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[G.R. No. 125735. August 26, 1999]LORLENE A. GONZALES, petit ioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, FIFTH DIVISION, CAGAYAN DE ORO CITY, and ATENEODE DAVAO UNIVERSITY, respondents .

D E C I S I O N

SYNOPSISPetitioner has been a schoolteacher in Ateneo de Davao since 1974. In 1991,

petitioner was informed of complaints from two parents for her alleged use of corporal

punishment on her students. She demanded that she be formally informed of thecomplaint and be duly investigated. An Investigative Committee was then organizedand petitioner was duly furnished with the rules of procedure. However, petitionerrefused to take part in the investigation, asking for the revision of the rules as thesame are violative of her right to due process. The Committee, steadfast in adoptingits rules of procedure, commenced with the investigation over the objection and non-participation of petitioner. Later, based on the findings of the Committee, petitionerwas served a Notice of Termination. She then filed a complaint for illegal dismissaland the Labor Arbiter ruled in her favor saying that there was failure to establishsubstantial evidence as to the guilt of petitioner of the offense charged. But on appealto the NLRC, the same was reversed.

Upon being notified of the termination, petitioner, in her demand for compliancewith the basic requirements of due process, at the very onset of the investigation,asked for the revision of the rules laid down by the Investigative Committee. And the

adamant refusal of the Committee to accede to this demand resulted in petitionersfailure to confront and cross-examine her accusers. This is a serious violation ofpetitioners right to due process that ultimately vitiated the investigation. Further, therewas failure to prove by substantial evidence that petitioner had indeed inflictedcorporal punishment on her students. The NLRC relied solely on the witnessesaffidavits with questionable veracity, while petitioner proved by means of affidavits,letters of petition and manifesto made by her students and co-teachers that she was acompetent and dedicated teacher. The conclusion of the NLRC being unwarranted,the same was reversed and set aside.

SYLLABUS1. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;

ILLEGAL DISMISSAL; DUE PROCESS; ELUCIDATED. - Upon being notifiedof her termination, petitioner has the right to demand compliance with the basic

requirements of due process. Compliance entails the twin requirements ofprocedural and substantial due process. Ample opportunity must be afforded theemployee to defend herself either personally and/or with assistance of arepresentative; to know the nature of her offense; and, to cross examine andconfront face to face the witnesses against her. Likewise, due process requiresthat the decision must be based on established facts and on a sound legalfoundation.

2. ID.; ID.; ID.; ID.; NOT AFFORDED PETITIONER IN CASE AT BAR. - It isprecisely to demand compliance with the requirements of due process thatpetitioner at the very onset of the investigation demanded the revision of therules laid down by the Investigative Committee. The adamant refusal of theCommittee to accede to this demand resulted in her failure to confront andcross-examine her accusers. This is not harping at technicalities as wrongfullypointed out by the NLRC but a serious violation of petitioners statutory and

constitutional right to due process that ultimately vitiated the investigation.

3. ID.; ID.; ID.; NOT JUSTIFIED BY SUBSTANTIAL EVIDENCE IN CASE AT BAR. -The failure of ATENEO to refute the contention of petitioner that the jointaffidavits executed by the students and parents were pre -prepared raisesserious doubts as to the probative value of this evidence. They are hearsayevidence that has no probative value whether objected to or not. ATENEO failedto prove by substantial evidence that petitioner had inflicted corporal punishmenton her students. InAng Tibay v. CIR, the Court set the measure of evidence tobe presented in an administrative investigation when it said, substantial

evidence is more than mere scintilla. It means such relevant evidence as areasonable mind might accept as adequate to support a conclusion. Theevidence of private respondent did not measure up to this standard. It reliedsolely on the witnesses affidavits with questionable veracity. Moreover, theaffidavit of recantation executed by some students and their parents all the moreweakened the case of private respondent. Failure in this regard negates thevery existence of the ground for dismissal.

4. ID.; EMPLOYMENT; SIGNIFICANCE AS A RIGHT. -Employment is not merely acontractual relationship; it has assumed the nature of property right. It may spellthe difference whether or not a family will have food on their table, roof over theirheads and education for their children. It is for this reason that the State hastaken up measures to protect employees from unjustified dismissals. It is alsobecause of this that the right to security of tenure is not only a statutory right but,more so, a constitutional right.

BELLOSILLO, J.:By way of certiorari under Rule 65 of the Rules of Court petitioner seeks the

nullification of the Decision of public respondent National Labor RelationsCommission, Fifth Division, which reversed and set aside that of Executive LaborArbiter Conchita J. Martinez.

Lorlene Gonzales, petitioner, has been a schoolteacher in the ElementaryDepartment of private respondent Ateneo de Davao University (hereafter ATENEO)since 1974 assigned to teach Reading, Mathematics, Language and Pilipino in theGrade VI class, while ATENEO is an educational institution, a corporation dulyorganized under the laws of the Philippines, with principal address at Jacinto St.,Davao City.

Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade School Headmaster,

sent a letter dated 11 April 1991 informing petitioner Lorlene A. Gonzales of thecomplaints of two (2) parents for alleged use of corporal punishment on herstudents. Petitioner claimed that she was not informed of the identity of the parentswho allegedly complained of the corporal punishment she purportedly inflicted inschool-year 1990-1991. She likewise claimed that she was not confronted about it byprivate respondent ATENEO in 1991 and that it was only two (2) years after thecomplaints were made that she discovered, through her students and their parents,that ATENEO was soliciting complainants to lodge written complaints against her.

On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J., demanding thatshe be formally informed of the complaint and be duly investigated.

On 9 June 1993 petitioner was informed of the composition of an investigativecommittee organized by Fr. Oscar Millar, S.J., to look into the alleged use of corporalpunishment by petitioner in disciplining her students. It can be gleaned from therecords that she was duly furnished with the rules of procedure, informed of the

schedule of the hearings, and given copies of the affidavits executed by the studentswho testified against her.


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Petitioner refused to take part in the investigation unless the rules of procedurelaid down by the Committee be revised, contending that the same were violative ofher right to due process. Petitioner specifically objected to the provision whichstated: x x x 3) Counsel for Ms. Lorlene Gonzales shall not directly participate in theinvestigation but will merely advise Ms. Gonzales x x x (par. 3).[1]

But the Committee was steadfast in its resolve to adopt the aforementionedrules. In its letter dated 9 August 1993, private respondent informed petitioner thatthe rules of procedure to be applied were substantially the same rules that were usedin the investigation of a former Ateneo employee and therefore we are under legal

advice not to change these rules."

[2]

Over the objection of petitioner the Committeecommenced with its investigation without petitioners participation. Out of the twenty -two (22) invitations sent out by ATENEO to petitioners students and their parents toshed light on the matter of corporal punishment allegedly administered by her,eleven (11) appeared and testified before the committee. The eleven (11) witnessesalso executed written statements denominated as affidavits.

On 10 November 1993 private respondent served a Notice of Termination onpetitioner pursuant to the findings and recommendation of theCommittee. Thereafter, petitioner received a letter from the president of ATENEOdemanding her voluntary resignation a week from receipt of the letter, otherwise, shewould be considered resigned from the service.

