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VOL.

442, NOVEMBER 17, 2004 573


Agabon vs. National Labor Relations Commission
*
G.R. No. 158693. November 17, 2004.

JENNY M. AGABON and VIRGILIO C. AGABON,


petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (NLRC), RIVIERA HOME
IMPROVEMENTS, INC. and VICENTE ANGELES,
respondents.

Labor Law; Administrative Law; If the factual findings of the


NLRC and the Labor Arbiter are conflicting, the reviewing court
may delve into the records and examine for itself the questioned
findings.·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. However, if the factual findings of the NLRC and the
Labor Arbiter are con-

_______________

* EN BANC.

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Agabon vs. National Labor Relations Commission

flicting, as in this case, the reviewing court may delve into the
records and examine for itself the questioned findings. Accordingly,
the Court of Appeals, after a careful review of the facts, ruled that
petitionersÊ dismissal was for a just cause. They had abandoned
their employment and were already working for another employer.
Same; Dismissal of Employees; 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.·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. 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 latterÊs representative in connection with the
employeeÊs 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.
Same; Same; Abandonment; Words and Phrases; Abandonment
is the deliberate and unjustified refusal of an employee to resume his
employment·it is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.·Abandonment is the
deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer. For a valid finding of
abandonment, these two factors should be present: (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.
Same; Same; Same; Moonlighting; Subcontracting for another
company clearly shows the intention to sever the employer-employee
relationship; The record of an employee is a relevant consideration
in

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determining the penalty that should be meted out to him.·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.
Same; Same; The employer may not be compelled to continue to
employ such persons whose continuance in the service will patently
be inimical to his interests.·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 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.
Same; Same; 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.·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.
Same; Same; Due Process; Notice Requirement; Procedurally,
(1) 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 if requested by the
employee

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before terminating the employment, 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;
Failure to observe due process in a dismissal for just or authorized
cause does not invalidate the dismissal but makes the employer
liable for non-compliance with the procedural requirements of due
process.·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.
Same; Same; Same; Same; The fact that the employee may not
be residing in the address indicated in the employerÊs records does
not excuse the employer from sending the notices to the employeeÊs
last known address.·The present case squarely falls under the
fourth

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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 employeeÊs last known address. Thus, it should
be held liable for non-compliance with the procedural requirements
of due process.
Same; Same; Same; Same; The Court believes that the ruling in
Serrano v. National Labor Relations Commission, 323 SCRA 445
(2000), did not consider the full meaning of Article 279 of the Labor
Code which provision means that the termination is illegal only if it
is not for any of the justified or authorized causes provided by law
and that 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 the Court to
revisit the doctrine.·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 reinstate-

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ment, 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.
Same; Same; Same; Constitutional Law; 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.·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. 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.
Same; Same; Same; Same; 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.
·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. 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.

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Same; Same; Same; The better rule is to abandon the Serrano


doctrine and to follow Wenphil v. National Labor Relations
Commission, 170 SCRA 69 (1989), by holding that the dismissal
was for just cause but imposing sanctions on the employer, which
sanctions, however, must be stiffer than that imposed in Wenphil.
·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.
Same; Same; Same; 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 it
from sustaining the employer when it is in the right.·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. 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.

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The law protecting the rights of the laborer authorizes neither


oppression nor self-destruction of the employer.
Same; Same; Social Justice; 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 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; Social justice is not based on rigid formulas set in
stone·it has to allow for changing times and circumstances.·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.‰ 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.
Same; Same; Due Process; The violation of an employeeÊs right
to statutory due process by the employer warrants the payment of
indemnity in the form of nominal damages, the amount of which is
addressed to the sound discretion of the court, taking into account
the relevant circumstances.·The violation of the petitionersÊ 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. 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.

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Same; Evidence; Payment; Burden of Proof; 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.·We affirm the ruling of the
appellate court on petitionersÊ money claims. Private respondent is
liable for petitionersÊ holiday pay, service incentive leave pay and
13th month pay without deductions. As a general rule, one who
pleads payment has the burden of proving it. Even where the
employee must allege non-payment, the general rule is that the
burden rests on the employer to prove payment, rather than on the
employee to prove non-payment. The reason for the rule is that the
pertinent personnel files, payrolls, records, remittances and other
similar documents·which will show that overtime, differentials,
service incentive leave and other claims of workers have been paid
·are not in the possession of the worker but in the custody and
absolute control of the employer.
Same; Wages; Thirteenth Month Pay; The 13th month pay is
included in the definition of wage under Article 97(f) of the Labor
Code from which the employer is prohibited under Article 113 from
making any deductions without the employeeÊs knowledge and
consent.·Anent the deduction of SSS loan and the value of the
shoes from petitioner Virgilio AgabonÊs 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 so as
„to further protect the level of real wages from the ravages of world-
wide inflation.‰ 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 of the same Code from making any deductions
without the em-

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Agabon vs. National Labor Relations Commission

ployeeÊs 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 AgabonÊs 13th month
pay was authorized by the latter. The lack of authority to deduct is
further bolstered by the fact that petitioner Virgilio Agabon
included the same as one of his money claims against private
respondent.

PUNO, J., Dissenting Opinion:

Labor Law; Dismissal of Employees; Due Process; I respectfully


dissent and maintain my view that the workingmanÊs right to job
security and due process of law cannot be measured with a reduced
price tag.·While I appreciate the view of Mme. Justice Ynares-
Santiago that „[t]he indemnity to be imposed should be stiffer in
order to discourage the abhorrent practice of Âdismiss now, pay
later,Ê ‰ the majority, however, simply retained, if not diminished,
the indemnity granted to the dismissed employees. Consequently, I
respectfully dissent and maintain my view that the workingmanÊs
right to job security and due process of law cannot be measured
with a reduced price tag. The majority opinion treats an employeeÊs
right to due process as no more than an abstract declaration. I am
unwilling to diminish petitionersÊ constitutional right to procedural
due process which is necessary to protect their security of tenure.
Same; Same; Same; Social Justice; Words and Phrases;
Constitution is an ode to social justice; Social justice is that virtue by
which individuals and groups fulfill their obligations to human
society by contributing positively to the complete well-being of their
fellowmen considered as members of society, and hence regulate all
their actions accordingly.·Our Constitution is an ode to social
justice. The Court should give due obeisance to this ode for social
justice is not a mere euphony of words. In other countries, political
debates over the last two centuries continue to rage on whether
social rights should be given constitutional protection. In our
jurisdiction, however, constitutional social rights have long been
embedded in all our Constitutions, and thus at the very least should
be respected and protected by our courts. Social justice is that
virtue by which individuals and groups fulfill their obligations to
human society by contributing positively to the complete well-being
of their fellowmen considered as members of that society, and hence
regulate all their actions accordingly. Social justice as a creed in the
1935 Constitution was crafted by Delegate Jose C. Locsin. He
persistently pounced on the necessity

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of including social justice in the Constitution to protect those who


have little in life.
Same; Same; Same; Same; Substantive rights are not to be
weakened by a diminished procedural right, for in weakening the
procedure, we weaken the substantive right.·Courts at all times
should give meaning and substance to constitutional postulates in
favor of the workingman. The 1987 Constitution is fraught with
provisions protecting the workingman, e.g., Secs. 9, 10 and 18, Art.
II, and Sec. 3, Art. XIII, a legacy of the evolution of rights. These
constitutional creeds should not be dwarfed by deeds. A contrary
posture would convert these creeds as „meaningless constitutional
patter.‰ The principle of social justice was not embedded in the
fundamental law for demogoguery. It was meant to be a vital,
articulate, compelling principle of public policy. Social justice should
be a living reality and not a mere high level abstraction. Thus,
while the Constitution must be read as a whole, even if we do not
invoke its Due Process Clause, the coherent application of the
separate constitutional creeds on social justice and labor is enough
to uphold the workersÊ constitutional right to work and their
consequent right to job security. These substantive rights are not to
be weakened by a diminished procedural right. For in weakening the
procedure, we weaken the substantive right. The importance of the
procedure to protect the exercise of the right to work Cannot be
overemphasized.
Same; Same; Same; Same; Social justice in these cases is not
equality but protection.·The constitution puts the employee on
equal footing with his employer. As between an employee, usually
poor and unlettered, and the employer, who has resources to secure
able legal advice, the law has reason to demand from the latter
stricter compliance. For, social justice in these cases is not equality
but protection. As Mr. Chief Justice Fernando stressed in Victorias
Milling Co., Inc. v. WorkmenÊs Compensation Commission·To
repeat, courts should ever be on the alert lest through inadvertence
or faulty analysis the expected opposition from management be
appraised much more favorably than warranted. The unfortunate
result would be that both the social justice concept and the
complementary constitutional command of protection to labor would
be disregarded and set at naught. There is no higher duty cast on
the judiciary than to guard against such an undesirable possibility,
fraught as it is with consequences truly to be deplored.

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Agabon vs. National Labor Relations Commission

Same; Same; Same; The Supreme Court has long extended


constitutional due process in labor cases involving private action.
·This Court has long extended constitutional due process in labor
cases involving private action. Prior to Wenphil, the rule etched in
stone is that an employer can validly dismiss an erring employee
only after giving him notice and hearing. Thus, decades ago, this
Court in Batangas Laguna Tayabas Bus Co. v. Court of Appeals
ruled that „the failure of petitioner to give the private respondent
the benefit of a hearing before he was dismissed constitutes an
infringement on his constitutional right to due process of law.‰ In De
Leon v. National Labor Relations Commission where an employee
was dismissed without notice, it was held that „[t]here is in this
case a clear denial of due process, a constitutional right which must
be safeguarded at all times especially when what is at stake is
petitionerÊs position as his only means of livelihood.‰ In Reyes v.
Philippine Duplicators, Inc., where petitioner Reyes was dismissed
from the service in 1977 without any investigation or hearing, this
Court found that the dismissal was arbitrary as Reyes was denied
due process. Hence, even the non-compliance with Sections 2 and 3,
Rule XIV, Book V of the Implementing Rules and Regulations of the
Labor Code pursuant to the amendments of P.D. No. 850 which was
issued in 1975, requiring a prior clearance from the Department of
Labor to terminate the services of an employee, rendered the
termination illegal and nullified the dismissal of the employee.
Same; Same; Same; The posture that the constitutional due
process requirement limits government action alone and does not
apply to private action is already passé·modern notions of
violations of due process which may fairly be attributed to the State
have expanded considerably in recent decades.·The posture that
the constitutional due process requirement limits government
action alone and does not apply to private action is already passé.
Thus, even in the United States, the application of due process to
private conduct has gained approval and has become a settled
norm. For, as expressed by Professor Laurence H. Tribe, a noted
constitutionalist·But particularly where ostensibly „private‰ power
is the primary source of the coercion and violence that oppressed
individuals and groups experience, it is hard to accept with
equanimity a rigid legal distinction between state and society. The
pervasive system of racial apartheid which existed in the South for
a century after the Civil War, for example, thrived only because of
the resonance of society and politics

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. . . the close fit between private terror, public discrimination, and


political exclusion. So too, where it is the stateÊs persistent inaction
in the face of patterns of deprivation for which the state and society
seem to many to bear collective responsibility, the premise that only
identifiable state „action‰ may be called constitutional account is
deeply troubling. Accordingly, modern notions of violations of due
process which may fairly be attributed to the State have expanded
considerably in recent decades. Seemingly private conducts have
arguably been treated as adequate state actions. Individual
invasions of individual rights in certain instances have become
proper subjects of constitutional restraints. In fine, as Mr. Justice
Felix Frankfurter put it in Joint Anti-Fascist Refugee Committee v.
McGrath, „ Â[d]ue process,Ê unlike some legal rules, is not a technical
conception with a fixed content unrelated to time, place, and
circumstances x x x. Due process is not a mechanical instrument. It
is not a yardstick. It is a delicate process of adjustment inescapably
involving the exercise of judgment by those whom the Constitution
entrusted with the unfolding of the process.‰ Beyond argument, the
Constitution was designed to embody and celebrate values and to
inculcate proper acceptance of them, as much as to compel
governments to abide by them.
Same; Same; Same; An employee who is denied procedural due
process is entitled to reinstatement, nothing less.·An employee who
is denied procedural due process is entitled to reinstatement.
Nothing less. This Court, in carrying out the constitutional directive
of the 1973 Constitution requiring the State to „assure the rights of
workers to x x x security of tenure x x x‰ has quite consistently
nullified, simply on constitutional grounds, dismissals in violation
of procedural due process, notwithstanding the absence of an
express provision of any statute. The Court has done the same
under the 1987 Constitution which admittedly has given more
protection to labor than any of our previous charters·through a
four-paragraph section in the Article on Social Justice and Human
Rights which details the protective mantle accorded to labor alone.
Thus, Art. XIII, Sec. 3 of the 1987 Constitution decrees that „[t]he
State shall afford full protection to labor x x x and promote full
employment x x x (All workers) shall be entitled to security of tenure
x x x‰ Art. XII, Sec. 18 of the 1987 Constitution mandates that „[t]he
State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.‰ All told,
this Court for almost three

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Agabon vs. National Labor Relations Commission

decades has set aside, on constitutional grounds, dismissals in


violation of procedural due process·until Wenphil came along, with
the interests of the employer tailing and suddenly enjoying
preference. To uphold Wenphil, Serrano, and now Agabon, is to
dilute the protection to those who need it most despite the
constitutional mandate which in the language of Mr. Justice
Cardozo speaks with „a reverberating clang that drowns all weaker
sounds.‰ With due respect, the grant of indemnity to the dismissed
employee „as both penalty and disincentive‰ as the majority
provides in the instant case does not square with the protection
accorded by the Constitution to labor. There is only one main relief
in cases of dismissal without notice and hearing·reinstatement.
Same; Same; Same; Compliance with procedural due process is
not a burden on employers.·Compliance with procedural due
process is not a burden on employers. There is no valid reason why
employers should have any difficulty according procedural due
process to their employees. The rules are fairly simple.
Same; Same; Same; Dismissal without due process debases
human dignity.·Verily, dismissal without due process debases
human dignity. It is, therefore, incumbent upon the employer to
conduct a formal investigation and inform the employee of the
specific charges against him. Most certainly, the resolution of
extreme cases, e.g., where the employee threatens the life of the
employer, are the exceptions rather than the ordinary and usual
cases. As such, rules governing them should not be used as the
general rule. Rather, employers should be reminded that under our
system of government, even the most hardened criminals are given
their day in court. Employees are not entitled to anything less.
Same; Same; Same; Security of Tenure; In the hierarchy of
rights of an employee, the right to security of tenure is high, if not the
highest.·In the hierarchy of rights of an employee, the right to
security of tenure is high, if not the highest. Its paramount value is
recognized and guaranteed under our new Constitution.
Consequently, the first paragraph of Article XIII, Section 3 of the
1987 Constitution, extends the protective mantle of the
Constitution to all of labor including the promotion of full
employment. The second paragraph specifies the guaranteed right
to security of tenure. All other rights, e.g., the right to collective
bargaining and negotiations,
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the right to peaceful concerted activities, the right to strike and


form unions, and the right to due process, merely complement the
right to job security. All these complementary rights are meaningless
to an unemployed Juan De la Cruz.
Same; Same; Same; Same; Workers need work more than
anything else·work is a defining feature of human existence.
·Workers need work more than anything else. For a wageworker, a
job is important. While there is work, there is food on the table.
Take away work, replace it with a meager lump sum, and the food
will disappear. Through work, the breadwinner satisfies his basic
needs and those of his family. He also provides himself with a
means to express himself, transform, develop and perfect his skills
and talents. Through work, he interacts and establishes relations
with others. Work is a defining feature of human existence. It is the
means of sustaining life and meeting essential needs. It is also an
activity through which individuals affirm their own identity, both to
themselves and to those around them. It is crucial to individual
choice, to the welfare of families and to the stability of societies.
Every man has the right to work, to a chance to develop his
qualities and his personality in the exercise of his profession, to
equitable remuneration which will enable him and his family to
lead a worthy life on material, social, cultural and spiritual level.
Shylock said it well: „You take my life when you do take the means
whereby I live.‰
Same; Same; Same; Same; To simply allow payment of nominal
damages for violation of employeeÊs right to due process is to give
undue advantage to employers·the right to security of tenure and
due process is beyond monetary valuation.·To simply allow
payment of nominal damages for violation of employeeÊs right to due
process is to give undue advantage to employers. One does not need
to have a stratospheric mind to know that the Constitution gave
greater rights to employees over their employers. The intent is to
equalize the fight of the underprivileged against the overprivileged.
We cannot allow the employers to marginalize the right of the
workingman to due process for a few pesos without mocking the
protection accorded by the Constitution to the powerless. The
deprivation of the right to security of tenure and due process is
beyond monetary valuation.In fine, to lengthen the longevity of
Serrano is to sharpen the dangerous divide between the haves and
have-nots in our society. But Agabon is not merely extending
Serrano. Agabon is far worse than Serrano.

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Same; Same; Same; Same; In these times when our lowly


workers can hardly maintain body and soul together due to their
meager means, I find it hard to believe that the majority in Wenphil,
in Serrano, and now in the instant case Agabon, persists in
weakening our employeeÊs right to job security.·In these times when
our lowly workers can hardly maintain body and soul together due
to their meager means, I find it hard to believe that the majority in
Wenphil, in Serrano, and now in the instant case Agabon, persists
in weakening our employeeÊs right to job security. The stance simply
offends a basic principle of justice so entrenched in our tradition
and etched in our conscience. An employee may not have a Torrens
title to his job but it is not too much to require that before he is
dismissed by his employer, he should be given a simple notice of the
cause of his dismissal and a summary hearing to present his side.
All our constitutional and statutory precepts on social justice and
the protection of labor will go to naught if we perpetuate our ruling
that a dismissal without the required prior notice is valid and if we
just penalize with the payment of pennies violations of the
employeeÊs right to due process. Without doubt, Wenphil and
Serrano have lengthened the queue of the unemployed. Agabon will
stretch it out even more.
Same; Same; Same; Same; The Supreme Court should protect
labor and it should walk the talk.·In the case at bar, where
petitioners Jenny Agabon and Virgilio Agabon were dismissed from
the service for abandonment of work without the due process
requirements of two (2) notices and hearing, I submit that the
dismissals should be nullified and set aside, and petitioners
immediately reinstated without loss of seniority rights and other
privileges. This Court should protect labor and it should walk the
talk.

PANGANIBAN, J., Separate Dissenting Opinion:


Labor Law; Dismissal of Employees; Due Process; I respectfully
submit that nothing has transpired in the past four and half years
since Serrano was issued, that justifies further diminution of
whatever constitutional rights to due process and security of tenure
our workers still enjoy.·With due respect, I strongly oppose the
CourtÊs inexplicable turnaround. This ruling is a setback on laborÊs
rights. Thus, I reiterate my Dissent in Serrano, in that case, I was
grateful enough that the Court had decided to reexamine and
modify the ten-year Wenphil doctrine. In the process, it had at least
increased the monetary award that should go to the dismissed
employee·from a

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nominal sum in the concept of „indemnity or damages‰ to „full back


wages.‰ I respectfully submit that nothing has transpired in the
past four and a half years since Serrano was issued, that justifies
further diminution of whatever constitutional rights to due process
and security of tenure our workers still enjoy. On the contrary,
nothing is more evident than the inescapable fact that their
empowerment makes them better partners in the countryÊs
development and global competence. Any further trampling of their
rights is undeserved.
Same; Same; Same; When an employee is dismissed without due
process, the legal effect is an illegal dismissal, and the appropriate
sanction is full back wages plus reinstatement, not merely full back
wages (or separation pay), much less merely „indemnity of one
month salary for every year of service.‰·As explained in my
Dissenting Opinion in Serrano, the notice requirement finds basis
not only in the Labor Code but, more important, in the due process
clause of the Constitution. Consequently, when an employee is
dismissed without due process, the legal effect is an illegal
dismissal; and the appropriate sanction is full back wages plus
reinstatement,not merely full back wages (or separation pay), much
less merely „indemnity of one month salary for every year of
service.‰ It is jurisprudential settled that when procedural due
process is violated, the proceedings·in this case, the dismissal·
shall be voided, and the parties returned to their status quo ante;
that is, the employees should be given back their old jobs and paid
all benefits as if they have never been dismissed. In ruling that the
dismissal should be deemed legal, the majority has virtually
rendered nugatory the employeesÊ right to due process as mandated
by law and the Constitution. It has implicitly allowed the employer
simply to ignore such right and just pay the employee. I respectfully
submit that illegal dismissal results not only from the absence of a
legal cause, in accordance with Articles 282 to 284 of the Labor
Code, but likewise from the failure to observe due process. There
are many labor and other cases in which acts violative of due
process have unequivocally been declared illegal by the Court. They
range from similar cases of employment termination to criminal
prosecutions to administrative cases and election cases as well. I
made a summary of these Decisions in my aforesaid Serrano
Opinion, which I shall no longer repeat here.
Same; Same; Same; Constitutional Law; The traditional
doctrine that constitutional rights may be invoked only against the
State

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should be modified to enable the judiciary to cope with new


paradigms and to continue protecting the people from new forms of
abuses.·True, traditional doctrine holds that constitutional rights
may be invoked only against the State, which in the past was the
only entity in a position to violate these rights, including the due
process clause. However, with the advent of liberalization,
deregulation and privatization, the State tended to cede some of its
powers to the „market forces.‰ Hence, corporate behemoths and
even individuals may now be sources of abuses and threats to
human rights and liberties. I believe, therefore, that this traditional
doctrine should be modified to enable the judiciary to cope with new
paradigms and to continue protecting the people from new forms of
abuses.

TINGA, J., Separate Opinion:

Labor Law; Dismissal of Employees; Due Process; The


importance of sending the notice of termination should not be
trivialized·the termination letter serves as indubitable proof of loss
of employment, and its receipt compels the employee to evaluate his
or next options.·The importance of sending the notice of
termination should not be trivialized. The termination letter serves
as indubitable proof of loss of employment, and its receipt compels
the employee to evaluate his or her next options. Without such
notice, the employee may be left uncertain of his fate; thus, its
service is mandated by the Implementing Rules. Non-compliance
with the notice rule, as evident in this case, contravenes the
Implementing Rules. But does the violation serve to invalidate the
AgabonsÊ dismissal for just cause?
Same; Same; Same; The Court, prior to the enactment of the
Labor Code, was ill-receptive to the notion that termination for just
cause without notice or hearing violated the constitutional right to
due process.·Clearly, the Court, prior to the enactment of the
Labor Code, was ill-receptive to the notion that termination for just
cause without notice or hearing violated the constitutional right to
due process. Nonetheless, the Court recognized an award of
damages as the appropriate remedy. In Galsim v. PNB, the Court
held: Of course, the employerÊs prerogative to dismiss employees
hired without a definite period may be with or without cause. But if
the manner in which such right is exercised is abusive, the
employer stands to answer to the dismissed employee for damages.

