always been to the effect that a party alleging a
critical fact must support his allegation with substantial evidence 30 which has been construed to
mean such relevant evidence as a reasonable mind will accept as adequate to support a
conclusion.31 Confronted with Escudero’s assertion that she reported for work despite irregular
payment of her salaries and was forced to stop doing so after her wages were not paid in May 2004,
the record shows that Tan Brothers proffered nothing beyond bare allegations to prove that
Escudero had abandoned her employment in July 2003.

It is, on the other hand, doctrinal that abandonment is a matter of intention 32 and cannot, for said
reason, be lightly inferred, much less legally presumed from certain equivocal acts. 33 Viewed in the
light of Escudero’s persistence in reporting for work despite the irregular payment of her salaries
starting July 2003, we find that her subsequent failure to do so as a consequence of Tan Brothers’
non-payment of her salaries in May 2004 is hardly evincive of an intention to abandon her
employment. Indeed, mere absence or failure to report for work, even after a notice to return work
has been served, is not enough to amount to an abandonment of employment. 34Considering that a
notice directing Escudero to return to work was not even issued in the premises, we find that the CA
committed no reversible error in ruling out Tan Brother’s defense of abandonment.

The same may be said of the CA’s rejection of the employer’s contention that the employee signified
her intention to sever the parties’ employer-employee relationship when she illegally appropriated for
herself the corporation’s typewriter and took its payrolls, vouchers and other material documents.
Since unsubstantiated accusation, without more, is not synonymous with guilt, 35 the CA correctly
brushed aside Escudero’s supposed infraction which Tan Brothers reported to the barangay
authorities of Seaside, Isabela City only on 6 September 2004 or after the filing of the complaint a
quo. In order to terminate an employee’s services for a just cause, moreover, it is essential that the
two-notice requirement must be complied with by the employer, to wit: a) a written notice containing
a statement of the cause for the termination to afford the employee ample opportunity to be heard
and defend himself with the assistance of his representative, if he so desires; and b) if the employer
decides to terminate the services of the employee, the employer must notify him in writing of the
decision to dismiss him, stating clearly the reason therefor. 36 The requirement of these notices is not
a mere technicality, but a requirement of due process to which every employee is entitled. 37

Neither are we inclined to disturb the CA’s finding that Escudero was constructively dismissed by
Tan Brothers which, as employer, had the burden of proving that said employee was dismissed for a
just and valid cause.38Constructive dismissal occurs when there is cessation of work because
continued employment is rendered impossible, unreasonable, or unlikely as when there is a
demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee leaving the latter with no other option but to
quit.39 The test is whether a reasonable person in the employee's position would have felt compelled
to give up his position under the circumstances.40 Much though Tan Brothers may now be inclined to
disparage the same as mere alibis, the fact that Escudero was deprived of office space, was not
given further work assignment and was not paid her salaries until she was left with no choice but
stop reporting for work all combine to make out a clear case of constructive dismissal.

Having been constructively dismissed, Escudero was correctly found entitled to backwages and
attorney’s fees by the Labor Arbiter, the NLRC and the CA. Under Article 279 of the Labor Code, as
amended, employees who have been illegally terminated from employment are entitled to the twin
reliefs of reinstatement without loss of seniority rights and to the payment of full back
wages41 corresponding to the period from their illegal dismissal up to actual
reinstatement.42 Reinstatement is a restoration to the state from which one has been removed or
separated,43while the payment of backwages is a form of relief that restores the income that was lost
by reason of the unlawful dismissal.44 Proper where reinstatement is not advisable or feasible as
when antagonism already caused a severe strain in the relationship between the employer and the
employee,45 separation pay may also be awarded where, as here, reinstatement is no longer
practical or in the best interest of the parties or when the employee decides not to be reinstated
anymore.46

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Decision of the
Court of Appeals in CA-G.R. SP No. 01028-MIN is AFFIRMED in toto.