On 29 November 1993 petitioner filed a complaint before the Labor Arbiter forillegal dismissal. After trial, Executive Labor Arbiter Conchita J. Martinez found herdismissal illegal for lack of factual basis and ordered ATENEO to award petitioner

separation pay, back wages and 13th month pay. In her decision, the ExecutiveLabor Arbiter opined that although petitioner was afforded procedural due processrespondent institution failed to establish substantial evidence as to the guilt of thecomplainant of the offense charged"[3]thus -x x x the complainant was afforded procedural due process. There is convincing andsufficient evidence x x x showing respondent complied with the notice and hearingrequirement x x x x.[4]After considering the evidence, arguments and counter-arguments of the parties, thisoffice finds that the respondent failed to establish substantial evidence as to the guiltof complainant of the offense charged x x x x.[5]Complainant has sufficiently established that she is a very good teacher. She isequipped with the appropriate educational qualifications, trainings, seminars and workexperiences. Such fact was affirmed by her present and former students, their

parents, colleagues and the former headmaster of the grade school x x x x

[6]

As a matter of fact, six (6) out of the nine (9) students and their parents/guardianshave retracted and withdrawn their statements x x x x[7]

Both parties appealed to the NLRC which on 25 March 1996 reversed thedecision of the Executive Labor Arbiter by declaring petitioners dismissal valid andlegal but added that since ATENEO offered petitioner her retirement benefits it wasbut proper that she be extended said benefits. Petitioner now seeks the reversal ofthe decision; hence, this petition.

The crux of the controversy is whether the NLRC committed grave abuse ofdiscretion in sustaining as valid and legal the dismissal of petitioner by privaterespondent ATENEO.

The NLRC, in our view, appears to have skirted several important issues raisedby petitioner foremost of which is the absence of due process. Upon being notified ofher termination, she has the right to demand compliance with the basic requirements

of due process. Compliance entails the twin requirements of procedural andsubstantial due process. Ample opportunity must be afforded the employee to defend

herself either personally and/or with assistance of a representative; to know thenature of her offense; and, to cross examine and confront face to face the witnessesagainst her. Likewise, due process requires that the decision must be based onestablished facts and on a sound legal foundation.

It is precisely to demand compliance with these requirements that petitioner atthe very onset of the investigation demanded the revision of the rules laid down bythe Investigative Committee. The adamant refusal of the Committee to accede to thisdemand resulted in her failure to confront and cross-examine her accusers. This isnot harping at technicalities as wrongfully pointed out by the NLRC but a serious

violation of petitioner's statutory and constitutional right to due process that ultimatelyvitiated the investigation.Moreover, the failure of ATENEO to refute the contention of petitioner that the

joint affidavits executed by the students and parents were "pre-prepared" raisesserious doubts as to the probative value of this evidence. As correctly pointed out bythe Executive Labor Arbiter, there is more reason to disregard it especially where thesame was challenged and has remained unexplained. Hearsay evidence, in the strictsense, has no probative value whether objected to or not.

In the instant case, ATENEO failed to prove by substantial evidence thatpetitioner had inflicted corporal punishment on her students. InAng Tibay v. CIR, theCourt set the measure of evidence to be presented in an administrative investigationwhen it said, substantial evidence is more than mere scintilla. It means suchrelevant evidence as a reasonable mind might accept as adequate to support aconclusion. The evidence of private respondent did not measure up to this

standard. It relied solely on the witnesses affidavits with questionableveracity. Moreover, the affidavit of recantation executed by some students and theirparents all the more weakened the case of private respondent. Failure in this regardnegates the very existence of the ground for dismissal.

On the other hand, petitioner adequately proved, by means of affidavits, lettersof petition and manifesto made by her students and co-teachers, that she was acompetent and dedicated teacher having spent seventeen (17) years of her life in theservice of the very institution which is now seeking her dismissal.

In view of the foregoing, the conclusion of the NLRC isunwarranted. Employment is not merely a contractual relationship; it has assumedthe nature of property right. It may spell the difference whether or not a family willhave food on their table, roof over their heads and education for their children. It isfor this reason that the State has taken up measures to protect employees from

unjustified dismissals. It is also because of this that the right to security of tenure isnot only a statutory right but, more so, a constitutional right.WHEREFORE, the assailed Decision of public respondent National Labor

Relations Commission dated 25 March 1996 is REVERSED and SET ASIDE, and thedecision of Executive Labor Arbiter Conchita J. Martinez declaring the dismissal ofcomplainant Lorlene A. Gonzales illegal for lack of factual basis and orderingrespondent Ateneo de Davao University to pay complainant separation pay, backwages and 13th month pay in the total amount of TWO HUNDRED SIXTEENTHOUSAND NINE HUNDRED THIRTY-EIGHT and 70/100 PESOS (P216,938.70) xx x [f]urther, ordering respondent to pay 10% of the total monetary award asattorney's fees to counsel for complainant x x x [d]ismissing all other claims for lack ofmerit, is REINSTATED, AFFIRMED and ADOPTED herein as the decision in theinstant case.

SO ORDERED.Mendoza, Quisumbing, andBuena JJ., concur.
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SECOND DIVISION[G.R. No. 108405. April 4, 2003]

JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO C.BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA, ALEXANDERABANAG, DOMINGO ASIA, FRANCISCO BAYUGA, ARTHUR M.ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT A. ORDOO,BERNARD V. JULARBAL, IGNACIO C. ALINGBAS and LEODEL N.SORIANO, petit ioners, vs. NATIONAL LABOR RELATIONSCOMMISSION (THIRD DIVISION), and BENGUET ELECTRICCOOPERATIVE, INC. (BENECO) respondents.

D E C I S I O NAUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorariseeking to annul the decision promulgated bythe National Labor Relations Commission (NLRC) on July 2, 1992 in NLRC CA No. L-000384-92,[1]and its resolution dated September 24, 1992 denying petitioners motionfor reconsideration.

The factual background of this case, as summarized by the Labor Arbiter, is asfollows:Fifteen (15) in all, these are consolidated cases for illegal dismissal, underpayment ofwages and claim for indemnity pay against a common respondent, the BenguetElectric Cooperative, Inc., (BENECO for short) represented by its Acting GeneralManager, Gerardo P. Versoza.Complainants services as meter readers were contracted for hardly a months

duration, or from October 8 to 31, 1990. Their employment contracts, couched inidentical terms, read:You are hereby appointed as METER READER (APPRENTICE) under BENECO-NEA Management with compensation at the rate of SIXTY-SIX PESOS ANDSEVENTY-FIVE CENTAVOS (P66.75) per day from October 08 to 31, 1990.x x x. (Annex B, Complainants Joint Position Paper)The said term notwithstanding, the complainants were allowed to work beyondOctober 31, 1990, or until January 2, 1991. On January 3, 1991, they were eachserved their identical notices of termination dated December 29, 1990. The sameread:Please be informed that effective at the close of office hours of December 31, 1990,your services with the BENECO will be terminated. Your termination has nothing todo with your performance. Rather, it is because we have to retrench on personnel as

we are already overstaffed.x x x. (Annex C, CJPP)On the same date, the complainants filed separate complaints for illegaldismissal. And following the amendment of said complaints, they submitted their jointposition paper on April 4, 1991. Respondent filed its position paper on April 2, 1991.It is the contention of the complainants that they were not apprentices but regularemployees whose services were illegally and unjustly terminated in a manner thatwas whimsical and capricious. On the other hand, the respondent invokes Article 283of the Labor Code in defense of the questioned dismissal.[2]

