Case Summary (G.R. No. 158693)
Procedural History
Labor Arbiter (28 December 1999): declared termination illegal and ordered backwages, separation pay in lieu of reinstatement, and other money claims (holiday pay, service incentive leave pay, premium pay, 13th month differential).
NLRC: reversed the Labor Arbiter, finding abandonment and denying the backwages, separation pay and most monetary claims for lack of evidence.
Court of Appeals (CA): affirmed abandonment but reversed NLRC only insofar as it denied certain monetary claims; ordered holiday pay (four regular holidays for 1996–1998), service incentive leave pay for same years, and balance of Virgilio’s 1998 13th month pay.
Supreme Court petition: limited to the single issue whether petitioners were illegally dismissed.
Issue Presented
Whether petitioners were illegally dismissed (i.e., whether the employer’s act amounted to illegal dismissal rather than abandonment), and the appropriate consequences where dismissal for just cause allegedly occurred without full statutory procedural notices.
Parties’ Contentions
Petitioners: allege they were dismissed when the employer refused to give assignments unless they accepted work on a pakyaw (piece-work) basis; they declined because it would affect SSS membership and benefits; they further contend the employer did not observe the twin statutory notice/hearing requirements.
Private respondent: contends petitioners abandoned their work, had subcontracted to work for another company, demanded an increased daily wage (P280.00), and therefore stopped reporting; employer sent letters to petitioners’ last known addresses and attempted telephone contact.
Standard of Review and Role of Triers of Fact
Findings of quasi-judicial agencies (Labor Arbiter, NLRC) are entitled to respect and generally finality when supported by substantial evidence. Where factual findings by such agencies conflict, appellate courts (including the CA and the Supreme Court on certiorari) may re-examine the record to resolve those factual conflicts.
Legal Standard for Abandonment
Abandonment defined in the jurisprudence: (1) failure to report for work or absence without valid/justifiable reason, and (2) a clear intention to sever the employer-employee relationship, the latter being more determinative and shown by overt acts (e.g., taking up employment elsewhere or subcontracting). Abandonment is a form of neglect of duty and constitutes a just cause for termination under Article 282 of the Labor Code.
Application of Abandonment Doctrine to the Facts
The Court found petitioners had repeatedly been absent in February 1999 while subcontracting for another company, and had previously, in January 1996, failed to report because they were working for another company despite a warning. Subcontracting and repeated absences manifested an intention to sever the employment relationship; petitioners’ choice to seek separation pay rather than reinstatement was also indicative of disinterest in preserving the employment relationship. Hence abandonment (a just cause under Article 282) was established.
Statutory Procedural Due Process Requirements
The Omnibus Rules Implementing the Labor Code require substantial observance of twin procedural requisites for termination for just causes: (1) a written notice specifying grounds and opportunity to explain; (2) a hearing or conference to respond and present evidence; and (3) a written notice of termination after consideration. The Court distilled four situations (just/authorized cause with or without due process, and dismissals without cause with or without due process) and their respective legal consequences.
Effect of Procedural Non‑Compliance Where Just Cause Exists
Where dismissal is for just cause but the employer failed to comply with statutory notice/hearing requirements, the Court held that the dismissal itself need not be invalidated. Instead, the employer is liable for violating statutory due process and must indemnify the employee. The Court rejected the Serrano doctrine insofar as it mandated full backwages for dismissals for just cause lacking statutory notice, and returned to a rule that upholds valid dismissals for cause while imposing a civil indemnity/nominal damages remedy to vindicate the employee’s statutory rights.
Constitutional and Statutory Distinction
The Court emphasized the distinction between constitutional due process (a restraint on the State) and statutory due process under the Labor Code (which governs private employer-employee relations). The Due Process Clause protects against state action and does not automatically make private employers’ failures constitutional violations; remedial measures for procedural lapses in private employment relations should be grounded in statutory and civil remedies rather than constitutional nullification of dismissals.