SO ORDERED.
Alfonso, ex-mayor of Itogon, Benguet, was hired as Social Acceptance Officer of Binga
Hydroelectric Plant in 1997. He did not receive his salary for the first 15 days of February,
1999, and advised not to report for work until his status had been clarified by the main office.
When he made inquiries about the status of his work, he was advised by the supervisor to
report for work but was again advised that his erappointment will have to be concurred by the
new management committee before he could be reinstated in the payroll. The committee also
wanted to determine if his services would still be necessary to the company. After the
management committee did not act on his inquiries, he filed a complaint for illegal dismissal.
The Labor Arbiter ruled in his favour, applying the four-fold test in determining the existence
of employer-employee relationship between the company and Alfonso, who was appointed by
the company president. Despite the existence of a controversy in the company’s ownership and
rehabilitation, the relationship subsisted as the new company was the successor to the
company. The NLRC, on the other hand reversed the LA ruling, noting that the appointment
letter of Alfonso recognised his status as probationary. His direct hiring and reporting to the
company, the absence of a Social Acceptance Officer in the table of organisation of the
company, as well as his lack of daily time records militated against him being a regular
employee. The Court of Appeals affirmed the NLRC decision, hence he elevated his case to
the Supreme by petition for review on certiorari.
The Supreme Court:
At the outset, it is clear that the requisites for a judicial declaration of abandonment are
absent in this case. Suffice it to say that abandonment is a fact that must be proven in
accordance with the standard set by this Court[1]:
It is well-settled in our jurisprudence that “Fo[2]r abandonment to constitute a valid cause for
termination of employment, there must be a deliberate, unjustified refusal of the employee to
resume his employment. This refusal must be clearly shown. Mere absence is not sufficient, it
must be accompanied by overt acts unerringly pointing to the fact that the employee does not
want to work anymore” (Emphasis and italics supplied[3])
Abandonment as a fact and a defense can only be claimed as a ground for dismissal if the
employer follows the procedure set by law.[4] In line with the burden of proof set by law, the
employer who alleges abandonment “has the burden of proof to show a deliberate and
unjustified refusal of the employee to resume his employment without any intention of
returning.” As this Court has stated in Agabon v. National Labor Relations Commission:
For a valid finding of[5] 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.[6]
From the foregoing, it is clear that respondent company failed to prove the necessary elements
of abandonment. Additionally, the NLRC and the CA failed to take into account the strict
requirements set by jurisprudence when they determined the existence of abandonment on the
basis of mere allegations that were contradicted by the evidence shown.
The very act of filing the Complaint for illegal dismissal should have negated any intention on
petitioner’s part to sever his employment.[7]  In fact, it should already have been sufficient
evidence to declare that there was no abandonment of work. Moreover, petitioner went back to
the company several times to inquire about the status of his employment.[8] The fact that his
inquiries were not answered does not prejudice this position.
Throughout the entire ordeal, petitioner was vigilant in protecting himself from any claim that
he had abandoned his work. The following circumstances evinced his intent to return to work:
1. His continuous inquiry with respondent about the status of his work.[9]
2. His willingness to return to work at any time, subject to the approval of respondent, and his
visits to the plant to apply for work.[10]
3. His filing of an illegal dismissal case.[11]
Considering all these facts, established by the LA and confirmed by the NLRC and the CA, we
conclude that both appellate bodies were remiss in declaring the existence of abandonment.
Since the first question has been disposed of, the second one now becomes the core issue,
because the existence of an employer-employee relationship in the nature of regular
employment will determine whether or not the company dismissed petitioner illegally.
Respondent company claims that because petitioner was a confidential employee of its former
president, his tenure was co-terminus with that of his employer.[12] To establish this
contention, respondent cites the CA’s determination of the facts, as follows:
1. Petitioner directly reported to Mr. Tan, the hiring authority.
2. The hiring did not pass through the existing procedure.
3. The position of officer for social acceptance was absent from the company’s table of
organization and position title.
4. Petitioner did not submit any daily time record.
5. Monthly fees received from Mr. Tan were denominated as retainer fees and subjected to
10% deductions.
6. Petitioner was not included in the payroll.
7. The taxes on the fees were paid by respondent company on behalf of petitioner.
8. Petitioner’s name was absent from respondent’s records.[13]
These facts allegedly proved that petitioner was the confidential employee of Mr. Tan,
respondent’s former president.[14] All of this occurred in the context of a rehabilitation
receivership conducted by the Securities and Exchange Commission Management Committee.
[15]
Respondent company failed to realize however that Mr. Tan, being its president, was clothed
with authority to hire employees on its behalf. This was precisely the import of petitioner’s
appointment papers, which even carried the letterhead of the company.[16]There is no
indication from the facts that his employment was of a confidential nature. The wording of his
appointment itself does not bear out that conclusion, viz:
To: Mr. Alfonso Fianza
From: Mr. Catalino Tan
Subject: Job and Responsibilities
Date: June 2, 1997
No: Mem97-10
This is to confirm your appointment as officer for social acceptance of BHEPI projects
effective June 3, 1997. In this position, you will be directly reporting to me and to those whom
I will designate to assure compliance and attainment of our corporate objectives in relation to
the reforestation program, silt control, and the social and livelihood projects to lift up the
[unintelligible word] condition of the residence in your area of operations. Specifically, your
job and responsibilities are:
1. Promote social acceptance by the local residence of the Itogon and the nearby
municipalities of the corporate projects as required in the ROL contract and the Supplemental
Agreement signed by the company with the National Power Corporation.
2. Identify problems in implementing ROL projects and offer possible solutions that the
company may adopt in resolving conflicts.
3. Assist in monitoring the success and failure of the company’s sponsored projects designed
to help the social and economic well-being of the people in the Itogon community.
4. Submit monthly report covering the above mentioned work.
5. In addition to the above, you may suggest to the management for their consideration any
program that will help attain the corporation objectives as a partner for progress of the whole
province by the year 2000.
You will be under employment probation for two months during which we will evaluate your
performance and will serve as the basis for permanent employment. Your compensation will
be P25,000 monthly inclusive of all benefits.
Allow me to welcome you to the BHEPI family.
SGD. Catalino Tan
Conforme[17]:
Several things stand out in this appointment paper. First, its letterhead is that of respondent
company, indicating the official nature of the document. Second, there is no indication that
the employment is co-terminus with that of the appointing power, or that the position was a
confidential one. In fact, alongside the obligation of petitioner to report to Mr. Tan, is that of
reporting to those whom the latter had designated as well as to the management in case
petitioner had any suggestion. This description evinces a supervisory function, by which the
employee will carry out company policy, but can only give suggestions to management as to
the creation or implementation of a new policy.[18]
Finally, the appointment paper recognizes that the petitioner would initially be on probation
status for two months, at the end of which he would be made a permanent employee should
his services be found satisfactory by respondent. All these circumstances are evident from the
appointment paper itself, which belies the claim of respondent that it had no employer-
employee relationship with petitioner.
For the foregoing reasons, this Court must assess whether it was a reversible error of law for
the appellate court to rule that there was no grave abuse of discretion that amounted to a lack
or an excess of jurisdiction on the part of the NLRC when it reversed the findings of the LA.
Since what is at stake in this case is the proper application of the doctrine of abandonment
and the legal concept of regular employment, it 1is clear to this Court that the CA indeed
committed a reversible error, and that petitioner was therefore unjustly and illegally
dismissed.
WHEREFORE, the Petition is hereby GRANTED. The Decision of the Court of Appeals
dated 12 June 2003 on CA-G.R. SP No. 72181, and its Resolution dated 19 March 2004 on the
same case are hereby REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated
28 February 2000 is REINSTATED.
SO ORDERED.
FIRST DIVISION, G. R. No. 163061, June 26, 2013, ALFONSO L. FIANZA, PETITIONER,
VS. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), BINGA
HYDROELECTRIC PLANT, INC., ANTHONY C. ESCOLAR, ROLAND M. LAUTCHANG,
RESPONDENTS.

[1] Id. at 60-66, 185-191.
[2] Id. at 312-314.
[3] Kingsize Manufacturing Corp., v. National Labor Relations Commission, G.R. Nos. 110452-
54, 24 November 1994, 238 SCRA 349.
[4] Labor v. National Labor Relations Commission, 318 Phil. 219 (1995), citing Flexo
Manufacturing Corp. vs. National Labor Relations Commission, 219 Phil. 659 (1985).
[5] Labor v. National Labor Relations Commission, supra. ; Aquinas School v. Hon. Magnaye,
G.R. No. 110062, 344 Phil. 145, 151 (1997); Labor Congress of the Philippines v. National
Labor Relations Commission, 352 Phil. 1118, 1136 (1998).
[6] 485 Phil. 248, 278 (2004).
[7] Labor v. National Labor Relations Commission , supra.
[8] Rollo, p. 78; CA rollo, pp. 104-105.
[9] Id.
[10] Rollo, p. 78; CA rollo, pp. 104-107.
[11] Records, pp. 1-2.
[12] Rollo, pp. 313-315.
[13] Id. at 313-314.
[14] Id.
[15] Id. at 312-313.
[16] A rollo, p. 70; Annex C-1, referred to as Annex A supra note 3.
[17] Id. at 70-71.
[18] United Pepsi-Cola Supervisory Union v. Judge Laguesma, 351 Phil. 244 (1998).

When is an employee considered to have abandoned his work?

When an employee absents himself from work without justifiable reason and performs an overt
act showing his/her intention to sever the employer-employee relationship, then he is deemed to
have abandoned his work, for which the employer may justifiably dismiss the employee.

This was the ruling in the recent case of Diamond Taxi and/or Bryan Ong v. Felipe Llamas,
Jr., G.R. No. 190724, 12 March 2014, where the Supreme Court had the occasion to reiterate
the doctrine governing abandonment of work as a just cause for dismissal.

In the said case, which involves the dismissal of a taxi cab driver, the only proof presented by
the operator (Diamond Taxi) was the photocopy of their attendance book (showing that Llamas
had been absent for several days without official leave) and their memorandum to Llamas for
insubordination and refusal to heed management instructions. The Supreme Court explained
that these were insufficient to prove just cause for Llamas' dismissal, as these do not show the
required uneqivocal intention on the part of Llamas to abandon his work. Mere absence from
work does not constitute abandonment of work.

To constitute abandonment of work, the Supreme Court held that the following should be
present: first, the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and second, there must have been a clear intention on the
part of the employee to sever the employer-employee relationship manifested by some overt
act.

“The employee's absence should be accompanied by overt acts that unerringly point to the
employee's clear intention to sever the employment relationship. And, to successfully invoke
abandonment, whether as a ground for dismissing an employee or as a defense, the employer
bears the burden of proving the employee's unjustified refusal to resume his employment.”

What further proved the absence of the intention to abandon work in the above case was the
fact that Llamas took no time to file his complaint for illegal dismissal against Diamond Taxi thus
proving that he had every intention to return to work and that there was really no abandonment
to begin with.

So keeping in mind the foregoing observations, before an employer decides to use

abandonment of work as a ground for dismissing an employee, the employer should first keep in
mind that mere absence from work is not enough. There must be, in addition, certain acts on the
part of the employee, which would show his deliberate and unjustified refusal to resume his
employment or the absence of any intention of returning.

For employees who have been dismissed due to abandonment, on the other hand, take note
that your acts before, during, and after the dismissal may be used for or against you, just as in
the case of Diamond Taxi where the filing of the illegal dismissal complaint was used as proof of
the absence of abandonment on the part of Llamas.