On October 18, 1991, the Labor Arbiter rendered a decision, the dispositiveportion of which reads as follows:WHEREFORE, judgment is hereby rendered:1. Dismissing the complaints for illegal dismissal filed by the complainants for lackof merit. However in view of the offer of the respondent to enter into another

temporary employment contract with the complainants, the respondent is directed toso extend such contract to each complainant, with the exception of Jaime Viernes,

and to pay each the amount of P2,590.50, which represents a months salary, asindemnity for its failure to give complainants the 30-day notice mandated under Article283 of the Labor Code; or, at the option of the complainants, to pay each financialassistance in the amount ofP5,000.00 and the P2,590.50 above-mentioned.2. Respondent is also ordered:A. To pay complainants the amount representing underpayment of their wages:a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Abellera, FranciscoBayuga, Arthur Oribello, Buenaventura de Guzman, Jr., Robert Ordoo, BernardJularbal and Leodel Soriano, P1,994.25 each;

b) Bernard Bustillo and Domingo Asia, P1,838.50 each; andc) Ferdinand Della, Alexander Abanag and Ignacio Alingbas, P1,816.25 each.B. To extend to complainant Jaime Viernes an appointment as regularemployee for the position of meter reader, the job he held prior to his termination, andto pay him P2,590.50 as indemnity, plus the underpayment of his wages as abovestated.C. To pay P7,000.00 as and for attorneys fees.No damages.SO ORDERED.[3]

Aggrieved by the Labor Arbiters decision, the complainants and the respondentfiled their respective appeals to the NLRC.

On July 2, 1992, the NLRC modified its judgment, to wit:WHEREFORE, premises considered, judgment is hereby rendered modifying theappealed decision by declaring complainants dismissal illegal, thus ordering their

reinstatement to their former position as meter readers or to any equivalent positionwith payment of backwages limited to one year and deleting the award of indemnityand attorneys fees. The award of underpayment of wages is hereby AFFIRMED.SO ORDERED.[4]

On August 27, 1992, complainants filed a Motion for Clarification and PartialReconsideration.[5]On September 24, 1992, the NLRC issued a resolution denyingthe complainants motion for reconsideration.

[6]Hence, complainants filed herein petition.Private respondent BENECO filed its Comment; the Office of the Solicitor

General (OSG) filed a Manifestation and Motion in Lieu of Comment; publicrespondent NLRC filed its own Comment; and petitioners filed their Manifestation andMotion In Lieu of Consolidated Reply. Public respondent NLRC, herein petitioners,and private respondent filed their respective memoranda, and the OSG, its

Manifestation in 1994.Pursuant to our ruling inRural Bank of Alaminos Employees Union vs.NLRC,

[7]to wit:

in the decision in the case of St. Martin Funeral Homes vs. National LaborRelations Commission, G.R. No. 130866, promulgated on September 16, 1998, thisCourt pronounced that petitions for certiorarirelating to NLRC decisions must be fileddirectly with the Court of Appeals, and labor cases pending before this Court shouldbe referred to the appellate court for proper disposition. However, in cases where theMemoranda of both parties have been filed with this Court prior to the promulgation ofthe St. Martin decision, the Court generally opts to take the case itself for its finaldisposition.[8]and considering that the parties have filed their respective memoranda as of 1994, weopt to resolve the issues raised in the present petition.

The parties raised the following issues:

1. Whether the respondent NLRC committed grave abuse of discretion in orderingthe reinstatement of petitioners to their former position as meter readers on
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probationary status in spite of its finding that they are regular employees under Article280 of the Labor Code.2. Whether the respondent NLRC committed grave abuse of discretion in limitingthe backwages of petitioners to one year only in spite of its finding that they wereillegally dismissed, which is contrary to the mandate of full backwages until actualreinstatement but not to exceed three years.3. Whether the respondent NLRC committed grave abuse of discretion in deletingthe award of indemnity pay which had become final because it was not appealed andin deleting the award of attorneys fees because of the absence of a trial-type hearing.

4. Whether the mandate of immediately executory on the reinstatement aspecteven pending appeal as provided in the decision of Labor Arbiters equally applies inthe decision of the National Labor Relations Commission even pending appeal, bymeans of a motion for reconsideration of the order reinstating a dismissed employeeor pending appeal because the case is elevated on certiorari before the SupremeCourt.[9]

We find the petition partly meritorious.As to the first issue: We sustain petitioners claim that they should be reinstated

to their former position as meter readers, not on a probationary status, but as regularemployees.

Reinstatement means restoration to a state or condition from which one hadbeen removed or separated.[10]In case of probationary employment, Article 281 of theLabor Code requires the employer to make known to his employee at the time of thelatters engagement of the reasonable standards under which he may qualify as a

regular employee.A review of the records shows that petitioners have never been probationary

employees. There is nothing in the letter of appointment, to indicate that theiremployment as meter readers was on a probationary basis. It was not shown thatpetitioners were informed by the private respondent, at the time of the lattersemployment, of the reasonable standards under which they could qualify as regularemployees. Instead, petitioners were initially engaged to perform their job for alimited duration, their employment being fixed for a definite period, from October 8 to31, 1990.

Private respondents reliance on the case ofBrent School, Inc. vs.Zamora,

[11]wherein we held as follows:Accordingly, and since the entire purpose behind the development of legislationculminating in the present Article 280 of the Labor Code clearly appears to have

been, as already observed, to prevent circumvention of the employees right to besecure in his tenure, the c lause in said article indiscriminately and completely rulingout all written or oral agreements conflicting with the concept of regular employmentas defined therein should be construed to refer to the substantive evil that the Codeitself has singled out: agreements entered into precisely to circumvent security oftenure. It should have no application to instances where a fixed period ofemployment was agreed upon knowingly and voluntarily by the parties, without anyforce, duress or improper pressure being brought to bear upon the employee andabsent any other circumstances vitiating his consent, or where it satisfactorilyappears that the employer and employee dealt with each other on more or less equalterms with no moral dominance whatever being exercised by the former over thelatter.[12]is misplaced.

The principle we have enunciated in Brentapplies only with respect to fixed term

employments. While it is true that petitioners were initially employed on a fixed termbasis as their employment contracts were only for October 8 to 31, 1990, after

October 31, 1990, they were allowed to continue working in the same capacity asmeter readers without the benefit of a new contract or agreement or without the termof their employment being fixed anew. After October 31, 1990, the employment ofpetitioners is no longer on a fixed term basis. The complexion of the employmentrelationship of petitioners and private respondent is thereby totallychanged. Petitioners have attained the status of regular employees.