Evolution of Jurisprudence (Wenphil, Serrano, Subsequent Rule)
Pre-1989 cases often allowed dismissals for just cause without prior notice. Wenphil (1989) upheld just-cause dismissals despite procedural lapses but imposed a modest indemnity for the employer’s failure to observe due process. Serrano (2000) later required full backwages from the date of dismissal until judicial affirmation of just cause, aiming to deter the “dismiss now, pay later” practice. In this decision the Court returned to the Wenphil approach (upholding dismissals for just cause but imposing an indemnity), while prescribing stiffer and principled indemnities based on Civil Code damages principles rather than automatic full backwages.
Basis and Measure of Remedies for Procedural Violations
The Court held that indemnities for failure to observe statutory due process should be civil damages under the Civil Code (nominal, temperate, actual, moral or exemplary as appropriate), adjudicated on the facts and the gravity of the omission. Article 288 (penal fines) is distinct and punitive, payable to the State; it is not the proper vehicle to compensate the dismissed employee. Nominal damages vindicate the violated statutory right even where no provable pecuniary loss exists; actual damages require proof of proximate pecuniary loss caused by the procedural failure.
Application to Monetary Claims and Burden of Proof
The Court of Appeals’ reinstatement of monetary awards (holiday pay for specified holidays, service incentive leave pay for 1996–1998, and balance of Virgilio’s 1998 13th month pay) was affirmed. The employer bears the burden
...continue readingCase Syllabus (G.R. No. 158693)
Factual Background
- Riviera Home Improvements, Inc. (private respondent) is engaged in selling and installing ornamental and construction materials, including gypsum board and cornice installation.
- Petitioners Jenny M. Agabon and Virgilio C. Agabon were hired as gypsum board and cornice installers on January 2, 1992, and rendered services until about February 23, 1999, when they stopped reporting for work.
- Petitioners allege they were told on February 23, 1999 that they would be rehired only on a “pakyaw” (piece-work) basis and that they refused that arrangement because it would cause loss of benefits such as Social Security System membership.
- Respondent employer alleges the petitioners abandoned their jobs: two letters dated March 10, 1999 were sent to petitioners’ last known addresses directing them to report for work but were returned “RTS Moved”; the employer’s manager spoke by telephone with Virgilio Agabon in June 1999 about a new Pacific Plaza Towers assignment; petitioners demanded a wage increase to P280.00 per day and were working for another company (subcontracting), which showed an intention to sever the employment relationship.
- Petitioners previously, in January 1996, failed to report for work because they were working for another company and were warned then that such conduct could lead to dismissal.
Procedural History
- Petitioners filed a complaint for illegal dismissal and payment of money claims with the Labor Arbiter.
- Labor Arbiter rendered a decision on December 28, 1999 declaring the dismissals illegal and awarding backwages, separation pay in lieu of reinstatement, holiday pay, service incentive leave pay, premium pay and a 13th month pay differential, with computed aggregate amounts for each petitioner.
- On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter, finding that petitioners had abandoned their employment, denying backwages and separation pay and disallowing other money claims for lack of evidence.
- Petitioners filed a petition for certiorari with the Court of Appeals (CA). The CA affirmed that petitioners abandoned their employment (i.e., dismissal for just cause) but reversed the NLRC insofar as it denied certain money claims, ordering payment of holiday pay for four regular holidays for 1996–1998, service incentive leave pay for those years, and the balance of Virgilio Agabon’s 13th month pay for 1998 (P2,150.00).
- Petitioners filed a petition for review with the Supreme Court raising the sole issue whether they were illegally dismissed.
Issue Presented
- Whether the petitioners were illegally dismissed, considering (a) whether their failure to report for work constituted abandonment (a just cause under Article 282 of the Labor Code), and (b) whether the employer’s failure to comply with the statutory twin notice requirements (notice and hearing) voids a dismissal that is for just cause or merely renders the employer liable to sanctions.
Parties’ Principal Contentions
- Petitioners:
- They were effectively dismissed because the employer refused to give assignments unless they agreed to work on a pakyaw basis.
