Agabon v. NLRC (2004): Valid Dismissal Without Notice

Riviera Home Improvements sells and installs ornamental and construction materials. It hired Virgilio and Jenny Agabon as gypsum board and cornice installers on January 2, 1992. It dismissed them on February 23, 1999 for abandonment of work.

The Agabons said they were dismissed because they refused to work on a "pakyaw" basis, which would have meant losing benefits as SSS members. The company said it never dismissed them. It said it had sent letters to their last known addresses asking them to report for work, and that they stopped reporting because they had taken installation work for another company. The Court found that they had done the same in January 1996 and had been warned then that they would be dismissed if it happened again. The company did not send the dismissal notices required by law. It argued that notices to their last known addresses would have been useless because they no longer lived there.

The Labor Arbiter ruled the dismissal illegal and awarded backwages and separation pay. The NLRC reversed, finding abandonment. The Court of Appeals agreed there was abandonment but ordered the company to pay certain money claims. The Agabons appealed to the Supreme Court.

Were the Agabons illegally dismissed? And if the employer had a just cause but skipped the notices, what is the consequence?

The Supreme Court denied the Agabons' petition and upheld the dismissal, but added an award of nominal damages.

Abandonment is a just cause. The Court called abandonment "a form of neglect of duty, hence, a just cause" for dismissal. It requires two things:

1. failure to report for work, or absence, without a valid or justifiable reason; and
2. a clear intention to end the employment, shown by overt acts. This second element is the more decisive one.

Working for another company while absent showed that intention. The Court also took into account that the Agabons had done it before and had been warned.

The notices were still required. For a just cause, the employer must give two written notices and a hearing or opportunity to be heard: a notice stating the grounds, a chance to answer, and a notice of the decision. The notices must be sent to the worker's last known address. Saying they would have been useless was "not a valid excuse".

Four possible situations. The Court described four situations, which lead to three results:

• Valid cause and due process followed: the dismissal is valid and the employer has no liability.
• No valid cause, with or without due process: the dismissal is illegal, and the worker is entitled to reinstatement and full backwages.
• Valid cause but no due process: the dismissal is upheld, but the employer is liable for not following the procedure.

The Agabons' case fell in the last group.

Serrano v. NLRC abandoned. In Serrano v. NLRC (2000), the Court had said that a dismissal with a valid cause but without notice was "ineffectual" and ordered full backwages until a court found the cause valid. Agabon abandoned that rule. The Court said that "the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual", but the employer should indemnify the worker. It said the sanction should be stiffer than before, to discourage the practice of "dismiss now, pay later".

Nominal damages of ₱30,000. Nominal damages recognize a right that was violated; they do not pay for a loss. The Court said their amount is "addressed to the sound discretion of the court", and fixed them at ₱30,000 for each worker.

Money claims. The Court also ordered the company to pay each worker holiday pay of ₱6,520 and service incentive leave pay of ₱3,255, and Virgilio the ₱2,150 balance of his 1998 13th month pay. The employer had to prove payment and did not. Deducting an SSS loan and the value of shoes from Virgilio's 13th month pay was not allowed, because he had not authorized it.

The decision was not unanimous. Several justices dissented, and others concurred only in the result.

When a dismissal is for a just cause but the employer did not follow the notice requirements, the dismissal remains valid, but the employer must pay the worker nominal damages for violating statutory due process, in an amount set by the court (₱30,000 in Agabon).

Agabon decides what happens in a very common situation: the worker really did something that justifies dismissal, but the employer did not send the two notices. Since Agabon, the worker in that situation does not get his job back or backwages, but does get nominal damages. If there was no valid cause at all, the dismissal is illegal and the usual remedies apply; see illegal dismissal remedies.

Agabon applied Article 282 of the Labor Code on just causes. Later decisions cite the same provision as Article 297, its number after the 2015 renumbering of the Labor Code.

A few months later, Jaka Food Processing v. Pacot applied the same idea to authorized causes, such as retrenchment, and set a higher amount. The two cases together explain the difference between a just cause and an authorized cause.

Here is a made-up illustration, with invented names. Ramon stops coming to work for weeks and starts working full time for a competitor. His employer simply removes him from the payroll without any notice. If a labor court finds that Ramon abandoned his job, the dismissal may stand, but the employer may still be ordered to pay nominal damages for skipping the notices. If Ramon was absent for a valid reason, such as illness, and never intended to quit, there may be no abandonment at all.

For plain answers, read Fired without notice? and What happens if I go AWOL?. Before deciding on a case of your own, see where to find legal help.