Would the Supreme Court's ruling change if Llamas filed his Complaint, not just two (2) days
after the dismissal, but, let's say, a year after? You decide. 
 Definition
Just causes for dismissal of employee may be defined as those lawful or valid grounds for termination of
employment which arise from causes directly attributable to the fault or negligence of the erring
employee.Just causes are usually serious or grave in nature and attended by willful or wrongful intent or
they reflected adversely on the moral character of the employees.
As opposed to authorized causes under Article 283 wherein the termination of employment is dictated by
necessity of the business, the dismissal under just causes is imposed by the employer to the erring
employee as a punishment for the latter’s acts or omission.
Just Causes Under the Labor Code
Just causes for termination under the Labor Code is found in Article 282 and enumerated here as follows:
1. Serious misconduct. Serious misconduct is an improper conduct willful in character and of such
grave nature that transgressed some established and definite rule of action in relation to the employee’s
work.
2. Willful disobedience to lawful orders. The employees are bound to follow reasonable and
lawful orders of the employer which are in connection with their work. Failure to do so may be a ground
for dismissal or other disciplinary action.
3. Gross and habitual neglect of duties. Gross negligence has been defined as the want or
absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them.
4. Fraud or willful breach of trust / Loss of confidence . Fraud is any act, omission, or
concealment which involves a breach of legal duty, trust, or confidence justly reposed and is injurious to
another.
5. Commission of a crime or offense. Commission of a crime or offense by the employee against
his employer or any immediate member of his family or his duly authorized representative, is a just cause
for termination of employment.
6. Analogous causes. Other causes analogous to the above grounds may also be a just cause for
termination of employment.
Examples of Analogous Causes
1. Abandonment. Abandonment of job is a form of neglect of duty. There is abandonment when
the employee leave his job or position with a clear and deliberate intent to discontinue his employment
without any intention of returning back.
2. Gross inefficiency. Gross inefficiency is analogous to and closely related to gross neglect for
both involve acts or omissions on the part of the employee resulting in damage to the employer or to his
business. (See Lim vs. NLRC, G.R. No. 118434, July 26, 1996.)
3. Disloyalty/conflict of interest. Disloyalty exists when one asserts an interest, or performs acts
adverse to one’s employer, such as secretly engaging in a business which renders him a competitor and
rival of his employer. It constitutes a breach of an implied condition of the contract of employment.
(See Elizalde International vs. Court of Appeals, G.R. No. L40553 February 26, 1981.)
4. Dishonesty. Acts of dishonesty deemed to be patently inimical to the employer is analogous to
breach of trust and is a valid cause for termination of employment.
No  Separation Pay
An employee who is terminated from employment for a just cause is not entitled to payment of
separation benefits. Section 7, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code
provides:
“Sec. 7. Termination of employment by employer. – The just causes for terminating the services of an
employee shall be those provided in Article 282 of the Code. The separation from work of an employee
for a just cause does not entitle him to the termination pay provided in Code, without prejudice, however,
to whatever rights, benefits and privileges he may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or practice.”
Last Edited:  Tuesday, April 24, 2012

Points to Remember in Dismissal Cases

Q: What are the just causes for the dismissal of an employee?

A:  Under Article 282 of the Labor Code, an employer may terminate an employment for any of
the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.

Q:  What are the other authorized causes for the dismissal of an employee?

A:  Under Article 283 of the Labor Code, the employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

Q:  When is a dismissed employee entitled to separation pay?

A:  The Labor Code requires a valid cause to terminate an employee. If there is no valid cause,
there is no valid termination and the employer will be held liable for illegal dismissal.   If the
cause of dismissal falls under any of the five circumstances of Article 282, no separation pay shall
be given to the dismissed employee. In dismissal cases falling under Article 283, separation pay
shall only be required if the dismissal is due to the installation of labor-saving devices or
redundancy.  In these two cases, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher.

If the dismissal is due to retrenchment to prevent losses or closures or cessation of operations of

establishment or undertaking not due to serious business losses or financial reverses the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher.  In all cases, a fraction of at least six (6) months shall
be considered one (1) whole year.

On the other hand if the dismissal is due to retrenchment to prevent losses or closures or
cessation of operations of establishment or undertaking due to serious business losses or financial
reverses no separation pay shall be given to the dismissed employee.

Q: What are the steps to follow to ensure that the dismissed employee is given due process?

A:  a.  Notice of Dismissal – The employer shall furnish the workers a written notice stating the
particular acts or omissions constituting the grounds for his dismissal.  In cases of abandonment of
work, the notice shall be served at the worker’s last known address.

b.  Answer – The worker may answer the allegations stated against him in the notice of dismissal
within a reasonable period.

c.  Hearing – The employer shall afford the worker ample opportunity to be heard and defend
himself with the assistance of his representative, if he so desires.

d.  Notice of decision – The employer shall immediately notify a worker in writing of a decision to
dismiss him stating clearly the reasons therefor.

e.  Report on dismissal – The employer shall submit a monthly report to the regional Office having
jurisdiction over the place of work, all dismissals effected by him during the month, specifying
therein the names of the dismissed workers, the reasons for their dismissal, the dates of
commencement and termination of employment, the positions last held by them and such other
information as may ber required by the Department of labor for policy guidance and statistical
purposes.

Job abandonment occurs when an employee has no intention of returning to the job and
has not notified the employer of his or her intention to quit.

Employers are cautioned not to assume all “no-call/no-shows” are automatic job-
abandonment cases. Occasionally, employees are unable to contact their employers,
such as in medical situations, incarceration or some other form of crisis. Determining
why an employee has stopped coming to work can set aside concerns that the
employee may have a medical condition, which could trigger leave of absence policies
or accommodation issues.

To help employees and employers work together on these issues, employers may
develop a policy defining how many days of absence will be considered job
abandonment. No federal or state laws specify the number of days; however, in some
states, case law establishes three days as reasonable. Three days is a common
measure and provides employers with enough time to investigate the absence (but not
long enough to put the organization in a position of holding a job for someone who will
never return).
In addition to policy development, employers must develop investigation procedures
and follow the termination process. Ideas for the investigation process include
contacting or attempting to contact the employee before issuing the termination. Then,
employers should document the job abandonment by sending a termination of
employment letter explaining the employer’s position and asking the employee to
contact the employer if there are circumstances that could potentially change the
employer’s action (e.g., medical condition). Finally, employers should follow established
termination procedures, such as updating the employee’s file with documentation and
termination dates, sending COBRA and insurance forms, if applicable, and cutting the
final paycheck according to state requirements.

A sound policy and procedure will provide proper guidance and leave little room for
potentially costly errors.

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This material is for informational purposes only and not for the purpose of providing
legal advice. You should always contact your attorney to determine if this information,
and your interpretation of it, is appropriate to your particular situation.

The CA erred when it considered 

"abandonment of work" generally 
understood in employee dismissal 
situations despite the fact that 
Nightowl never raised it as
a defense.

As no dismissal was carried out in this case, any consideration of abandonment - as a defense raised by an
employer in dismissal situations -was clearly misplaced. To our mind, the CA again committed a reversible
error in considering that Nightowl raised abandonment as a defense.

Abandonment, as understood under our labor laws, refers to the deliberate and unjustified refusal of an
19
employee to resume his employment.  It is a form of neglect of duty that constitutes just cause for the
20
employer to dismiss the employee.

Under this construct, abandonment is a defense available against the employee who alleges a dismissal.
Thus, for the employer "to successfully invoke abandonment, whether as a ground for dismissing an
employee or as a  defense, the employer bears the burden of proving the employee's unjustified refusal to
21
resume his employment."  This burden, of course, proceeds from the general rule that places the burden
on the employer to prove the validity of the dismissal.
The CA, agreeing with LA Demaisip, concluded that Lumahan was illegally dismissed because Nightowl failed
to prove the existence of an overt act showing Lumahan's intention to sever his employment. To the CA, the
fact that Nightowl failed to send Lumahan notices for him to report back to work all the more showed no
abandonment took place.