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Same; Same; Same; The Labor Code, in its inception, did not
require notice or hearing before an employer could terminate an
employee for just cause.·The Termination Pay Law was among the
repealed laws with the enactment of the Labor Code in 1974.
Significantly, the Labor Code, in its inception, did not require notice
or hearing before an employer could terminate an employee for just
cause. As Justice Mendoza explained: Where the termination of
employment was for a just cause, no notice was required to be given
to the employee. It was only on September 4, 1981 that notice was
required to be given even where the dismissal or termination of an
employee was for cause. This was made in the rules issued by the
then Minister of Labor and Employment to implement B.P. Blg. 130
which amended the Labor Code. And it was still much later when
the notice requirement was embodied in the law with the
amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989.
Same; Same; Same; It cannot be denied though that the
thinking that absence of notice or hearing prior to termination
constituted a constitutional violation has gained a jurisprudential
foothold with the Court.·It cannot be denied though that the
thinking that absence of notice or hearing prior to termination
constituted a constitutional violation has gained a jurisprudential
foothold with the Court. Justice Puno, in his Dissenting Opinion,
cites several cases in support of this theory, beginning with
Batangas Laguna Tayabas Bus Co. v. Court of Appeals wherein we
held that „the failure of petitioner to give the private respondent
the benefit of a hearing before he was dismissed constitutes an
infringement on his constitutional right to due process of law.‰ Still,
this theory has been refuted, pellucidly and effectively to my mind,
by Justice MendozaÊs disquisition in Serrano.
Constitutional Law; Legal Philosophy; Judicial Legislation;
Theories, no matter how entrancing, remain theoretical unless
adopted by legislation, or more controversially, by judicial opinion.
·Justice Puno characterizes the notion that constitutional due
process limits government action alone as „passé,‰ and adverts to
nouvelle vague theories which assert that private conduct may be
restrained by constitutional due process. His dissent alludes to the
American experience making references to the post-Civil War/pre-
World War II era when the US Supreme Court seemed overly
solicitous to the rights of big business over those of the workers.
Theories, no matter

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how entrancing, remain theoretical unless adopted by legislation, or


more controversially, by judicial opinion. There were a few decisions
of the US Supreme Court that, ostensibly, imposed on private
persons the values of the constitutional guarantees. However, in
deciding the cases, the American High Court found it necessary to
link the actors to adequate elements of the „State‰ since the
Fourteenth Amendment plainly begins with the words „No State
shall . . .‰ More crucially to the American experience, it had become
necessary to pass legislation in order to compel private persons to
observe constitutional values. While the equal protection clause was
deemed sufficient by the Warren Court to bar racial segregation in
public facilities, it necessitated enactment of the Civil Rights Acts of
1964 to prohibit segregation as enforced by private persons within
their property. In this jurisdiction, I have trust in the statutory
regime that governs the correction of private wrongs. There are
thousands of statutes, some penal or regulatory in nature, that are
the source of actionable claims against private persons. There is
even no stopping the State, through the legislative cauldron, from
compelling private individuals, under pain of legal sanction, into
observing the norms ordained in the Bill of Rights.
Same; Same; Same; The strained analogy between the State and
a private employer does not square since the attributes of an
employer are starkly incongruous with those of the State·employers
plainly do not possess the awesome powers and the tremendous
resources which the State has at its command.·Justice
PanganibanÊs Separate Opinion asserts that corporate behemoths
and even individuals may now be sources of abuses and threats to
human rights and liberties. The concern is not unfounded, but
appropriate remedies exist within our statutes, and so resort to the
constitutional trump card is not necessary. Even if we were to
engage the premise, the proper juristic exercise should be to
examine whether an employer has taken the attributes of the State
so that it could be compelled by the Constitution to observe the
proscriptions of the Bill of Rights. But the strained analogy simply
does not square since the attributes of an employer are starkly
incongruous with those of the State. Employers plainly do not
possess the awesome powers and the tremendous resources which
the State has at its command. The differences between the State
and employers are not merely literal, but extend to their very
essences. Unlike the State, the raison dÊetre of employers in
business is to accumulate profits. Perhaps the State

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and the employer are similarly capacitated to inflict injury or


discomfort on persons under their control, but the same power is
also possessed by a school principal, hospital administrator, or a
religious leader, among many others. Indeed, the scope and reach of
authority of an employer pales in comparison with that of the State.
There is no basis to conclude that an employer, or even the
employer class, may be deemed a de facto state and on that premise,
compelled to observe the Bill of Rights. There is simply no nexus in
their functions, distaff as they are, that renders it necessary to
accord the same jurisprudential treatment.
Same; Same; Same; The remedy to rightward judicial bias is
not leftward judicial bias·the more proper judicial attitude is to
give due respect to legislative prerogatives, regardless of the
ideological sauce they are dipped in.·It may be so, as alluded in the
dissent of Justice Puno, that a conservative court system overly
solicitous to the concerns of business may consciously gut away at
rights or privileges owing to the labor sector. This certainly
happened before in the United States in the early part of the
twentieth century, when the progressive labor legislation such as
that enacted during President RooseveltÊs New Deal regime·most
of them addressing problems of labor·were struck down by an
arch-conservative Court. The preferred rationale then was to
enshrine within the constitutional order business prerogatives,
rendering them superior to the express legislative intent. Curiously,
following its judicial philosophy at the time the U.S. Supreme Court
made due process guarantee towards employers prevail over the
police power to defeat the cause of labor. Of course, this Court
should not be insensate to the means and methods by which the
entrenched powerful class may maneuver the sociopolitical system
to ensure self-preservation. However, the remedy to rightward
judicial bias is not leftward judicial bias. The more proper judicial
attitude is to give due respect to legislative prerogatives, regardless
of the ideological sauce they are dipped in.
Same; Same; Same; While the Bill of Rights maintains a
position of primacy in the constitutional hierarchy, it has scope and
limitations that must be respected and asserted by the Court, even
though they may at times serve somewhat bitter ends.·While the
Bill of Rights maintains a position of primacy in the constitutional
hierarchy, it has scope and limitations that must be respected and
asserted by the Court, even though they may at times serve
somewhat

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bitter ends. The dissenting opinions are palpably distressed at the


effect of the Decision, which will undoubtedly provoke those
reflexively sympathetic to the labor class. But haphazard legal
theory cannot be used to justify the obverse result. The adoption of
the dissenting views would give rise to all sorts of absurd
constitutional claims. An excommunicated Catholic might demand
his/her reinstatement into the good graces of the Church and into
communion on the ground that excommunication was violative of
the constitutional right to due process. A celebrity contracted to
endorse Pepsi Cola might sue in court to void a stipulation that
prevents him/her from singing the praises of Coca Cola once in a
while, on the ground that such stipulation violates the
constitutional right to free speech. An employee might sue to
prevent the employer from reading outgoing e-mail sent through
the company server using the company e-mail address, on the
ground that the constitutional right to privacy of communication
would be breached.
Same; Same; Same; We must avoid overarching declarations in
order to justify an end result beneficial to labor.·The above
concerns do not in anyway serve to trivialize the interests of labor.
But we must avoid overarching declarations in order to justify an
end result beneficial to labor. I dread the doctrinal acceptance of the
notion that the Bill of Rights, on its own, affords protection and
sanctuary not just from the acts of State but also from the conduct
of private persons. Natural and juridical persons would hesitate to
interact for fear that a misstep could lead to their being charged in
court as a constitutional violator. Private institutions that thrive on
their exclusivity, such as churches or cliquish groups, could be
forced to renege on their traditional tenets, including vows of
secrecy and the like, if deemed by the Court as inconsistent with
the Bill of Rights. Indeed, that fundamental right of all private
persons to be let alone would be forever diminished because of a
questionable notion that contravenes with centuries of political
thought.
Same; Same; Same; It is not difficult to be enraptured by novel
legal ideas·their characterization is susceptible to the same
marketing traps that hook consumers to new products; Before we
join the mad rush in order to proclaim a theory as „brilliant,‰ a
rigorous test must first be employed to determine whether it
complements or contradicts our own system of laws and juristic
thought; Just as patriotism is the last refuge of scoundrels, the broad
constitutional claim

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that the Bill of Rights may be invoked to invalidate actions by


private entities against private individuals is the final resort of the
desperate litigant.·It is not difficult to be enraptured by novel legal
ideas. Their characterization is susceptible to the same marketing
traps that hook consumers to new products. With the help of unique
wrapping, a catchy label, and testimonials from professed experts
from exotic lands, a malodorous idea may gain wide acceptance,
even among those self-possessed with their own heightened senses
of perception. Yet before we join the mad rush in order to proclaim a
theory as „brilliant,‰ a rigorous test must first be employed to
determine whether it complements or contradicts our own system of
laws and juristic thought. Without such analysis, we run the risk of
abnegating the doctrines we have fostered for decades and the
protections they may have implanted into our way of life. Should
the Court adopt the view that the Bill of Rights may be invoked to
invalidate actions by private entities against private individuals,
the Court would open the floodgates to, and the docket would be
swamped with, litigations of the scurrilous sort. Just as patriotism
is the last refuge of scoundrels, the broad constitutional claim is the
final resort of the desperate litigant.
Same; Labor Law; Due Process; It was only after the enactment
of the Labor Code that the doctrine relied upon by the dissenting
opinions became en vogue.·It is quite apparent that the
constitutional protection of labor was entrenched more than eight
decades ago, yet such did not prevent this Court in the past from
affirming dismissals for just cause without valid notice. Nor was
there any pretense made that this constitutional maxim afforded a
laborer a positive right against dismissal for just cause on the
ground of lack of valid prior notice. As demonstrated earlier, it was
only after the enactment of the Labor Code that the doctrine relied
upon by the dissenting opinions became en vogue. This point
highlights my position that the violation of the notice requirement
has statutory moorings, not constitutional.
Same; Same; Same; Without specific and pertinent legislation,
judicial bodies will be at a loss, formulating their own conclusion to
approximate at least the aims of the Constitution·ultimately,
therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right to stave off the dismissal of an employee for
just cause owing to the failure to serve proper notice or hearing.·
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Thus, the constitutional mandates of protection to labor and


security of tenure may be deemed as self-executing in the sense that
these are automatically acknowledged and observed without need
for any enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the full exercise
of the rights embodied therein, and the realization of ideals therein
expressed, would be impractical, if not unrealistic. The espousal of
such view presents the dangerous tendency of being overbroad and
exaggerated. The guarantees of „full protection to labor‰ and
„security of tenure,‰ when examined in isolation, are facially
unqualified, and the broadest interpretation possible suggests a
blanket shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment·a utopian notion,
doubtless·but still hardly within the contemplation of the framers.
Subsequent legislation is still needed to define the parameters of
these guaranteed rights to ensure the protection and promotion, not
only the rights of the labor sector, but of the employersÊ as well.
Without specific and pertinent legislation, judicial bodies will be at
a loss, formulating their own conclusion to approximate at least the
aims of the Constitution. Ultimately, therefore, Section 3 of Article
XIII cannot, on its own, be a source of a positive enforceable right to
stave off the dismissal of an employee for just cause owing to the
failure to serve proper notice or hearing. As manifested by several
framers of the 1987 Constitution, the provisions on social justice
require legislative enactments for their enforceability.
Same; Same; Same; The CourtÊs reference to laws other than the
Constitution in resolving the issue of dismissal is an implicit
acknowledgment that the right to security of tenure, while recognized
in the Constitution, cannot be implemented uniformly absent a law
prescribing concrete standards for its enforcement.·The necessity
for laws concretizing the constitutional principles on the protection
of labor is evident in the reliance placed upon such laws by the
Court in resolving the issue of the validity of a workerÊs dismissal.
In cases where that was the issue confronting the Court, it
consistently recognized the constitutional right to security of tenure
and employed the standards laid down by prevailing laws in
determining whether such right was violated. The CourtÊs reference
to laws other than the Constitution in resolving the issue of
dismissal is an implicit acknowledgment that the right to security
of tenure, while recognized

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in the Constitution, cannot be implemented uniformly absent a law


prescribing concrete standards for its enforcement. As discussed
earlier, the validity of an employeeÊs dismissal in previous cases was
examined by the Court in accordance with the standards laid down
by Congress in the Termination Pay Law, and subsequently, the
Labor Code and the amendments thereto. At present, the validity of
an employeeÊs dismissal is weighed against the standards laid down
in Article 279, as well as Article 282 in relation to Article 277(b) of
the Labor Code, for a dismissal for just cause, and Article 283 for a
dismissal for an authorized cause.
Labor Law; Dismissal of Employees; Due Process; The
circumstances distinguishing just and authorized causes are too
markedly different to be subjected to the same rules and reasoning in
interpretation.·Before I proceed with my discussion on dismissals
for just causes, a brief comment regarding dismissals for authorized
cause under Article 283 of the Labor Code. While the justiciable
question in Serrano pertained to a dismissal for unauthorized
cause, the ruling therein was crafted as definitive to dismissals for
just cause. Happily, the Decision today does not adopt the same
unwise tack. It should be recognized that dismissals for just cause
and dismissals for authorized cause are governed by different
provisions, entail divergent requisites, and animated by distinct
rationales. The language of Article 283 expressly effects the
termination for authorized cause to the service of written notice on
the workers and the Ministry of Labor at least one (1) month before
the intended date of termination. This constitutes an eminent
difference than dismissals for just cause, wherein the causal
relation between the notice and the dismissal is not expressly
stipulated. The circumstances distinguishing just and authorized
causes are too markedly different to be subjected to the same rules
and reasoning in interpretation.
Same; Same; Same; There is no express provision in the Labor
Code that voids a dismissal for just cause on the ground that there
was no notice or hearing·based on reading Section 279 alone, the
existence of just cause by itself is sufficient to validate the
termination.·There is no express provision in the Labor Code that
voids a dismissal for just cause on the ground that there was no
notice or hearing. Under Section 279, the employer is precluded
from dismissing an employee except for a just cause as provided in
Section 282, or an authorized cause under Sections 283 and 284.
Based on reading

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Section 279 alone, the existence of just cause by itself is sufficient to


validate the termination.
Same; Same; Same; Reinstatement; The remedy of
reinstatement despite termination for just cause is simply not
authorized by the Labor Code.·The failure to substantially comply
with the standards of due process, including the notice and hearing
requirement, may give rise to an actionable claim against the
employer. Under Article 288, penalties may arise from violations of
any provision of the Labor Code. The Secretary of Labor likewise
enjoys broad powers to inquire into existing relations between
employers and employees. Systematic violations by management of
the statutory right to due process would fall under the broad grant
of power to the Secretary of Labor to investigate under Article 273.
However, the remedy of reinstatement despite termination for just
cause is simply not authorized by the Labor Code. Neither the
Labor Code nor its implementing rules states that a termination for
just cause is voided because the requirement of notice and hearing
was not observed. This is not simply an inadvertent semantic
failure, but a conscious effort to protect the prerogatives of the
employer to dismiss an employee for just cause. Notably, despite the
several pronouncements by this Court in the past equating the
notice-hearing requirement in labor cases to a constitutional
maxim, neither the legislature nor the executive has adopted the
same tack, even gutting the protection to provide that substantial
compliance with due process suffices. The Labor Code significantly
eroded management prerogatives in the hiring and firing of
employees. Whereas employees could be dismissed even without
just cause under the Termination Pay Law, the Labor Code affords
workers broad security of tenure. Still, the law recognizes the right
of the employer to terminate for just cause. The just causes
enumerated under the Labor Code·serious misconduct or willful
disobedience, gross and habitual neglect, fraud or willful breach of
trust, commission of a crime by the employee against the employer,
and other analogous causes·are characterized by the harmful
behavior of an employee against the business or the person of the
employer. These just causes for termination are not negated by the
absence of notice or hearing. An employee who tries to kill the
employer cannot be magically absolved of trespasses just because
the employer forgot to serve due notice. Or a less extreme example,
the gross and habitual neglect of an employee will not be improved
upon

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just because the employer failed to conduct a hearing prior to


termination.
Same; Same; Same; The Labor Code presents no textually
demonstrable commitment to invalidate a dismissal for just cause
due to the absence of notice or hearing.·The Labor Code presents
no textually demonstrable commitment to invalidate a dismissal for
just cause due to the absence of notice or hearing. This is not
surprising, as such remedy will not restore the employer or
employee into equity. Absent a showing of integral causation, the
mutual infliction of wrongs does not negate either injury, but
instead enforces two independent rights of relief.
Same; Same; Separation Pay; Supreme Court; Equity
Jurisdiction; The award of separation pay as a measure of social
justice has no statutory basis, but clearly emanates from the CourtÊs
so-called „equity jurisdiction.‰·The award of separation pay as a
measure of social justice has no statutory basis, but clearly
emanates from the CourtÊs so-called „equity jurisdiction.‰ The
CourtÊs equity jurisdiction as a basis for award, no matter what
form it may take, is likewise unwarranted in this case. Easy resort
to equity should be avoided, as it should yield to positive rules
which pre-empt and prevail over such persuasions. Abstract as the
concept is, it does not admit to definite and objective standards.
Same; Same; Social Justice; Social justice should be the
aspiration of all that we do, yet I think it the more mature attitude to
consider that it ebbs and flows within our statutes, rather than view
it as an independent source of funding.·I consider the
pronouncement regarding the proper monetary awards in such
cases as Wenphil Corp. v. NLRC, Reta, and to a degree, even
Serrano as premised in part on equity. This decision is premised in
part due to the absence of cited statutory basis for these awards. In
these cases, the Court deemed an indemnity award proper without
exactly saying where in statute could such award be derived at.
Perhaps, equity or social justice can be invoked as basis for the
award. However, this sort of arbitrariness, indeterminacy and
judicial usurpation of legislative prerogatives is precisely the source
of my discontent. Social justice should be the aspiration of all that
we do, yet I think it the more mature attitude to consider that it
ebbs and flows within our statutes, rather than view it as an
independent source of funding.

600

600 SUPREME COURT REPORTS ANNOTATED

Agabon vs. National Labor Relations Commission

Same; Criminal Law; Under Art. 288 of the Labor Code, which
is a penal provision, the penalty should be paid to the State, and not
to the person or persons who may have suffered injury as a result of
the violation; Art. 288 clearly serves as a punitive fine, rather than a
compensatory measure·nothing in its language indicates an
intention to compensate or remunerate a private person for injury he
may have sustained.·It is apparent that Article 288 is a penal
provision; hence, the prescription for penalties such as fine and
imprisonment. The Article is also explicit that the imposition of fine
or imprisonment is at the „discretion of the court.‰ Thus, the
proceedings under the provision is penal in character. The criminal
case has to be instituted before the proper courts, and the Labor
Code violation subject thereof duly proven in an adversarial
proceeding. Hence, Article 288 cannot apply in this case and serve
as basis to impose a penalty on Riviera Homes. I also maintain that
under Article 288 the penalty should be paid to the State, and not to
the person or persons who may have suffered injury as a result of
the violation. A penalty is a sum of money which the law requires to
be paid by way of punishment for doing some act which is
prohibited or for not doing some act which is required to be done. A
penalty should be distinguished from damages which is the
pecuniary compensation or indemnity to a person who has suffered
loss, detriment, or injury, whether to his person, property, or rights,
on account of the unlawful act or omission or negligence of another.
Article 288 clearly serves as a punitive fine, rather than a
compensatory measure, since the provision penalizes an act that
violates the Labor Code even if such act does not cause actual injury
to any private person. Independent of the employeeÊs interests
protected by the Labor Code is the interest of the State in seeing to
it that its regulatory laws are complied with. Article 288 is intended
to satiate the latter interest. Nothing in the language of Article 288
indicates an intention to compensate or remunerate a private
person for injury he may have sustained.
Same; Damages; The proper legal basis for holding the employer
liable for monetary damages to the employee dismissed for just cause
is the Civil Code.·As earlier stated, Wenphil allowed the payment
of indemnity to the employee dismissed for just cause is dependent
on the facts of each case and the gravity of the omission committed
by the employer. However, I considered Wenphil flawed insofar as it
is silent as to the statutory basis for the indemnity award. This
failure, to my mind, renders it unwise for to reinstate

601

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Agabon vs. National Labor Relations Commission

the Wenphil rule, and foster the impression that it is the judicial
business to invent awards for damages without clear statutory
basis. The proper legal basis for holding the employer liable for
monetary damages to the employee dismissed for just cause is the
Civil Code. The award of damages should be measured against the
loss or injury suffered by the employee by reason of the employerÊs
violation or, in case of nominal damages, the right vindicated by the
award. This is the proper paradigm authorized by our law, and
designed to obtain the fairest possible relief.
Same; Same; The damages referred under Section 217(4) of the
Labor Code are those available under the Civil Code, it being the
law that regulates the private relations of the members of civil
society, determining their respective rights and obligations with
reference to persons, things, and civil acts.·The damages referred
under Section 217(4) of the Labor Code are those available under
the Civil Code. It is but proper that the Civil Code serve as the
basis for the indemnity, it being the law that regulates the private
relations of the members of civil society, determining their
respective rights and obligations with reference to persons, things,
and civil acts. No matter how impressed with the public interest the
relationship between a private employer and employee is, it still is
ultimately a relationship between private individuals. Notably, even
though the Labor Code could very well have provided set rules for
damages arising from the employer-employee relationship, referral
was instead made to the concept of damages as enumerated and
defined under the Civil Code.

PETITION for review on certiorari of a decision of the


Court of Appeals.

The facts are stated in the opinion of the Court.


Public AttorneyÊs Office for petitioners.
Nestor P. Ricolcol for private respondents.

602

602 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

YNARES-SANTIAGO, J.:
1
This petition for review seeks to reverse the decision 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 2
board and cornice installers on January 2, 1992 until
February 23, 1999 when they were dismissed for
abandonment of work.
Petitioners then filed a complaint
3
for illegal dismissal
and payment of money claims 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 AgabonÊs 13th month pay differential amounting to

_______________

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.

603

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Agabon vs. National Labor Relations Commission

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.
4
SO ORDERED.Ê ‰

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 5by the Labor Arbiter were
also denied for lack of evidence.
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 petitionerÊs
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 AgabonÊs 13th month pay for 1998
in the amount of P2,150.00.
6
„SO ORDERED.‰

Hence, this petition for review on the


7
sole issue of whether
petitioners were illegally dismissed.

_______________

4 Id., p. 92.
5 Id., p. 131.
6 Id., p. 173.
7 Id., p. 20.

604

604 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

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
8
comply with the twin
requirements of notice and hearing.
Private respondent, on the other hand, maintained that
petitioners
9
were not dismissed but had abandoned their
work. In fact, private respondent sent two letters to the
last known addresses of the petitioners advising them to
report for work. Private respondentÊs 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 stopped10
reporting
for work and filed the illegal dismissal case.
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 when11
such findings were
affirmed by the Court of Appeals. However, if the factual
findings of the NLRC and the Labor Arbiter are conflicting,
as in this case,

_______________

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.

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Agabon vs. National Labor Relations Commission

the reviewing court may delve into the 12


records and
examine for itself the questioned findings.
Accordingly, the Court of Appeals, after a careful review
of the facts, ruled that petitionersÊ 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
13
the opportunity to be heard
and to defend himself. 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
latterÊs representative in connection with the employeeÊs
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
14
refusal of
an employee to resume his employment. It is a form of
neglect of duty, hence, a just15cause for termination of
employment by the employer. 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,

_______________

12 Tres Reyes v. MaximÊs 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. National Labor Relations
Commission, 417 Phil. 81, 100; 364 SCRA 606, 622 (2001).
15 De Paul/King Philip Customs Tailor v. National Labor Relations
Commission, 364 Phil. 91, 102; 304 SCRA 448, 458 (1999).

606

606 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

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 16shown by clear proof
that it was deliberate and unjustified.
In February 1999, petitioners were frequently absent
having subcontracted for an installation work for another
company. Subcontracting for another company clearly
showed the intention to sever the employer-employee
relationship with private respondent. This was not the first
time they did this. In January 1996, they did not report for
work because they were working for another company.
Private respondent at that time warned petitioners that
they would be dismissed if this happened again. Petitioners
disregarded the warning and exhibited a clear intention to
sever their employer-employee relationship. The record of
an employee is a relevant consideration 17
in determining the
penalty that should be meted out to him.
18
In Sandoval Shipyard v. Clave, we held that an
employee who deliberately absented from work without
leave or permission from his employer, for the purpose of
looking for a job elsewhere, is considered to have
abandoned his job. We should apply that rule with more
reason here where petitioners were absent because they
were already working in another company.
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

_______________

16 Sta. Catalina College v. National Labor Relations Commission, G.R.


No. 144483, 19 November 2003, 416 SCRA 233.
17 Cosmos Bottling Corporation v. National Labor Relations
Commission, 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.

607

VOL. 442, NOVEMBER 17, 2004 607


Agabon vs. National Labor Relations Commission

only good performance,


19
adequate work and diligence, but
also good conduct and loyalty. The employer may not be
compelled to continue to employ such persons whose
continuance20
in the service will patently be inimical to his
interests.
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 employeeÊs last known address.

_______________

19 Judy Philippines, Inc. v. National Labor Relations Commission, 352


Phil. 593, 606; 289 SCRA 755, 766 (1998).
20 Philippine-Singapore Transport Services, Inc. v. National Labor
Relations Commission, 343 Phil. 284, 291; 277 SCRA 506, 512 (1997).

