EN BANC

JENNY M. AGABON and G.R. No. 158693

VIRGILIO C. AGABON,
Petitioners, Present:

Davide, Jr., C.J.,

Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
- versus - Carpio,
Austria-Martinez,
Corona,
Carpio-Morales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario, and
Garcia, JJ.
NATIONAL LABOR RELATIONS
COMMISSION (NLRC), RIVIERA
HOME IMPROVEMENTS, INC. Promulgated:
and VICENTE ANGELES,
Respondents. November 17, 2004
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

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

Private respondent Riviera Home Improvements, Inc. is engaged in the

business of selling and installing ornamental and construction materials. It
employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and
cornice installers on January 2, 19922[2] until February 23, 1999 when they were
dismissed for abandonment of work.

1[1]
Penned by Associate Justice Marina L. Buzon and concurred in by Associate Justices
Josefina Guevara-Salonga and Danilo B. Pine.
2[2]
Rollo, p. 41.
 Petitioners then filed a complaint for illegal dismissal and payment of
money claims3[3] and on December 28, 1999, the Labor Arbiter rendered a
decision declaring the dismissals illegal and ordered private respondent to pay
the monetary claims. The dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the

complainants illegal. Accordingly, respondent is hereby ordered to pay them
their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

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

Respondent is further ordered to pay the complainants their holiday pay

and service incentive leave pay for the years 1996, 1997 and 1998 as well as
their premium pay for holidays and rest days and Virgilio Agabon’s 13 th month
pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY
(P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE
THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos
for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT
HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon,
as per attached computation of Julieta C. Nicolas, OIC, Research and
Computation Unit, NCR.

SO ORDERED.4[4]

On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also
denied for lack of evidence.5[5]

Upon denial of their motion for reconsideration, petitioners filed a petition

for certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was
not illegal because they had abandoned their employment but ordered the
payment of money claims. The dispositive portion of the decision reads:

WHEREFORE, the decision of the National Labor Relations Commission

is REVERSED only insofar as it dismissed petitioner’s 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
3[3]
Id., pp. 13-14.
4[4]
Id., p. 92.
5[5]
Id., p. 131.
said years, and to pay the balance of petitioner Virgilio Agabon’s 13 th month pay
for 1998 in the amount of P2,150.00.

SO ORDERED.6[6]

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

Petitioners assert that they were dismissed because the private

respondent refused to give them assignments unless they agreed to work on a
“pakyaw” basis when they reported for duty on February 23, 1999. They did not
agree on this arrangement because it would mean losing benefits as Social
Security System (SSS) members. Petitioners also claim that private respondent
did not comply with the twin requirements of notice and hearing.8[8]

Private respondent, on the other hand, maintained that petitioners were

not dismissed but had abandoned their work. 9[9] In fact, private respondent sent
two letters to the last known addresses of the petitioners advising them to report
for work. Private respondent’s manager even talked to petitioner Virgilio Agabon
by telephone sometime in June 1999 to tell him about the new assignment at
Pacific Plaza Towers involving 40,000 square meters of cornice installation work.
However, petitioners did not report for work because they had subcontracted to
perform installation work for another company. Petitioners also demanded for an
increase in their wage to P280.00 per day. When this was not granted,
petitioners stopped reporting for work and filed the illegal dismissal case.10[10]

It is well-settled that findings of fact of quasi-judicial agencies like the

NLRC are accorded not only respect but even finality if the findings are
supported by substantial evidence. This is especially so when such findings
were affirmed by the Court of Appeals.11[11] However, if the factual findings of the
NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court
may delve into the records and examine for itself the questioned findings.12[12]

6[6]
Id., p. 173.
7[7]
Id., p. 20.
8[8]
Id., pp. 21-23.
9[9]
Id., p. 45.
10[10]
Id., pp. 42-43.
11[11]
Rosario v. Victory Ricemill, G.R. No. 147572, 19 February 2003, 397 SCRA 760,
767.
12[12]
Reyes v. Maxim’s Tea House, G.R. No. 140853, 27 February 2003, 398 SCRA 288,
298.
 Accordingly, the Court of Appeals, after a careful review of the facts, ruled
that petitioners’ dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.