Under Article 280 of the Labor Code, a regular employee is one who is engagedto perform activities which are necessary or desirable in the usual business or tradeof the employer, or a casual employee who has rendered at least one year of service,

whether continuous or broken, with respect to the activity in which he is employed.In De Leon vs. NLRC,[13]andAbasolo vs. NLRC,[14]we laid down the test indetermining regular employment, to wit:The primary standard, therefore, of determining regular employment is the reasonableconnection between the particular activity performed by the employee in relation tothe usual trade or business of the employer. The test is whether the former is usuallynecessary or desirable in the usual business or trade of the employer. Theconnection can be determined by considering the nature of the work performed andits relation to the scheme of the particular business or trade in its entirety. Also if theemployee has been performing the job for at least a year, even if the performance isnot continuous and merely intermittent, the law deems repeated and continuing needfor its performance as sufficient evidence of the necessity if not indispensability of thatactivity to the business. Hence, the employment is considered regular, but only withrespect to such activity and while such activity exists.[15]

Clearly therefrom, there are two separate instances whereby it can bedetermined that an employment is regular: (1) The particular activity performed by theemployee is necessary or desirable in the usual business or trade of the employer; or(2) if the employee has been performing the job for at least a year.

Herein petitioners fall under the first category. They were engaged to performactivities that are necessary to the usual business of private respondent. We agreewith the labor arbiters pronouncement that the job of a meter reader is necessary tothe business of private respondent because unless a meter reader records theelectric consumption of the subscribing public, there could not be a valid basis forbilling the customers of private respondent. The fact that the petitioners were allowedto continue working after the expiration of their employment contract is evidence ofthe necessity and desirability of their service to private responden ts business. Inaddition, during the preliminary hearing of the case on February 4, 1991, private

respondent even offered to enter into another temporary employment contract withpetitioners. This only proves private respondents need for the services o f hereinpetitioners. With the continuation of their employment beyond the original term,petitioners have become full-fledged regular employees. The fact alone thatpetitioners have rendered service for a period of less than six months does not maketheir employment status as probationary.

Since petitioners are already regular employees at the time of their illegaldismissal from employment, they are entitled to be reinstated to their former positionas regular employees, not merely probationary.

As to the second issue, Article 279 of the Labor Code, as amended by R.A. No.6715, which took effect on March 21, 1989, provides that an illegally dismissedemployee is entitled to full backwages, inclusive of allowances, and to his otherbenefits or their monetary equivalent computed from the time his compensation waswithheld from him up to the time of his actual reinstatement. Since petitioners were

employed on October 8, 1990, the amended provisions of Article 279 of the LaborCode shall apply to the present case. Hence, it was patently erroneous, tantamount
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to grave abuse of discretion on the part of the public respondent in limiting to oneyear the backwages awarded to petitioners.

With respect to the third issue, an employer becomes liable to pay indemnity toan employee who has been dismissed if, in effecting such dismissal, the employerfails to comply with the requirements of due process.[16]The indemnity is in the formof nominal damages intended not to penalize the employer but to vindicate orrecognize the employees right to procedural due process which was violated by theemployer.[17]Under Article 2221 of the Civil Code, nominal damages are adjudicatedin order that a right of the plaintiff, which has been violated or invaded by thedefendant, may be vindicated or recognized, and not for the purpose of indemnifyingthe plaintiff for any loss suffered by him.

We do not agree with the ruling of the NLRC that indemnity is incompatible withthe award of backwages. These two awards are based on differentconsiderations. Backwages are granted on grounds of equity to workers for earningslost due to their illegal dismissal from work.[18]On the other hand, the award ofindemnity, as we have earlier held, is meant to vindicate or recognize the right of anemployee to due process which has been violated by the employer.

In the present case, the private respondent, in effecting the dismissal ofpetitioners from their employment, failed to comply with the provisions of Article 283of the Labor Code which requires an employer to serve a notice of dismissal upon theemployees sought to be terminated and to the Department of Labor, at least onemonth before the intended date of termination. Petitioners were served notice onJanuary 3, 1991 terminating their services, effective December 29, 1990, or

retroactively, in contravention of Article 283. This renders the private respondentliable to pay indemnity to petitioners.

Thus, we find that the NLRC committed grave abuse of discretion in deleting theaward of indemnity. InDel Val vs. NLRC,[19]we held that the award of indemnityranges fromP1,000.00 to P10,000.00 depending on the particular circumstances ofeach case. In the present case, the amount of indemnity awarded by the labor arbiteris P2,590.50, which is equivalent to petitioners one-month salary. We find no cogentreason to modify said award, for being just and reasonable.

As to the award of attorneys fees, the same is justified by the provisions ofArticle 111 of the Labor Code, to wit:Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages the culpableparty may be assessed attorneys fees equivalent to ten percent of the amount ofwages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial oradministrative proceedings for the recovery of the wages, attorneys fees whichexceed ten percent of the amount of wages recovered.

As to the last issue, Article 223 of the Labor Code is plain and clear that thedecision of the NLRC shall be final and executory after ten (10) calendar days fromreceipt thereof by the parties. In addition, Section 2(b), Rule VIII of the New Rules ofProcedure of the NLRC provides that should there be a motion for reconsiderationentertained pursuant to Section 14, Rule VII of these Rules, the decision shall beexecutory after ten calendar days from receipt of the resolution on such motion.

We find nothing inconsistent or contradictory between Article 223 of the LaborCode and Section 2(b), Rule VIII, of the NLRC Rules of Procedure. The aforecitedprovision of the NLRC Rules of Procedure merely provides for situations where amotion for reconsideration is filed. Since the Rules allow the filing of a motion forreconsideration of a decision of the NLRC, it simply follows that the ten-day period

provided under Article 223 of the Labor Code should be reckoned from the date ofreceipt by the parties of the resolution on such motion. In the case at bar, petitioners

received the resolution of the NLRC denying their motion for reconsideration onOctober 22, 1992. Hence, it is on November 2, 1992 that the questioned decisionbecame executory.

WHEREFORE, the petition is partially GRANTED. The decision of the NationalLabor Relations Commission dated July 2, 1992 is MODIFIED. Private respondentBenguet Electric Cooperative, Inc. (BENECO) is hereby ordered to reinstatepetitioners to their former or substantially equivalent position as regular employees,without loss of seniority rights and other privileges appurtenant thereto, with fullbackwages from the time of their dismissal until they are actually reinstated. Theamount of P2,590.50 awarded by the labor arbiter as indemnity to petitioners isREINSTATED. Private respondent is also ordered to pay attorneys fees in theamount of ten percent (10%) of the total monetary award due to the petitioners. In allother respects the assailed decision and resolution are AFFIRMED.

Costs against private respondent BENECO.SO ORDERED.Bellosillo, (Chairman), Mendoza, Quisumbing, andCallejo, Sr., JJ., concur.
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G.R. No. 158693JENNY M. AGABON and VIRGILIO C. AGABON vs. NATIONAL LABORRELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. andVICENTE ANGELES,

YNARES-SANTIAGO,J.:

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

Private respondent Riviera Home Improvements, Inc. is engaged in thebusiness of selling and installing ornamental and construction materials. It employedpetitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installerson January 2, 1992[2] until February 23, 1999 when they were dismissed forabandonment 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 thedismissals illegal and ordered private respondent to pay the monetary claims. Thedispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of thecomplainants illegal. Accordingly, respondent is hereby ordered to pay them theirbackwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.932. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month forevery year of service from date of hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay andservice 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 paydifferential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00)Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIXHUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, andONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT& 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation ofJulieta C. Nicolas, OIC, Research and Computation Unit, NCR.

SO ORDERED.[4]

On appeal, the NLRC reversed the Labor Arbiter because it found that thepetitioners had abandoned their work, and were not entitled to backwages andseparation 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 forcertiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was notillegal because they had abandoned their employment but ordered the payment ofmoney claims. The dispositive portion of the decision reads:

WHEREFORE, the decision of the National Labor Relations Commission isREVERSED only insofar as it dismissed petitioners money claims. Privaterespondents are ordered to pay petitioners holiday pay for four (4) regular holidays in1996, 1997, and 1998, as well as their service incentive leave pay for said years, andto pay the balance of petitioner Virgilio Agabons 13th month pay for 1998 in theamount of P2,150.00.

SO ORDERED.[6]

Hence, this petition for review on the sole issue of whether petitioners wereillegally dismissed.[7]

Petitioners assert that they were dismissed because the private respondent refusedto give them assignments unless they agreed to work on a pakyaw basis when theyreported for duty on February 23, 1999. They did not agree on this arrangementbecause it would mean losing benefits as Social Security System (SSS) members.

Petitioners also claim that private respondent did not comply with the twinrequirements of notice and hearing.[8]

Private respondent, on the other hand, maintained that petitioners were notdismissed but had abandoned their work.[9] In fact, private respondent sent twoletters to the last known addresses of the petitioners advising them to report for work.Private respondents manager even talked to petitioner Virgilio Agabon by telephonesometime in June 1999 to tell him about the new assignment at Pacific Plaza Towersinvolving 40,000 square meters of cornice installation work. However, petitioners didnot report for work because they had subcontracted to perform installation work foranother company. Petitioners also demanded for an increase in their wage toP280.00 per day. When this was not granted, petitioners stopped reporting for workand filed the illegal dismissal case.[10]

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC areaccorded not only respect but even finality if the findings are supported by substantialevidence. This is especially so when such findings were affirmed by the Court ofAppeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter areconflicting, as in this case, the reviewing court may delve into the records andexamine for itself the questioned findings.[12]

Accordingly, the Court of Appeals, after a careful review of the facts, ruled thatpetitioners dismissal was for a just cause. They had abandoned their employmentand were already working for another employer.

To dismiss an employee, the law requires not only the existence of a just andvalid 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 justcauses for termination by the employer: (a) serious misconduct or willful


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disobedience by the employee of the lawful orders of his employer or the lattersrepresentative in connection with the employees work; (b) gross and habitual neglectby the employee of his duties; (c) fraud or willful breach by the employee of the trustreposed in him by his employer or his duly authorized representative; (d) commissionof a crime or offense by the employee against the person of his employer or anyimmediate member of his family or his duly authorized representative; and (e) othercauses analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee toresume his employment.[14] It is a form of neglect of duty, hence, a just cause fortermination 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 absencewithout valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which ismanifested by overt acts from which it may be deduced that the employees has nomore intention to work. The intent to discontinue the employment must be shown byclear proof that it was deliberate and unjustified.[16]

In February 1999, petitioners were frequently absent having subcontracted foran installation work for another company. Subcontracting for another companyclearly showed the intention to sever the employer-employee relationship with privaterespondent. This was not the first time they did this. In January 1996, they did notreport 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 theiremployer-employee relationship. The record of an employee is a relevantconsideration in determining the penalty that should be meted out to him.[17]

In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberatelyabsented from work without leave or permission f rom his employer, for the purpose oflooking for a job elsewhere, is considered to have abandoned his job. We shouldapply that rule with more reason here where petitioners were absent because theywere already working in another company.

The law imposes many obligations on the employer such as providing justcompensation to workers, observance of the procedural requirements of notice and

hearing in the termination of employment. On the other hand, the law also recognizesthe 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 employermay not be compelled to continue to employ such persons whose continuance in theservice will patently be inimical to his interests.[20]

After establishing that the terminations were for a just and valid cause, we nowdetermine 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 ofemployment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282of the Code:

(a) A written notice served on the employee specifying the ground or grounds fortermination, and giving to said employee reasonable opportunity within which toexplain his side;

(b) A hearing or conference during which the employee concerned, with theassistance of counsel if the employee so desires, is given opportunity to respond tothe charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upondue consideration of all the circumstances, grounds have been established to justifyhis termination.

In case of termination, the foregoing notices shall be served on theemployeeslast known address.

Dismissals based on just causes contemplate acts or omissions attributable to theemployee while dismissals based on authorized causes involve grounds under theLabor Code which allow the employer to terminate employees. A termination for anauthorized cause requires payment of separation pay. When the termination ofemployment is declared illegal, reinstatement and full backwages are mandated

under Article 279. If reinstatement is no longer possible where the dismissal wasunjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, theemployer must give the employee two written notices and a hearing or opportunity tobe heard if requested by the employee before terminating the employment: a noticespecifying the grounds for which dismissal is sought a hearing or an opportunity to beheard 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, theemployer must give the employee and the Department of Labor and Employmentwritten 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 authorizedcause under Article 283, or for health reasons under Article 284, and due processwas observed; (2) the dismissal is without just or authorized cause but due processwas observed; (3) the dismissal is without just or authorized cause and there was nodue process; and (4) the dismissal is for just or authorized cause but due processwas not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will notsuffer any liability.

In the second and third situations where the dismissals are illegal, Article 279mandates that the employee is entitled to reinstatement without loss of seniority rightsand other privileges and full backwages, inclusive of allowances, and other benefits ortheir monetary equivalent computed from the time the compensation was not paid up

to the time of actual reinstatement.


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In the fourth situation, the dismissal should be upheld. While the proceduralinfirmity cannot be cured, it should not invalidate the dismissal. However, theemployer should be held liable for non-compliance with the procedural requirementsof due process.

The present case squarely falls under the fourth situation. The dismissal shouldbe upheld because it was established that the petitioners abandoned their jobs towork for another company. Private respondent, however, did not follow the noticerequirements and instead argued that sending notices to the last known addresseswould have been useless because they did not reside there anymore. Unfortunatelyfor the private respondent, this is not a valid excuse because the law mandates thetwin notice requirements to the employees last known address.[21] Thus, it shouldbe held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate andtimely to clarify the various rulings on employment termination in the light of Serranov. National Labor Relations Commission.[22]

Prior to 1989, the rule was that a dismissal or termination is illegal if theemployee was not given any notice. In the 1989 case of Wenphil Corp. v. NationalLabor Relations Commission,[23] we reversed this long-standing rule and held thatthe dismissed employee, although not given any notice and hearing, was not entitledto reinstatement and backwages because the dismissal was for grave misconduct

and insubordination, a just ground for termination under Article 282. The employeehad a violent temper and caused trouble during office hours, defying superiors whotried to pacify him. We concluded that reinstating the employee and awardingbackwages may encourage him to do even worse and will render a mockery of therules of discipline that employees are required to observe.[24] We further held that:

Under the circumstances, the dismissal of the private respondent for just causeshould 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 toprivate respondent his right to an investigation before causing his dismissal. The ruleis explicit as above discussed. The dismissal of an employee must be for just orauthorized 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 aformal notice and conduct an investigation as required by law before dismissingpetitioner from employment. Considering the circumstances of this case petitionermust indemnify the private respondent the amount of P1,000.00. The measure of thisaward depends on the facts of each case and the gravity of the omission committedby the employer.[25]

The rule thus evolved: where the employer had a valid reason to dismiss anemployee but did not follow the due process requirement, the dismissal may beupheld but the employer will be penalized to pay an indemnity to the employee. Thisbecame 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 thetermination. However, the dismissal is ineffectual and the employer must pay full

backwages from the time of termination until it is judicially declared that the dismissalwas for a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano was thesignificant number of cases involving dismissals without requisite notices. Weconcluded that the imposition of penalty by way of damages for violation of the noticerequirement was not serving as a deterrent. Hence, we now required payment of fullbackwages from the time of dismissal until the time the Court finds the dismissal wasfor a just or authorized cause.