608

608 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

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

609

VOL. 442, NOVEMBER 17, 2004 609


Agabon vs. National Labor Relations Commission

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 21
notice requirements to the employeeÊs last known address.
Thus, it should be held liable for noncompliance 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 22
light of Serrano
v. National Labor Relations Commission.
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 23
of Wenphil Corp. v. National Labor
Relations Commis-sion, 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

_______________

21 See Stolt-Nielsen Marine Services, Inc. v. National Labor Relations


Commission, 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.

610

610 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

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 the24rules of discipline that employees
are required to observe.‰ 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
25
gravity of the omission committed by the employer.

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

_______________

24 Id., at p. 76.
25 Id.

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VOL. 442, NOVEMBER 17, 2004 611


Agabon vs. National Labor Relations Commission

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
civi-

612

612 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

lized society as conceived by our entire history. Due process


is that which comports 26with the deepest notions of what is
fair and right and just. 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, Rule27I, Sec. 2, as amended by Department Order
Nos. 9 and 10. 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. 28
In Sebuguero v. National Labor Relations Commission,
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

_______________

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.

613

VOL. 442, NOVEMBER 17, 2004 613


Agabon vs. National Labor Relations Commission

depends on the facts of each case and the gravity of the


omission committed by the employer. 29
In Nath v. National Labor Relations Commission, 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 attorneyÊs fees.
Mr. Justice Jose C. Vitug, in his separate opinion in
MGG Marine30 Services, Inc. v. National Labor Relations
Commission, 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
31
separation pay, nominal damages to the employee. x x x.

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

_______________

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).

614

614 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

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
32
the employer when it is in the
right, as in this case. 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 la-

_______________

32 Capili v. National Labor Relations Commission, G.R. No. 117378, 26


March 1997, 270 SCRA 488, 495.

615

VOL. 442, NOVEMBER 17, 2004 615


Agabon vs. National Labor Relations Commission

borer authorizes
33
neither oppression nor self-destruction of
the employer.
It must be stressed that in the present case, the
petitioners committed a grave offense, i.e., abandonment,
which, if the requirements of due process were complied
with, would undoubtedly result in a valid dismissal.
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 of34 bringing about „the greatest good to the
greatest number.‰
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

_______________

33Filipro, Inc. v. National Labor Relations Commission, G.R. No. L-


70546, 16 October 1986, 145 SCRA 123.
34 Calalang v. Williams, 70 Phil. 726, 735 (1940).

616

616 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

justice must always be served for the poor and the rich alike,
35
according to the mandate of the law.

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, as36 ruled in Reta v.
National Labor Relations Commission. 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 purpose37 of indemnifying the
plaintiff for any loss suffered by him.

_______________

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.

617

VOL. 442, NOVEMBER 17, 2004 617


Agabon vs. National Labor Relations Commission

As enunciated by this Court


38
in Viernes v. National Labor
Relations Commission, 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 employeeÊs one month salary. This
indemnity is intended not to penalize the employer but to
vindicate or recognize the employeeÊs right to
39
statutory due
process which was violated by the employer.
The violation of the petitionersÊ 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 40
court, taking into account the relevant circumstances.
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.

_______________

38 G.R. No. 108405, April 4, 2003, 400 SCRA 557 citing Kwikway
Engineering Works v. National Labor Relations Commission, G.R. No.
85014, 22 March 1991, 195 SCRA 526, 532; Aurelio v. National Labor
Relations Commission, G.R. No. 99034, 12 April 1993, 221 SCRA 432,
443; and Sampaguita Garments Corporation v. National Labor Relations
Commission, G.R. No. 102406, 17 June 1994, 233 SCRA 260, 265.
39 Id., citing Better Buildings, Inc. v. National Labor Relations
Commission, G.R. No. 109714, 15 December 1997, 283 SCRA 242, 251;
Iran v. National Labor Relations Commission, G.R. No. 121927, 22 April
1998, 289 SCRA 433, 442.
40 Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003, 405
SCRA 416.

618

618 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

Private respondent claims that the Court of Appeals erred


in holding that it failed to pay petitionersÊ holiday pay,
service incentive leave pay and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on
petitionersÊ money claims. Private respondent is liable for
petitionersÊ holiday pay, service incentive leave pay and
13th month pay without deductions.
As a general rule, one who pleads payment has the
burden of proving it. Even where the employee must allege
non-payment, the general rule is that the burden rests on
the employer to prove payment, rather than on the
employee to prove non-payment. The reason for the rule is
that the pertinent personnel files, payrolls, records,
remittances and other similar documents·which will show
that overtime, differentials, service incentive leave and
other claims of workers have been paid·are not in the
possession of the worker 41
but in the custody and absolute
control of the employer.
In the case at bar, if private respondent indeed paid
petitionersÊ 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 42
showing payments of
the benefit in the years disputed. Allegations by private
respondent that it does not operate during holidays and
that it allows its employees 10 days leave with pay, other
than being self-serving, do not constitute proof of payment.
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 AgabonÊs 13th month pay, we
find the

_______________

41 Villar v. National Labor Relations Commission, G.R. No. 130935, 11


May 2000, 331 SCRA 686.
42 Rollo, pp. 60-71.

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Agabon vs. National Labor Relations Commission

same to be unauthorized. The evident intention of


Presidential Decree No. 851 is to grant an additional
income in the form of the 13th
43
month pay to employees not
already receiving the same so as „to further protect the
level of 44real wages from the ravages of world-wide
inflation.‰ 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 . . .‰
45
from which an employer is prohibited under Article 113 of
the same Code from making any deductions without the
employeeÊs knowledge and consent. In the instant case,
private

_______________

43 UST Faculty Union v. National Labor Relations Commission, G.R.


No. 90445, 2 October 1990, 190 SCRA 215.
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.

620

620 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

respondent failed to show that the deduction of the SSS


loanand the value of the shoes from petitioner Virgilio
AgabonÊs13th month pay was authorized by the latter. The
lack ofauthority to deduct is further bolstered by the fact
that petitioner Virgilio Agabon included the same as one of
his moneyclaims 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
AgabonÊs 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 AgabonÊs 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.

Quisumbing, Carpio, Carpio-Morales, Callejo, Sr.


and Azcuna, JJ., concur.
Davide, Jr. (C.J.), I join Mr. Justice Puno in his
dissenting opinion.
Puno, J., See Dissenting Opinion.

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Agabon vs. National Labor Relations Commission

Panganiban, J., See Dissenting Opinion.


Sandoval-Gutierrez, J., I join Justice Puno in his
Dissent.
Austria-Martinez, J., I join in the separate opinion
of Justice Tinga.
Corona, J., On Leave.
Tinga, J., In the result, per separate opinion.
Chico-Nazario, J., I concur in J. PunoÊs dissenting
opinion.
Garcia, J., I join J. PunoÊs dissenting opinion.

DISSENTING OPINION

PUNO, J.:

„Strike if you will, but hear me first!‰ was adjuration of


Themistocles, c. 528-462 B.C., Athenian General and
Statesman, to Eurybiades, Admiral of the Spartan fleet,
who,1 in an argument, raised his staff as though to strike
him. It was the same plea, centuries later, of petitioner-
employees Jenny M. Agabon and Virgilio C. Agabon to their
employer who fired them from their jobs without hearing
them first.
In the last two decades, this Court has wrestled with
due process issues in dismissal cases. In February 1989,
Wenphil Corporation
2
v. National Labor Relations
Commission put an abrupt end to the longstanding
doctrine nullifying the dismissal of an employee even if
based on a just or authorized cause, if done without prior
notice to the employee. Wenphil upheld the dismissal of a
crew of a fast food chain for just cause even if it was
effected without the requisite notice. And in compensation
for the deprivation of his prior right to notice and
investigation before dismissal, he was given a measly sum

_______________

1 Plutarch, Lives: Themistocles, Ch. 3, Sec. 11.


2 G.R. No. 80587, February 8, 1989, 170 SCRA 69.

622

622 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

of P1,000.00. Since then, lowly employees have been cut-off


from their bloodline·their jobs·without due process of
law.
A decade later, we re-examined Wenphil
3
in Serrano v.
National Labor Relations Commission but the struggle of
our employees for job security turned from bad to worse. In
Serrano, the majority held that „the employerÊs failure to
comply with the notice requirement does not constitute a
denial of due process but a mere failure to observe a
procedure for the termination of employment which4makes
the termination of employment merely ineffectual.‰ Thus,
the dismissal without prior notice was further legalized
and the dismissed employee was simply awarded some
crumbs·backwages from the time his employment was
terminated until it was determined that the termination
was for an authorized cause. I dissented and voted for the
return of the pre-Wenphil rule to stop the pernicious
practice of dismissals without prior notice.
After four years of the Serrano rule, I see no reason to
relent from my Dissenting Opinion as the situation has
even turned from worse to worst. Agabon is doing away
with the crumbs and is leaving the employee with no more
than a tiny bit of grain. As such, I feel the strong urgency
to right away revert to the pre-Wenphil era to rectify a
grave error and atone for the wanton, albeit now licensed,
violation of the pre-dismissal notice requirement
committed by employers with twisted ethos.
There are enduring reasons for resisting Wenphil, its
clone Serrano, and now their offspring Agabon. As I said in
Serrano·

Our ten (10) years experience with Wenphil is not a happy one.
Unscrupulous employers have abused the Wenphil ruling. They
have dismissed without notice employees including those who are
not as eminently undesirable as the Wenphil employee. They
dismissed

_______________

3 G.R. No. 117040, January 27, 2000, 323 SCRA 445.


4 Id., p. 472.

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Agabon vs. National Labor Relations Commission

employees without notice as a general rule when it should be the


exception. The purpose of the pre-dismissal notice requirement was
entirely defeated by employers who were just too willing to pay an
indemnity for its violation. The result, as the majority concedes, is
that the indemnity we imposed has not been effective to prevent
unjust dismissals of employees. To be sure, this is even a supreme
understatement. The ugly truth is that Wenphil is the mother of
many unjust and unauthorized dismissals of employees who are too
weak to challenge their powerful employers.
As the Wenphil indemnity doctrine has proved to be highly
inimical to the interest of our employees, I humbly submit a return
to the pre-Wenphil rule where a reasonless violation of the pre-
dismissal notice requirement makes the dismissal of an employee
illegal and results in his reinstatement. In fine, we should strike
down as illegal the dismissal of an employee even if it is for a
justified end if it is done thru unjustified means for we cannot be
disciples of the Machiavellian doctrine of the end justifies the
means. With due respect, the majority decision comes too near this
mischievous doctrine by giving emphasis on the end and not on the
means of dismissal of employees. What grates is that the majority
today espouses a doctrine more pernicious than Wenphil for now it
announces that a violation of the pre-dismissal notice requirement
does not even concern due process. The reasons relied upon by the
majority for this new ruling against the job security of employees
cannot inspire assent.
xxx xxx xxx
The new ruling of the majority erodes the sanctity of the most
important right of an employee, his constitutional right to security
of tenure. This right will never be respected by the employer if we
merely honor the right with a price tag. The policy of „dismiss now
and pay later‰ favors [moneyed] employers and is a mockery of the
right of employees to social justice. There is no way to justify this
pro-employer stance when the 1987 Constitution is undeniably
more pro-employee than our previous fundamental laws. Section 18
of Article 11 (State Policies) provides that „the State affirms labor
as a primary social economic force. It shall protect the rights of
workers and promote their welfare.‰ Section 1, Article XIII (Social
Justice and Human Rights), calls for the reduction of economic
inequalities. Section 3, Article XIII (Labor) directs the State to
accord full protection to labor and to guaranty security of tenure.
These are constitu-

624

624 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

tional polestars and not mere works of cosmetology. Our odes to the
poor will be meaningless mouthfuls if we cannot protect the
employeeÊs right to due process against the power of the peso of the
employers.
To an employee, a job is everything. Its loss involves terrible
repercussions·stoppage of the schooling of children, ejectment
from leased premises, hunger to the family, a life without any safety
net. Indeed, to many employees, dismissal is their lethal injection.
Mere payment of money by way of separation pay and backwages
will not secure food on the mouths of employees who do not even
5
have the right to choose what they will chew.

The instant case is a perfect portrait of this reversal of


fortune. On January 2, 1992, petitioners Jenny Agabon and
Virgilio Agabon were hired as gypsum board and cornice
installers by respondent Riviera Home Improvements, Inc.,
a corporation engaged in the business of selling and
installing ornamental and construction materials. Seven
(7) years later, on February 23, 1999, their services were
terminated on the ground of abandonment of work.
Apparently, petitioners were subcontracting installation
jobs for another company and were frequently absent from
work. Thus, when petitioners reported for work on
February 23, 1999, respondent company simply refused to
reemploy them unless they agree to work on a „pakyaw‰
basis. Petitioners demurred since this would mean losing
their benefits. They were given their walking papers
without according them the twin requirements of notice
and hearing. Respondent company stated that they
abandoned their jobs. Hence, petitioners filed a complaint
for illegal dismissal and payment of money claims against
respondent company.
On December 28, 1999, the Labor Arbiter held that the
dismissal of petitioners was illegal and ordered respondent
company to pay them backwages, holiday and service
incentive leave pay, and separation pay in lieu of
reinstatement. On appeal, the NLRC reversed the decision
of the Labor Arbi-

_______________

5 Id., pp. 499-500; 523-524.

625

VOL. 442, NOVEMBER 17, 2004 625


Agabon vs. National Labor Relations Commission

ter and ruled that the latter erred in awarding backwages


and separation pay to petitioners who deliberately
abandoned their work. On certiorari, the Court of Appeals
affirmed the findings of the NLRC but ordered respondent
company to pay petitioners their money claims. Hence, this
petition for review on the lone issue of whether petitioners
were illegally dismissed from the service.
While I appreciate the view of Mme. Justice Ynares-
Santiago that „[t]he indemnity to be imposed should be
stiffer in order to discourage
6
the abhorrent practice of
Âdismiss now, pay later,Ê ‰ the majority, however, simply
retained, if not diminished, the indemnity granted to the
dismissed employees. Consequently, I respectfully dissent
and maintain my view that the workingmanÊs right to job
security and due process of law cannot be measured with a
reduced price tag. The majority opinion treats an
employeeÊs right to due process as no more than an abstract
declaration. I am unwilling to diminish petitionersÊ
constitutional right to procedural due process which is
necessary to protect their security of tenure. I proffer the
following precepts:
One. Our Constitution is an ode to social justice. The
Court should give due obeisance to this ode for social
justice is not a mere euphony of words. In other countries,
political debates over the last two centuries continue to
rage on whether
7
social rights should be given constitutional
protection. In our jurisdiction, however, constitutional
social rights have long been embedded in all our
Constitutions, and thus at the very least should be
respected and protected by our courts.
Social justice is that virtue by which individuals and
groups fulfill their obligations to human society by
contributing positively to the complete well-being of their
fellowmen considered as members of that society, and
hence regulate all

_______________

6 Ponencia, 15.
7 See Fabre, C., Social Rights Under the Constitution. Government and
the Decent Life. Oxford University Press, 2000.

626
626 SUPREME COURT REPORTS ANNOTATED
Agabon vs. National Labor Relations Commission
8
their actions accordingly. Social justice as a creed in the
1935 Constitution was crafted by Delegate Jose C. Locsin.
He persistently pounced on the necessity of including social
justice in the Constitution to protect those who have little
in life. In the course of the debates, the core concept of
social justice was developed to mean·

x x x justice to the common tao, the „little man‰ so-called. It means


justice to him, his wife, and children in relation to their employers
in the factories, in the farms, in the mines, and in other
employments. It means justice to him in the education of his
children in the schools, in his dealings with the different offices of
9
the government, including the courts of justice.

1935 Constitution

Thus, Article II (Declaration of Principles), Section 5 of the


1935 Constitution, provides that „[t]he promotion of social
justice to insure the well-being and economic security of all
the people should be the concern of the State.‰ Mr. Justice
Jose Laurel, in his concurring opinion in the 10
main case of
Ang Tibay v. Court of Industrial Relations, explained the
constitutional milestone·

Our Constitution was adopted in the midst of surging unrest and


dissatisfaction resulting from economic and social distress which
was threatening the stability of governments the world over. Alive
to the social and economic forces at work, the framers of our
Constitution boldly met the problems and difficulties which faced
them and endeavored to crystallize, with more or less fidelity, the
political, social and economic propositions of their age x x x (by
inserting) general provisions in the Constitution which are intended
to bring about the needed social and economic equilibrium between
compo-

_______________

8 Rerum Novarum (On the Condition of the Working Classes). Encyclical of


His Holiness Pope Leo XIII on Capital and Labor issued on May 15, 1891.
9 I J. Aruego, The Framing of the Philippine Constitution 147 (1936).
10 L-46496, May 29, 1939, 7 LawyerÊs Journal 487.
627

VOL. 442, NOVEMBER 17, 2004 627


Agabon vs. National Labor Relations Commission

nent elements of society through the application of what may be


termed as the justitia communis advocated by Grotius and Leibinitz
many years ago to be secured through the counterbalancing of
economic and social forces and opportunities which should be
regulated, if not controlled by the State or placed, as it were, in
custodia societatis. „The promotion of social justice to insure the
well-being and economic security of all the people‰ was thus
11
inserted as a vital principle in our Constitution.

And, as quoted in the 1940 case of Antamok Goldfields 12


Mining Company v. Court of Industrial Relations, this
Court held that in order that the declaration of the
principle of social justice „may not just be an empty medley
of words, the Constitution in various sections13thereof has
provided the means towards its realization.‰ Thus, the
promotion of the welfare of the working classes was
concretized in Article XIII (General Provisions), Section 6,
which mandates that „[t]he State shall afford protection to
labor, especially to working women and minors, and shall
regulate the relations x x x between labor and capital in
industry and in agriculture. The State may provide for
compulsory arbitration.‰
Delegate Locsin even exerted a last-ditch effort to
amend the draft of the constitutional provision on labor to
read in part, „[t]he State recognizes the right of all workers
to work and shall enact laws protecting labor.‰ In defense of
his substitute amendment, Delegate Locsin in a stirring
speech dwelt on the necessity of paying more attention to
the needs of the working class and of including in the
Constitution a provision guaranteeing to all workers the
right to work. His substitute amendment was however
defeated, but only because his ideas were already said to be
within the scope of the constitutional

_______________

11 Id., p. 494.
12 70 Phil. 340 (1940).
13 Id., p. 357.
628

628 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

provisions on social
14
justice and on labor which was then
being considered. 15
As early as Calalang v. Williams, the Court already
threw in some wind of caution·

The promotion of social justice, however, is to be achieved not


through a mistaken sympathy towards any given group. Social
justice is „neither communism, nor despotism, nor atomism, nor
anarchy,‰ but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational
and objectively secular conception may at least be approximated.
Social justice means the promotion of the welfare of all the people,
the adoption by the Government of measures calculated to [e]nsure
economic stability of all the competent elements of society, through
the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus
16
populi est suprema lex.
Social justice, therefore, must be founded on the recognition of
the necessity of interdependence among divers and 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
17
number.‰

Indeed, in light of the accelerated pace of Philippine


industrialization then, the Filipinos who used to be more or
less anchored to the soil and living comparatively simple
lives were fast becoming full-fledged members of the
complex and impersonal industrial society. They and their
families were entirely at the mercy of the severities of the
labor system.

_______________

14 II J. Aruego, The Framing of the Philippine Constitution 656-657


(1937).
15 70 Phil. 726 (1940).
16 The welfare of the people is the supreme law.
17 70 Phil. 726, 734-735 (1940).

629

VOL. 442, NOVEMBER 17, 2004 629


Agabon vs. National Labor Relations Commission

They were wholly dependent for their subsistence,


sustenance and sheer survival on a job and regular wage.

In time, Mr. Chief Justice Enrique M. Fernando drew the


arches of social justice as follows:

What is thus stressed is that a fundamental principle as social


justice, identified as it is with the broad scope of police power, has
an even more basic role to play in aiding those whose lives are spent
in toil, with destitution an ever-present threat, to attain a certain
degree of economic well-being. Precisely, through the social justice
coupled with the protection to labor provisions, the government is
enabled to pursue an active and militant policy to give reality and
substance to the proclaimed aspiration of a better life and more
decent living conditions for all. It is in that spirit that in 1969, in
Del Rosario vs. Delos Santos (L-20586, March 21, 1969, 22 SCRA
1196), reference was made to what the social justice concept
signifies in the realistic language of the late President Magsaysay:
„He who has less in life should have more in law.‰ After tracing the
course of decisions which spoke uniformly to the effect that the
tenancy legislation, now on the statute books, is not vitiated by
constitutional infirmity, the Del Rosario opinion made clear why it
is easily understandable „from the enactment of the Constitution
with its avowed concern for those who have less in life, [that] the
constitutionality of such legislation has been repeatedly upheld.‰
What is sought to be accomplished by the above fundamental
principle is to assure the effectiveness of the communityÊs effort to
assist the economically underprivileged. For under existing
conditions, without succor and support, they might not, unaided, be
18
able to secure justice for themselves.

1973 Constitution

The 1973 Constitution carried over the concept of social


19
justice under the 1935 Constitution. Article II
(Declaration of Principles and State Policies), Section 6 of
the 1973 Constitution, provides that „[t]he State shall
promote social justice to

_______________

18 Fernando, Enrique M., Constitution of the Philippines, 80-81 (1974).


19 Bernas, Joaquin G., The 1987 Constitution of the Republic of the
Philippines. A Commentary, 81 (2003).

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630 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

ensure the dignity, welfare, and security of all the people.


Towards this end, the State shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private
property, and equitably diffuse property ownership and
profits.‰ Its counterpart provision on labor was specific and
categorical. Article II (Declaration of Principles and State
Policies), Section 9 of the 1973 Constitution, commands
that „[t]he State shall afford protection to labor, promote
full employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the relations
between workers and employers. The State shall assure the
rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.
The State may provide for compulsory arbitration.‰ The
elevation of this provision in the Declaration of Principles
and State Policies of the 1973 Constitution underscored its
sublime significance. Hence, in Philippine Apparel Workers
20
Union v. National Labor Relations Commission, this
Court explained that this obligation of the State to the
workingman has repercussions on the stability, if not
survival, of the nation itself·

More than elusive justice, survival is the daily problem of the


worker and his family. The employer is not faced with such a
problem. More often than not, the employer dissipates part of his
income or profit in pleasures of the flesh and gambling aside from
luxuries, fabulous parties and conspicuous consumption.
The stability of the economy does not depend on the employer
alone, but on government economic policies concerning productivity
in all areas and not only in the clothing or textile industries. There
is not even an intimation that the company is losing. It is the living
wage of the workers which is the basis of a stable economy. If the
company cannot pay a living wage, it has no business operating at
the expense of the lives of its workers from the very start.
The preservation of the lives of the citizens is a basic duty, of the
State, more vital than the preservation of the profits of the
corporation. When the State is engaged in a life-and-death struggle,
like

_______________

20 G.R. No. 50320, July 31, 1981, 106 SCRA 444.

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Agabon vs. National Labor Relations Commission

war or rebellion, it is the citizen worker who fights in defense of the


State and for the preservation of the existence of corporations and
businesses within its territorial confines. When the life of the State
is threatened from within and without, it is the citizen, not the
corporation or business enterprise, that mans the weapons of war
and march into battle.
To invoke the nebulous term „stable economy‰ to justify rejection
of the claims of the workers as against the assets of the employer, is
to regard human life as more expendable than corporate capital.
There is nothing in the Constitution that expressly guarantees the
viability of business enterprises much less assuring them of
21
profits.

Thus, in affirming the reinstatement of an employee, this


Court in Philippine 22Air Lines v. Philippine Air Lines
Employees Association held that·

[t]he futility of this appeal becomes even more apparent considering


the express provision in the Constitution already noted, requiring
the State to assure workers „security of tenure.‰ It was not that
specific in the 1935 Charter. The mandate was limited to the State
affording „protection to labor, especially to working women and
minors x x x.‰ If by virtue of the above, it would not be legally
justifiable to reverse the order of reinstatement, it becomes even
more readily apparent that such a conclusion is even more
unwarranted now. To reach it would be to show lack of fealty to a
23
constitutional command.
1987 Constitution

The 1987 Constitution has deepened the roots of social


justice and expanded its
24
branches to include „all phases of
national development.‰ An entire article was devoted to
Social

_______________

21 Id., p. 462.
22 L-24626, June 28, 1974, 57 SCRA 489.
23 Id., pp. 495-496.
24 Section 10, Article II (Declaration of State Policies and Principles,
State Policies), 1987 Constitution provides: „The State shall promote
social justice in all phases of development.‰

632

632 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission
25
Justice and Human Rights which properly includes a full
section on labor·

LABOR

Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work,
and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.

