Agabon v. NLRC

Riviera Home Improvements, Inc., which sells and installs ornamental and construction materials, employed Virgilio and Jenny Agabon as gypsum board and cornice installers from January 2, 1992 until February 23, 1999, when they were dismissed for abandonment of work. The Agabons claimed they were dismissed because they refused to work on a "pakyaw" basis, and that the twin requirements of notice and hearing were not observed. Riviera said they had stopped reporting after subcontracting for another company. It said it had sent letters to their last known addresses asking them to report, and it argued that notices would have been useless because they no longer lived there. The Labor Arbiter declared the dismissals illegal and awarded backwages, separation pay and money claims. The NLRC reversed on the ground of abandonment. The Court of Appeals upheld the finding of abandonment but ordered payment of holiday pay, service incentive leave pay, and the balance of Virgilio's 13th month pay.

1. 1Whether the Agabons were illegally dismissed (the sole issue the Court identified), including the consequence of a dismissal for just cause effected without the statutory notice requirements.
2. 2Whether Riviera is liable for the holiday pay, service incentive leave pay and 13th month pay balance awarded by the Court of Appeals.

The dismissal was for a just cause but violated statutory due process, so it was upheld and nominal damages were awarded. Abandonment is a form of neglect of duty and a just cause under Art. 282 [now Art. 297]. It requires an unjustified failure to report and a clear intention to sever the relationship; the Agabons' subcontracting for another company, as they had also done in 1996 despite a warning, showed that intention. For just causes, the implementing rules require two written notices, served at the employee's last known address, and a hearing or opportunity to be heard. Riviera did not comply; its excuse that the Agabons no longer lived at their last known addresses was rejected because the rules require service there. Of four possible situations, this case is the fourth: just cause without due process. "While the procedural infirmity cannot be cured, it should not invalidate the dismissal." The Court reasoned that under Art. 279 [now Art. 294], reinstatement and backwages follow only an unjust dismissal. It therefore abandoned the Serrano v. NLRC rule, which required full backwages until a judicial finding of just cause, and returned to Wenphil with a stiffer sanction. The Court distinguished statutory due process under the Labor Code from constitutional due process, which restrains the government. Nominal damages vindicate the violated statutory right and were fixed at P30,000.00 each. The money claims were affirmed because the employer, who pleads payment, bears the burden of proving it. Deducting an SSS loan and the value of shoes from the 13th month pay was unauthorized under Art. 113. The petition was denied and the CA decision affirmed, with P30,000.00 nominal damages to each petitioner.