Labor Law I, Agrarian Law and Social Legislation

Atty. Ryan Mercader

2G Case Digests

Agabon vs. NLRC

G.R. No. 158693 17 November 2004
Ynares-Santiago, J.

Doctrine:

 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 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. 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:

a. The failure to report for work or absence without valid or justifiable reason; and

b. 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.

 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.

 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
Labor Law I, Agrarian Law and Social Legislation
Atty. Ryan Mercader
2G Case Digests

give the employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation.

 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.

 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. Considering the prevailing circumstances in the case at bar, the Court deem
it proper to fix it at P30,000.00. The Court believes 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.

FACTS:

Private respondent Riviera Home Improvements, Inc. (Riviera) 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. They were dismissed for
abandonment of work.

Petitioners then filed a complaint 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.

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.

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.

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
Labor Law I, Agrarian Law and Social Legislation
Atty. Ryan Mercader
2G Case Digests
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.

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

ISSUES:

1. Whether or not petitioners were illegally dismissed.

2. Whether or not the requirement of notice and hearing was violated.
3. What are the consequences of violating the procedural requirements of termination.

HELD:

1. NO. There was just cause for their dismissal which is abandonment.

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 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. 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:

a. The failure to report for work or absence without valid or justifiable reason; and

b. 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.
Labor Law I, Agrarian Law and Social Legislation
Atty. Ryan Mercader
2G Case Digests
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.

In Sandoval Shipyard v. Clave, the Court 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. The Court 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 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.

2. YES. Riviera did not observe the procedural requirements of notice and hearing in the
termination of employees.

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.

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 Law I, Agrarian Law and Social Legislation
Atty. Ryan Mercader
2G Case Digests
Labor Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.

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 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, a.) 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 b.) 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:

Labor Law I, Agrarian Law and Social Legislation
Atty. Ryan Mercader
2G Case Digests
a. 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. The dismissal is undoubtedly valid and the employer will not
suffer any liability.

b and c. The dismissal is without just or authorized cause but due process was observed
and the dismissal is without just or authorized cause and there was no due process. In
these 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.

d. The dismissal is for just or authorized cause but due process was not observed. 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. Thus, it should
be held liable for non-compliance with the procedural requirements of due process.

3. 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. The dismissal is valid but
Riviera should pay P30,000 nominal damages.

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 the Court to the cause of labor does not prevent it from
Labor Law I, Agrarian Law and Social Legislation
Atty. Ryan Mercader
2G Case Digests
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. The law protecting the rights of the laborer authorizes 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.

However, the employer should indemnify the employee for the violation of his statutory rights,
as 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 the Court
sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special consideration the gravity
of the due process violation of the employer.

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

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

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.
Considering the prevailing circumstances in the case at bar, the Court deem it proper to fix it at
P30,000.00. The Court believes 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.