Then, Article II (Declaration of Principles and State


Policies), Section 18 of the 1987 Constitution, provides that
„[t]he State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote
their welfare.‰ Under Article II (Declaration of Principles
and State Policies), Section 9 of the 1987 Constitution,
„[t]he State shall promote a just and dynamic social order
that will ensure the prosperity and independence of the
nation and free the people from poverty through policies
that provide adequate social services, promote full
employment, a rising standard of living and an improved
quality of life for all.‰ These provisions protecting labor are
not mere beliefs but should be reinforced by everyoneÊs
behavior.

_______________

25 Article XIII (Social Justice and Human Rights), 1987 Constitution.

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Agabon vs. National Labor Relations Commission

The Labor Code of the Philippines and its


Implementing Rules

In 1974, P.D. No. 442, as amended, otherwise known as the


Labor Code of the Philippines, was enacted. There was
power in its purpose which was trumpeted in its title·to
afford protection to labor, promote employment and human
resources development and insure industrial peace based on
social justice. Article 3 of its Preliminary Title under
General Provisions provides·

ART. 3. Declaration of basic policy.·The State shall afford


protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. The State shall assure
the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.
Under Labor Relations (Book Five), Article 211 states·

ART. 211. Declaration of Policy.·A. It is the policy of the State:

(a) To promote and emphasize the primacy of free collective


bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling
labor or industrial disputes;
(b) To promote free trade unionism as an instrument for the
enhancement of democracy and the promotion of social
justice and development;
(c) To foster the free and voluntary organization of a strong and
united labor movement;
(d) To promote the enlightenment of workers concerning their
rights and obligations as union members and as employees;
(e) To provide an adequate administrative machinery for the
expeditious settlement of labor or industrial peace;
(f) To ensure a stable but dynamic and just industrial peace;
and

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634 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

(g) To ensure the participation of workers in decision and


policy-making processes affecting their rights, duties and
welfare.

In May 1980 and then again in March 1989, B.P. Blg. 70


and R.A. No. 6715 were approved, respectively, „to
strengthen the constitutional right of workers‰ and „to
extend protection to labor.‰ Accordingly,
26
Volkschel Labor
Union v. Bureau of Labor Relations, decreed that „[i]n the
implementation and interpretation of the provisions of the
Labor Code and its implementing regulations, the
workingmanÊs welfare should 27
be the primordial and
paramount consideration.‰
Two. Courts at all times should give meaning and
substance to constitutional postulates in favor of the
workingman. The 1987 Constitution is fraught with
provisions protecting the workingman, e.g., Secs. 9, 10 and
18, Art. II, and Sec. 3, Art. XIII, a legacy of the evolution of
rights. These constitutional creeds should not be dwarfed
by deeds. A contrary posture would 28convert these creeds as
„meaningless constitutional patter.‰ The principle of social
justice was not embedded in the fundamental law for
demogoguery. It was meant to be 29
a vital, articulate,
compelling principle of public policy. Social justice should
30
be a living reality and not a mere high level abstraction.
Thus, while the Constitution must be read as a whole, even
if we do not invoke its Due Process Clause,

_______________

26 L-45824, June 19, 1985, 137 SCRA 42.


27 Id., p. 48.
28 Philippine Blooming Mills Employees Organization v. Philippine
Blooming Mills Co., L-31195, June 5, 1973, 51 SCRA 189, 210.
29 Bocobo, Jorge., Cult of Legalism, cited by Mr. Justice Gregorio
Perfecto in his Concurring Opinion in Ocampo Vda. De Gomez v. The
Government Insurance Board, 78 Phil. 216, 225 (1947); and by Mr.
Justice Teodoro Padilla some 40 years later in National Service
Corporation v. National Labor Relations Commission, G.R. No. 69870,
November 29, 1988, 168 SCRA 122, 138.
30 Magnolia Corporation v. National Labor Relations Commission,
G.R. No. 116813, November 24, 1995, 250 SCRA 332, 340.

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Agabon vs. National Labor Relations Commission

the coherent application of the separate constitutional


creeds on social justice and labor is enough to uphold the
workersÊ constitutional right to work and their consequent
right to job security. These substantive rights are not to be
weakened by a diminished procedural right. For in
weakening the procedure, we weaken the substantive right.
The importance of the procedure to protect the exercise of
the right to work cannot be overemphasized.
I have always, as I do now, adhered to the constitutional
precepts of social justice and protection to labor.
31
Some
years back, in Pepito v. Secretary of Labor, I, as an
Assistant Solicitor General, invoked the argument of
constitutional guarantee of security of tenure as the
rationale for the reinstatement of an employee. The
argument was sustained by this Court speaking through
Mr. Chief Justice Fernando no less·
x x x As set forth in the Comment, considered as the answer,
Solicitor General Estelito P. Mendoza, Assistant Solicitor General
Reynato S. Puno and Solicitor Jesus V. Diaz „are of the opinion that
petitionerÊs reinstatement is in order.‰ Their view follows from
pronouncements of this Tribunal „handed down in consonance with
the social justice and protection to labor provisions of the
Constitution.‰
x x x That point is well-taken. In the latest case in point,
Meracap v. International Ceramics Mfg. Co., Inc., this Court left no
doubt that it is committed to the principle of vitalizing „the
constitutional mandate of security of tenure as an aspect of the
protection accorded labor.‰ There should be no reason why there
should be a deviation in this litigation especially so when again, as
noted in the Comment, respect for such a mandate has been
32
accorded in previous opinions.

With due respect, we should not now deviate from this


doctrine.

_______________

31 L-49418, February 29, 1980, 96 SCRA 454.


32 Id., pp. 457; 459-460.

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636 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

Three. The constitution


33
puts the employee on equal footing
with his employer. As between an employee, usually poor
and unlettered, and the employer, who has resources to
secure able legal advice, the law has reason to demand
from the latter stricter compliance. For, social
34
justice in
these cases is not equality but protection. As Mr. Chief
Justice Fernando stressed in Victorias
35
Milling Co., Inc. v.
WorkmenÊs Compensation Commission ·

To repeat, courts should ever be on the alert lest through


inadvertence or faulty analysis the expected opposition from
management be appraised much more favorably than warranted.
The unfortunate result would be that both the social justice concept
and the complementary constitutional command of protection to
labor would be disregarded and set at naught. There is no higher
duty cast on the judiciary than to guard against such an
undesirable possibility, fraught as it is with consequences truly to
36
be deplored.

In a similar vein, Mr. Chief Justice Ramon C. Aquino, in


his Concurring 37
Opinion in Allied Investigation Bureau v.
Hon. Inciong, opined that „social justice in the case of the
laborers means compassionate justice or an
implementation of the policy that 38
those who have less in
life should have more in law.‰ The Constitution helps
labor for a simple reason. Employees are overmatched in
their struggle against their employers. Their playing field
is not level.
Four. This Court has long extended constitutional due
process in labor cases involving private action. Prior to
Wenphil, the rule etched in stone is that an employer can
validly

_______________

33 Philippine Airlines v. Santos, G.R. No. 77875, February 4, 1993, 218


SCRA 415.
34 Agustin v. WorkmenÊs Compensation Commission, L-19957,
September 29, 1964, 12 SCRA 55, 59.
35 L-25665, May 22, 1969, 28 SCRA 285.
36 Id., p. 298.
37 L-49678, June 29, 1979, 91 SCRA 265.
38 Id., p. 274.

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Agabon vs. National Labor Relations Commission

dismiss an erring employee only after giving him notice


and hearing. Thus, decades ago, this Court 39 in Batangas
Laguna Tayabas Bus Co. v. Court of Appeals ruled that
„the failure of petitioner to give the private respondent the
benefit of a hearing before he was dismissed constitutes an
infringement
40
on his constitutional right to due process of
law.‰ In 41 De Leon v. National Labor Relations
Commission where an employee was dismissed without
notice, it was held that „[t]here is in this case a clear denial
of due process, a constitutional right which must be
safeguarded at all times especially when what is at stake 42
is
petitionerÊs position as his only means of livelihood.‰ In
43
Reyes v. Philippine Duplicators, Inc., where petitioner
Reyes was dismissed from the service in 1977 without any
investigation or hearing, this Court found that the
dismissal was arbitrary as Reyes was denied due process.
Hence, even the non-compliance with Sections 2 and 3,
Rule XIV, Book V of the Implementing Rules and
Regulations of the Labor Code pursuant to the
amendments of P.D. No. 850 which was issued in 1975,
requiring a prior clearance from the Department of Labor
to terminate the services of an employee, rendered the
termination
44
illegal and nullified the dismissal of the
employee.
In August 1981, B.P. Blg. 130 did away with, the
clearance to terminate employment. Prior notice and
formal investigation were however instead imposed as
conditions sine qua non

_______________

39 L-38482, June 18, 1976, 71 SCRA 470.


40 Id., p. 480.
41 G.R. No. 52056, October 30, 1980, 100 SCRA 691.
42 Id., p. 698.
43 G.R. No. 54996, November 27, 1981, 109 SCRA 489.
44 Egyptair v. National Labor Relations Commission, G.R. No. 63185,
February 27, 1987, 148 SCRA 125; Oliva v. National Labor Relations
Commission, G.R. No. 57865. April 28, 1983, 121 SCRA 827; Visperas v.
Inciong, G.R. No. 51299, December 29, 1982, 119 SCRA 476; Bachiller v.
National Labor Relations Commission, G.R. No. 51484, June 25, 1980, 98
SCRA 393.

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638 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission
45
before termination may be effected. Thus, the inviolability
of prior notice and hearing before an employee could be
dismissed was iterated and reiterated. 46In Miguel v.
National Labor Relations Commission, where the
employee was simply handed his walking papers without
any explanation, this Court held that the dismissal was
unwarranted and ruled that „[t]he due process requirement
is not a mere formality that may be dispensed with at will.
Its disregard is a matter of serious concern since it
constitutes a safeguard of the highest
47
order in response to
manÊs innate sense of justice.‰ Kwikway Engineering
48
Works v. National Labor Relations Commission, explained
that „[t]he twin requirements of notice and hearing
constitute essential elements of due process in cases of
employee dismissal: the requirement of notice is intended
to inform the employee concerned of the employerÊs intent
to dismiss and the reason for the proposed dismissal; upon
the other hand, the requirement of hearing affords the
employee an opportunity to answer his employerÊs charges
against him accordingly to defend himself therefrom before
dismissal is effected. Neither of these two requirements can
be dispensed with without running afoul49of the due process
requirement of the 1987 Constitution.‰ In a stream of
ceaseless cases, we adhered to the doctrine that failure to
comply with the two-notice rule makes the dismissal illegal
and rein-

_______________

45 Metro Port Service Inc. v. National Labor Relations Commission,


G.R. Nos. 71632-33, March 9, 1989, 171 SCRA 190.
46 G.R. No. 78993, June 22, 1988, 162 SCRA 441.
47 Id., p. 445, citing Natividad v. WorkmenÊs Compensation
Commission, L-42340, August 31, 1978, 85 SCRA 115, 119-120; and
Luzon Surety Co. v. Beson, L-26865-66, January 30, 1970, 31 SCRA 313,
318. See also De Leon v. National Labor Relations Commission, G.R. No.
52056, October 30, 1980, 100 SCRA 691.
48 G.R. No. 85014, March 22, 1991, 195 SCRA 526.
49 Id., p. 531; citing Century Textile Mills, Inc. v. National Labor
Relations Commission, G.R. No. 77859, May 25, 1988, 161 SCRA 528,
535.

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Agabon vs. National Labor Relations Commission
50
statement or payment of separation pay in order. In fine,
„fire the employee,
51
and let him explain later‰ violates this
hallowed rule. It has always been this way·until
Wenphil.

This is not to hold that a trial-type proceeding is required


52
to be conducted by employers. Hearings before the
employers prior to the dismissal are in the nature of and
akin to administrative due process which is free from the
rigidity of certain procedural requirements. Mr. Justice
Laurel way back in 1940 enumerated the cardinal rights of
parties in administrative proceedings in the53landmark case
of Ang Tibay v. Court of Industrial Relations ·

1. the right to a hearing which includes the right to


present oneÊs case and submit evidence in support
thereof;
2. the tribunal must consider the evidence presented;
3. the decision must have something to support itself;
4. the evidence must be substantial which means such
evidence as a reasonable mind might accept as
adequate to support a conclusion;

_______________

50 Nitto Enterprises v. National Labor Relations Commission, G.R. No.


114337, September 29, 1995, 248 SCRA 654; Pepsi-Cola Bottling Co. v.
National Labor Relations Commission, G.R. No. 101900, June 23, 1992,
210 SCRA 277; De Vera v. National Labor Relations Commission, G.R.
No. 93070, August 9, 1991, 200 SCRA 439; Tingson v. National Labor
Relations Commission, G.R. No. 84702, May 18, 1990, 185 SCRA 498;
Ruffy v. National Labor Relations Commission, G.R. No. 84193, February
15, 1990, 182 SCRA 365; and National Service Corp. v. National Labor
Relations Commission, G.R. No. 69870, November 29, 1988, 168 SCRA
122.
51 Batangas Laguna Tayabas Bus Company v. National Labor
Relations Commission, G.R. No. 94429, May 29, 1992, 209 SCRA 430,
439.
52 Sajonas v. National Labor Relations Commission, L-49286, March
15, 1990, 183 SCRA 182.
53 69 Phil. 635 (1940).

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640 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

5. the decision must be based on the evidence


presented at the hearing, or at least contained in
the record and disclosed to the parties affected;
6. the tribunal or body or any of its judges must act on
its own independent consideration of the law and
facts of the controversy, and not simply accept the
views of a subordinate;
7. the board or body should, in all controversial
questions, render its decision in such manner that
the parties to the proceeding can know the issues
involved 54and the reasons for the decision
rendered.

The posture that the constitutional due process requirement


limits government action alone and does not apply to
private action is already passé. Thus, even in the United
States, the application of due process to private conduct
has gained approval and has become a settled norm. For, as
expressed by Professor Laurence H. Tribe, a noted
constitutionalist·

But particularly where ostensibly „private‰ power is the primary


source of the coercion and violence that oppressed individuals and
groups experience, it is hard to accept with equanimity a rigid legal
distinction between state and society. The pervasive system of racial
apartheid which existed in the South for a century after the Civil
War, for example, thrived only because of the resonance of society
and politics . . . the close fit between private terror, public
discrimination, and political exclusion. So too, where it is the stateÊs
persistent inaction in the face of patterns of deprivation for which
the state and society seem to many to bear collective responsibility,
the premise that only identifiable state „action‰ may be called
55
constitutional account is deeply troubling.

_______________

54 Id., pp. 642-644; cited by Alliance of Democratic Free Labor


Organization v. Laguesma, G.R. No. 108625, March 11, 1996, 254 SCRA
565, 573-574; and Doruelo v. Commission on Elections, G.R. No. 67746,
November 21, 1984, 133 SCRA 376, 381-382.
55 Tribe, L., Constitutional Choices (Chapter 16. Refocusing the „State
Action‰ Inquiry: Separating State Acts from State Actors). Harvard
University Press, 1985.

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Agabon vs. National Labor Relations Commission
Accordingly, modern notions of violations of due process
which may fairly be attributed to the State have expanded
considerably in recent decades. Seemingly private conducts 56
have arguably been treated as adequate state actions.
Individual invasions of individual rights in certain
instances 57have become proper subjects of constitutional
restraints. In fine, as Mr. Justice Felix Frankfurter put 58
it
in Joint Anti-Fascist Refugee Committee v. McGrath, „
Â[d]ue process,Ê unlike some legal rules, is not a technical
conception with a fixed content unrelated to time, place,
and circumstances x x x. Due process is not a mechanical
instrument. It is not a yardstick. It is a delicate process of
adjustment inescapably involving the exercise of judgment
by those whom the Constitution 59
entrusted with the
unfolding of the process.‰ Beyond argument, the
Constitution was designed to embody and celebrate values
and to inculcate proper acceptance of 60them, as much as to
compel governments to abide by them.
This is as it ought to be for as well observed by Dr. David
C. Korten, Founder and President of the People-Centered
Development Forum, „x x x [corporations have emerged as
the

_______________

56 See Gunther, G. and Sullivan, K., Constitutional Law, 13th Ed.


(Chapter 10. The Post Civil War Amendments and Civil Rights
Legislation: Constitutional Restraints on Private Conduct; Congressional
Power to Implement Amendments). The Foundation Press, Westbury,
New York, 1997.
57 See Cohen, W. and Varat, J., Constitutional Law. Cases and
Materials. 9th Ed. (Chapter 12. Application of the Post Civil War
Amendments to Private Conduct: Congressional Power to Enforce the
Amendments). The Foundation Press, Westbury, New York, 1993.
58 341 U.S. 123 (1951).
59 Cited by Altschuler, B. and Sgroi, C, Understanding Law in a
Changing Society. (Chapter 3. Due Process of Law, 94). Prentice Hall,
Inc., 1996.
60 Chemerinsky. E., Rethinking Sate Action., 80 Nw.U.L. Rev. 503, 535-
546, 550-553 (1985), citing Franz v. United States, 707 F.2d. 582, 594 n.
45 (D.C.Cir. 1983).

642

642 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

dominant governance institutions on the planet, with the


largest among them reaching into virtually every country of
the world and exceeding most governments in size and
power. Increasingly, it is the corporate interest more than
the human interest that defines the 61
policy agendas of
states and international bodies x x x.‰ Assailing the threat
to liberty coming from these new economic rulers,
President Franklin Delano Roosevelt said: „The royalists of
the economic order have conceded that political freedom
was the business of government but they have maintained
that economic slavery was nobodyÊs business. They granted
that the government could protect the citizen in his right to
vote, but they denied that the government could do anything
to protect
62
the citizen in his right to work and his right to
live.‰ To be sure, some of the unlamented decisions of the
Supreme Court of the United States were those which
allowed private corporations to run roughshod
63
over the
rights of workers. Observed Korten again:

A conservative court system that was consistently responsive to the


appeals and arguments of corporate lawyers steadily chipped away
at the restraints a wary citizenry had carefully placed on corporate
powers. Step-by-step, the court system put in place new precedents
that made the protection of corporations and corporate property a
centerpiece of constitutional law. These precedents eliminated the
use of juries to decide fault and assess damages in cases involving
corporate-caused harm and took away the right of states to oversee
corporate rates of return and prices. Judges sympathetic to
corporate interests ruled that workers were responsible for causing
their own injuries on the job, limited the liability of corporations for
damages they might cause, and declared wage and hours laws
unconstitutional. They interpreted the common good to mean
maximum production·no matter what was produced or who it
harmed.

_______________

61 Korten, When Corporations Rule the World, 54 (2002 ed.).


62 Acceptance Speech for the Democratic Nomination for President,
Philadelphia, June 27, 1936.
63 Korten, op. cit., 59.

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Agabon vs. National Labor Relations Commission

The choice that confronts us is which right to uphold: the


right to work of an underprivileged natural person or the
right to property of an overprivileged artificial person. In
truth, there is but one choice to make for it is highly
anomalous to bestow better
64
rights to an artificial person
than a natural person.

Certainly, these are neither „novel legal ideas‰ nor


„nouvelle vague theories‰ but careful directions brought
about by the evolution of laws and the due process clause
which saw the need to rightfully protect the
underprivileged as a result of ominous occurrences over the
years. These, on the contrary, are persuasive axioms which
prevail in other countries and should find application in
our jurisdiction.
Indeed, it strains my imagination to see how the
application of the constitutional due process clause to cases
of illegal dismissal can „open the floodgates to, and the
docket x x x swamped with, litigations of the scurrilous
sort‰ and „give rise to all absurd constitutional claims.‰
Suffice it to say that equating an excommunicated Catholic
demanding reinstatement, or a celebrity endorser suing to
be able to sing for another brand, or even an employee
preventing his employer to read his out going e-mail with a
dismissed employee exerting his constitutional right to
security of tenure and due process of clause is too off-line.
Withal, as adverted to, we have long extended constitutional
due process and security of tenure in labor cases involving
private action and I have yet to see „litigations of the
scurrilous sort‰ being entertained by the courts.
Five. An employee who is denied procedural due process
is entitled to reinstatement. Nothing less. This Court, in
carrying out the constitutional directive of the 1973
Constitution requiring the State to „assure the 65
rights of
workers to x x x security of tenure x x x‰ has quite
consistently nullified, simply

_______________

64 See Hartmann, Unequal Protection: The Rise of Corporate


Dominance and the Theft of Human Rights.
65 Article II (Declaration of Principles and State Policies), Section 9 of
the 1973 Constitution.

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644 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

on constitutional grounds, dismissals in violation of


procedural due process, notwithstanding the absence of an
express provision of any statute. The Court has done the
same under the 1987 Constitution which admittedly has
given more protection to labor than any of our previous
charters·through a four-paragraph section in the Article
on Social Justice and Human Rights which 66
details the
protective mantle accorded to labor alone. Thus, Art. XIII,
Sec. 3 of the 1987 Constitution decrees that „[t]he State
shall afford full protection to labor x x x and promote full
employment x x x (All workers) shall be entitled to security
of tenure x x x‰ Art. XII, Sec. 18 of the 1987 Constitution
mandates that „[t]he State affirms labor as a primary social
economic force. It shall protect the rights of workers and
promote their welfare.‰ All told, this Court for almost three
decades has set aside, on constitutional grounds, dismissals
in violation of procedural due process·until Wenphil came
along, with the interests of the employer tailing and
suddenly enjoying preference. To uphold Wenphil, Serrano,
and now Agabon, is to dilute the protection to those who
need it most despite the constitutional mandate which in
the language of Mr. Justice Cardozo speaks with „a
reverberating clang that drowns all weaker sounds.‰ With
due respect, the grant of indemnity to the dismissed
employee „as both penalty and disincentive‰ as the
majority provides in the instant case does not square with
the protection accorded by the Constitution to labor. There
is only one main relief in cases of dismissal without notice
and hearing·reinstatement.
Six. Compliance with procedural due process is not a
burden on employers. There is no valid reason why
employers should have any difficulty according procedural
due process to their employees. The rules are fairly simple.
Section 2, Rule XXIII (Termination of Employment), Book V
(Labor Relations), Omnibus Rules Implementing the Labor
Code, provides·
_______________

66 Article XIII (Social Justice and Human Rights), Section 3 of the


1987 Constitution.

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Agabon vs. National Labor Relations Commission

Section 2. 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


employeeÊs last known address.

II. For termination of employment as based on authorized


causes defined in Article 283 of the Code, 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 at least thirty (30) days
before the effectivity of the termination, specifying the
ground or grounds for termination.
III. If the termination is brought about by the completion of the
contract or phase thereof, no prior notice is required. If the
termination is brought about by the failure of an employee
to meet the standards of the employer in the case of
probationary employment, it shall be sufficient that a
written notice is served the employee within a reasonable
time from the effective date of termination.