The critical point the CA missed, however, was the fact that Nightowl never raised abandonment as a
defense. What Nightowl persistently argued was that Lumahan stopped reporting for work beginning April
22, 1999; and that it had been waiting for Lumahan to show up so that it could impose on him the
necessary disciplinary action for abandoning his post at Steelwork, only to learn that Lumahan had filed an
illegal dismissal complaint. Nightowl did not at all argue that Lumahan had abandoned his work, thereby
warranting the termination of his employment.

Significantly, the CA construed these arguments as abandonment of work under the labor law construct. We
find it clear, however, that Nightowl did not dismiss Lumahan; hence, it never raised the defense of
abandonment.

Besides, Nightowl did not say that Lumahan "abandoned his work"; rather, Nightowl stated that Lumahan
"abandoned his post" at Steelwork. When read together with its arguments, what this phrase simply means
is that Lumahan abandoned his assignment at Steelwork; nonetheless, Nightowl still considered him as its
employee whose return they had been waiting for.

Finally, failure to send notices to Lumahan to report back to work should not be taken against Nightowl
despite the fact that it would have been prudent, given the circumstance, had it done so. Report-to-work
notices are required, as an aspect of procedural due process, only in situations involving the dismissal, or
22
the possibility of dismissal, of the employee.  Verily, report-to-work notices could not be required when
dismissal, or the possibility of dismissal, of the employee does not exist.

Separation pay in lieu of

reinstatement is the proper award
in this case.

In cases where no dismissal took place, the proper award is reinstatement, without backwages, not as a
23
relief for any illegal dismissal but on equitable grounds.  When, however, reinstatement of the employee is
rendered impossible, as when the employee had been out for a long period of time, the award of separation
24
pay is proper.

Here, considering that more than ten (10) years has already passed from the time Lumahan stopped
reporting for work on April 22, 1999, up to this date, it is no longer possible and reasonable for Nightowl to
reinstate Lumahan in its service. Thus, in lieu of reinstatement, we find it just and equitable to award
Lumahan separation pay in an amount equivalent to one (1) month pay for every year of service, computed
up to the time he stopped working, or until April 22, 1999.

WHEREFORE, we GRANT IN PART the petition; we REVERSE and SET ASIDE the September 18, 2013

Decision and the April 4, 2014 resolution of the Court of Appeals in CA-G.R. SP No. 117982.
We REINSTATE the August 31, 2010 decision of the National Labor Relations Commission with the
following MODIFICATION: Nightowl is ordered to pay Lumahan separation pay, in lieu of reinstatement,
equivalent to one (1) month pay for every year of service, computed up to the time he stopped working, or
until April 22, 1999.

SO ORDERED. chanroblesvirtuallawlibrary
This would encourage frivolous suits, where even the most notorious violators of
company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the
employee is caught stealing or threatens the lives of his co-employees or has become a
criminal, who has fled and cannot be found, or where serious business losses demand
that operations be ceased in less than a month. Invalidating the dismissal would not
serve public interest. It could also discourage investments that can generate
employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword
to oppress employers. The commitment of this Court to the cause of labor does not
prevent us from sustaining the employer when it is in the right, as in this case.[32]
Certainly, an employer should not be compelled to pay employees for work not
actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued employment is
patently inimical to the employer. The law protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the employer.[33]
It must be stressed that in the present case, the petitioners committed a grave offense,
i.e., abandonment, which, if the requirements of due process were complied with,
would undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the term
suggests, should be used only to correct an injustice. As the eminent Justice Jose P.
Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be
equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about “the
greatest good to the greatest number.”[34]
This is not to say that the Court was wrong when it ruled the way it did in Wenphil,
Serrano and related cases. Social justice is not based on rigid formulas set in stone. It
has to allow for changing times and circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:
We have repeatedly stressed that social justice – or any justice for that matter – is for
the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is
true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to
whom the Constitution fittingly extends its sympathy and compassion. But never is it
justified to give preference to the poor simply because they are poor, or reject the rich
simply because they are rich, for justice must always be served for the poor and the
rich alike, according to the mandate of the law.[35]
Justice in every case should only be for the deserving party. It should not be presumed
that every case of illegal dismissal would automatically be decided in favor of labor,
as management has rights that should be fully respected and enforced by this Court.
As interdependent and indispensable partners in nation-building, labor and
management need each other to foster productivity and economic growth; hence, the
need to weigh and balance the rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or ineffectual. However,
the employer should indemnify the employee for the violation of his statutory rights,
as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be
imposed should be stiffer to discourage the abhorrent practice of “dismiss now, pay
later,” which we sought to deter in the Serrano ruling. The sanction should be in the
nature of indemnification or penalty and should depend on the facts of each case,
taking into special consideration the gravity of the due process violation of the
employer.
Xxx xxx xxx
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.

LABOR REL: WENPHIL SERRANO AGABON DOCTRINE Distinguished

THE DISMISSAL IS FOR A JUST OR AUTHORIZED CAUSE BUT DUE PROCESS WAS
NOT OBSERVED.

Due Process to be Observed by The Employer - For termination of the employment

based on the any of the just causes for termination, the requirements of due process
that an employer must comply with are: (TWIN NOTICES)

Written notice should be served to the employee specifying the ground or grounds for

termination and giving the said employee reasonable opportunity within which to
explain;

A hearing or conference should be held during which the employee concerned, with

the assistance of counsel, if the employee so desires, is given the opportunity to
respond to the charge, present his evidence and present the evidence presented
against him;

A written notice of termination, if termination is the decision of the employer, should

be served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

For termination of employment based on authorized causes, the requirements of due

process shall be deemed complied with upon service of a written notice to the
employee and the appropriate Regional office of the Department of Labor and
employment at least thirty days before the effectivity of the termination specifying the
grounds for termination.

NOTE:

Under the so-called WENPHIL DOCTRINE if the services of the employee was

terminated due to a just or authorized cause but the affected employee’s right to due
process has been violated, the dismissal is legal but the employee is entitled to
damages by way of indemnification for the violation of the right.

SERRANO vs. ISETANN et. al. abandoned the WENPHIL DOCTRINE and ruled that if
the employee is dismissed under just or authorized cause but the affected employee’s
right to due process has been violated, his dismissal becomes ineffectual. Therefore,
the employee is entitled to backwages from the time he was dismissed until the
determination of the justness of the cause of the dismissal.

AGABON vs. NLRC (Nov. 17, 2004) abandoned the Serrano doctrine and REINSTATED
THE WENPHIL DOCTRINE. The sanctions, however must be stiffer than that imposed
in Wenphil.

Synopsis on the developments in the law.

In the last couple of decades, the Supreme Court has grappled with the legal effect and
the corresponding sanction in cases where there exists a just and valid ground to
justify the dismissal but the employer fails to comply with the due process
requirement of the law. Prior to the promulgation in 1989 of Wenphil v. NLRC, [170
SCRA 69, February 8, 1989], the prevailing doctrine held that dismissing employees
without giving them proper notices and an opportunity to be heard was illegal and
that, as a consequence thereof, they were entitled to reinstatement plus full
backwages. Wenphil abandoned this jurisprudence and ruled that if the dismissal was
for a just or an authorized cause but done without due process, the termination was
valid but the employer should be sanctioned with the payment of indemnity ranging
from P1,000.00 to P10,000.00.

In 2000, the Supreme Court promulgated Serrano v. NLRC, [G.R. No. 117040,

January 27, 2000], which modified Wenphil. It considered such termination
“ineffectual” (not illegal) and sanctioned the employer with payment of full backwages
plus nominal and moral damages, if warranted by the evidence. In case the dismissal
was for an authorized cause, separation pay in accordance with Article 283 of the
Labor Code should be awarded.