- Employer failed to comply with the twin requirements of notice and hearing; only one notice was sent; employer knew petitioners’ changed address (company IDs) yet sent notices to old addresses.
- They sought relief for illegal dismissal and unpaid monetary benefits (holiday pay, service incentive leave pay, vocational premium differentials, 13th month).
- Employer (Riviera Home):
- Petitioners abandoned their employment, having subcontracted for installation work for another company and demanded increased wages (P280/day), then stopped reporting for work.
- Sent notices to the petitioners’ last known addresses on March 10, 1999; notices were returned “RTS Moved”; proper service thus accomplished.
- Employer produced cash vouchers for payment of some 13th month benefits but otherwise lacked documentary proof of other alleged payments because records are the employer’s to produce.
Labor Arbiter’s Findings and Award
- Labor Arbiter (Decision dated December 28, 1999):
- Found the termination illegal.
- Ordered respondent to pay backwages up to November 29, 1999: P56,231.93 each for Jenny and Virgilio Agabon.
- In lieu of reinstatement, ordered separation pay of one month for every year of service up to November 29, 1999.
- Ordered payment of holiday pay, service incentive leave pay for 1996–1998, premium pay for holidays and rest days, and Virgilio Agabon’s 13th month pay differential (aggregate figures were stated in the Arbiter’s dispositive portion).
- Reasoned employer failed to refute petitioners’ claim they were no longer given work after Feb 23, 1999, and failed to comply with notice requirements; employer knew of change of address.
NLRC Ruling
- NLRC (Second Division):
- Reversed the Labor Arbiter and dismissed the complaint for lack of merit.
- Found petitioners had substantially abandoned their jobs: payroll evidence showed very few days worked in relevant payroll period; notices were properly served to last known address; petitioners did not seek reinstatement but only separation pay.
- Denied Labor Arbiter’s award of other money claims for lack of proof.
Court of Appeals Ruling
- Court of Appeals (Decision dated January 23, 2003):
- Agreed with NLRC that petitioners abandoned their employment (thus dismissal for just cause).
- Reversed NLRC only insofar as it dismissed petitioners’ money claims: ordered payment of holiday pay for four regular holidays in 1996–1998, service incentive leave pay for the same years, and the balance of Virgilio Agabon’s 13th month pay for 1998 (P2,150.00).
- Held burden of proof for payment of such monetary claims rests on the employer because payroll and remittance records are under employer’s control; deductions (SSS loan, shoes) from Virgilio’s 13th month were unauthorized absent proof of authorization.
Governing Legal Framework and Precedents Considered
- Labor Code provisions:
- Article 279 (Security of tenure): employer shall not terminate services except for just cause or when authorized; unjust dismissal entitles employee to reinstatement and full backwages.
- Article 282 (Just causes for termination): serious misconduct, willful disobedience, gross habitual neglect, fraud/willful breach of trust, commission of crime, other analogous causes; abandonment is a form of neglect and a just cause.
- Article 283–284 (Authorized causes) and distinctions between just and authorized causes.
- Article 97(f) (definition of wage) and Article 113 (prohibition on deductions without employee’s knowledge/consent) as to 13th month pay treatment and deductions.
- Omnibus Rules Implementing the Labor Code (Book VI, Rule I, Section 2(d) / Rule XXIII Book V):
- Standards of due process for terminations based on just causes: (a) written notice specifying ground(s) and reasonable opportunity to explain; (b) hearing/conference allowing employee to respond and present evidence with counsel if desired; (c) written notice of termination indicating grounds established after due consideration.
- Substantial compliance standard.
- Precedents and doctrines:
- Abandonment jurisprudence: abandonment requires (1) failure to report without valid reason; (2) clear intention to sever employment manifested by overt acts (second element more determinative).
- Wenphil Corp. v. NLRC (1989) — where dismissal is for just cause but due process not observed, dismissal may be upheld but employer liable for indemnity (small award) for failure to afford due process (Wenphil or belated due