Similarly, Section 2, Rule I (Termination of Employment


and Retirement), Book VI (Post-Employment) of the same
Omnibus Rules, which covers all establishments and
undertakings, whether for profit or not, except the
Government, requires the same notice and hearing.
In sum, in cases of dismissal based on just causes
(Article 282, Labor Code), the employer must give two (2)
simple notices: (1) notice before dismissal to apprise the
employee being

646

646 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

dismissed of the particular acts or omissions for which the


dismissal is sought, and (2) subsequent notice to inform
him of the employerÊs decision to dismiss him. In cases of
dismissal for authorized causes (Article 283, Labor Code),
the employer must serve an uncomplicated written notice
on the worker and on the Department of Labor and
Employment at least one (1) month before the intended
closure of the establishment or reduction of personnel. The
law requires nothing more.
It is distressing to say the least why employers should
be exempted from observing this simple duty. In fine, to
give to labor what is due them is far from authorizing
oppression, nor destruction of the employer as some views
would have. The employer cannot simply abuse the conduct
of his business to the prejudice of an employee. The
persistence in violating the rights of the workers is the
employerÊs own doing and self-destruction which may be let
alone.
The right of an employer to dismiss an employee differs
from and should not be confused with the manner in which
such right is exercised. While the management has certain
privileges, the exercise of such privileges must be made
without abuse of discretion. Thus, Dole 67
Philippines v.
National Labor Relations Commission, recognized as a
management prerogative the determination of the need for
the phasing out of a department as a labor and cost saving
device. In the same manner, Remereco Garments 68
Manufacturing v. Minister of Labor and Employment
conceded that it is the sole prerogative of management to
dismiss or lay-off an employee. But in these two cases, and
in so many other cases, this Court cautioned that the
exercise of such prerogatives must be made without abuse
of discretion for what is at stake is not only
69
the employeeÊs
position but also their means of livelihood. It must

_______________

67 G.R. No, 120009, September 13, 2001, 365 SCRA 124.


68 G.R. Nos. 56176-77, February 28, 1985, 135 SCRA 167, 175.
69 International Harvester Macleod v. Intermediate Appellate Court,
G.R. No. 73287, May 18, 1987, 149 SCRA 641 citing D.M.

647

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Agabon vs. National Labor Relations Commission

not be oppressive and abusive since it affects oneÊs person


and property. It is the right of every workingman to assure
himself and his family a life worthy of human dignity.
Consequently, in dismissing an employee based on
authorized cause or for just cause, as the case may be, the
employer must, at the very minimum, comply with
procedural due process. Failure to observe due process,
particularly the prior notice requirement, rightly deserves
stiff sanctions, if not condemnation, and not a mere slap on
the wrist, as the majority now propounds. As I said in
Serrano·

It is equally puzzling why the majority believes that restoring the


employeeÊs right to pre-dismissal notice will negate the right of an
employer to dismiss for cause. The pre-Wenphil rule simply requires
that before the right of the employer to dismiss can be exercised, he
must give prior notice to the employee of its cause. There is nothing
strange nor difficult about this requirement. It is no burden to an
employer. He is bereft of reason not to give the simple notice. If he
fails to give notice, he can only curse himself. He forfeits his right to
dismiss by failing to follow the procedure for the exercise of his
right.
xxx xxx xxx
In fine, if the employerÊs right to dismiss an employee is forfeited
for his was failure to comply with this simple, reasonable duty to
70
pre-notify his employee, he has nothing to blame but himself.

Verily, dismissal without due process debases human


dignity. It is, therefore, incumbent upon the employer to
conduct a formal investigation and inform the employee of
the specific charges against him. Most certainly, the
resolution of extreme cases, e.g., where the employee
threatens the life of the employer, are the exceptions rather
than the ordinary and usual

_______________

Consunji, Inc. v. National Labor Relations Commission, G.R. No.


71459, July 30, 1986, 143 SCRA 204; Kapisanan ng Manggagawa sa
Camara Shoes v. Camara Shoes, G.R. No. 50985, January 30, 1982, 111
SCRA 477.
70 323 SCRA 445, 504-505, 523.

648

648 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

cases. As such, rules governing them should not be used as


the general rule. Rather, employers should be reminded
that under our system of government, even the most 71
hardened criminals are given their day in court.
Employees are not entitled to anything less.
Seven. In the hierarchy of rights of an employee, the right
to security of tenure is high, if not the highest. Its
paramount value is 72
recognized and guaranteed under our
new Constitution. Consequently, the first paragraph of
Article XIII, Section 3 of the 1987 Constitution, extends the
protective mantle of the Constitution to all of labor
including the promotion of full employment. The second
paragraph specifies the guaranteed right to security of
tenure. All other rights, e.g., the right to collective
bargaining and negotiations, the right to peaceful concerted
activities, the right to strike and form unions, and the right
to due process, merely complement the right to job security.
All these complementary rights are meaningless to an
unemployed Juan De la Cruz. Thus, we 73
held in Rance v.
National Labor Relations Commission, „[i]t is the policy,
of the State to assure the right of workers to Âsecurity of
tenure.Ê The guarantee is an act of social justice. When a
person has no property, his job may possibly be his only
possession or means of livelihood. Therefore he should be 74
protected against any arbitrary deprivation
75
of his job.‰
Almira v. B.F. Goodrich Philippines, Inc. is worth quoting
·

It would imply at the very least that where a penalty less punitive
would suffice, whatever missteps may be committed by labor ought
not to be visited with a consequence so severe. It is not only

_______________

71 De Leon v. National Labor Relations Commission, G.R. No. 52056, October


30, 1980, 100 SCRA 691, 698.
72 Tolentino v. National Labor Relations Commission, G.R. No. 75380, July
31, 1987, 152 SCRA 724.
73 G.R. No. 68147, June 30, 1988, 163 SCRA 279.
74 Id., pp. 284-285. See also Bondoc v. PeopleÊs Bank and Trust Company, L-
43835, March 31, 1981, 103 SCRA 599, 605.
75 L-34974, July 25, 1974, 58 SCRA 120.

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Agabon vs. National Labor Relations Commission

because of the lawÊs concern for the workingman. There is, in


addition, his family to consider. Unemployment brings untold
hardships and sorrows on those dependent on the wage-earner. The
misery and pain attendant on the loss of jobs then could be avoided
if there be acceptance of the view that under all the circumstances
of this case, petitioners should not be deprived of their means of
livelihood. Nor is this to condone what had been done by them. For
all this while, since private respondent considered them separated
from the service, they had not been paid. From the strictly juridical
standpoint, it cannot be too strongly stressed, to follow Davis in his
masterly work, Discretionary Justice, that where a decision may be
made to rest [on] an informed judgment rather than rigid rules, all
the equities of the case must be accorded their due weight. Finally,
labor law determinations, to quote from Bultmann, should be not
76
only secundum rationem but also secundum caritatem.

Eight. Workers need work more than anything else. For a


wageworker, a job is important. While there is work, there
is food on the table. Take away work, replace it with a
meager lump sum, and the food will disappear. Through
work, the breadwinner satisfies his basic needs and those
of his family. He also provides himself with a means to
express himself, transform, develop and perfect his skills
and talents. Through work, he interacts and establishes
relations with others. Work is a defining feature of human
existence. It is the means of sustaining life and meeting
essential needs. It is also an activity through which
individuals affirm their own identity, both to themselves
and to those around them. It is crucial to individual choice, 77
to the welfare of families and to the stability of societies.
Every man has the right to work, to a chance to develop his
qualities and his personality in the exercise of his
profession, to equitable remuneration which will enable
him and his family to lead a worthy life on material, social,
cul-

_______________

76 Id., p. 131.
77 Juan Somavia, ILO Director-General, June 2001.

650

650 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

78
tural and spiritual level. Shylock said it well: „You79
take
my life when you do take the means whereby I live.‰
Nine. To simply allow payment of nominal damages for
violation of employeeÊs right to due process is to give undue
advantage to employers. One does not need to have a
stratospheric mind to know that the Constitution gave
greater rights to employees over their employers. The
intent is to equalize the fight of the underprivileged against
the overprivileged. We cannot allow the employers to
marginalize the right of the workingman to due process for
a few pesos without mocking the protection accorded by the
Constitution to the powerless. The deprivation of the right
to security of tenure and due process is beyond monetary
valuation. In fine, to lengthen the longevity of Serrano is to
sharpen the dangerous divide between the haves and have-
nots in our society. But Agabon is not merely extending
Serrano. Agabon is far worse than Serrano.
In Serrano, the dismissed employee was awarded
backwages from the time his employment was terminated
until it was determined that the termination was for an
authorized cause. Using the facts of the instant case as an
illustration, petitioner-employees who were dismissed in
February 1999 stand to get roughly 63 months of
backwages under Serrano, i.e., the number of months from
the time they were dismissed in February 1999 until
November 2004 when it was determined that the
termination was for just cause. In Agabon, however, the
dismissed employee is merely being granted an indemnity
equivalent to Thirty Thousand Pesos. This is exactly
Wenphil more than a decade later, with the cost of money
and inflation factored in. Indeed, the sorry plight of the
workers has just been worsened, if not preserved, by the
new majority ruling.

_______________

78 Octagesima Adveniens. An Apostolic Letter of His Holiness Pope


Paul VI., citing Gaudium et Spes, 25: AAS 67 (1966), p. 1089.
79 The Merchant of Venice.

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Agabon vs. National Labor Relations Commission

Just a word more. In Serrano, I pointed out:

x x x The dilution of the rule has been abused by unscrupulous


employers who then followed the „dismiss now, pay later‰ strategy.
This evil practice of employers was what I expected the majority to
address in re-examining, the Wenphil doctrine. At the very least, I
thought that the majority would restore the balance of rights
between an employee and an employer by giving back the
employeeÊs mandatory right to notice before dismissal. It is
disquieting, however, that the majority re-arranged this balance of
right by tilting it more in favor of the employerÊs right to dismiss.
Thus, instead of weakening a bit the right to dismiss of employers,
the majority further strengthens it by insisting that a dismissal
without prior notice is merely „ineffectual‰ and not illegal.
The stubborn refusal of the majority to appreciate the
importance of pre-dismissal notice is difficult to understand. It is
the linchpin of an employeesÊ right against an illegal dismissal. The
notice tells him the cause of [the] dismissal. It gives him a better
chance to contest his dismissal in an appropriate proceeding as laid
down in the partiesÊ collective bargaining agreement or the rules of
employment established by the employer, as the case may be. In
addition, it gives to both the employee and employer more cooling
time to settle their differences amicably. In fine, the prior notice
requirement and the hearing before the employer gives an employee
a distinct, different and effective first level of remedy to protect his
job.
xxx xxx xxx
I respectfully submit that the majority cannot revise our laws
nor shun the social justice thrust of our Constitution in the guise of
interpretation especially when its result is to favor employers and
disfavor employees. The majority talks of high nobility but the
80
highest nobility is to stoop down to reach the poor.

In these times when our lowly workers can hardly maintain


body and soul together due to their meager means, I find it
hard to believe that the majority in Wenphil,in Serrano,and
now in the instant case Agabon, persists in weakening our

_______________

80 Id., pp. 503-504; 521.

652

652 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

employeeÊs right to job security. The stance simply offends a


basic principle of justice so entrenched in our tradition and
etched in our conscience. An employee may not have a
torrens title to his job but it is not too much to require that
before he is dismissed by his employer, he should be given a
simple notice of the cause of his dismissal and a summary
hearing to present his side. All our constitutional and
statutory precepts on social justice and the protection of
labor will go to naught if we perpetuate our ruling that a
dismissal without the required prior notice is valid and if
we just penalize with the payment of pennies violations of
the employeeÊs right to due process. Without doubt,
Wenphil and Serrano have lengthened the queue of the
unemployed. Agabon will stretch it out even more.
In the case at bar, where petitioners Jenny Agabon and
Virgilio Agabon were dismissed from the service for
abandonment of work without the due process
requirements of two (2) notices and hearing, I submit that
the dismissals should be nullified and set aside, and
petitioners immediately reinstated without loss of seniority
rights and other privileges. This Court should protect labor
and it should walk the talk.
Accordingly, I vote for the immediate
REINSTATEMENT of petitioners Jenny M. Agabon and
Virgilio C. Agabon, without loss of their seniority rights
and other privileges and with full backwages, and the
REVERSION to the pre-Wenphil Doctrine in resolving
future labor cases.

SEPARATE DISSENTING OPINION

PANGANIBAN, J.:

The core issue of the present case concerns the legal effect
of and the corresponding sanction for the failure of an
employer to give an employee the pre-dismissal written
notice of termination and opportunity to be heard required
under the Labor Code and its implementing Rules.

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Agabon vs. National Labor Relations Commission
1
In Serrano v. NLRC, the Court held that such termination
of employment should be considered „ineffectual‰ and, as
such, sanctioned with payment of full back wages plus·in
case the dismissal was for an authorized
2
cause·separation
pay in accordance with Article 283 of the Labor Code. In
addition, nominal and moral damages may also be
awarded, if warranted by the evidence.
In the case before us now, the employment of petitioners
was terminated on the ground of abandonment of their
work. However, the employer failed to accord them their
right
3
to prior notice and hearing, required under Article
277 of the

_______________

1 380 Phil. 416; 323 SCRA 445, January 27, 2000.


2 „Art. 283. Closure of establishment and reduction of personnel.·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 or 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 establishments or undertaking not due to
serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or to as 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.‰
3 „Art. 277. . . .

(b) Subject to the constitutional right of workers to security of tenure


and their right to be protected against dismissal except for a just
and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish
the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for
termination and shall afford the

654

654 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

4
Labor Code and Section 2 of Rule XXIII of the 1999
Implementing Rules and Regulations. The majority holds
that for violation of the employeeÊs right to statutory due
process, an indemnity in the amount of P30,000 should be
awarded to the

_______________

latter ample opportunity to be heard and to defend himself with the assistance
of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment. Any decision taken by the employer shall be without
prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor
Relations Commission. The burden of proving that the termination was for a
valid or authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie
finding by the appropriate official of the Department of Labor and Employment
before whom such dispute is pending that the termination may cause a serious
labor dispute or is in implementation of a mass lay-off.‰

4 „Sec. 2. 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 employeeÊs


last known address.‰

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Agabon vs. National Labor Relations Commission

petitioners as nominal damages under the Civil Code.


According to the majority, this award should serve to
discourage employers from violating the statutory due
process rights of their employees.

With due respect, I disagree with this ruling, because it


aggravates the rights of our work force, and diminishes
respect for due process.

Jurisprudence on Right to Notice and Hearing


5
Prior to the promulgation in 1989 of Wenphil v. NLRC, the
Court held that·whether for a valid cause or not·
dismissing employees without giving them prior notice and
the opportunity to be heard was illegal; and that, as a
consequence, they were entitled to reinstatement plus full
back wages. Wenphil abandoned this policy and ruled that
if the dismissal was for a just or an authorized cause, but
without due process, the termination was valid; but that
the employer should be sanctioned, for violating the
employeeÊs right to notice and hearing, through the
payment of indemnity to each dismissed employee in an
amount ranging from 6
P1,000 to P10,000.
In 2000, Serrano held that such dismissals for just or
authorized causes but without due process were merely
ineffectual (not illegal). Nevertheless, the employee was
entitled to full back wages plus nominal and moral
damages, if warranted by the evidence; and, in case the
dismissal was for an authorized cause, separation pay in
accordance with Article 283 of the Labor Code.
This time, in the present case, the majority is incredibly
reverting to Wenphil in upholding the validity of
employment terminations without due process.

_______________

5 170 SCRA 69, February 8, 1989.


6 Supra.

656

656 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

A Setback on LaborÊs Rights


With due respect, I strongly oppose the CourtÊs inexplicable
turnaround. This ruling is a7 setback on laborÊs rights.
Thus, I reiterate my Dissent in Serrano. In that case, I
was grateful enough that the Court had decided to
reexamine and modify the ten-year Wenphil doctrine. In
the process, it had at least increased the monetary award
that should go to the dismissed employee·from a nominal
sum in the concept of „indemnity or damages‰ to „full back
wages.‰
I respectfully submit that nothing has transpired in the
past four and a half years since Serrano was issued, that
justifies further diminution of whatever constitutional
rights to due process and security of tenure our workers
still enjoy. On the contrary, nothing is more evident than
the inescapable fact that their empowerment makes them
better partners in the countryÊs development and global
competence. Any further trampling of their rights is
undeserved.
As explained in my Dissenting Opinion in Serrano, the
notice requirement finds basis not only in the Labor Code
but, more important, in the due process clause of the
Constitution.
Consequently, when an employee is dismissed without
due process, the legal effect is an illegal dismissal; and the
appropriate sanction is full back wages plus reinstatement,
not merely full back wages (or separation pay), much less
merely „indemnity of one month salary for every year of
service.‰ It is jurisprudential settled that when procedural
due process is violated, the proceedings·in this case, the
dismissal·shall be voided, and the parties returned to
their status quo ante; that is, the employees should be
given back their old jobs and paid all benefits as if they
have never been dismissed.

_______________

7 Pp. 531-547; pp. 251-258. See also my Separate Opinions in Better


Buildings, Inc. v. National Labor Relations Commission, 347 Phil. 521,
535; 283 SCRA 242, December 15, 1997; and Del Val v. National Labor
Relations Commission, 357 Phil. 286, 294; 296 SCRA 283, 291,
September 25, 1998.

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Agabon vs. National Labor Relations Commission

In ruling that the dismissal should be deemed legal, the


majority has virtually rendered nugatory the employeesÊ
right to due process as mandated by law and the
Constitution. It has implicitly allowed the employer simply
to ignore such right and just pay the employee.
I respectfully submit that illegal dismissal results not
only from the8
absence
9
of a legal cause, in accordance with
Articles 282 to 284 of the Labor Code, but likewise from
the failure to observe due process. There are many labor
and other cases in which acts violative of due process have
unequivocally been declared illegal by the Court. They 10
range from similar cases of employment termination to
criminal

_______________

8 „Art. 282. Termination by employer.·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 representative; and
(e) Other causes analogous to the foregoing.‰

9 „Art. 284. Disease as a ground for termination.·An employer may


terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law
or is prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.‰
10 Pepsi-Cola Bottling Co. v. National Labor Relations Commission,
210 SCRA 277, June 23, 1992; Bacus v. Ople, 217 Phil. 670; 132

658

658 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission
11 12 13
prosecutions to administrative cases and election cases
as well. I made a summary of these Decisions in my
aforesaid Serrano Opinion, which I shall no longer repeat
here.

Violation of Due Process Amounts to Illegality of


Proceedings
In all these cases, the Court has uniformly ruled that the
denial of the fundamental right to due process resulted in
the illegality of the proceedings. Thus, the deprived
individuals should be brought back to their status quo ante,
not merely awarded nominal damages or indemnity.
Our labor force deserves no less. Indeed, 14the State
recognizes it as its primary social economic force, to which15
it is constitutionally mandated to afford full protection.
Yet, the Court refuses to declare the illegality of dismissals
made without due process. I insist that we should denounce
such dismissals as null and void and grant our workers
these proper reliefs: (1) a declaration that the termination
or dismissal is illegal and unconstitutional; and (2) the
reinstatement of the employee, without loss of seniority
rights and accruing benefits plus full back wages.

_______________

SCRA 690, October 23, 1984; Philippine National Bank v. Apalisok,


199 SCRA 92, July 12, 1991.
11 People v. Bocar, 138 SCRA 166, 170-171, August 16, 1985; People v.
San Diego, 135 Phil. 514; 26 SCRA 522, December 24, 1968; People v.
Sola, 191 Phil. 21; 103 SCRA 393, March 17, 1981; People v. Dacudao,
170 SCRA 489, February 21, 1989; People v. Calo, Jr., 186 SCRA 620,
June 18, 1990; People v. Burgos, 200 SCRA 67, August 2, 1991; People v.
Parazo, 369 Phil. 398; 310 SCRA 146, July 8, 1999 (Resolution on the
Motion for Reconsideration).
12 Fabella v. Court of Appeals, 346 Phil. 940; 282 SCRA 256, November
28, 1997.
13 Villarosa v. Commission on Elections, 371 Phil. 497; 319 SCRA 470,
November 29, 1999.
14 §18, Art. II, 1987 Constitution.
15 §3, Art. XIII, Ibid.

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Agabon vs. National Labor Relations Commission

Exception to Due Process Sanctions


The only exception to the above sanctions would be a case
analogous to Wenphil, one clearly showing the
impracticality and the futility of observing the procedure
laid down by law in terminating employment. To recall, the
employee involved in Wenphil had exhibited a violent
temper and caused trouble even in the presence of the
restaurantÊs customers. In an altercation with a co-
employee, he „slapped [the latterÊs] cap, stepped on his foot
and picked up the ice scooper and brandished it against
[him].‰ When summoned by the assistant manager, the
employee „shouted and uttered profane words‰ instead of
giving an explanation. Under the circumstances, instant
action was necessary to preserve order and discipline, as
well as to safeguard the customersÊ confidence in the
employerÊs business·a fastfood chain catering to the
general public, towards whom courtesy was a prized virtue.
In most of the succeeding cases, though·including the
present one before us in which petitioners had been
dismissed without prior notice and hearing·there were
ample opportunities for the employers to observe the
requisites of due process. There were no exigencies that
called for immediate response.
For the infringement of the fundamental right to due
process, I believe that the price the Court once again sets is
too insignificant and too niggardly at such a late hour. I
iterate that imposing a stiffer sanction is the only way to
emphasize to employers the extreme importance of the
right to due process. Such right is too sacred to be taken for
granted or glossed over in a cavalier fashion. To hold
otherwise, as by simply imposing an indemnity (or even
„full back wages‰ as was done in Serrano), is to allow the
rich and powerful to virtually purchase and thereby stifle a
constitutional right granted to the poor and marginalized.

660

660 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

Respect for Due Process Should Be Maintained


The ponencia concedes that the workerÊs right to due
process is both statutory and constitutional in nature. Yet,
it still gives it little regard and value.
May16I just recall that in Wallem Maritime Services v.
NLRC, the Court said that „[o]neÊs employment,
profession, trade or calling is a property right within the
protection of the constitutional guaranty of due process of
law.‰ An objective reading of the Bill of Rights clearly
shows that the due process protection is not limited to
government action alone. The Constitution does not say
that the right cannot be claimed against private
individuals and entities. Indeed, the employee is entitled to
due process, not because of the Labor Code, but because of
the Constitution. Elementary is the doctrine that
constitutional provisions are deemed written into every
statute, contract or undertaking.
True, traditional doctrine holds that constitutional
rights may be invoked only against the State, which in the
past was the only entity in a position to violate these
rights, including the due process clause. However, with the
advent of liberalization, deregulation and privatization, the
State tended to cede some of its powers to the „market
forces.‰ Hence, corporate behemoths and even individuals
may now be sources of abuses and threats to human rights
and liberties. I believe, therefore, that this traditional
doctrine should be modified to enable the judiciary to cope
with new paradigms and to continue protecting the people
from new forms of abuses.
In the final analysis, what is involved here is not simply
the amount of monetary award·whether insignificant or
substantial; whether termed as indemnity, penalty,
separation pay or full back wages. Neither is the subject
here merely

_______________

16 331 Phil. 476, 485; 263 SCRA 174, 182, October 15, 1996, per
Romero, J.

661

VOL. 442, NOVEMBER 17, 2004 661


Agabon vs. National Labor Relations Commission

a matter of respect for workersÊ rights or adequate


protection of labor. The bottom line is the constitutionally
granted right to due process, which is the very essence of
justice itself. Where the rule of law is the bedrock of our
free society, justice is its very lifeblood. A denial of due
process is thus no less than a denial of justice itself.

Summary
In conclusion, I believe that even if there was just or
authorized cause for termination of employment, but due
process was not afforded the employee, the dismissal
proceedings must be declared null and void. Consequently,
the employee must be reinstated and given full back wages
and accruing benefits. Depending on the facts of each case,
damages as provided under applicable articles of the Civil
Code may additionally be awarded.
An exception may be entertained if the employer could
adequately prove that under the peculiar circumstances of
the case, there was no opportunity to comply with due
process requirements; or doing so would have been
impractical or gravely adverse to the employer, as when the
employee was caught in flagrante delicto. Under such
circumstances, dismissal would not be illegal, and no
award may properly be granted. Nevertheless, as a
measure of compassion in this specific instance, the
employee may be given a nominal sum depending on the
circumstances, pursuant to Article 2221 of the Civil Code.
WHEREFORE, I vote to GRANT the Petition and
ORDER the petitionersÊ REINSTATEMENT without loss of
seniority rights and other privileges, plus FULL BACK
WAGES from the date of termination until actual
reinstatement.

662

662 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

SEPARATE OPINION:

TINGA, J.:

I concur in the result, the final disposition of the petition


being correct. There is no denying the importance of the
CourtÊs ruling today, which should be considered as
definitive as to the effect of the failure to render the notice
and hearing required under the Labor Code when an
employee is being dismissed for just causes, as defined
under the same law. The Court emphatically reaffirms the
rule that dismissals for just cause are not invalidated due
to the failure of the employer to observe the proper notice
and hearing requirements under the Labor Code. At the
same time, The Decision likewise establishes that the Civil
Code provisions on damages serve as the proper framework
for the appropriate relief to the employee dismissed for just
cause if the
1
notice-hearing requirement is not met. Serrano
v. NLRC, insofar as it is controlling in dismissals for
unauthorized causes, is no longer the controlling precedent.
Any and all previous rulings and statements of the Court
inconsistent with these determinations are now deemed
inoperative.
My views on the questions raised in this petition are
comprehensive, if I may so in all modesty. I offer this
opinion to discuss the reasoning behind my conclusions,
pertaining as they do to questions of fundamental
importance.

Prologue

The factual backdrop of the present Petition for Review is


not novel. Petitioners claim that they were illegally
dismissed by the respondents, who allege in turn that
petitioners had actually abandoned their employment.
There is little difficulty in upholding the findings of the
NLRC and the Court of Appeals that petitioners are guilty
of abandonment, one of the

_______________

1 380 Phil. 416; 323 SCRA 445.

663

VOL. 442, NOVEMBER 17, 2004 663


Agabon vs. National Labor Relations Commission

just causes for termination under the Labor Code. Yet, the
records also show that the employer was remiss in not
giving the notice required by the Labor Code; hence, the
resultant controversy as to the legal effect of such failure
vis-à-vis the warranted dismissal.
Ostensibly,
2
the matter has been settled by our decision
in Serrano , wherein the Court ruled that the failure to
properly observe the notice requirement did not render the
dismissal, whether for just or authorized causes, null and
void, for such violation was not a denial of the
constitutional right to due process, and that the measure of
appropriate damages in such cases ought to be the amount
of wages the employee should have received were it not for3
the termination of his employment without prior notice.
Still, the Court has, for good reason, opted to reexamine the
so-called Serrano doctrine through the present petition

Antecedent Facts

Respondent Riviera Home Improvements, Inc. (Riviera


Home) is engaged in the manufacture and installation of
gypsum board and cornice. In January of 1992, the
Agabons were hired in January of 1992 as cornice installers
by Riviera Home. According to their personnel file with
Riviera Home, the Agabons given address was 3RDS
Tailoring, E. Rodriguez Ave., Moonwalk
4
Subdivision, P-II
Parañaque City, Metro Manila.
It is not disputed that sometime around February 1999,
the Agabons stopped rendering services for Riviera Home.
The Agabons allege that beginning on 23 February 1999,5
they stopped receiving assignments from Riviera Home.
When they demanded an explanation, the manager of
Riviera

_______________

2 Id.
3 Id., at pp. 443, 445, 448; pp. 472, 474, 476.
4 Rollo, p. 42.
5 Id., at p. 32.

664

664 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

Homes, Marivic Ventura, informed them that they would


be hired again, but on a „pakyaw‰ (piece-work) basis. When
the Agabons spurned this proposal, Riviera Homes refused
to continue6their employment under the original terms and
agreement. Taking affront, the Agabons filed a complaint
for illegal dismissal with the National Labor Relations
Commission („NLRC‰).
Riviera Homes adverts to a different version of events
leading to the filing of the complaint for illegal dismissal. It
alleged that in the early quarter of 1999, the Agabons
stopped reporting for work with Riviera. Two separate
letters dated 10 March 1999, were sent to the Agabons at
the address indicated in their personnel file. In these
notices, the 7 Agabons were directed to report for work
immediately. However, these notices were returned
unserved with the notation „RTS Moved.‰ Then, in June of
1999, Virgilio Agabon informed Riviera Homes by
telephone that he and Jenny Agabon were ready to return
to work for Riviera Homes, on the condition that their
wages be first adjusted. On 18 June 1999, the Agabons
went to Riviera Homes, and in a meeting with
management, requested a wage increase of up to Two
Hundred Eighty Pesos (P280.00) a day. When no
affirmative response was offered by Riviera Homes, 8
the
Agabons initiated the complaint before the NLRC.
In their Position Paper, the Agabons likewise alleged
that they were required to work even on holidays and rest
days, but were never paid the legal holiday pay or the
premium pay for holiday or rest day. They also asserted
that they were denied Service Incentive Leave pay, and
that Virgilio Agabon was not 9
given his thirteenth (13th)
month pay for the year 1998.

_______________

6 Ibid.
7 Id., at pp. 59-60.
8 Id., at p. 15.
9 Id., at p. 34.

665

VOL. 442, NOVEMBER 17, 2004 665


Agabon vs. National Labor Relations Commission

After due deliberation, Labor Arbiter Daisy G. Cauton-


Barcelona rendered a Decision dated 28 December 1999,
finding the termination of the Agabons illegal, and ordering
Riviera Homes to pay backwages in the sum of Fifty Six
Thousand Two Hundred Thirty One Pesos and Ninety
Three Centavos (P56,231.93) each. The Labor Arbiter
likewise ordered, in lieu of reinstatement, the payment of
separation pay of one (1) month pay for every year of
service from date of hiring up to 29 November 1999, as well
as the payment of holiday pay, service incentive leave pay,
and premium pay for holiday and restday, 10 plus thirteenth
(13th) month differential to Virgilio Agabon.
In so ruling, the Labor Arbiter declared that Riviera
Homes was unable to satisfactorily refute the AgabonsÊ
claim that they were no longer given work to do after 23
February 1999 and that their rehiring was only on
„pakyaw‰ basis. The Labor Arbiter also held that Riviera
Homes failed to comply with the notice requirement, noting
that Riviera Homes well knew of the change of address of
the Agabons, considering that the identification cards it
issued stated 11 a different address from that on the
personnel file. The Labor Arbiter asserted the principle
that in all termination cases, strict compliance by the
employer with the demands of procedural and substantive
due process is 12a condition sine qua non for the same to be
declared valid.
On appeal, the NLRC Second Division set aside the
Labor ArbiterÊs Decision and 13ordered the dismissal of the
complaint for lack of merit. The NLRC held that the
Agabons were not

_______________

10 Id., at p. 92.
11 Id., at p. 91. The address indicated in the identification cards was „V
6 Cruz Iron Works, E. Rodriguez Parañaque City.‰
12 Ibid., citing Philippine Air Lines v. National Labor Relations
Commission, 279 SCRA 533 (1997).
13 In a Decision dated 21 August 2000, penned by Commissioner V.R.
Calaycay, and concurred in by Presiding Commissioner R. Aquino and
Commissioner A. Gacutan.

666

666 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

able to refute the assertion that for the payroll period


ending on 15 February 1999, Virgilio and Jenny Agabon
worked for only two and one-half (2 1/2) and three (3) days,
respectively. It disputed the earlier finding that Riviera
Homes had known of the change in address, noting that the
address indicated in the identification cards was not the
Agabons, but that of the persons who should14 be notified in
case of emergency concerning the employee. Thus, proper
service of the notice was deemed to have been
accomplished. Further, the notices evinced good reason to
believe that the Agabons had not been dismissed, but had
instead abandoned their jobs by refusing to report for work.
In support of its conclusion that the Agabons had
abandoned their work, the NLRC also observed that the
Agabons did not seek reinstatement, but only separation
pay. While the choice of relief was premised by the Agabons
on their purported strained relations with Riviera Homes,
the NLRC pointed out that such claim was amply belied by
the fact that the Agabons had actually sought a conference
with Riviera Homes in June of 1999. The NLRC likewise
found that the failure of the Labor Arbiter to justify the
award of extraneous money claims, such as holiday and
service incentive leave pay, confirmed that there was no
proof to justify such claims.
A Petition for Certiorari was promptly filed with the
Court of Appeals by the Agabons, imputing grave abuse of
discretion on the part of the NLRC in dismissing 15
their
complaint for illegal dismissal. In a Decision dated 23
January 2003, the Court of Appeals affirmed the finding
that the Agabons had abandoned their employment. It
noted that the two elements constituting abandonment had
been established, to wit: the failure to report for work or
absence without valid justifiable reason, and; a clear
intention to sever the employer-employee relationship. The
intent to sever the employer-employee rela-

_______________

14 Rollo, p. 127.
15 Penned by Associate Justice M. Buzon, concurred in by Associate
Justices J. Guevara-Salonga and D. Pine.

667

VOL. 442, NOVEMBER 17, 2004 667


Agabon vs. National Labor Relations Commission

tionship was buttressed by the AgabonÊs choice to seek not


reinstatement, but separation pay. The Court of Appeals
likewise found that the service of the notices were valid, as
the Agabons did not notify Riviera Homes of their change
of address, and thus the failure to return to work despite
notice amounted to abandonment of work.
However, the Court of Appeals reversed the NLRC as
regards the denial of the claims for holiday pay, service
incentive leave pay, and the balance of Virgilio AgabonÊs
thirteenth (13th) month pay. It ruled that the failure to
adduce proof in support thereof was not fatal and that the
burden of proving that such16
benefits had already been paid
rested on Riviera Homes. Given that Riviera Homes failed
to present proof of payment to the Agabons of their holiday
pay and service incentive leave pay for the years 1996,
1997 and 1998, the Court of Appeals chose to believe that
such benefits had not actually been received by the
employees. It also ruled that the apparent deductions made
by Riviera Homes on the thirteenth (13th) month pay of
Virgilio Agabon violated Section 10 of the Rules and 17
Regulations Implementing Presidential Decree No. 851.
Accordingly, Riviera Homes was ordered to pay the
Agabons holiday for four (4) regular holidays in 1996, 1997
and 1998, as well as their service incentive leave pay for
said years, and the balance of Virgilio AgabonÊs thirteenth
(13th) month pay for 1998 in the amount18
of Two Thousand
One Hundred Fifty Pesos (P2,150.00).
In their Petition for Review, the Agabons claim that they
had been illegally dismissed, reasserting their version of
events, thus: (1) that they had not been given new assign-

_______________

16 In their Petition for Certiorari before the Court of Appeals, the


Agabons particularly claimed that they were required to work on four
holidays, namely, Araw Ng Kagitingan, National Heroes Day, Bonifacio
Day, and Rizal Day. See Rollo, p. 154.
17 Deducted from Virgilio AgabonÊs thirteenth (13th) month pay were
his SSS loan and expenses for shoes. Rollo, pp. 171-172.
18 Rollo, p. 173.

668

668 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

ments since 23 February 1999; (2) that they were told that
they would only be re-hired on a „pakyaw‰ basis, and; (3)
that Riviera Homes had knowingly sent the notices to their
old address despite its knowledge of their change
19
of address
as indicated in the identification cards. Further, the
Agabons note that only one notice was sent to each of them,
in violation of the rule that the employer must furnish two
written notices before termination·the first to apprise the
employee of the cause for which dismissal is sought, and
the second 20
to notify the employee of the decision of
dismissal. The Agabons likewise maintain that they did
not seek reinstatement owing to the strained relations
between them and Riviera Homes.
The Agabons present to this Court only one issue, i.e.:
whether or not21
they were illegally dismissed from their
employment. There are several dimensions though to this
issue which warrant full consideration.

The Abandonment Dimension

Review of Factual Finding of Abandonment

As the Decision points out, abandonment is characterized


by the failure to report for work or absence without valid or
justifiable reason, and a clear intention to sever the
employer-employee relationship. The question of whether
or not an employee has22 abandoned employment is
essentially a factual issue. The NLRC and the Court of
Appeals, both appropriate triers of fact, concluded that the
Agabons had actually abandoned their employment, thus
there is little need for deep

_______________

19 Id., at p. 22.
20 Id., at p. 23 citing Kingsize Manufacturing Corporation v. National
Labor Relations Commission, 238 SCRA 349 (1994).
21 Rollo, p. 20.
22 Palencia v. National Labor Relations Commission, G.R. No. L-
75763, 21 August 1987, 153 SCRA 247; Pure Blue Industries v. National
Labor Relations Commission, G.R. No. 115879, 16 April 1997, 271 SCRA
259.

669

VOL. 442, NOVEMBER 17, 2004 669


Agabon vs. National Labor Relations Commission

inquiry into the correctness of this factual finding. There is


no doubt that the Agabons stopped reporting for work
sometime in February of 1999. And there is no evidence to
support their assertion that such absence was due to the
deliberate failure of Riviera Homes to give them work.
There is also the fact, as noted by the NLRC and the Court
of Appeals, that the Agabons did not pray for
reinstatement,
23
but only for separation pay and money
claims. This failure indicates their disinterest in
maintaining the employer-employee relationship and their
unabated avowed intent to sever it. Their excuse that
strained relations between them and Riviera Homes
rendered reinstatement no longer feasible was hardly
24
given
credence by the NLRC and the Court of Appeals.
The contrary conclusion arrived at by the Labor Arbiter
as regards abandonment is of little bearing to the case. All
that the Labor Arbiter said on that point was that Riviera
Homes was not able to refute the AgabonsÊ25
claim that they
were terminated on 23 February 1999. The Labor Arbiter
did not explain why or how such finding was reached or
how such finding was more credible than that of Riviera
HomesÊ. Being bereft of reasoning, the conclusion deserves
scant consideration.

Compliance with Notice Requirement


At the same time, both the NLRC and the Court of Appeals
failed to consider the apparent fact that the rules
governing notice of termination were not complied with by
Riviera Homes. Section 2, Book V, Rule XXIII of the
Omnibus Rules Implementing the Labor Code
(Implementing Rules) specifi-

_______________

23 Rollo, pp. 129, 170.


24 Both the NLRC and the Court of Appeals noted that the 10 June
1999 conference between the Agabons and Riviera Homes was at the
behest of the Agabons, thus countering the claim of strained relations.
Rollo, pp. 130, 170-171.
25 Rollo, p. 91.

670
670 SUPREME COURT REPORTS ANNOTATED
Agabon vs. National Labor Relations Commission

cally provides that for termination of employment based on


just causes as defined in Article 282, there must be: (1)
written notice served on the employee specifying the
grounds for termination and giving employee reasonable
opportunity to explain his/her side; (2) a hearing or
conference wherein the employee, with the assistance of
counsel if so desired, is given opportunity to respond to the
charge, present his evidence or rebut evidence presented
against him/her; and (3) written notice of termination
served on the employee indicating that upon due
consideration of all the circumstances, grounds have been
established to justify termination.
At the same time, Section 2, Book V, Rule XXIII of the
Implementing Rules does not require strict compliance
with the above procedure, but only that the same be
„substantially observed.‰
Riviera Homes maintains that the letters it sent on 10
March 1999 to the Agabons sufficiently complied with the
notice rule. These identically worded letters noted that the
Agabons had stopped working without permission that
they failed to return for work despite having been
repeatedly told
26
to report to the office and resume their
employment. The letters ended with an invitation to27the
Agabons to report back to the office and return to work.
The apparent purpose of these letters was to advise the
Agabons that they were welcome to return back to work,
and not to notify them of the grounds of termination. Still,
considering that only substantial compliance with the
notice requirement is required, I am prepared to say that
the letters sufficiently conform to the first notice required
under the Implementing Rules. The purpose of the first
notice is to duly inform the employee that a particular
transgression is being considered against him or her, and
that an opportunity is being offered for him or her to
respond to the charges. The

_______________

26 Supra note 6.
27 Id.

671
VOL. 442, NOVEMBER 17, 2004 671
Agabon vs. National Labor Relations Commission

letters served the purpose of informing the Agabons of the


pending matters beclouding their employment, and
extending them the opportunity to clear the air.
Contrary to the AgabonsÊ claim, the letter-notice was
correctly sent to the employeeÊs last known address, in
compliance with the Implementing Rules. There is no
dispute that these letters were not actually received by the
Agabons, as they had apparently moved out of the address
indicated therein. Still, the letters were sent to what
Riviera Homes knew to be the AgabonsÊ last known
address, as indicated in their personnel file. The Agabons
insist that Riviera Homes had known of the change of
address, offering as proof their company IDs which
purportedly print out their correct new address. Yet, as
pointed out by the NLRC and the Court of Appeals, the
addresses indicated in the IDs are not the Agabons, but
that of the person who is to be notified in case on
emergency involve either or both of the Agabons.
The actual violation of the notice requirement by Riviera
Homes lies in its failure to serve on the Agabons the second
notice which should inform them of termination. As the
Decision notes, Riviera HomesÊ argument that sending the
second notice was useless due to the change of address is
inutile, since the Implementing Rules plainly require that
the notice of termination should be served at the
employeeÊs last known address.
The importance of sending the notice of termination
should not be trivialized. The termination letter serves as
indubitable proof of loss of employment, and its receipt
compels the employee to evaluate his or her next options.
Without such notice, the employee may be left uncertain of
his fate; thus, its service is mandated by the Implementing
Rules. Noncompliance with the notice rule, as evident in
this case, contravenes the Implementing Rules. But does
the violation serve to invalidate the AgabonsÊ dismissal for
just cause?

672

672 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission
The So-Called Constitutional Law Dimension

Justices Puno and Panganiban opine that the Agabons


should be reinstated as a consequence of the violation of
the notice requirement. I respectfully disagree, for the
reasons expounded below.

Constitutional Considerations
Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases

Justice Puno proposes that the failure to render due notice


and hearing prior to dismissal for just cause constitutes a
violation of the constitutional right to due process. This
view, as acknowledged by Justice Puno himself, runs
contrary
28
to the CourtÊs pronouncement in Serrano v.
NLRC that the absence of due notice and hearing prior to
dismissal, if for just cause, violates statutory due process.
The ponencia of Justice Vicente V. Mendoza in Serrano
provides this cogent overview of the history of the doctrine:

Indeed, to contend that the notice requirement in the Labor Code is


an aspect of due process is to overlook the fact that Art. 283 had its
origin in Art. 302 of the Spanish Code of Commerce of 1882 which
gave either party to the employer-employee relationship the right to
terminate their relationship by giving notice to the other one month
in advance. In lieu of notice, an employee could be laid off by paying
him a mesada equivalent to his salary for one month. This provision
was repealed by Art. 2270 of the Civil Code, which took effect on
August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise
known as the Termination Pay Law, was enacted reviving the
mesada. On June 21, 1957, the law was amended by R.A. No. 1787
29
providing for the giving of advance notice for every year of service.

_______________

28 Supra note 1.
29 Supra note 1 at p. 446; p. 469.

673

VOL. 442, NOVEMBER 17, 2004 673


Agabon vs. National Labor Relations Commission
Under Section 1 of the Termination Pay Law, an employer
could dismiss an employee without just cause by serving
written notice on the employee at least one month in
advance or one-half month for every30
year of service of the
employee, whichever was longer. Failure to serve such
written notice entitled the employee to compensation
equivalent to his salaries or wages corresponding to the
required period of notice from the date of termination of his
employment.
However, there was no similar written notice
requirement under the Termination Pay Law if the
dismissal of the employee was for just cause. The Court,
speaking through Justice
31
JBL Reyes, ruled in Phil.
Refining Co. v. Garcia:

[Republic] Act 1052, as amended by Republic Act 1787, impliedly


recognizes the right of the employer to dismiss his employees (hired
without definite period) whether for just case, as therein defined or
enumerated, or without it. If there be just cause, the employer is not
required to serve any notice of discharge nor to disburse termination
32
pay to the employee. x x x

_______________

30 See Section 1, Republic Act No. 1052, which states:

Sec. 1. In cases of employment, without a definite period, in a commercial,


industrial, or agricultural establishment or enterprise, the employer or the
employee may terminate at any time the employment with just cause; or
without just cause in the case of an employee by serving written notice on the
employer at least one month in advance, or in the case of an employer, by
serving such notice to the employee at least one month in advance or one-half
month for every year of service of the employee, whichever is longer, a fraction
of at least six months being considered as one whole year.
The employee, upon whom no such notice was served in case of termination
of employment without just cause shall be entitled to compensation from the
date of termination of his employment in an amount equivalent to his salaries
or wages corresponding to the required period of notice.

31 124 Phil. 698; 18 SCRA 107 (1966).


32 Id., at p. 703; p. 111.

674

674 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission
Clearly, the Court, prior to the enactment of the Labor
Code, was ill-receptive to the notion that termination for
just cause without notice or hearing violated the
constitutional right to due process. Nonetheless, the Court
recognized an award of 33damages as the appropriate
remedy. In Galsim v. PNB, the Court held:

Of course, the employerÊs prerogative to dismiss employees hired


without a definite period may be with or without cause. But if the
manner in which such right is exercised is abusive, the employer
34
stands to answer to the dismissed employee for damages.

The Termination Pay Law was among the repealed laws


with the enactment of the Labor Code in 1974.
Significantly, the Labor Code, in its inception, did not
require notice or hearing before an employer could
terminate an employee for just cause. As Justice Mendoza
explained:

Where the termination of employment was for a just cause, no


notice was required to be given to the employee. It was only on
September 4, 1981 that notice was required to be given even where
the dismissal or termination of an employee was for cause. This was
made in the rules issued by the then Minister of Labor and
Employment to implement B.P. Blg. 130 which amended the Labor
Code. And it was still much later when the notice requirement was
embodied in the law with the amendment of Art. 277(b) by R.A. No.
35
6715 on March 2, 1989.

It cannot be denied though that the thinking that absence


of notice or hearing prior to termination constituted a
constitutional violation has gained a jurisprudential
foothold with the Court. Justice Puno, in his Dissenting
Opinion, cites several cases in support of this theory,
beginning with Batangas

_______________

33 139 Phil. 747; 29 SCRA 293 (1969).


34 Id., at p. 754; p. 298.
35 Serrano v. National Labor Relations Commission, supra note 1 at p.
447; p. 470.

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Agabon vs. National Labor Relations Commission
36
Laguna Tayabas Bus Co. v. Court of Appeals wherein we
held that „the failure of petitioner to give the private
respondent the benefit of a hearing before he was
dismissed constitutes an infringement
37
on his constitutional
right to due process of law.‰
Still, this theory has been refuted, pellucidly and
effectively to my mind, by Justice MendozaÊs disquisition in
Serrano, thus:

x x x There are three reasons why, on the other hand, violation by


the employer of the notice requirement cannot be considered a
denial of due process resulting in the nullity of the employeeÊs
dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a
limitation on governmental powers. It does not apply to the exercise
of private power, such as the termination of employment under the
Labor Code. This is plain from the text of Art. III, §1 of the
Constitution, viz.: „No person shall be deprived of life, liberty, or
property without due process of law. . . .‰ The reason is simple: Only
the State has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to ensure that
the exercise of this power is consistent with what are considered
civilized methods.
The second reason is that notice and hearing are required under
the Due Process Clause before the power of organized society are
brought to bear upon the individual. This is obviously not the case
of termination of employment under Art. 283. Here the employee is
not faced with an aspect of the adversary system. The purpose for
requiring a 30-day written notice before an employee is laid off is
not to afford him an opportunity to be heard on any charge against
him, for there is none. The purpose rather is to give him time to
prepare for the eventual loss of his job and the DOLE an
opportunity to determine whether economic causes do exist
justifying the termination of his employment.
xxx

_______________

36 G.R. No. L-38482, 18 June 1976, 71 SCRA 470.


37 Serrano v. National Labor Relations Commission, supra note 1 at p.
480; p. 514.

676
676 SUPREME COURT REPORTS ANNOTATED
Agabon vs. National Labor Relations Commission

The third reason why the notice requirement under Art. 283 can not
be considered a requirement of the Due Process Clause is that the
employer cannot really be expected to be entirely an impartial judge
of his own cause. This is also the case in termination of employment
for a just cause under Art. 282 (i.e., serious misconduct or willful
disobedience by the employee of the lawful orders of the employer,
gross and habitual neglect of duties, fraud or willful breach of trust
of the employer, commission of crime against the employer or the
latterÊs immediate family or duly authorized representatives, or
38
other analogous cases)
39
The Court in the landmark case of People v. Marti
clarified the proper dimensions of the Bill of Rights.

That the Bill of Rights embodied in the Constitution is not meant to


be invoked against acts of private individuals finds support in the
deliberations of the Constitutional Commission. True, the liberties
guaranteed by the fundamental law of the land must always be
subject to protection. But protection against whom? Commissioner
Bernas in his sponsorship speech in the Bill of Rights answers the
query which he himself posed, as follows:

„First, the general reflections. The protection of fundamental liberties in


the essence of constitutional democracy. Protection against whom?
Protection against the state. The Bill of Rights governs the relationship
between the individual and the state. Its concern is not the relation
between individuals, between a private individual and other individuals.
What the Bill of Rights does is to declare some forbidden zones in the
private sphere inaccessible to any power holder.‰ (Sponsorship Speech of
Commissioner Bernas; Record of the Constitutional Commission, Vol. 1,
40
p. 674; July 17, 1986; Italics supplied)

I do not doubt that requiring notice and hearing prior to


termination for just cause is an admirable sentiment borne
out of basic equity and fairness. Still, it is not a
constitutional requirement that can impose itself on the
relations of private

_______________

38 Serrano, supra note 1 at pp. 445-446; pp. 468-470.


39 G.R. No. 81561, 18 January 1991, 193 SCRA 57.
40 Id., at p. 67.
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Agabon vs. National Labor Relations Commission

persons and entities. Simply put, the Bill of Rights affords


protection against possible State oppression against its
citizens, but not against an unjust or repressive conduct by
a private party towards another.
Justice Puno characterizes the notion that constitutional
due process limits government action alone as „passé,‰ and
adverts to nouvelle vague theories which assert that private
conduct may be restrained by constitutional due process.
His dissent alludes to the American experience making
references to the post-Civil War/pre-World War II era when
the US Supreme Court seemed overly solicitous to the
rights of big business over those of the workers.
Theories, no matter how entrancing, remain theoretical
unless adopted by legislation, or more controversially, by
judicial opinion. There were a few decisions of the US
Supreme Court that, ostensibly, imposed on private persons
the values of the constitutional guarantees. However, in
deciding the cases, the American High Court found it
necessary to link the actors to adequate elements of the
„State‰ since the Fourteenth Amendment41
plainly begins
with the words „No State shall . . .‰
More crucially to the American experience, it had
become necessary to pass legislation in order to compel
private persons to observe constitutional values. While the
equal protection clause was deemed sufficient by the
Warren Court to bar racial segregation in public facilities,
it necessitated enactment of the Civil Rights Acts of 1964 to
prohibit segregation as enforced by private persons within
their property. In this jurisdiction, I have trust in the
statutory regime that governs the correction of private
wrongs. There are thousands of statutes, some penal or
regulatory in nature, that are the source of actionable
claims against private persons. There is even no stopping
the State, through the legislative cauldron, from

_______________

41 See G. Gunther and K. Sullivan, Constitutional Law (14th ed.) at p.


867.
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678 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

compelling private individuals, under pain of legal


sanction, into observing the norms ordained in the Bill of
Rights.
Justice PanganibanÊs Separate Opinion asserts that
corporate behemoths and even individuals may now be
sources 42of abuses and threats to human rights and
liberties. The concern is not unfounded, but appropriate
remedies exist within our statutes, and so resort to the
constitutional trump card is not necessary. Even if we were
to engage the premise, the proper juristic exercise should
be to examine whether an employer has taken the
attributes of the State so that it could be compelled by the
Constitution to observe the proscriptions of the Bill of
Rights. But the strained analogy simply does not square
since the attributes of an employer are starkly incongruous
with those of the State. Employers plainly do not possess
the awesome powers and the tremendous resources which
the State has at its command.
The differences between the State and employers are not
merely literal, but extend to their very essences. Unlike the
State, the raison dÊetre of employers in business is to
accumulate profits. Perhaps the State and the employer are
similarly capacitated to inflict injury or discomfort on
persons under their control, but the same power is also
possessed by a school principal, hospital administrator, or a
religious leader, among many others. Indeed, the scope and
reach of authority of an employer pales in comparison with
that of the State. There is no basis to conclude that an
employer, or even the employer class, may be deemed a de
facto state and on that premise, compelled to observe the
Bill of Rights. There is simply no nexus in their functions,
distaff as they are, that renders it necessary to accord the
same jurisprudential treatment.
It may be so, as alluded in the dissent of Justice Puno,
that a conservative court system overly solicitous to the
concerns of business may consciously gut away at rights or
privileges owing to the labor sector. This certainly
happened before in
_______________

42 Separate Opinion of Justice Panganiban, p. 12.

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Agabon vs. National Labor Relations Commission

the United States in the early part of the twentieth


century, when the progressive labor legislation such as that
enacted during President RooseveltÊs New Deal regime·
most of them addressing problems of labor·were
43
struck
down by an archconservative Court. The preferred
rationale then was to enshrine within the constitutional
order business prerogatives, rendering them superior to the
express legislative intent. Curiously, following its judicial
philosophy at the time the U.S. Supreme Court made due
process guarantee towards employers44 prevail over the
police power to defeat the cause of labor.
Of course, this Court should not be insensate to the
means and methods by which the entrenched powerful
class may maneuver the socio-political system to ensure
self-preservation. However, the remedy to rightward
judicial bias is not leftward judicial bias. The more proper
judicial attitude is to give due respect to legislative
prerogatives, regardless of the ideological sauce they are
dipped in.
While the Bill of Rights maintains45
a position of primacy
in the constitutional hierarchy, it has scope and
limitations that must be respected and asserted by the
Court, even though they may at times serve somewhat
bitter ends. The

_______________

43 See e.g., Morehead v. State of New York, 298 U.S. 587 (1936), which
affirmed the invalidity of minimum wage laws as previously declared in
Adkins v. ChildrenÊs Hospital, 261 U.S. 525 (1923).
44 Famously justified by the Supreme Court as an assertion of the
„liberty of contract‰, or „the right to contract about oneÊs affairs‰, as
contained in the Fourteenth Amendment. Adkins v. ChildrenÊs Hospital,
261 U.S. 525, 545. (1923). But as Justice Holmes famously critiqued:
„Contract is not specially mentioned in the text (of the Fourteenth
Amendment) that we have to construe. It is merely an example of doing
what you want to do, embodied in the word liberty. But pretty much all
law consists in forbidding men to do some things that they want to do,
and contract is no more exempt from law than other acts.‰ Adkins v.
ChildrenÊs Hospital, Id., at p. 568.
45 See People v. Tudtud, G.R. No. 144037, 26 September 2003, 412
SCRA 142.

680

680 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

dissenting opinions are palpably distressed at the effect of


the Decision, which will undoubtedly provoke those
reflexively sympathetic to the labor class. But haphazard
legal theory cannot be used to justify the obverse result.
The adoption of the dissenting views would give rise to all
sorts of absurd constitutional claims. An excommunicated
Catholic might demand his/her reinstatement into the good
graces of the Church and into communion on the ground
that excommunication was violative of the constitutional
right to due process. A celebrity contracted to endorse Pepsi
Cola might sue in court to void a stipulation that prevents
him/her from singing the praises of Coca Cola once in a
while, on the ground that such stipulation violates the
constitutional right to free speech. An employee might sue
to prevent the employer from reading outgoing e-mail sent
through the company server using the company e-mail
address, on the ground that the constitutional right to
privacy of communication would be breached.
The above concerns do not in anyway serve to trivialize
the interests of labor. But we must avoid overarching
declarations in order to justify an end result beneficial to
labor. I dread the doctrinal acceptance of the notion that
the Bill of Rights, on its own, affords protection and
sanctuary not just from the acts of State but also from the
conduct of private persons. Natural and juridical persons
would hesitate to interact for fear that a misstep could lead
to their being charged in court as a constitutional violator.
Private institutions that thrive on their exclusivity, such as
churches or cliquish groups, could be forced to renege on
their traditional tenets, including vows of secrecy and the
like, if deemed by the Court as inconsistent with the Bill of
Rights. Indeed, that fundamental right of all private
persons to be let alone would be forever diminished because
of a questionable notion that contravenes with centuries of
political thought.
It is not difficult to be enraptured by novel legal ideas.
Their characterization is susceptible to the same marketing
traps that hook consumers to new products. With the help
of

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Agabon vs. National Labor Relations Commission

unique wrapping, a catchy label, and testimonials from


professed experts from exotic lands, a malodorous idea may
gain wide acceptance, even among those self-possessed
with their own heightened senses of perception. Yet before
we join the mad rush in order to proclaim a theory as
„brilliant,‰ a rigorous test must first be employed to
determine whether it complements or contradicts our own
system of laws and juristic thought. Without such analysis,
we run the risk of abnegating the doctrines we have
fostered for decades and the protections they may have
implanted into our way of life.
Should the Court adopt the view that the Bill of Rights
may be invoked to invalidate actions by private entities
against private individuals, the Court would open the
floodgates to, and the docket would be swamped with,
litigations of the scurrilous sort. Just as patriotism is the
last refuge of scoundrels, the broad constitutional claim is
the final resort of the desperate litigant.

Constitutional Protection of Labor


The provisions of the 1987 Constitution affirm the primacy
of labor and advocate a multi-faceted state policy that
affords, among others, full protection to labor. Section 18,
Article II thereof provides:

The State affirms labor as a primary social economic force. It shall


protect the rights of workers and promote their welfare.

Further, Section 3, Article XIII states:

The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and
equal employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security to tenure, humane conditions of work,
and a living wage. They shall also participate in policy and decision-

682

682 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

making processes affecting their rights and benefits as may be


provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.

The constitutional enshrinement of the guarantee of full


protection of labor is not novel to the 1987 Constitution.
Section 6, Article XIV of the 1935 Constitution reads:

The State shall afford protection to labor, especially to working


women, and minors, and shall regulate the relations between the
landowner and tenant, and between labor and capital in industry
and in agriculture. The State may provide for compulsory
arbitration.

Similarly, among the principles and state policies declared


in the 1973 Constitution, is that provided in Section 9,
Article II thereof:

The State shall afford full protection to labor, promote full


employment and equality in employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. The State shall assure
the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work. The
State may provide for compulsory arbitration.

On the other hand, prior to the 1973 Constitution, the right


to security of tenure could only be found in legislative
enactments and their respective implementing rules and
regulations. It was only in the 1973 Constitution that
security of tenure was elevated as a constitutional right.
The development of the concept of security of tenure as a
constitutionally

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recognized right was discussed


46
by this Court in BPI Credit
Corporation v. NLRC, to wit:

The enthronement of the workerÊs right to security of tenure in our


fundamental law was not achieved overnight. For all its liberality
towards labor, our 1935 Constitution did not elevate the right as a
constitutional right. For a long time, the workerÊs security of tenure
had only the protective mantle of statutes and their interpretative
rules and regulations. It was as uncertain protection that
sometimes yielded to the political permutations of the times. It took
labor nearly four decades of sweat and tears to persuade our people
thru their leaders, to exalt the workerÊs right to security of tenure
as a sacrosanct constitutional right. It was Article II, section 2 [9] of
our 1973 Constitution that declared as a policy that the State shall
assure the right of workerÊs to security of tenure. The 1987
Constitution is even more solicitous of the welfare of labor. Section 3
of its Article XIII mandates that the State shall afford full
protection to labor and declares that all workers shall be entitled to
security of tenure. Among the enunciated State policies are the
promotion of social justice and a just and dynamic social order. In
contrast, the prerogative of management to dismiss a worker, as an
aspect of property right, has never been endowed with a
constitutional status.
The unequivocal constitutional declaration that all workers shall
be entitled to security of tenure spurred our lawmakers to
strengthen the protective walls around this hard earned right. The
right was protected from undue infringement both by our
substantive and procedural laws. Thus, the causes for dismissing
employees were more defined and restricted; on the other hand, the
procedure of termination was also more clearly delineated. These
substantive and procedural laws must be strictly complied with
47
before a worker can be dismissed from his employment.
It is quite apparent that the constitutional protection of
labor was entrenched more than eight decades ago, yet
such did not prevent this Court in the past from affirming
dismissals for just cause without valid notice. Nor was
there any pretense made that this constitutional maxim
afforded a laborer

_______________

46 G.R. No. 106027, 234 SCRA 441, 25 July 1994.


47 Id., at pp. 451-452.

684

684 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

a positive right against dismissal for just cause on the


ground of lack of valid prior notice. As demonstrated
earlier, it was only after the enactment of the Labor Code
that the doctrine relied upon by the dissenting opinions
became en vogue. This point highlights my position that the
violation of the notice requirement has statutory moorings,
not constitutional.
It should be also noted that the 1987 Constitution also
recognizes the principle of shared responsibility between
workers and employers, and the right of enterprise to
reasonable returns, expansion, and growth. Whatever
perceived imbalance there might have been under previous
incarnations of the provision have been obviated by Section
3, Article XIII. 48
In the case of Manila Prince Hotel v. GSIS, we affirmed
the presumption that all constitutional provisions are self-
executing. We reasoned that to declare otherwise would
result in the pernicious situation wherein by mere inaction
and disregard by the legislature, constitutional mandates
would be rendered ineffectual. Thus, we held:

As against constitutions of the past, modern constitutions have


been generally drafted upon a different principle and have often
become in effect extensive codes of laws intended to operate directly
upon the people in a manner similar to that of statutory
enactments, and the function of constitutional conventions has
evolved into one more like that of a legislative body. Hence, unless it
is expressly provided that a legislative act is necessary to enforce a
constitutional mandate, the presumption now is that all provisions
of the constitu-

_______________

48 335 Phil. 82; 267 SCRA 408 (1997). The Court therein was divided, with
twelve voting for, and three against the decision. Interestingly, both Justices
Puno and Panganiban adopted the dissenting position that the provisions of
Article XII of the Constitution alone were insufficient to accord the Filipino
bidder a preferential right to obtain the winning bid for Manila Hotel. Their
concession as to the enforceability of paragraph 2, Section 10, Article XII of the
Constitution without enabling legislation was in a situation wherein if the bids
of the Filipino and the foreign entity were tied. Id., at p. 154 (J. Puno,
dissenting) and 154 (J. Panganiban, dissenting).

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tion are self-executing. If the constitutional provisions are treated


as requiring legislation instead of self-executing, the legislature
would have the power to ignore and practically nullify the mandate
of the fundamental law. This can be cataclysmic. That is why the
prevailing view is, as it has always been, that·

. . . in case of doubt, the Constitution should be considered self-executing


rather than non-self-executing. . . . Unless the contrary is clearly
intended, the provisions of the Constitution should be considered self-
executing, as a contrary rule would give the legislature discretion to
determine when, or whether, they shall be effective. These provisions
would be subordinated to the will of the lawmaking body, which could
make them entirely meaningless by simply refusing to pass the needed
49
implementing statute.

In further discussing self-executing provisions, this Court


stated that:

In self-executing constitutional provisions, the legislature may still


enact legislation to facilitate the exercise of powers directly granted
by the constitution, further the operation of such a provision,
prescribe a practice to be used for its enforcement, provide a
convenient remedy for the protection of the rights secured or the
determination thereof, or place reasonable safeguards around the
exercise of the right. The mere fact that legislation may supplement
and add to or prescribe a penalty for the violation of a self-executing
constitutional provision does not render such a provision ineffective
in the absence of such legislation. The omission from a constitution
of any express provision for a remedy for enforcing a right or
liability is not necessarily an indication that it was not intended to
be self-executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on the
subject, but any legislation must be in harmony with the
constitution, further the exercise of constitutional right and make it
more available. Subsequent legislation however does not necessarily
mean that the subject constitutional provision is not, by itself, fully
50
enforceable.

_______________

49 Id., at p. 102 citing 16 Am Jur. 2d 281.


50 Id., at pp. 103-104 citing 16 Am. Jur. 2d 283-284.

686

686 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

Thus, the constitutional mandates of protection to labor


and security of tenure may be deemed as self-executing in
the sense that these are automatically acknowledged and
observed without need for any enabling legislation.
However, to declare that the constitutional provisions are
enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein
expressed, would be impractical, if not unrealistic. The
espousal of such view presents the dangerous tendency of
being overbroad and exaggerated. The guarantees of „full
protection to labor‰ and „security of tenure‰, when
examined in isolation, are facially unqualified, and the
broadest interpretation possible suggests a blanket shield
in favor of labor against any form of removal regardless of
circumstance. This interpretation implies an
unimpeachable right to continued employment·a utopian
notion, doubtless·but still hardly within the
contemplation of the framers. Subsequent legislation is still
needed to define the parameters of these guaranteed rights
to ensure the protection and promotion, not only the rights
of the labor sector, but of the employersÊ as well. Without
specific and pertinent legislation, judicial bodies will be at
a loss, formulating their own conclusion to approximate at
least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on
its own, be a source of a positive enforceable right to stave
off the dismissal of an employee for just cause owing to the
failure to serve proper notice or hearing. As manifested by
several framers of the 1987 Constitution, the provisions on
social justice require legislative enactments for their
enforceability. This is reflected in the record of debates on
the social justice provisions of the Constitution:

MS. [FELICITAS S.] AQUINO: We appreciate the concern


of the Commissioner. But this Committee [on Social
Justice] has actually become the forum already of a lot of
specific grievances and specific demands, such that
understandably, we may have been, at one time or
another, dangerously treading into the functions of
legislation. Our only plea to the Commission is to focus
our perspective

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on the matter of social justice and its rightful place in the


Constitution. What we envision here is a mandate
specific enough that would give impetus for statutory
implementation. We would caution ourselves in terms of
the judicious exercise of self-censorship against 51 treading
into the functions of legislation. (italics supplied)
xxx
[FLORENZ D.] REGALADO: I notice that the 1935
Constitution had only one section on social justice; the
same is true with the 1973 Constitution. But they seem
to have stood us in good stead; and I am a little
surprised why, despite that attempt at self-censorship,
there are certain
52
provisions here which are properly for
legislation.
xxx
BISHOP [TEODORO S.] BACANI: [I] think the distinction
that was given during the presentation of the provisions
on the Bill of Rights by Commissioner Bernas is very
apropos here. He spoke of self-executing rights which
belong properly to the Bill of Rights, and then he spoke of
a new body of rights which are more of claims and that
these have come about largely through the works of social
philosophers and then the teaching of the Popes. They
focus on the common good and hence, it is not as easy to
pinpoint precisely these rights nor the situs of the rights.
53
And yet, they exist in relation to the common good.
xxx
MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of
this kind of collaboration will be left to legislation but
the important thing now is the conservation, utilization
or maximization of the very limited resources. x x x
[RICARDO J.] ROMULO: The other problem is that, by
and large, government services are inefficient. So, this is
a problem all by itself. On Section 19, where the report

_______________

51 II Record of the Constitutional Commission: Proceedings and


Debates 613.
52 Id., at p. 617.
53 Id., at p. 626.

688

688 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

says that peopleÊs organizations as a principal means of


empowering the people to pursue and protect through
peaceful means . . ., I do not suppose that the Committee
would like to either preempt or exclude the legislature,
because the concept of a representative and democratic
system really is that the legislature is normally the
principal means.
[EDMUNDO G.] GARCIA: That is correct. In fact, people
cannot even dream of influencing the composition or the
membership of the legislature, if they do not get
organized. It is, in fact, a recognition of the principle
that unless a citizenry is organized and mobilized to
pursue its ends peacefully,
54
then it cannot really
participate effectively.

There is no pretense on the part of the framers that the


provisions on Social Justice, particularly Section 3 of
Article XIII, are self-executory. Still, considering the rule
that provisions should be deemed self-executing if
enforceable without further legislative action, an
examination of Section 3 of Article XIII is warranted to
determine whether it is complete in itself as a definitive
law, or if it 55needs future legislation for completion and
enforcement. Particularly, we should inquire whether or
not the provision voids the dismissal of a laborer for just
cause if no valid notice or hearing is attendant.
Constitutional Commissioner Fr. Joaquin G. Bernas
makes a significant comment on Section 3, Article XIII of
the 1987 Constitution:

_______________

54 Id., at p. 644.
55 The test suggested by Justice Puno in the Manila Hotel case, supra
note 47, is as definitive as any proposed method of analysis could ever be.
„A searching inquiry should be made to find out if the provision is
intended as a present enactment, complete in itself as a definitive law, or
if it needs future legislation for completion and enforcement. The inquiry
demands a micro-analysis and the context of the provision in question.‰
J. Puno, dissenting, Id., at pp. 141-142. See also Rev. Pamatong v.
Commission on Elections, G.R. No. 161872, 13 April 2004, 427 SCRA 96.

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The [cluster] of rights guaranteed in the second paragraph are the


right „to security of tenure, humane conditions of work, and a living
wage.‰ Again, although these have been set apart by a period (.)
from the next sentence and are therefore not modified by the final
phrase „as may be provided by law,‰ it is not the intention to place
56
these beyond the reach of valid laws. x x x (emphasis supplied)

At present, the Labor Code is the primary mechanism to


carry out 57the ConstitutionÊs directives. This is clear from
Article 3 under Chapter 1 thereof which essentially
restates the policy on the protection of labor as worded in
the 1973 Constitution, which was in force at the time of
enactment of the Labor Code. It crystallizes the
fundamental lawÊs policies on labor, defines the parameters
of the rights granted to labor such as the right to security
of tenure, and prescribes the standards for the enforcement
of such rights in concrete terms. While not infallible, the
measures provided therein tend to ensure the achievement
of the constitutional aims.
The necessity for laws concretizing the constitutional
principles on the protection of labor is evident in the
reliance placed upon such laws by the Court in resolving
the issue of the validity of a workerÊs dismissal. In cases
where that was the issue confronting the Court, it
consistently recognized the constitutional right to security
of tenure and employed the standards laid down by
prevailing laws in determining

_______________

56 J. BERNAS, THE 1987 CONSTITUTION OF THE REPUBLIC OF


THE PHILIPPINES: A COMMENTARY (1996), at p. 1064.
57 Article 3, Chapter I of the Labor Code declares:

Declaration of basic policy.·The State shall afford full protection to labor,


promote full employment, ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between workers and employers. The
State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure and just and humane conditions of work.

690

690 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission
58
whether such right was violated. The CourtÊs reference to
laws other than the Constitution in resolving the issue of
dismissal is an implicit acknowledgment that the right to
security of tenure, while recognized in the Constitution,
cannot be implemented uniformly absent a law prescribing
concrete standards for its enforcement.
As discussed earlier, the validity of an employeeÊs
dismissal in previous cases was examined by the Court in
accordance with the standards laid down by Congress in
the Termination Pay Law, and subsequently, the Labor
Code and the amendments thereto. At present, the validity
of an employeeÊs dismissal is weighed against the
standards laid down in Article 279, as well as Article 282 in
relation to Article 277(b) of the Labor Code, for a dismissal
for just cause, and Article 283 for a dismissal for an
authorized cause.
The Effect of Statutory Violation Of Notice and Hearing
There is no doubt that the dismissal of an employee even
for just cause, without prior notice or hearing, violates the

_______________

58 See Phil. Aeolus Automotive United Corp. v. National Labor


Relations Commission, 387 Phil. 250; 331 SCRA 232 (2000); Gonzales v.
National Labor Relations Commission, 372 Phil. 39; 313 SCRA 139
(1999); Jardine Davies v. National Labor Relations Commission, 370
Phil. 310; 311 SCRA 289 (1999); Pearl S. Buck Foundation v. National
Labor Relations Commission, G.R. No. 80728, February 21, 1990, 182
SCRA 446; Bagong Bayan Corporation, Realty Investors & Developers v.
National Labor Relations Commission, G.R. No. 61272, September 29,
1989, 178 SCRA 107; Labajo v. Alejandro, et al., G.R. No. L-80383,
September 26, 1988, 165 SCRA 747; D.M. Consunji, Inc. v. Pucan, et al.,
G.R. No. L-71413, March 21, 1988; 159 SCRA 107; Santos v. National
Labor Relations Commission, G.R. No. L-76271, September 21, 1987, 154
SCRA 166; PeopleÊs Bank & Trust Co. v. PeopleÊs Bank & Trust Co.
Employees Union, 161 Phil. 15; 69 SCRA 10 (1976); Philippine Movie
Pictures Association v. Premiere Productions, 92 Phil. 843 (1953); Phil.
Refining Co. v. Garcia, supra.