Serrano was confronting the practice of employers to dismiss now and pay later byimposing full backwages.

We believe, however, that the ruling in Serrano did not consider the full meaning ofArticle 279 of the Labor Code which states:

ART. 279. Security of Tenure.In cases of regular employment, the employershall not terminate the services of an employee except for a just cause or whenauthorized by this Title. An employee who is unjustly dismissed from work shall beentitled to reinstatement without loss of seniority rights and other privileges and to hisfull backwages, inclusive of allowances, and to his other benefits or their monetaryequivalent computed from the time his compensation was withheld from him up to thetime of his actual reinstatement.

This means that the termination is illegal only if it is not for any of the justified orauthorized 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 elicitedstrong dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitutionembodies a system of rights based on moral principles so deeply imbedded in thetraditions and feelings of our people as to be deemed fundamental to a civilizedsociety 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 restrainton the legislative as well as on the executive and judicial powers of the governmentprovided 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 underthe Labor Code; and procedural, i.e., the manner of dismissal. Procedural dueprocess 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, RuleI, Sec. 2, as amended by Department Order Nos. 9 and 10.[27] Breaches of thesedue process requirements violate the Labor Code. Therefore statutory due processshould 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


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process found in the Labor Code and Implementing Rules protects employees frombeing unjustly terminated without just cause after notice and hearing.

In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for ajust and valid cause but the employee was not accorded due process. The dismissalwas upheld by the Court but the employer was sanctioned. The sanction should be inthe nature of indemnification or penalty, and depends on the facts of each case andthe gravity of the omission committed by the employer.

In Nath v. National Labor Relations Commission,[29] it was ruled that even if theemployee was not given due process, the failure did not operate to eradicate the justcauses for dismissal. The dismissal being for just cause, albeit without due process,did not entitle the employee to reinstatement, backwages, damages and attorneysfees.

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 properlyobserved by an employer, it would not be right to order either the reinstatement of thedismissed employee or the payment of backwages to him. In failing, however, tocomply 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 bemade liable, for the payment of separation pay. It might be pointed out that the noticeto be given and the hearing to be conducted generally constitute the two-part dueprocess requirement of law to be accorded to the employee by the employer.Nevertheless, peculiar circumstances might obtain in certain situations where toundertake 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, inlieu of separation pay, nominal damages to the employee. x x x.[31]

After carefully analyzing the consequences of the divergent doctrines in the law onemployment termination, we believe that in cases involving dismissals for cause butwithout observance of the twin requirements of notice and hearing, the better rule isto abandon the Serrano doctrine and to follow W enphil 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 wouldbe able to achieve a fair result by dispensing justice not just to employees, but toemployers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid orauthorized causes but not complying with statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violatorsof company policy are rewarded by invoking due process. This also creates absurdsituations where there is a just or authorized cause for dismissal but a proceduralinfirmity invalidates the termination. Let us take for example a case where theemployee 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 lossesdemand that operations be ceased in less than a month. Invalidating the dismissal

would not serve public interest. It could also discourage investments that cangenerate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a swordto oppress employers. The commitment of this Court to the cause of labor does notprevent 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 notactually performed and in fact abandoned.

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

It must be stressed that in the present case, the petitioners committed a graveoffense, i.e., abandonment, which, if the requirements of due process were compliedwith, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 shouldnot be protected by the Social Justice Clause of the Constitution. Social justice, asthe term suggests, should be used only to correct an injustice. As the eminent JusticeJose P. Laurel observed, social justice must be founded on the recognition of thenecessity 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 oursocial and economic life, consistent with the fundamental and paramount objective ofthe state of promoting the health, comfort, and quiet of all persons, and of bringingabout 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 inWenphil, Serrano and related cases. Social justice is not based on rigid formulas setin 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 hishovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor ofthe poor to whom the Constitution fittingly extends its sympathy and compassion. Butnever is it justified to give preference to the poor simply because they are poor, orreject the rich simply because they are rich, for justice must always be served for thepoor 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 bepresumed that every case of illegal dismissal would automatically be decided in favorof labor, as management has rights that should be fully respected and enforced bythis Court. As interdependent and indispensable partners in nation-building, laborand 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 andemployer.


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

Under the Civil Code, nominal damages is adjudicated in order that a right ofthe plaintiff, which has been violated or invaded by the defendant, may be vindicatedor recognized, and not for the purpose of indemnifying the plaintiff for any losssuffered by him.[37]

As enunciated by this Court in Viernes v. National Labor RelationsCommissions,[38] an employer is liable to pay indemnity in the form of nominaldamages to an employee who has been dismissed if, in effecting such dismissal, theemployer fails to comply with the requirements of due process. The Court, afterconsidering the circumstances therein, fixed the indemnity at P2,590.50, which wasequivalent to the employees one month salary. This indemnity is intended not topenalize the employer but to vindicate or recognize the employees right to statutorydue process which was violated by the employer.[39]

The violation of the petitioners right to statutory due process by the privaterespondent warrants the payment of indemnity in the form of nominal damages. Theamount of such damages is addressed to the sound discretion of the court, taking intoaccount the relevant circumstances.[40] Considering the prevailing circumstances inthe case at bar, we deem it proper to fix it at P30,000.00. We believe this form ofdamages would serve to deter employers from future violations of the statutory dueprocess rights of employees. At the very least, it provides a vindication or recognitionof this fundamental right granted to the latter under the Labor Code and itsImplementing Rules.

Private respondent claims that the Court of Appeals erred in holding that itfailed 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. Privaterespondent 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. Evenwhere the employee must allege non-payment, the general rule is that the burdenrests 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 documentswhich will show that overtime,differentials, service incentive leave and other claims of workers have been paidarenot 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 andservice incentive leave pay, it could have easily presented documentary proofs ofsuch monetary benefits to disprove the claims of the petitioners. But it did not, exceptwith respect to the 13th month pay wherein it presented cash vouchers showingpayments of the benefit in the years disputed.[42] Allegations by private respondentthat it does not operate during holidays and that it allows its employees 10 days leavewith pay, other than being self-serving, do not constitute proof of payment.Consequently, it failed to discharge the onus probandi thereby making it liable forsuch claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitionerVirgilio Agabons 13th month pay, we find the same to be unauthorized. The evidentintention of Presidential Decree No. 851 is to grant an additional income in the form ofthe 13th month pay to employees not already receiving the same[43] so as to furtherprotect 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 underArticle 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 orascertained on a time, task, piece , or commission basis, or other method ofcalculating the same, which is payable by an employer to an employee under awritten 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, asdetermined by the Secretary of Labor, of board, lodging, or other facilities customarilyfurnished by the employer to the employee

from which an employer is prohibited under Article 113[45] of the same Code frommaking any deductions without the employees knowledge and consent. In theinstant case, private respondent failed to show that the deduction of the SSS loan andthe value of the shoes f rom petitioner Virgilio Agabons 13th month pay wasauthorized by the latter. The lack of authority to deduct is further bolstered by the factthat petitioner Virgilio Agabon included the same as one of his money claims againstprivate 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 forfour regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentiveleave pay for the same period in the amount of P3,255.00 and the balance of VirgilioAgabons thirteenth month pay for 1998 in the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision ofthe Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding thatpetitioners Jenny and Virgilio Agabon abandoned their work,and ordering privaterespondent to pay each of the petitioners holiday pay for four regular holidays from1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the sameperiod in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenthmonth pay for 1998 in the amount of P2,150.00 is AFFIRMED with theMODIFICATION that private respondent Riviera Home Improvements, Inc. is furtherORDERED to pay each of the petitioners the amount of P30,000.00 as nominal

damages for non-compliance with statutory due process.


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SECOND DIVISION

[G.R. No. 93070. August 9, 1991.]

NORMAN DE VERA, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSIONand BANK OF THE PHILIPPINE ISLANDS, INC., Respondents.

Limqueco & Macaraeg Law Office for Petitioner.

Angara, Abello, Concepcion, Regala & Cruz for Private Respondent.

SYLLABUS

1. LABOR LAW; TERMINATION OF EMPLOYMENT; DISMISSAL; REQUIRESNOTICE AND HEARING. We have laid down in Ruffy v. NLRC, G.R. No. 84193,February 15, 1990, 182 SCRA 365, and in Tingson v. NLRC, G.R. No. 84702, May18, 1990, 185 SCRA 498, the procedure to be observed by an employer who seeks todismiss an employee. Once more, we quote the Labor Code: . . . HOWEVER, THEEMPLOYER SHALL FURNISH THE WORKER WHOSE EMPLOYMENT IS SOUGHTTO BE TERMINATED A WRITTEN NOTICE CONTAINING A STATEMENT OF THECAUSES FOR TERMINATION AND SHALL AFFORD THE LATTER AMPLE

OPPORTUNITY TO BE HEARD AND DEFEND HIMSELF WITH THE ASSISTANCEOF HIS REPRESENTATIVE IF HE SO DESIRES IN ACCORDANCE WITHCOMPANY RULES AND REGULATIONS PROMULGATED PURSUANT TOGUIDELINES SET BY THE MINISTRY OF LABOR AND EMPLOYMENT. . . .

2. ID.; ID.; ID.; ID.; NOTICE OF PREVENTIVE SUSPENSION; NOTCONSIDERED AN ADEQUATE NOTICE. The requirements of notice and hearingare recited anew in Sec. 13 of Batas Pambansa Bilang 130, an act amending certainprovisions of the Labor Code, as correctly pointed out by the petitioner. Definitely, theNotice of Preventive Suspension can not be considered adequate notice since theobjectives of the petitioners preventive suspension, as stated in the notice, weremerely to ascertain the extent of the loss to the bank, and to pinpoint responsibility ofthe parties involved, and not to apprise the petitioner of the causes of his desired

dismissal.3. ID.; ID.; ID.; ID.; INTERVIEW CONDUCTED FOR THE PURPOSE OFFILING CRIMINAL CASE AGAINST ANOTHER PERSON; NOT AN AMPLEOPPORTUNITY TO BE HEARD CONTEMPLATED BY LAW. The subsequentinterview is not the "ample opportunity to be heard" contemplated by law. Ampleopportunity to be heard is especially accorded to the employee sought to bedismissed after he is informed of the charges against him in order to give him anopportunity to refute the accusations levelled against him, and it certainly does notconsist of an inquiry conducted merely for the purpose of filing a criminal case againstanother person. Similarly, the respondents position that the petitioner, with hiseducation and position, should have realized, after going through some rigorousinterrogations, that he himself was being suspected and investigated for possiblecomplicity in the anomalies is unacceptable. The petitioner as an assistant cashier is

not expected to be proficient with the intricacies of law and procedure. He should notbe faulted if he relied on the statement of the private respondent that the investigation

was being conducted in connection with the criminal case filed against Martinez, andconsequently failed to realize that he himself was being suspected for possibleinvolvement in the fraud. In fact, the private respondent should be admonished forprovoking self-incriminating statements from the petitioner under the guise ofconducting an investigation for some other reason.

4. ID.; ID.; ID.; ID.; TWO KINDS OF NOTICE REQUIRED. This Court hasrepeatedly held that the employer is mandated to furnish the employee sought to bedismissed two notices, the written charge, and the notice of dismissal, if, afterhearing, dismissal is indeed warranted.

5. ID.; ID.; ID.; ID.; EMPLOYEES PRESENTATION OF THIS CASE ANDARGUMENT BEFORE NATIONAL LABOR RELATIONS COMMISSION; DOES NOTCURE THE DEFECTS IN DUE PROCESS. The respondents then claim that thealleged defects in due process were cured when the petitioner presented his caseand arguments before the NLRC. This is untenable. The case before the NLRC is thepetitioners complaint for illegal dismissal. At that time, he had already beenterminated. What the Labor Code sets forth is the procedure prior to dismissal. "Firethe employee, and let him explain later" is not in accord with the due process underthe law.

6. ID.; ID.; ID.; ID.; MANAGEMENTS DISCRETION TO DISCIPLINEEMPLOYEES; MUST BE SUBJECT TO THE REQUIREMENT OF DUE PROCESS.

We can not accept claims of "a wider latitude of discretion" of management in thediscipline of managerial employees. First, managements discretion is subject to therequirements of due process. Due process, as we held, is applicable to managerialemployees. In the absence thereof, any dismissal becomes unlawful andreinstatement plus backwages are warranted.

7. ID.; ID.; ID.; ID.; LOSS OF CONFIDENCE AS A GROUND; MUST BEESTABLISHED CLEARLY AND CONVINCINGLY. As we held, "loss ofconfidence," as a ground for dismissal, must rest on "some basis." Here, none hasbeen established, for the plain reason that the petitioner was never investigated orheard in his defense. It can not be said therefore that he is guilty to justifymanagements claim of loss of trust. To that extent, this case must be distinguishedfrom PLDT v. NLRC, G.R. No. 80609, August 23, 1988, 164 SCRA 671, where "theft"

was established clearly and convincingly and no question of due process wasinvolved.

D E C I S I O N

SARMIENTO, J.:

The twin requirements of notice and hearing are essential elements of due process incases of employee dismissal. Failure to satisfy these requisites has been recognizedto be fatal. This orthodoxy is not about to be abandoned yet.

The paramount question is whether or not the requirements of due process weresubstantially complied with in dismissing an employee, after an inquiry conducted for


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the purpose of filing a criminal case against another employee. The respondentscontend that it is sufficient. The petitioner holds otherwise.

The decision in question pertains to the National Labor Relations Commission(NLRC, for brevity), 1 promulgated on March 8, 1990, deleting the award ofseparation pay granted by the labor arbiter to the herein petitioner.

The material facts, as culled f rom the records of the case, are as follows:chanrob1esvirtual 1aw library

Petitioner Norman de Vera was an Assistant Cashier at the Taft Avenue Branch ofthe respondent Bank of the Philippine Islands (BPI, for brevity), when he was placedunder preventive suspension then subsequently dismissed. By then, he had servedthe respondent bank for a total of twenty five (25) years, more or less.