To dismiss an employee, the law requires not only the existence of a just
and valid cause but also enjoins the employer to give the employee the
opportunity to be heard and to defend himself.13[13] Article 282 of the Labor Code
enumerates the just causes for termination by the employer: (a) serious
misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latter’s representative in connection with the employee’s work;
(b) gross and habitual neglect by the employee of his duties; (c) fraud or willful
breach by the employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense by the employee
against the person of his employer or any immediate member of his family or his
duly authorized representative; and (e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to

resume his employment.14[14] It is a form of neglect of duty, hence, a just cause
for termination of employment by the employer. 15[15] For a valid finding of
abandonment, these two factors should be present: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to
sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.16[16]

In February 1999, petitioners were frequently absent having subcontracted

for an installation work for another company. Subcontracting for another
company clearly showed the intention to sever the employer-employee
relationship with private respondent. This was not the first time they did this. In
January 1996, they did not report for work because they were working for
another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the warning

13[13]
Santos v. San Miguel Corporation, G.R. No. 149416, 14 March 2003, 399 SCRA
172, 182.
14[14]
Columbus Philippine Bus Corporation v. NLRC, 417 Phil. 81, 100 (2001).
15[15]
De Paul/King Philip Customs Tailor v. NLRC, 364 Phil. 91, 102 (1999).
16[16]
Sta. Catalina College v. NLRC, G.R. No. 144483, 19 November 2003.
and exhibited a clear intention to sever their employer-employee relationship.
The record of an employee is a relevant consideration in determining the penalty
that should be meted out to him.17[17]

In Sandoval Shipyard v. Clave,18[18] we held that an employee who

deliberately absented from work without leave or permission from his employer,
for the purpose of looking for a job elsewhere, is considered to have abandoned
his job. We should apply that rule with more reason here where petitioners were
absent because they were already working in another company.

The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice
and hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good
performance, adequate work and diligence, but also good conduct 19[19] and
loyalty. The employer may not be compelled to continue to employ such persons
whose continuance in the service will patently be inimical to his interests.20[20]

After establishing that the terminations were for a just and valid cause, we
now determine if the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I,

Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. – In all cases of

termination of employment, the following standards of due process shall be
substantially observed:

I. For termination of employment based on just causes as defined in

Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or

grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side;

(b) A hearing or conference during which the employee concerned,

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

17[17]
Cosmos Bottling Corporation v. NLRC, G.R. No. 111155, 23 October 1997, 281
SCRA 146, 153-154.
18[18]
G.R. No. L-49875, 21 November 1979, 94 SCRA 472, 478.
19[19]
Judy Philippines, Inc. v. NLRC, 352 Phil. 593, 606 (1998).
20[20]
Philippine-Singapore Transport Services, Inc. v. NLRC, 343 Phil. 284, 291 (1997).
 (c) A written notice of termination served on the employee indicating
that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

In case of termination, the foregoing notices shall be served on the

employee’s last known address.

Dismissals based on just causes contemplate acts or omissions

attributable to the employee while dismissals based on authorized causes involve
grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust, separation
pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article

282, the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the
dismissal is for a just cause under Article 282 of the Labor Code, for an
authorized cause under Article 283, or for health reasons under Article 284, and
due process was observed; (2) the dismissal is without just or authorized cause
but due process was observed; (3) the dismissal is without just or authorized
cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer
will not suffer any liability.

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

In the fourth situation, the dismissal should be upheld. While the

procedural infirmity cannot be cured, it should not invalidate the dismissal.
However, the employer should be held liable for non-compliance with the
procedural requirements of due process.