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Labor Code. However, does such violation necessarily void


the dismissal?
Before I proceed with my discussion on dismissals for
just causes, a brief comment regarding dismissals for
authorized cause under Article 283 of the Labor Code.
While the justiciable question in Serrano pertained to a
dismissal for unauthorized cause, the ruling therein was
crafted as definitive to dismissals for just cause. Happily,
the Decision today does not adopt the same unwise tack. It
should be recognized that dismissals for just cause and
dismissals for authorized cause are governed by different
provisions, entail divergent requisites, and animated by
distinct rationales. The language of Article 283 expressly
effects the termination for authorized cause to the service
of written notice on the workers and the Ministry of Labor
at least one (1) month before the intended date of
termination. This constitutes an eminent difference than
dismissals for just cause, wherein the causal relation
between the notice and the dismissal is not expressly
stipulated. The circumstances distinguishing just and
authorized causes are too markedly different to be
subjected to the same rules and reasoning in
interpretation.
Since the present petition is limited to a question arising
from a dismissal for just cause, there is no reason for
making any pronouncement regarding authorized causes.
Such declaration would be merely obiter, since they are
neither the law of the case nor dispositive of the present
petition. When the question becomes justiciable before this
Court, we will be confronted with an appropriate factual
milieu on which we can render a more judicious disposition
of this admittedly important question.

B. Dismissal for Just Cause

There is no express provision in the Labor Code that voids


a dismissal for just cause on the ground that there was no
notice or hearing. Under Section 279, the employer is
precluded from dismissing an employee except for a just
cause as

692

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Agabon vs. National Labor Relations Commission

provided in Section 282, or an authorized cause under


Sections 283 and 284. Based on reading Section 279 alone,
the existence of just cause by itself is sufficient to validate
the termination.
Just cause is defined by Article 282, which unlike Article
283, does not condition the termination on the service of
written notices. Still, the dissenting opinions propound that
even if there is just cause, a termination may be
invalidated due to the absence of notice or hearing. This
view is anchored mainly on constitutional moorings, the
basis of which I had argued against earlier. For
determination now is whether there is statutory basis
under the Labor Code to void a dismissal for just cause due
to the absence of notice or hearing.
As pointed out by Justice Mendoza in Serrano, it was
only in 1989 that the Labor Code was amended to enshrine 59
into statute the twin requirements of notice and hearing.
Such requirements are found in Article 277 of the Labor
Code, under the heading „Miscellaneous Provisions.‰ Prior
to the amendment, the notice-hearing requirement was
found under the implementing rules issued by the then
Minister of Labor in 1981. The present-day implementing
rules likewise mandate that the standards of due process,
including the requirement 60of written notice and hearing,
„be substantially observed.‰
Indubitably, the failure to substantially comply with the
standards of due process, including the notice and hearing
requirement, may give rise to an actionable claim against
the employer. Under Article 288, penalties may arise from
violations of any provision of the Labor Code. The
Secretary of Labor likewise enjoys broad powers to inquire
into existing relations between employers and employees.
Systematic violations by management of the statutory right
to due process

_______________

59 Serrano v. National Labor Relations Commission, supra note 1.


60 Section 2, Rule XXIII, Book V, Omnibus Rules Implementing the
Labor Code.

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would fall under the broad grant of power to the Secretary


of Labor to investigate under Article 273.
However, the remedy of reinstatement despite
termination for just cause is simply not authorized by the
Labor Code. Neither the Labor Code nor its implementing
rules states that a termination for just cause is voided
because the requirement of notice and hearing was not
observed. This is not simply an inadvertent semantic
failure, but a conscious effort to protect the prerogatives of
the employer to dismiss an employee for just cause.
Notably, despite the several pronouncements by this Court
in the past equating the notice-hearing requirement in
labor cases to a constitutional maxim, neither the
legislature nor the executive has adopted the same tack,
even gutting the protection to provide that substantial
compliance with due process suffices.
The Labor Code significantly eroded management
prerogatives in the hiring and firing of employees. Whereas
employees could be dismissed 61even without just cause
under the Termination Pay Law , the Labor Code affords
workers broad security of tenure. Still, the law recognizes
the right of the employer to terminate for just cause. The
just causes enumerated under the Labor Code·serious
misconduct or willful disobedience, gross and habitual
neglect, fraud or willful breach of trust, commission of a
crime by the employee against the employer, and other
analogous causes·are characterized by the harmful
behavior of an employee against the business or the person
of the employer.
These just causes for termination are not negated by the
absence of notice or hearing. An employee who tries to kill
the employer cannot be magically absolved of trespasses
just because the employer forgot to serve due notice. Or a
less extreme example, the gross and habitual neglect of an
employee will not be improved upon just because the
employer failed to conduct a hearing prior to termination.

_______________

61 Supra note 2.

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In fact, the practical purpose of requiring notice and


hearing is to afford the employee the opportunity to dispute
the contention that there was just cause in the dismissal.
Yet it must be understood·if a dismissed employee is
deprived of the right to notice and hearing, and thus denied
the opportunity to present countervailing evidence that
disputes the finding of just cause, reinstatement will be
valid not because the notice and hearing requirement was
not observed, but because there was no just cause in the
dismissal. The opportunity to dispute the finding of the just
cause is readily available before the Labor Arbiter, and the
subsequent levels of appellate review. Again, as held in
Serrano:
Even in cases of dismissal under Art. 282, the purpose for the
requirement of notice and hearing is not to comply with the Due
Process Clause of the Constitution. The time for notice and hearing
is at the trial stage. Then that is the time we speak of notice and
hearing as the essence of procedural due process. Thus, compliance
by the employer with the notice requirement before he dismisses an
employee does not foreclose the right of the latter to question the
legality of his dismissal. As Art. 277(b) provides, „Any decision
taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations
62
Commission.‰

The Labor Code presents no textually demonstrable


commitment to invalidate a dismissal for just cause due to
the absence of notice or hearing. This is not surprising, as
such remedy will not restore the employer or employee into
equity. Absent a showing of integral causation, the mutual
infliction of wrongs does not negate either injury, but
instead enforces two independent rights of relief.

_______________

62 Serrano v. National Labor Relations Commission, supra note 1 at p.


445; p. 468.

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The DamagesÊ Dimensions

Award for Damages Must Have Statutory Basis


The Court has grappled with the problem of what should be
the proper remedial relief of an employee dismissed with
just cause, but not afforded either notice or hearing. In 63
a
long line of cases, beginning with Wenphil Corp. v. NLRC
and up until Serrano in 2000, the Court had deemed an
indemnification award as sufficient to answer for the
violation by the employer against the employee. However,
the doctrine was modified in Serrano.
I disagree with Serrano insofar as it held that employees
terminated for just cause are to be paid backwages from
the time employment was terminated „until it is
determined that the termination is for just cause because
the failure to hear him before he is dismissed renders the 64
termination of his employment without legal effect.‰
Article 279 of the Labor Code clearly authorizes the
payment of backwages only if an employee is unjustly
dismissed. A dismissal for just cause is obviously
antithetical to an unjust dismissal. An award for
backwages is not clearly warranted by the law.

The Impropriety of Award for Separation Pay


The formula of one monthÊs pay for every year served does
have statutory basis. It is found though in the Labor Code
though, not the Civil Code. Even then, such computation is
made for separation pay under the Labor Code. But
separation pay is not an appropriate as a remedy in this
case, or in any case wherein an employee is terminated for
just cause. As Justice Vitug noted in his separate opinion in
Serrano, an employee whose employment is terminated for
a just cause is

_______________

63 G.R. No. 80587, 8 February 1989, 170 SCRA 69.


64 Serrano, supra note 1 at pp. 453; p. 476.

696

696 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

65
not entitled to the payment of separation benefits.
Separation pay is traditionally a monetary award paid as
an alternative to reinstatement which can no longer be
effected in view of the long passage
66
of time or because of
the realities of the situation. However, under Section 7,
Rule 1, Book VI of the Omnibus Rules Implementing the
Labor Code, „[t]he separation from work of an employee for
a just cause does not 67entitle him to the termination pay
provided in the Code.‰ Neither does the Labor Code itself
provide instances wherein separation pay is warranted for
dismissals with just cause. Separation pay is warranted
only for dismissals for authorized causes, as enumerated in
Articles 283 and 284 of the Labor Code.

The Impropriety of Equity Awards


Admittedly, the Court has in the past authorized the award
of separation pay for duly terminated employees as a
measure of social justice, provided that the employee is not
68
guilty of serious misconduct reflecting on moral character.
This doctrine is inapplicable in this case, as the Agabons
are guilty of abandonment, which is the deliberate and
unjustified refusal of an employee to resume his
employment. Abandonment is tantamount to serious
misconduct, as it constitutes a willful breach of the
employer-employee relationship without cause.

_______________

65 Serrano, supra note 1 at p. 485; p. 525; J. Vitug, separate


concurring and dissenting.
66 Balaquezon EWTU v. Zamora, G.R. Nos. L-46766-7, 1 April 1980, 97
SCRA 5, 8.
67 „x x x 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.‰ Section 7, Rule 1, Book VI, Omnibus Rules Implementing the
Labor Code.
68 See Philippine Rabbit Bus Lines, Inc. v. National Labor Relations
Commission, G.R. No. 98137, 15 September 1997, 279 SCRA 106, 115,
citing cases.

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The award of separation pay as a measure of social justice


has no statutory basis, but clearly emanates from the
CourtÊs so-called „equity jurisdiction.‰ The CourtÊs equity
jurisdiction as a basis for award, no matter what form it
may take, is likewise unwarranted in this case. Easy resort
to equity should be avoided, as it should yield to positive 69
rules which pre-empt and prevail over such persuasions.
Abstract as the concept is, it does not admit to definite and
objective standards.
I consider the pronouncement regarding the proper
monetary awards in such cases as Wenphil Corp. v.
70 71
NLRC, Reta, and to a degree, even Serrano as premised
in part on equity. This decision is premised in part due to
the absence of cited statutory basis for these awards. In
these cases, the Court deemed an indemnity award proper
without exactly saying where in statute could such award
be derived at. Perhaps, equity or social justice can be
invoked as basis for the award. However, this sort of
arbitrariness, indeterminacy and judicial usurpation of
legislative prerogatives is precisely the source of my
discontent. Social justice should be the aspiration of all
that we do, yet I think it the more mature attitude to
consider that it ebbs and flows within our statutes, rather
than view it as an independent source of funding.

Article 288 of the Labor Code as a Source of Liability


Another putative source of liability for failure to render the
notice requirement is Article 288 of the Labor Code, which
states:

_______________

69 Aguila v. Court of First Instance, G.R. No. L-48335, 15 April 1988,


160 SCRA 352, 360. „For all its conceded merits, equity is available only
in the absence of law and not as its replacement. Equity is described as
justice outside legality, which simply means that it cannot supplant
although it may, as often happens, supplement the law.‰ Id.
70 170 SCRA 69 (1989).
71 G.R. No. 112100, May 27, 1994, 232 SCRA 613.

698

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Agabon vs. National Labor Relations Commission

Article 288 states:

Penalties.·Except as otherwise provided in this Code, or unless the


acts complained of hinges on a question of interpretation or
implementation of ambiguous provisions of an existing collective
bargaining agreement, any violation of the provisions of this Code
declared to be unlawful or penal in nature shall be punished with a
fine of not less than One Thousand Pesos (P1,000.00) nor more than
Ten Thousand Pesos (P10,000.00), or imprisonment of not less than
three months nor more than three years, or both such fine and
imprisonment at the discretion of the court.
It is apparent from the provision that the penalty arises
due to contraventions of the provisions of the Labor Code.
It is also clear that the provision comes into play regardless
of who the violator may be. Either the employer or the
employee may be penalized, or perhaps even officials
tasked with implementing the Labor Code.
However, it is apparent that Article 288 is a penal
provision; hence, the prescription for penalties such as fine
and imprisonment. The Article is also explicit that the
imposition of fine or imprisonment is at the „discretion of
the court.‰ Thus, the proceedings under the provision is
penal in character. The criminal case has to be instituted
before the proper courts, and the Labor Code violation
subject thereof duly proven in an adversarial proceeding.
Hence, Article 288 cannot apply in this case and serve as
basis to impose a penalty on Riviera Homes.
I also maintain that under Article 288 the penalty
should be paid to the State, and not to the person or
persons who may have suffered injury as a result of the
violation. A penalty is a sum of money which the law
requires to be paid by way of punishment for doing some
act which is prohibited 72
or for not doing some act which is
required to be done. A penalty should be distinguished
from damages which is the pecu-

_______________

72 BlackÊs Law Dictionary, 1990 ed., p. 1133; citing Hidden Hollow


Ranch v. Collins, 146 Mont. 321, 406 P.2d 365, 368.

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niary compensation or indemnity to a person who has


suffered loss, detriment, or injury, whether to his person,
property, or rights, on account of the unlawful act or
omission or negligence of another. Article 288 clearly serves
as a punitive fine, rather than a compensatory measure,
since the provision penalizes an act that violates the Labor
Code even if such act does not cause actual injury to any
private person.
Independent of the employeeÊs interests protected by the
Labor Code is the interest of the State in seeing to it that
its regulatory laws are complied with. Article 288 is
intended to satiate the latter interest. Nothing in the
language of Article 288 indicates an intention to
compensate or remunerate a private person for injury he
may have sustained.
It should be noted though that in Serrano, the Court
observed
73
that since the promulgation of Wenphil Corp. v.
NLRC in 1989, „fines imposed for violations of the notice
requirement have varied 74from P1,000.00 to P2,000.00 to
P5,000.00 to P10,000.00.‰ Interestingly, this range is the
same range of the penalties imposed by Article 288. These
„fines‰ adverted to in Serrano were paid to the dismissed
employee. The use of the term „fines,‰ 75
as well as the
terminology employed a few other cases, may have left an
erroneous impression that the award implemented
beginning with Wen-phil was based on Article 288 of the
Labor Code. Yet, an examination of Wenphil reveals that
what the Court actually awarded to the employee was an
„indemnity,‰ dependent on the facts of each case and the
gravity of the omission committed by the employer. There
is no mention in Wenphil of Article

_______________

73 170 SCRA 69 (1989).


74 Serrano v. National Labor Relations Commission, supra note 1 at
pp. 442; p. 465.
75 See e.g., Reta v. National Labor Relations Commission, G.R. No.
112100, 27 May 1994, 232 SCRA 613, wherein the Court held that
„private respondents should pay petitioner P10,000.00 as penalty for
failure to comply with the due process requirement.‰ Id., at p. 618.

700

700 SUPREME COURT REPORTS ANNOTATED


Agabon vs. National Labor Relations Commission

288 of the Labor Code, or indeed, of any statutory basis for


the award.

The Proper Basis: EmployerÊs Liability under the Civil Code


As earlier stated, Wenphil allowed the payment of
indemnity to the employee dismissed for just cause is
dependent on the facts of each case and the gravity of the
omission committed by the employer. However, I considered
Wenphil flawed insofar as it is silent as to the statutory
basis for the indemnity award. This failure, to my mind,
renders it unwise for to reinstate the Wenphil rule, and
foster the impression that it is the judicial business to
invent awards for damages without clear statutory basis.
The proper legal basis for holding the employer liable for
monetary damages to the employee dismissed for just cause
is the Civil Code. The award of damages should be
measured against the loss or injury suffered by the employee
by reason of the employerÊs violation or, in case of nominal
damages, the right vindicated by the award. This is the
proper paradigm authorized by our law, and designed to
obtain the fairest possible relief.
Under Section 217(4) of the Labor Code, the Labor
Arbiter has jurisdiction over claims for actual, moral,
exemplary and other forms of damages arising from the
employer-employee relations. It is thus the duty of Labor
Arbiters to adjudicate claims for damages, and they should
disabuse themselves of any inhibitions if it does appear
that an award for damages is warranted. As triers of facts
in a specialized field, they should attune themselves to the
particular conditions or problems attendant to employer-
employee relationships, and thus be in the best possible
position as to the nature and amount of damages that may
be warranted in this case.
The damages referred under Section 217(4) of the Labor
Code are those available under the Civil Code. It is but
proper that the Civil Code serve as the basis for the
indemnity, it

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being the law that regulates the private relations of the


members of civil society, determining their respective
rights and obligations
76
with reference to persons, things,
and civil acts. No matter how impressed with the public
interest the relationship between a private employer and
employee is, it still is ultimately a relationship between
private individuals. Notably, even though the Labor Code
could very well have provided set rules for damages arising
from the employer-employee relationship, referral was
instead made to the concept of damages as enumerated and
defined under the Civil Code.
Given the long controversy that has dogged this present
issue regarding dismissals for just cause, it is wise to lay
down standards that would guide the proper award of
damages under the Civil Code in cases wherein the
employer failed to comply with statutory due process in
dismissals for just cause.
First. I believe that it can be maintained as a general
rule, that failure to comply with the statutory requirement
of notice automatically gives rise to nominal damages, at
the very least, even if the dismissal was sustained for just
cause.
Nominal damages are adjudicated in order that a right
of a plaintiff which has been violated or invaded by another
may be vindicated or recognized without having to 77
indemnify the plaintiff for any loss suffered by him.
Nominal damages may likewise be awarded in every
obligation arising from law, contracts, quasi-contracts, acts
or omissions punished by law, and quasi-delicts, or where
any property right has been invaded.
Clearly, the bare act of failing to observe the notice
requirement gives rise to nominal damages assessable
against the employer and due the employee. The Labor
Code indubi-

_______________

76 A. Tolentino, Civil Code of the Philippines (1990 ed.), at p. 11; citing


9 Fabres 10.
77 Article 2221, Civil Code.

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Agabon vs. National Labor Relations Commission

tably entitles the employee to notice even if dismissal is for


just cause, even if there is no apparent intent to void such
dismissals deficiently implemented. It has also been held
that oneÊs employment, profession, trade, or calling is a
„property right‰ and the wrongful 78
interference therewith
gives rise to an actionable wrong. 79
In Better Buildings, Inc. v. NLRC, the Court ruled that
the while the termination therein was for just and valid
cause, the manner of termination was done in complete
80
disregard of the necessary procedural safeguards. The
Court found nominal damages as the proper form of award,
as it was purposed to vindicate the81 right to procedural due
process violated by the employer. 82
A similar holding was
maintained
83
in Iran v. NLRC and Malaya Shipping v.
NLRC. The doctrine has express statutory basis, duly
recognizes the existence of the right to notice, and
vindicates the violation of such right. It is sound, logical,
and should be adopted as a general rule.
The assessment of 84nominal damages is left to the
discretion of the court, or in labor cases, of the Labor
Arbiter and the successive appellate levels. The authority
to nominate standards governing the award of nominal
damages has clearly been delegated to the judicial branch,
and it will serve good purpose for this Court to provide
such guidelines. Considering that the affected right is a
property right, there is justification

_______________

78 Ferrer v. National Labor Relations Commission, G.R. No. 100898, 5


July 1993, 224 SCRA 410; citing Callanta vs. Carnation Philippines, Inc.,
145 SCRA 268 (1986).
79 347 Phil. 521, 531; 283 SCRA 242, 250 (1997).
80 Id., at p. 531; p. 250.
81 Id.
82 G.R. No. 121927, 22 April 1998, 289 SCRA 433.
83 G.R. No. 121698, 26 March 1998, 288 SCRA 181. The ponente in all
three cases was Justice Flerida Ruth Romero.
84 See Article 2216, Civil Code. See also Saludo v. Court of Appeals,
G.R. No. 95536, 23 March 1992, 207 SCRA 498.

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in basing the amount of nominal damages on the particular


characteristics attaching to the claimantÊs employment.
Factors such as length of service, positions held, and
received salary may be considered to obtain the proper
measure of nominal damages. After all, the degree by
which a property right should be vindicated is affected by
the estimable value of such right.
At the same time, it should be recognized that nominal
damages are not meant to be compensatory, and should not
be computed through a formula based on actual losses.
Consequently, nominal
85
damages usually limited in
pecuniary value. This fact should be impressed upon the
prospective claimant, especially one who is contemplating
seeking actual/compensatory damages.
Second. Actual or compensatory damages are not
available as a matter of right to an employee dismissed for
just cause but denied statutory due process.
86
They must be
based on clear factual and legal bases, and correspond to
such pecuniary
87
loss suffered by the employee as duly
proven. Evidently, there is less degree of discretion to
award actual or compensatory damages.
I recognize some inherent difficulties in establishing
actual damages in cases for terminations validated for just
cause. The dismissed employee retains no right to
continued employment from the moment just cause for
termination exists, and such time most likely would have
arrived even before the employer is liable to send the first
notice. As a result, an award of backwages disguised as
actual damages would almost never be justified if the
employee was dismissed for just cause. The possible
exception would be if it can be proven the

_______________

85 In relation to Article 2224 of the Civil Code, nominal damages are


less than temperate/moderate damages or compensatory damages.
86 See De la Paz, Jr. v. Intermediate Appellate Court, 154 SCRA 65
[1987]; Chavez v. Gonzales, 32 SCRA 547 [1970].
87 See Art. 2199, Civil Code.

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ground for just cause came into being only after the
dismissed employee had stopped receiving wages from the
employer.
Yet it is not impossible to establish a case for actual
damages if dismissal was for just cause. Particularly
actionable, for example, is if the notices are not served on
the employee, thus hampering his/her opportunities to
obtain new employment. For as long as it can be
demonstrated that the failure of the employer to observe
procedural due process mandated by the Labor Code is the
proximate cause of pecuniary loss or injury to the
dismissed employee, then actual or compensatory damages
may be awarded.
Third. If there is a finding of pecuniary loss arising from
the employer violation, but the amount cannot be proved
with certainty, then temperate or moderate damages are
available under Article 2224 of the Civil Code. Again,
sufficient discretion is afforded to the adjudicator as
regards the proper award, and the 88award must be
reasonable under the circumstances. Temperate or
nominal damages may yet prove to be a plausible remedy,
especially when common sense dictates that pecuniary loss
was suffered, but incapable of precise definition.
Fourth. Moral and exemplary damages may also be
awarded in the appropriate circumstances. As pointed out
by the Decision, moral damages are recoverable where the
dismissal of the employee was attended by bad faith, fraud,
or was done in a manner contrary to morals, good customs
or public policy, 89 or the employer committed an act
oppressive to labor. Exemplary damages may avail if the
dismissal was effected in a wanton, oppressive or
malevolent manner.

Appropriate Award of Damages to the Agabons


The records indicate no proof exists to justify the award of
actual or compensatory damages, as it has not been estab-

_______________

88 Art. 2225, Civil Code.


89 Page 16, Decision, citing jurisprudence.

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Agabon vs. National Labor Relations Commission

lished that the failure to serve the second notice on the


Agabons was the proximate cause to any loss or injury. In
fact, there is not even any showing that such violation
caused any sort of injury or discomfort to the Agabons. Nor
do they assert such causal relation. Thus, the only
appropriate award of damages is nominal damages.
Considering the circumstances, I agree that an award of
Fifteen Thousand Pesos (P15,000.00) each for the Agabons
is sufficient.
All premises considered, I VOTE to:

(1) DENY the PETITION for lack of merit, and


AFFIRM the Decision of the Court of Appeals dated
23 January 2003, with the MODIFICATION that in
addition, Riviera Homes be ORDERED to pay the
petitioners the sum of Fifteen Thousand Pesos
(P15,000.00) each, as nominal damages.
(2) HOLD that henceforth, dismissals for just cause
may not be invalidated due to the failure to observe
the due process requirements under the Labor
Code, and that the only indemnity award available
to the employee dismissed for just cause are
damages under the Civil Code as duly proven. Any
and all previous rulings and statements of the
Court inconsistent with this holding are now
deemed INOPERATIVE.

Petition denied, judgment affirmed with modification.

Notes.·Separation pay is allowed as a measure of


social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct
or those reflecting on his moral character. (Salavarria vs.
Letran College, 296 SCRA 184 [1998])
While the right of an employer to terminate the services
of an employee for a just or authorized cause is recognized,
nevertheless, the dismissal of employees must be made
within the parameters of law and pursuant to the tenets of
equity

706

706 SUPREME COURT REPORTS ANNOTATED


In Re: The Writ of Habeas Corpus for Reynaldo De Villa

and fair play. (Colegio de San Juan de Letran vs.


Association of Employees and Faculty of Letran, 340 SCRA
587 [2000])
The offer to re-employ an employee could not have the
effect of validating an otherwise arbitrary dismissal.
(Hantex Trading Co., Inc. vs. Court of Appeals, 390 SCRA
181 [2002])

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