In 2004, the Supreme Court in Agabon v. NLRC, [G.R. No. 158693, November
17, 2004], abandoned Serrano and effectively reverted to Wenphil (known also as the
“Belated Due Process Rule”) and held that a dismissal due to abandonment - a just
cause - was not illegal or ineffectual, even if done without due process; but the
employer should indemnify the employee with “nominal damages for non-compliance
with statutory due process.” (Glaxo Wellcome Phils., Inc. v. Nagkakaisang Empleyado
ng Wellcome-DFA, G.R. No. 149349, March 11, 2005).

Labor Law is an intricate subject that not only deals with a lot of provisions, laws, and
doctrines, it also deals with people whose lives are greatly affected by these laws.
Labor Law protects both the employers and employees and sees to it that rights are
not violated.

Here are some doctrines on the termination of employment (Source: The Labor Code
with Comments and Cases Volume II, 7th Edition by CA Azucena):

Wenphil (1989) - declared the termination valid BUT the employer should pay
indemnity for not respecting the employee's right to due process.

Serrano (2000) - modified Wenphil; stiffened the penalty to "full backwages"; The
employee, dismissed for a valid reason, remains dismissed, but the employer who
disregarded proper procedure, must pay full backwages in addition to the separation
pay, if applicable, and indemnity.

Viernes (2003) - imposed both backwages and indemnity.

Agabon (2004) - the termination is valid, the employee remains dismissed, but the
employer must pay an indemnity (penalty for not observing due process) heavier than
that imposed in Wenphil but lighter than full backwages; fixed the amount to
P30,000.00

Jaka (2005) - fine-tunes Agabon; P50,000 nominal damages

1) if the dismissal is based on a just cause under Article 282 but the employer failed to
comply with the notice requirement, the santion to be imposed upon him should be
tempered  because the dismissal process was, in effect, initiated by an act imputable
to the employee;
2) if the dismissal is based on an authorized cause under Article 283 but the employer
failed to comply with the notice requirement, the sanction should be stiffer because
the dismissal was initiated by the employer's exercise of his management prerogative.

Industrial Timber (2006) - subdivides the authorized causes into: 1) due to losses and
2) not due to losses.
- If the authorized cause that terminates employment arises from losses, the penalty to
the employer who disregarded due process may be lighter than if the authorized cause
has no relation to losses. (The court in the Industrial Timber case awarded P10,000.00
for each employee instead of P50,000.00)
-The court enumerated other factors to consider in assessing the penalty to the
employer, which are:
1) the authorized cause invoked, whether it was a retrenchment  or a closure or
cessation of operation of the establishment due to serious business losses or financial
reverses or otherwise;
2) the number of employees to be awarded;
3) the capacity of the employers to satisfy the awards, taking into account their
prevailing financial status as borne by the records;
4) the employer's grant of other termination benefits in favor of the employees; and
5) whether there was a bona fide attempt to comply with the notice requirements as
opposed to giving no notice at all. (Industrial Timber Corp, et al. vs Ababan, et al., GR
No. 165418, March 30, 2006)

EN BANC
 
 
JENNY M. AGABON and G.R. No. 158693
VIRGILIO C. AGABON,
Petitioners, Present:
 

Davide, Jr., C.J.,

Puno,

Panganiban,

Quisumbing,
Ynares-Santiago,

Sandoval-Gutierrez,

- versus - Carpio,

Austria-Martinez,

Corona,

Carpio-Morales,

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 NLRC-NCR Case No. 023442-00.
 
Private respondent Riviera Home Improvements, Inc. is engaged in the business
of selling and installing ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992[2] until February 23, 1999 when they were dismissed
for abandonment of work.
 
Petitioners then filed a complaint for illegal dismissal and payment of
money claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision
declaring the dismissals illegal and ordered private respondent to pay the
monetary claims. The dispositive portion of the decision states:

 
WHEREFORE, premises considered, We find the termination of the
complainants illegal. Accordingly, respondent is hereby ordered to pay
them their backwages up to November 29, 1999 in the sum of:
 
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
 
and, in lieu of reinstatement to pay them their separation pay of one (1)
month for every year of service from date of hiring up to November 29,
1999.
 
Respondent is further ordered to pay the complainants their holiday
pay and service incentive leave pay for the years 1996, 1997 and 1998
as well as their premium pay for holidays and rest days and Virgilio
Agabons 13th month pay differential amounting to TWO THOUSAND
ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of
ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT
 & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED
TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of
Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.
 
SO ORDERED.[4]
 
 
On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also
denied for lack of evidence.[5]
Upon denial of their motion for reconsideration, petitioners filed a petition for
certiorari with the Court of Appeals.
 
The Court of Appeals in turn ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment but ordered the payment
of money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission
is REVERSED only insofar as it dismissed petitioners money claims.
Private respondents are ordered to pay petitioners holiday pay for four
(4) regular holidays in 1996, 1997, and 1998, as well as their service
incentive leave pay for said years, and to pay the balance of petitioner
Virgilio Agabons 13th month pay for 1998 in the amount of P2,150.00.
 
SO ORDERED.[6]
 
Hence, this petition for review on the sole issue of whether petitioners were
illegally dismissed.[7]
 
Petitioners assert that they were dismissed because the private respondent
refused to give them assignments unless they agreed to work on a pakyaw basis
when they reported for duty on February 23, 1999. They did not agree on this
arrangement because it would mean losing benefits as Social Security System
(SSS) members. Petitioners also claim that private respondent did not comply
with the twin requirements of notice and hearing.[8]
 
Private respondent, on the other hand, maintained that petitioners were not
dismissed but had abandoned their work.[9] In fact, private respondent sent two
letters to the last known addresses of the petitioners advising them to report for
work. Private respondents manager even talked to petitioner Virgilio Agabon by
telephone sometime in June 1999 to tell him about the new assignment at Pacific
Plaza Towers involving 40,000 square meters of cornice installation work.
However, petitioners did not report for work because they had subcontracted to
perform installation work for another company. Petitioners also demanded for an
increase in their wage to P280.00 per day. When this was not granted, petitioners
stopped reporting for work and filed the illegal dismissal case.[10]
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are
accorded not only respect but even finality if the findings are supported by
substantial evidence. This is especially so when such findings were affirmed by the
Court of Appeals.[11] However, if the factual findings of the NLRC and the Labor
Arbiter are conflicting, as in this case, the reviewing court may delve into the
records and examine for itself the questioned findings.[12]
 
Accordingly, the Court of Appeals, after a careful review of the facts, ruled
that petitioners dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee the opportunity to be
heard and to defend himself.[13] Article 282 of the Labor Code enumerates the just
causes for termination by the employer: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the latters
representative in connection with the employees work; (b) gross and habitual
neglect by the employee of his duties; (c) fraud or willful breach by the employee
of the trust reposed in him by his employer or his duly authorized representative;
(d) commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume
his employment.[14] It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.[15] For a valid finding of
abandonment, these two factors should be present: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to
sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.[16]
In February 1999, petitioners were frequently absent having subcontracted for an
installation work for another company. Subcontracting for another company
clearly showed the intention to sever the employer-employee relationship with
private respondent. This was not the first time they did this. In January 1996, they
did not report for work because they were working for another company. Private
respondent at that time warned petitioners that they would be dismissed if this
happened again. Petitioners disregarded the warning and exhibited a clear
intention to sever their employer-employee relationship. The record of an
employee is a relevant consideration in determining the penalty that should be
meted out to him.[17]
 
In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately
absented from work without leave or permission from his employer, for the
purpose of looking for a job elsewhere, is considered to have abandoned his job.
We should apply that rule with more reason here where petitioners were absent
because they were already working in another company.
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice
and hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good
performance, adequate work and diligence, but also good conduct [19] and loyalty.
The employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interests.[20]
 
After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed.
 
 The procedure for terminating an employee is found in Book VI, Rule I,
Section 2(d) of the Omnibus Rules Implementing the Labor Code:
 
Standards of due process: requirements of notice. In all cases of
termination of employment, the following standards of due process
shall be substantially observed:
 
I. For termination of employment based on just causes as defined
in Article 282 of the Code:
 
(a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side;
 
(b) A hearing or conference during which the employee
concerned, with the assistance of counsel if the employee so desires, is
given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him; and
 
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
 
In case of termination, the foregoing notices shall be served on the
employees last known address.
 
Dismissals based on just causes contemplate acts or omissions attributable
to the employee while dismissals based on authorized causes involve grounds
under the Labor Code which allow the employer to terminate employees. A
termination for an authorized cause requires payment of separation pay. When
the termination of employment is declared illegal, reinstatement and full
backwages are mandated under Article 279. If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
 
 Procedurally, (1) if the dismissal is based on a just cause under Article 282,
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation.
 
From the foregoing rules four possible situations may be derived: (1) the dismissal
is for a just cause under Article 282 of the Labor Code, for an authorized cause
under Article 283, or for health reasons under Article 284, and due process was
observed; (2) the dismissal is without just or authorized cause but due process
was observed; (3) the dismissal is without just or authorized cause and there was
no due process; and (4) the dismissal is for just or authorized cause but due
process was not observed.
 
In the first situation, the dismissal is undoubtedly valid and the employer will not
suffer any liability.
 
In the second and third situations where the dismissals are illegal, Article
279 mandates that the employee is entitled to reinstatement without loss of
seniority rights and other privileges and full backwages, inclusive of allowances,
and other benefits or their monetary equivalent computed from the time the
compensation was not paid up to the time of actual reinstatement.
 
In the fourth situation, the dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the dismissal. However, the
employer should be held liable for non-compliance with the procedural
requirements of due process.
 
The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to
work for another company. Private respondent, however, did not follow the
notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid excuse because the
law mandates the twin notice requirements to the employees last known address.
[21]
 Thus, it should be held liable for non-compliance with the procedural
requirements of due process.
 
A review and re-examination of the relevant legal principles is appropriate and
timely to clarify the various rulings on employment termination in the light
of Serrano v. National Labor Relations Commission.[22]
 
Prior to 1989, the rule was that a dismissal or termination is illegal if the
employee was not given any notice. In the 1989 case of Wenphil Corp. v. National
Labor Relations Commission,[23] we reversed this long-standing rule and held that
the dismissed employee, although not given any notice and hearing, was not
entitled to reinstatement and backwages because the dismissal was for grave
misconduct and insubordination, a just ground for termination under Article 282.
The employee had a violent temper and caused trouble during office hours,
defying superiors who tried to pacify him. We concluded that reinstating the
employee and awarding backwages may encourage him to do even worse and will
render a mockery of the rules of discipline that employees are required to
observe.[24] We further held that:
 
Under the circumstances, the dismissal of the private respondent for
just cause should be maintained. He has no right to return to his former
employment.
 
However, the petitioner must nevertheless be held to account for
failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed. The
dismissal of an employee must be for just or authorized cause and after
due process. Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before
dismissing petitioner from employment. Considering the circumstances
of this case petitioner must indemnify the private respondent the
 amount of P1,000.00. The measure of this award depends on the facts
of each case and the gravity of the omission committed by the
employer.[25]
 
The rule thus evolved: where the employer had a valid reason to dismiss an
employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee.
This became known as the Wenphil or Belated Due Process Rule.
 
On January 27, 2000, in Serrano, the rule on the extent of the sanction was
changed. We held that the violation by the employer of the notice requirement in
termination for just or authorized causes was not a denial of due process that will
nullify the termination. However, the dismissal is ineffectual and the employer
must pay full backwages from the time of termination until it is judicially declared
that the dismissal was for a just or authorized cause.
 
The rationale for the re-examination of the Wenphil doctrine in Serrano was
the significant number of cases involving dismissals without requisite notices. We
concluded that the imposition of penalty by way of damages for violation of the
notice requirement was not serving as a deterrent. Hence, we now required
payment of full backwages from the time of dismissal until the time the Court
finds the dismissal was for a just or authorized cause.
 
Serrano  was confronting the practice of employers to dismiss now and pay
later by imposing full backwages.
 
We believe, however, that the ruling in Serrano  did not consider the full
meaning of Article 279 of the Labor Code which states:
 
ART. 279. Security of Tenure. In cases of regular employment, the
employer shall not terminate the services of an employee except for a
 just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up
to the time of his actual reinstatement.
 
 
This means that the termination is illegal only if it is not for any of the
justified or authorized causes provided by law. Payment of backwages and other
benefits, including reinstatement, is justified only if the employee was unjustly
dismissed.
 
The fact that the Serrano ruling can cause unfairness and injustice which
elicited strong dissent has prompted us to revisit the doctrine.
 

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution
embodies a system of rights based on moral principles so deeply imbedded in the
traditions and feelings of our people as to be deemed fundamental to a civilized
society as conceived by our entire history. Due process is that which comports with
the deepest notions of what is fair and right and just.[26] It is a constitutional
restraint on the legislative as well as on the executive and judicial powers of the
government provided by the Bill of Rights.
 
Due process under the Labor Code, like Constitutional due process, has two
aspects: substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal are found in the Implementing
Rules of P.D. 442, as amended, otherwise known as the Labor Code of the
Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and
10.[27] Breaches of these due process  requirements violate the Labor Code.
Therefore statutory due process should be differentiated from failure to comply
with constitutional due process.
 

Constitutional due process protects the individual from the government and

assures him of his rights in criminal, civil or administrative proceedings;
while statutory due process found in the Labor Code and Implementing Rules
protects employees from being unjustly terminated without just cause after
notice and hearing.
 
In Sebuguero v. National Labor Relations Commission,[28] the dismissal was
for a just and valid cause but the employee was not accorded due process. The
dismissal was upheld by the Court but the employer was sanctioned. The sanction
should be in the nature of indemnification or penalty, and depends on the facts of
each case and the gravity of the omission committed by the employer.
 
In Nath v. National Labor Relations Commission,[29] it was ruled that even if
the employee was not given due process, the failure did not operate to eradicate
the just causes for dismissal. The dismissal being for just cause, albeit without due
process, did not entitle the employee to reinstatement, backwages, damages and
attorneys fees.
 
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services,
Inc. v. National Labor Relations Commission,[30] which opinion he reiterated
in Serrano, stated:
 

C. Where there is just cause for dismissal but due process has not been properly
observed by an employer, it would not be right to order either the reinstatement of the
dismissed employee or the payment of backwages to him. In failing, however, to comply
with the procedure prescribed by law in terminating the services of the employee, the
employer must be deemed to have opted or, in any case, should be made liable, for the
payment of separation pay. It might be pointed out that the notice to be given and the
hearing to be conducted generally constitute the two-part due process requirement of
 law to be accorded to the employee by the employer. Nevertheless, peculiar
circumstances might obtain in certain situations where to undertake the above steps
would be no more than a useless formality and where, accordingly, it would not be
imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay,
nominal damages to the employee. x x x.[31]

 
After carefully analyzing the consequences of the divergent doctrines in the
law on employment termination, we believe that in cases involving dismissals for
cause but without observance of the twin requirements of notice and hearing, the
better rule is to abandon the Serrano doctrine and to follow Wenphil by holding
that the dismissal was for just cause but imposing sanctions on the employer.
Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing
so, this Court would be able to achieve a fair result by dispensing justice not just
to employees, but to employers as well.
 
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized
causes but not complying with statutory due process may have far-reaching
consequences.
 
This would encourage frivolous suits, where even the most notorious violators of
company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the
employee is caught stealing or threatens the lives of his co-employees or has
become a criminal, who has fled and cannot be found, or where serious business
losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments
that can generate employment in the local economy.
 