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

A review and re-examination of the relevant legal principles is appropriate

and timely to clarify the various rulings on employment termination in the light of
Serrano v. National Labor Relations Commission.22[22]

Prior to 1989, the rule was that a dismissal or termination is illegal if the
employee was not given any notice. In the 1989 case of Wenphil Corp. v.
National Labor Relations Commission,23[23] we reversed this long-standing rule
and held that the dismissed employee, although not given any notice and
hearing, was not entitled to reinstatement and backwages because the dismissal
was for grave misconduct and insubordination, a just ground for termination
under Article 282. The employee had a violent temper and caused trouble during
office hours, defying superiors who tried to pacify him. We concluded that
reinstating the employee and awarding backwages “may encourage him to do
even worse and will render a mockery of the rules of discipline that employees
are required to observe.”24[24] We further held that:

21[21]
See Stolt-Nielsen Marine Services, Inc. v. NLRC, G.R. No. 128395, 29 December
1998, 300 SCRA 713, 720.
22[22]
G.R. No. 117040, 27 January 2000, 323 SCRA 445.
23[23]
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
24[24]
Id. at 76.
 Under the circumstances, the dismissal of the private respondent for just
cause should be maintained. He has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to

extend to private respondent his right to an investigation before causing his
dismissal. The rule is explicit as above discussed. The dismissal of an employee
must be for just or authorized cause and after due process. Petitioner committed
an infraction of the second requirement. Thus, it must be imposed a sanction for
its failure to give a formal notice and conduct an investigation as required by law
before dismissing petitioner from employment. Considering the circumstances of
this case petitioner must indemnify the private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case and
the gravity of the omission committed by the employer.25[25]

The rule thus evolved: where the employer had a valid reason to dismiss
an employee but did not follow the due process requirement, the dismissal may
be upheld but the employer will be penalized to pay an indemnity to the
employee. This became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction
was changed. We held that the violation by the employer of the notice
requirement in termination for just or authorized causes was not a denial of due
process that will nullify the termination. However, the dismissal is ineffectual and
the employer must pay full backwages from the time of termination until it is
judicially declared that the dismissal was for a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano

was the significant number of cases involving dismissals without requisite
notices. We concluded that the imposition of penalty by way of damages for
violation of the notice requirement was not serving as a deterrent. Hence, we
now required payment of full backwages from the time of dismissal until the time
the Court finds the dismissal was for a just or authorized cause.

Serrano was confronting the practice of employers to “dismiss now and

pay later” by imposing full backwages.

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

ART. 279. Security of Tenure. – In cases of regular employment, the

employer shall not terminate the services of an employee except for a just cause
or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other
25[25]
Id.
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.

This means that the termination is illegal only if it is not for any of the
justified or authorized causes provided by law. Payment of backwages and other
benefits, including reinstatement, is justified only if the employee was unjustly
dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which
elicited strong dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the

Constitution embodies a system of rights based on moral principles so deeply
imbedded in the traditions and feelings of our people as to be deemed
fundamental to a civilized society as conceived by our entire history. Due
process is that which comports with the deepest notions of what is fair and right
and just.26[26] It is a constitutional restraint on the legislative as well as on the
executive and judicial powers of the government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has
two aspects: substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal are found in the
Implementing Rules of P.D. 442, as amended, otherwise known as the Labor
Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department
Order Nos. 9 and 10.27[27] Breaches of these due process requirements violate
the Labor Code. Therefore statutory due process should be differentiated from
failure to comply with constitutional due process.

Constitutional due process protects the individual from the government

and assures him of his rights in criminal, civil or administrative proceedings; while
statutory due process found in the Labor Code and Implementing Rules protects
employees from being unjustly terminated without just cause after notice and
hearing.
26[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[27]
Department Order No. 9 took effect on 21 June 1997. Department Order No. 10 took
effect on 22 June 1997.
 In Sebuguero v. National Labor Relations Commission,28[28] the dismissal
was for a just and valid cause but the employee was not accorded due process.
The dismissal was upheld by the Court but the employer was sanctioned. The
sanction should be in the nature of indemnification or penalty, and depends on
the facts of each case and the gravity of the omission committed by the
employer.