The petitioners predicament started on May 28, 1987, when the representatives ofASB Realty Corporation (ASB, for brevity) presented to the BPI Taft Avenue Branch aP10-million RCBC Managers Check payable to BPI for the time deposit account ofASB. The branch manager, Rebecca Dizon, asked the petitioner to present the checkto the drawee bank for special clearing, which the latter did. RCBC cleared the P10-million check and a Special Clearing Receipt was subsequently issued to thepetitioner, which receipt was in turn given to Branch Manager Dizon.

Meanwhile, Dizon and teller Myrna Apostol presented to the petitioner for the lattersinitials three (3) personal checks with a total amount of P1,650,000.00, all drawnagainst the account of one Daniel Martinez. The petitioner claims that since he is oneof the validating officers for the encashment of checks, as per bank procedurerequiring two (2) officers to approve transactions of P50,000.00 and above, and sincethe said checks had already been encashed under the orders of Dizon, his superior,he endorsed them. In short, the "transaction" was already fait accompli when thepetitioner entered the picture.

Afterwards, Dizon apparently made a mistake (or slipped) and handed to thepetitioner for his signature Time Certificate of Deposit (TCD, for brevity) No. 119762with a face value of P10 million. The petitioner asserts that "he got the shock of hislife, became tongue-tied and refused to affix his signature" after realizing that the said

TCD contained his forged signature.Later that day, Dizon entered ASBs check in the computer at the BPI RoxasBoulevard Branch (since the computers at the Taft Avenue Branch were out of order),not in ASBs account, but instead, in the account of Daniel Martinez.

On the following day, May 29, at around 10:00 oclock a.m., ASBs representativeinformed BPI Vice President Rogelio Nera that ASB had placed a P10-million timedeposit with BPIs Taft Avenue Branch. Vice-President Nera then called the Branch toverify the transaction. He talked to the petitioner who said that it was Dizon who hadfull knowledge of the transaction, but that Dizon had not yet reported for work at thattime. Vice-President Nera then requested for a return call from Dizon. The petitionerlater relayed the Vice-Presidents request to Dizon who allegedly ignored the same.

After office hours, petitioner de Vera, together with BPI Asst. Manager VirgilioVentura, informed BPI Asst. Vice President Gregorio Santayana of the forgedsignature on the TCD and i ts apparent irregular issuance.

On the 30th of May 1987, a non-working Saturday, a group composed of thepetitioner, Asst. Managers Virgilio Ventura and Abelardo Ortiz, and Ret. GeneralBueno, head of BPI Security, proceeded to the BPI Taft Avenue Branch andexamined its books. They discovered that the P10-million time deposit of ASB wasdiverted to the personal account of Martinez.

Several personal and cashiers checks drawn against the account of Martinez werethen intercepted and retrieved, and the remaining balance in his checking accountwas frozen. However, by then, around P3-million had already been withdrawn,although this was refuted by the petitioner who argued that since some three (3)checks amounting to P1.4-million had been "stopped payment", the actual amountwithdrawn was only P1,650,000.00, and not P3-mil lion as claimed by the respondentbank.

Pending further investigation, allegedly to ascertain the extent of the loss to the bank,and to pinpoint responsibility of the parties involved, the petitioner, on June 4, 1987,received a Notice of Preventive Suspension dated June 2, 1987.

On the following day, June 5, 1987, the petitioner was queried regarding the incident.

This was followed by an interview with the Criminal Investigation Service (CIS, forbrevity) on June 8, 1987, when the petitioner was summoned by Ret. General Buenoto give a statement in connection with the estafa case f iled by the respondent bankagainst Daniel Martinez.

The bank, in the course of its investigation, also uncovered a similar pattern ofoperation which had transpired earlier. On May 5, 1987, the NAFP Retirements andSeparation Benefit System (NAFP-RSBS, for brevity) issued a P4.7-million check infavor of the respondent bank in consideration of a P5-million TCD placement with theTaft Avenue Branch. The P4.7-million was the net of the front end discount of six percentum (6%) of the face value of the TCD granted by Dizon to NAFP-RSBS as anincentive for placing the money with the bank. However, it turned out that this wasneither deposited nor credited in the account of NAFP-RSBS, but instead in the

account of a certain Russel, Crame and Co., Inc. (Russel, for brevity) whoseauthorized signer is the same Daniel Martinez.

By the time the irregularity was discovered, four (4) checks, all payable to cash anddrawn against the account of Russel, had already been encashed at the Taft AvenueBranch, three of which were jointly approved by Dizon and the petitioner. Thereafter,eleven (11) other checks drawn against the account of Russel, four of which had anaggregate amount of P2,578,480.00, were discovered to have been approved forencashment by Dizon, together with the petitioner. It must, however, be noted thatnowhere in the records was there an indication that the petitioner was questionedregarding this anomaly involving the account of the NAFP-RSBS.

On August 3, 1987, the petitioner received a Notice of Termination dated July 10,1987, terminating his services on the ground of fraud or willful breach of trust and

setting forth therein the transgressions he had allegedly committed.


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Aggrieved, the petitioner, on August 6,1987, commenced this proceeding of filing acase with the NLRC. On December 7, 1988, Labor Arbiter Evangeline Lubatonrendered a decision on the sole basis of the pleadings presented and the evidenceattached thereto, the dispositive portion of which is quoted hereunder, asavoir:chanrob1es virtual 1aw library

WHEREFORE, premises considered, judgment is hereby rendered ordering the Bankof the Philippine Islands to pay Norman M. de Vera separation pay according to bankpolicy, or in the absence thereof, equivalent to one-half month pay for every year ofservice plus all other benefits, privileges and emoluments he may have been entitledto at the time of his termination from his employment.

The claims for moral and exemplary damages, attorneys fees and costs of suit arehereby dismissed for lack of merit.

SO ORDERED. 2

The respondent bank, not satisfied with the labor arbiters decision, interposed anappeal with the NLRC. The Second Division of the NLRC then promulgated aresolution on March 8, 1990; holding that the requirements of due process weresubstantially complied with and accordingly, deleted the award of separation pay. Thepetitioners subsequent motion for reconsideration was later denied by anotherresolution. 3 These resolutions are now assailed in this special civil action for

certiorari.

The petitioner basically contends that the respondent NLRC committed a grave abuseof discretion in holding that his dismissal had indicia of due process. He also claimsthat he is entitled to reinstatement or separation pay, plus full backwages and allother benefits, in either case. He stresses that while it is true that he was interviewedand later summoned by the CIS to give sworn statements in connection with theanomalous transaction, he was not aware that he was already being indicted andtried for an offense of which he was never informed. To support his contentions ondue process, the petitioner cited Sections 1 to 6 of Rule XIV, Book V of the OmnibusRules Implementing the Labor Code, 4 which lay down the procedure taken in casesof termination of employment.

On the other hand, the respondent bank posits that the Notice of PreventiveSuspension received by the petitioner was sufficient notice since the tenor of theletter itself should have already alerted the latter that the investigation then beingconducted was partly being done to determine the extent of the latters involvement inthe anomalies. Furthermore, it would have been unlikely for a person not suspectedof involvement in the anomalies to be suspended pending investigation. Precisely, thepe

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