FACTS
Virgilio C. Agabon and Jenny M. Agabon were employed by Riviera Home Improvements, Inc. as gypsum board and cornice installers beginning January 2, 1992. On February 23, 1999, Riviera dismissed them for abandonment of work. The Agabons then filed a complaint for illegal dismissal and payment of money claims. The Labor Arbiter initially declared their dismissal illegal and ordered Riviera to pay their monetary claims.
The evidence, however, showed that the Agabons had repeatedly failed to report for work because they were performing installation work for another company. In January 1996, they had similarly failed to report for work while working for another company and had been warned by Riviera that they would be dismissed if the same conduct happened again. Despite the warning, they again stopped reporting for work and worked for another company. The NLRC subsequently found that they had abandoned their employment.
The Agabons challenged the NLRC ruling before the Court of Appeals. The Court of Appeals found that the Agabons had indeed abandoned their employment, but it nevertheless ordered Riviera to pay their money claims. The Agabons then brought the case to the Supreme Court, principally arguing that they had been dismissed without compliance with the statutory requirements of notice and hearing. Riviera admitted that it had not sent the required notices to the Agabons' last known addresses, claiming that doing so would have been useless because they no longer lived there.
The Supreme Court therefore had to determine not only whether the Agabons were validly dismissed for abandonment, but also the legal consequence of Riviera's failure to comply with the procedural requirements for termination of employment. The case required the Court to revisit the conflicting doctrines concerning dismissal for a valid cause but without compliance with the required procedure.
ISSUE
The first issue was whether the dismissal of Virgilio and Jenny Agabon was valid, particularly whether their failure to report for work and their decision to work for another company constituted abandonment and therefore a just cause for termination under the Labor Code.
The second issue was whether the dismissal was invalid because Riviera failed to comply with the procedural requirements of due process, particularly the requirement of written notices and opportunity to be heard before termination.
The third issue was whether failure to comply with the procedural requirements rendered an otherwise valid dismissal illegal, or whether the employer should instead be held liable only for the consequences of its failure to observe the required procedure.
HELD
The Supreme Court DENIED the petition. It held that the Agabons were validly dismissed because they had abandoned their employment. However, Riviera failed to comply with the statutory requirements of procedural due process. The Court therefore distinguished between the validity of the dismissal on substantive grounds and the employer's liability for violating the procedural requirements.
The Court explained that abandonment is the deliberate and unjustified refusal of an employee to resume employment. It is a form of neglect of duty and constitutes a just cause for termination. The Court found that the Agabons' repeated absences for the purpose of working for another company demonstrated their intention to sever their employment relationship with Riviera. Their previous similar conduct, together with Riviera's prior warning, further supported the finding of abandonment.
The Court then addressed procedural due process. Under the applicable provisions of the Labor Code and its implementing rules, termination for a just cause required the employer to observe the prescribed notice requirements. The employee must be given written notice specifying the grounds for termination and a reasonable opportunity to explain, followed by the required written notice of termination after consideration of the circumstances. Riviera did not comply with these requirements. Its explanation that sending the notices to the Agabons' last known addresses would have been futile did not excuse its failure to comply with the procedure required by law.
The Court explained that due process in termination cases has two aspects: substantive due process and procedural due process. Substantive due process requires that the dismissal be based on a valid or authorized cause under the Labor Code. Procedural due process concerns the manner by which the dismissal is effected. Here, the substantive requirement was satisfied because the Agabons had abandoned their jobs, but the procedural requirement was not satisfied because Riviera failed to give the required notices.
The Court expressly abandoned the rule in Serrano v. NLRC insofar as it treated a dismissal for a valid cause but without compliance with procedural due process as invalid. The Court instead reaffirmed the doctrine in Wenphil Corp. v. NLRC, with a modification concerning the amount of liability. Thus, where there is a valid cause for dismissal but the employer fails to comply with the procedural requirements, the dismissal remains valid, but the employer must pay the employee nominal damages for violation of the statutory right to procedural due process.
The Supreme Court therefore upheld the Agabons' dismissal for abandonment but held Riviera liable for nominal damages of ₱30,000.00 to each petitioner for its failure to observe the statutory requirements of procedural due process. The Court also sustained the award of their holiday pay, service incentive leave pay, and 13th-month pay, insofar as these monetary claims were properly established.
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