In Nath v. National Labor Relations Commission,29[29] it was ruled that even

if the employee was not given due process, the failure did not operate to
eradicate the just causes for dismissal. The dismissal being for just cause, albeit
without due process, did not entitle the employee to reinstatement, backwages,
damages and attorney’s fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine

Services, Inc. v. National Labor Relations Commission,30[30] which opinion he
reiterated in Serrano, stated:

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

After carefully analyzing the consequences of the divergent doctrines in

the law on employment termination, we believe that in cases involving dismissals
for cause but without observance of the twin requirements of notice and hearing,
the better rule is to abandon the Serrano doctrine and to follow Wenphil by
holding that the dismissal was for just cause but imposing sanctions on the
employer. Such sanctions, however, must be stiffer than that imposed in

28[28]
G.R. No. 115394, 27 September 1995, 248 SCRA 535.
29[29]
G.R. No. 122666, 19 June 1997, 274 SCRA 386.
30[30]
G.R. No. 114313, 29 July 1996, 259 SCRA 699, 700.
31[31]
Serrano, supra, Vitug, J., Separate (Concurring and Dissenting) Opinion, 323 SCRA
524, 529-530 (2000).
Wenphil. By doing so, this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or

authorized causes but not complying with statutory due process may have far-
reaching consequences.

This would encourage frivolous suits, where even the most notorious
violators of company policy are rewarded by invoking due process. This also
creates absurd situations where there is a just or authorized cause for dismissal
but a procedural infirmity invalidates the termination. Let us take for example a
case where the employee is caught stealing or threatens the lives of his co-
employees or has become a criminal, who has fled and cannot be found, or
where serious business losses demand that operations be ceased in less than a
month. Invalidating the dismissal would not serve public interest. It could also
discourage investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to

be a sword to oppress employers. The commitment of this Court to the cause of
labor does not prevent us from sustaining the employer when it is in the right, as
in this case.32[32] Certainly, an employer should not be compelled to pay
employees for work not actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person

who is admittedly guilty of misfeasance or malfeasance and whose continued
employment is patently inimical to the employer. The law protecting the rights of
the laborer authorizes neither oppression nor self-destruction of the employer. 33
[33]

It must be stressed that in the present case, the petitioners committed a

grave offense, i.e., abandonment, which, if the requirements of due process were
complied with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should

not be protected by the Social Justice Clause of the Constitution. Social justice,
as the term suggests, should be used only to correct an injustice. As the eminent
Justice Jose P. Laurel observed, social justice must be founded on the

32[32]
Capili v. NLRC, G.R. No. 117378, 26 March 1997, 270 SCRA 488, 495.
33[33]
Filipro, Inc. v. NLRC, G.R. No. L-70546, 16 October 1986, 145 SCRA 123.
recognition of the necessity of interdependence among diverse units of a society
and of the protection that should be equally and evenly extended to all groups as
a combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet
of all persons, and of bringing about “the greatest good to the greatest
number.”34[34]

This is not to say that the Court was wrong when it ruled the way it did in
Wenphil, Serrano and related cases. Social justice is not based on rigid formulas
set in stone. It has to allow for changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced

approach to labor-management relations and dispense justice with an even hand
in every case:

We have repeatedly stressed that social justice – or any justice for that
matter – is for the deserving, whether he be a millionaire in his mansion or a
pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the
balance in favor of the poor to whom the Constitution fittingly extends its
sympathy and compassion. But never is it justified to give preference to the poor
simply because they are poor, or reject the rich simply because they are rich, for
justice must always be served for the poor and the rich alike, according to the
mandate of the law.35[35]

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

Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission.36[36] The indemnity to be imposed should be stiffer to discourage
the abhorrent practice of “dismiss now, pay later,” which we sought to deter in the
Serrano ruling. The sanction should be in the nature of indemnification or
34[34]
Calalang v. Williams, 70 Phil. 726, 735 (1940).
35[35]
Gelos v. Court of Appeals, G.R. No. 86186, 8 May 1992, 208 SCRA 608, 616.
36[36]
G.R. No. 112100, 27 May 1994, 232 SCRA 613, 618.
penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.