The constitutional policy to provide full protection to labor is not meant to
be a sword to oppress employers. The commitment of this Court to the cause of
labor does not prevent us from sustaining the employer when it is in the right, as
in this case.[32] Certainly, an employer should not be compelled to pay employees
for work not actually performed and in fact abandoned.
 
The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued
employment is patently inimical to the employer. The law protecting the rights of
the laborer authorizes neither oppression nor self-destruction of the employer.[33]
 

It must be stressed that in the present case, the petitioners committed a grave
offense, i.e., abandonment, which, if the requirements of due process were
complied with, would undoubtedly result in a valid dismissal.
 
An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the
term suggests, should be used only to correct an injustice. As the eminent Justice
Jose P. Laurel observed, social justice must be founded on the recognition of the
necessity of interdependence among diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet
of all persons, and of bringing about the greatest good to the greatest number.[34]

 
This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on rigid
formulas set in stone. It has to allow for changing times and circumstances.
 
Justice Isagani Cruz strongly asserts the need to apply a balanced approach
to labor-management relations and dispense justice with an even hand in every
case:
 
We have repeatedly stressed that social justice or any justice for that
matter is for the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of reasonable doubt, we
are to tilt the balance in favor of the poor to whom the Constitution
fittingly extends its sympathy and compassion. But never is it justified to
 give preference to the poor simply because they are poor, or reject the
rich simply because they are rich, for justice must always be served for
the poor and the rich alike, according to the mandate of the law.[35]
 

Justice in every case should only be for the deserving party. It should not be
presumed that every case of illegal dismissal would automatically be decided in
favor of labor, as management has rights that should be fully respected and
enforced by this Court. As interdependent and indispensable partners in nation-
building, labor and management need each other to foster productivity and
economic growth; hence, the need to weigh and balance the rights and welfare of
both the employee and employer.
 

Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission.[36] The indemnity to be imposed should be stiffer to discourage
the abhorrent practice of dismiss now, pay later, which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.
 

Under the Civil Code, nominal damages is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.[37]
 
As enunciated by this Court in Viernes v. National Labor Relations Commissions,
[38]
 an employer is liable to pay indemnity in the form of nominal damages to an
employee who has been dismissed if, in effecting such dismissal, the employer
fails to comply with the requirements of due process. The Court, after considering
the circumstances therein, fixed the indemnity at P2,590.50, which was
equivalent to the employees one month salary. This indemnity is intended not to
penalize the employer but to vindicate or recognize the employees right to
statutory due process which was violated by the employer.[39]
 
The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages.
The amount of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances.[40] Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We
believe this form of damages would serve to deter employers from future
violations of the statutory due process rights of employees. At the very least, it
provides a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules.
 
Private respondent claims that the Court of Appeals erred in holding that it failed
to pay petitioners holiday pay, service incentive leave pay and 13th month pay.
 
We are not persuaded.
 
We affirm the ruling of the appellate court on petitioners money claims.
Private respondent is liable for petitioners holiday pay, service incentive leave pay
and 13thmonth pay without deductions.
As a general rule, one who pleads payment has the burden of proving it. Even
where the employee must allege non-payment, the general rule is that the
burden rests on the employer to prove payment, rather than on the employee to
prove non-payment. The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents which will show that
overtime, differentials, service incentive leave and other claims of workers have
been paid are not in the possession of the worker but in the custody and absolute
control of the employer.[41] 
In the case at bar, if private respondent indeed paid petitioners holiday pay and
service incentive leave pay, it could have easily presented documentary proofs of
such monetary benefits to disprove the claims of the petitioners. But it did not,
except with respect to the 13th month pay wherein it presented cash vouchers
showing payments of the benefit in the years disputed.[42] Allegations by private
respondent that it does not operate during holidays and that it allows its
employees 10 days leave with pay, other than being self-serving, do not
constitute proof of payment. Consequently, it failed to discharge the onus
probandi thereby making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner
Virgilio Agabons 13th month pay, we find the same to be unauthorized. The
evident intention of Presidential Decree No. 851 is to grant an additional
income in the form of the 13th month pay to employees not already receiving the
same[43] so as to further protect the level of real wages from the ravages of world-
wide inflation.[44] Clearly, as additional income, the 13th month pay is included in
the definition of wage under Article 97(f) of the Labor Code, to wit:
 
(f) Wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money whether fixed or ascertained
on a time, task, piece , or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered
and includes the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to the
employee

from which an employer is prohibited under Article 113[45] of the same Code from
making any deductions without the employees knowledge and consent. In the
instant case, private respondent failed to show that the deduction of the SSS loan
and the value of the shoes from petitioner Virgilio Agabons 13 th month pay was
authorized by the latter. The lack of authority to deduct is further bolstered by
the fact that petitioner Virgilio Agabon included the same as one of his money
claims against private respondent. 
The Court of Appeals properly reinstated the monetary claims awarded by
the Labor Arbiter ordering the private respondent to pay each of the petitioners
holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in
the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the
Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that
petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private
respondent to pay each of the petitioners holiday pay for four regular holidays
from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for
the same period in the amount of P3,255.00 and the balance of Virgilio Agabons
thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is
further ORDERED to pay each of the petitioners the amount of P30,000.00 as
nominal damages for non-compliance with statutory due process.
No costs.
 
SO ORDERED.
[1]
 Penned by Associate Justice Marina L. Buzon and concurred in by Associate Justices Josefina
Guevara-Salonga and Danilo B. Pine.
[2]
 Rollo, p. 41.
[3]
 Id., pp. 13-14.
[4]
 Id., p. 92.
[5]
 Id., p. 131.
[6]
 Id., p. 173.
[7]
 Id., p. 20.
[8]
 Id., pp. 21-23.
[9]
 Id., p. 45.
[10]
 Id., pp. 42-43.
[11]
 Rosario v. Victory Ricemill, G.R. No. 147572, 19 February 2003, 397 SCRA 760, 767.
[12]
 Reyes v. Maxims Tea House, G.R. No. 140853, 27 February 2003, 398 SCRA 288, 298.
[13]
 Santos v. San Miguel Corporation, G.R. No. 149416, 14 March 2003, 399 SCRA 172, 182.
[14]
 Columbus Philippine Bus Corporation v. NLRC, 417 Phil. 81, 100 (2001).
[15]
 De Paul/King Philip Customs Tailor v. NLRC, 364 Phil. 91, 102 (1999).
[16]
 Sta. Catalina College v. NLRC, G.R. No. 144483, 19 November 2003.
[17]
 Cosmos Bottling Corporation v. NLRC, G.R. No. 111155, 23 October 1997, 281 SCRA 146,
153-154.
[18]
 G.R. No. L-49875, 21 November 1979, 94 SCRA 472, 478.
[19]
 Judy Philippines, Inc. v. NLRC, 352 Phil. 593, 606 (1998).
[20]
 Philippine-Singapore Transport Services, Inc. v. NLRC, 343 Phil. 284, 291 (1997).
[21]
 See Stolt-Nielsen Marine Services, Inc. v. NLRC, G.R. No. 128395, 29 December 1998, 300
SCRA 713, 720.
[22]
 G.R. No. 117040, 27 January 2000, 323 SCRA 445.
[23]
 G.R. No. 80587, 8 February 1989, 170 SCRA 69.
[24]
 Id. at 76.
[25]
 Id.
[26]
 Solesbee v. Balkcom, 339 U.S. 9, 16 (1950) (Frankfurter, J., dissenting). Due process is
violated if a practice or rule offends some principle of justice so rooted in the traditions and
conscience of our people as to be ranked as fundamental; Snyder v. Massachusetts, 291 U.S. 97,
105 (1934).
[27]
 Department Order No. 9 took effect on 21 June 1997. Department Order No. 10 took effect on
22 June 1997.
[28]
 G.R. No. 115394, 27 September 1995, 248 SCRA 535.
[29]
 G.R. No. 122666, 19 June 1997, 274 SCRA 386.
[30]
 G.R. No. 114313, 29 July 1996, 259 SCRA 699, 700.
[31]
 Serrano, supra, Vitug, J., Separate (Concurring and Dissenting) Opinion, 323 SCRA 524,
529-530 (2000).
[32]
 Capili v. NLRC, G.R. No. 117378, 26 March 1997, 270 SCRA 488, 495.
[33]
 Filipro, Inc. v. NLRC, G.R. No. L-70546, 16 October 1986, 145 SCRA 123.
[34]
 Calalang v. Williams, 70 Phil. 726, 735 (1940).
[35]
 Gelos v. Court of Appeals, G.R. No. 86186, 8 May 1992, 208 SCRA 608, 616.
[36]
 G.R. No. 112100, 27 May 1994, 232 SCRA 613, 618.
[37]
 Art. 2221, Civil Code.
[38]
 G.R. No. 108405. April 4, 2003 citing Kwikway Engineering Works v. NLRC, G.R. No. 85014, 22 March
1991, 195 SCRA 526, 532; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432, 443; and
Sampaguita Garments Corporation v. NLRC, G.R. No. 102406, 17 June 1994, 233 SCRA 260, 265.
[39]
 Id. citing Better Buildings, Inc. v. NLRC, G.R. No. 109714, 15 December 1997, 283 SCRA 242, 251; Iran
v. NLRC, G.R. No. 121927, 22 April 1998, 289 SCRA 433, 442.
[40]
 Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003.
[41]
 Villar v. NLRC, G.R. No. 130935, 11 May 2000.
[42]
 Rollo, pp. 60-71.
[43]
 UST Faculty Union v. NLRC, G.R. No. 90445, 2 October 1990.
[44]
 Whereas clauses, P.D. No. 851.
[45]
 Art. 113. Wage deduction. - No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees except:
(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check
off has been recognized by the employer or authorized in writing by the
individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. Justice, is, in every case for the deserving, and it must be dispensed with in the light of
established facts, the applicable law, and existing jurisprudence. 52

-Supra note 35, at 380-381.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services,
Inc. v. National Labor Relations Commission,[30] which opinion he reiterated
in Serrano, stated:
 

C. Where there is just cause for dismissal but due process has not been properly
observed by an employer, it would not be right to order either the reinstatement of the
dismissed employee or the payment of backwages to him. In failing, however, to comply
with the procedure prescribed by law in terminating the services of the employee, the
employer must be deemed to have opted or, in any case, should be made liable, for the
payment of separation pay. It might be pointed out that the notice to be given and the
hearing to be conducted generally constitute the two-part due process requirement of
law to be accorded to the employee by the employer. Nevertheless, peculiar
circumstances might obtain in certain situations where to undertake the above steps
would be no more than a useless formality and where, accordingly, it would not be
imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay,
nominal damages to the employee. x x x.[31]

 
After carefully analyzing the consequences of the divergent doctrines in the
law on employment termination, we believe that in cases involving dismissals for
cause but without observance of the twin requirements of notice and hearing, the
better rule is to abandon the Serrano doctrine and to follow Wenphil by holding
that the dismissal was for just cause but imposing sanctions on the employer.
Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing
so, this Court would be able to achieve a fair result by dispensing justice not just
to employees, but to employers as well.
 
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized
causes but not complying with statutory due process may have far-reaching
consequences.
 
This would encourage frivolous suits, where even the most notorious violators of
company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the
employee is caught stealing or threatens the lives of his co-employees or has
become a criminal, who has fled and cannot be found, or where serious business
losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments
that can generate employment in the local economy.
 
The constitutional policy to provide full protection to labor is not meant to
be a sword to oppress employers. The commitment of this Court to the cause of
labor does not prevent us from sustaining the employer when it is in the right, as
in this case.[32] Certainly, an employer should not be compelled to pay employees
for work not actually performed and in fact abandoned.

 
The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued
employment is patently inimical to the employer. The law protecting the rights of
the laborer authorizes neither oppression nor self-destruction of the employer.[33]
 

It must be stressed that in the present case, the petitioners committed a grave
offense, i.e., abandonment, which, if the requirements of due process were
complied with, would undoubtedly result in a valid dismissal.
 
An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the
term suggests, should be used only to correct an injustice. As the eminent Justice
Jose P. Laurel observed, social justice must be founded on the recognition of the
necessity of interdependence among diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet
of all persons, and of bringing about the greatest good to the greatest number.[34]
 
This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on rigid
formulas set in stone. It has to allow for changing times and circumstances.
 
Justice Isagani Cruz strongly asserts the need to apply a balanced approach
to labor-management relations and dispense justice with an even hand in every
case:
 
We have repeatedly stressed that social justice or any justice for that
matter is for the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of reasonable doubt, we
are to tilt the balance in favor of the poor to whom the Constitution
fittingly extends its sympathy and compassion. But never is it justified to
give preference to the poor simply because they are poor, or reject the
rich simply because they are rich, for justice must always be served for
the poor and the rich alike, according to the mandate of the law.[35]
 

Justice in every case should only be for the deserving party. It should not be
presumed that every case of illegal dismissal would automatically be decided in
favor of labor, as management has rights that should be fully respected and
enforced by this Court. As interdependent and indispensable partners in nation-
building, labor and management need each other to foster productivity and
economic growth; hence, the need to weigh and balance the rights and welfare of
both the employee and employer.
 

Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission.[36] The indemnity to be imposed should be stiffer to discourage
the abhorrent practice of dismiss now, pay later, which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or
 penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.
 

Under the Civil Code, nominal damages is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.[37]
 
As enunciated by this Court in Viernes v. National Labor Relations Commissions,
[38]
 an employer is liable to pay indemnity in the form of nominal damages to an
employee who has been dismissed if, in effecting such dismissal, the employer
fails to comply with the requirements of due process. The Court, after considering
the circumstances therein, fixed the indemnity at P2,590.50, which was
equivalent to the employees one month salary. This indemnity is intended not to
penalize the employer but to vindicate or recognize the employees right to
statutory due process which was violated by the employer.[39]
 
The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages.
The amount of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances.[40] Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We
believe this form of damages would serve to deter employers from future
violations of the statutory due process rights of employees. At the very least, it
provides a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules.
 
Private respondent claims that the Court of Appeals erred in holding that it failed
to pay petitioners holiday pay, service incentive leave pay and 13th month pay.
 
We are not persuaded.
[30]
 G.R. No. 114313, 29 July 1996, 259 SCRA 699, 700.
[31]
 Serrano, supra, Vitug, J., Separate (Concurring and Dissenting) Opinion, 323 SCRA 524,
529-530 (2000).
[32]
 Capili v. NLRC, G.R. No. 117378, 26 March 1997, 270 SCRA 488, 495.
[33]
 Filipro, Inc. v. NLRC, G.R. No. L-70546, 16 October 1986, 145 SCRA 123.
[34]
 Calalang v. Williams, 70 Phil. 726, 735 (1940).
[35]
 Gelos v. Court of Appeals, G.R. No. 86186, 8 May 1992, 208 SCRA 608, 616.
[36]
 G.R. No. 112100, 27 May 1994, 232 SCRA 613, 618.
[37]
 Art. 2221, Civil Code.
[38]
 G.R. No. 108405. April 4, 2003 citing Kwikway Engineering Works v. NLRC, G.R. No. 85014, 22 March
1991, 195 SCRA 526, 532; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432, 443; and
Sampaguita Garments Corporation v. NLRC, G.R. No. 102406, 17 June 1994, 233 SCRA 260, 265.
[39]
 Id. citing Better Buildings, Inc. v. NLRC, G.R. No. 109714, 15 December 1997, 283 SCRA 242, 251; Iran
v. NLRC, G.R. No. 121927, 22 April 1998, 289 SCRA 433, 442.
[40]
 Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003.