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

As enunciated by this Court in Viernes v. National Labor Relations

Commissions,38[38] an employer is liable to pay indemnity in the form of nominal
damages to an employee who has been dismissed if, in effecting such dismissal,
the employer fails to comply with the requirements of due process. The Court,
after considering the circumstances therein, fixed the indemnity at P2,590.50,
which was equivalent to the employee’s one month salary. This indemnity is
intended not to penalize the employer but to vindicate or recognize the
employee’s right to statutory due process which was violated by the employer. 39
[39]

The violation of the petitioners’ right to statutory due process by the

private respondent warrants the payment of indemnity in the form of nominal
damages. The amount of such damages is addressed to the sound discretion of
the court, taking into account the relevant circumstances. 40[40] Considering the
prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to deter employers
from future violations of the statutory due process rights of employees. At the
very least, it provides a vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it
failed to pay petitioners’ holiday pay, service incentive leave pay and 13 th month
pay.

37[37]
Art. 2221, Civil Code.
38[38]
G.R. No. 108405. April 4, 2003 citing Kwikway Engineering Works v. NLRC,
G.R. No. 85014, 22 March 1991, 195 SCRA 526, 532; Aurelio v. NLRC, G.R. No.
99034, 12 April 1993, 221 SCRA 432, 443; and Sampaguita Garments
Corporation v. NLRC, G.R. No. 102406, 17 June 1994, 233 SCRA 260, 265.
39[39]
Id. citing Better Buildings, Inc. v. NLRC, G.R. No. 109714, 15 December
1997, 283 SCRA 242, 251; Iran v. NLRC, G.R. No. 121927, 22 April 1998, 289
SCRA 433, 442.
40[40]
Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003.
 We are not persuaded.

We affirm the ruling of the appellate court on petitioners’ money claims.

Private respondent is liable for petitioners’ holiday pay, service incentive leave
pay and 13th month pay without deductions.

As a general rule, one who pleads payment has the burden of proving it.
Even where the employee must allege non-payment, the general rule is that the
burden rests on the employer to prove payment, rather than on the employee to
prove non-payment. The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents – which will show that
overtime, differentials, service incentive leave and other claims of workers have
been paid – are not in the possession of the worker but in the custody and
absolute control of the employer.41[41]

In the case at bar, if private respondent indeed paid petitioners’ holiday

pay and service incentive leave pay, it could have easily presented documentary
proofs of such monetary benefits to disprove the claims of the petitioners. But it
did not, except with respect to the 13th month pay wherein it presented cash
vouchers showing payments of the benefit in the years disputed. 42[42] Allegations
by private respondent that it does not operate during holidays and that it allows
its employees 10 days leave with pay, other than being self-serving, do not
constitute proof of payment. Consequently, it failed to discharge the onus
probandi thereby making it liable for such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from
petitioner Virgilio Agabon’s 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
same43[43] so as “to further protect the level of real wages from the ravages of
world-wide inflation.”44[44] Clearly, as additional income, the 13th month pay is
included in the definition of wage under Article 97(f) of the Labor Code, to wit:

(f) “Wage” paid to any employee shall mean the remuneration or

earnings, however designated, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece , or commission basis, or
other method of calculating the same, which is payable by an employer to an

41[41]
Villar v. NLRC, G.R. No. 130935, 11 May 2000.
42[42]
Rollo, pp. 60-71.
43[43]
UST Faculty Union v. NLRC, G.R. No. 90445, 2 October 1990.
44[44]
“Whereas” clauses, P.D. No. 851.
employee under a written or unwritten contract of employment for work done or
to be done, or for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the employer to the employee…”

from which an employer is prohibited under Article 113 45[45] of the same Code
from making any deductions without the employee’s 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 Agabon’s 13 th month pay
was authorized by the latter. The lack of authority to deduct is further bolstered
by the fact that petitioner Virgilio Agabon included the same as one of his money
claims against private respondent.

The Court of Appeals properly reinstated the monetary claims awarded by

the Labor Arbiter ordering the private respondent to pay each of the petitioners
holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabon’s 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 Agabon’s 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.

45[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.
No costs.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice