EN BANC

G.R. No. 117040

Very truly yours,

January 27, 2000

RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION and ISETANN DEPARTMENT STORE, respondents.
MENDOZA, J.:
This is a Petition seeking review of the resolutions, dated March 30, 1994
and August 26, 1994, of the National Labor Relations Commission (NLRC)
which reversed the decision of the Labor Arbiter and dismissed petitioner
Ruben Serrano's complaint for illegal dismissal and denied his motion for
reconsideration. The facts are as follows:
Petitioner was hired by private respondent Isetann Department Store as a
security checker to apprehend shoplifters and prevent pilferage of
merchandise.1 Initially hired on October 4, 1984 on contractual basis,
petitioner eventually became a regular employee on April 4, 1985. In 1988,
he became head of the Security Checkers Section of private respondent. 2

[Sgd.] TERESITA A. VILLANUEVA

Human Resources Division Manager
The loss of his employment prompted petitioner to file a complaint on
December 3, 1991 for illegal dismissal, illegal layoff, unfair labor
practice, underpayment of wages, and nonpayment of salary and
overtime pay.4
The parties were required to submit their position papers, on the
basis of which the Labor Arbiter defined the issues as follows: 5
Whether or not there is a valid ground for the dismissal of the
complainant.
Whether or not complainant is entitled to his monetary claims for
underpayment of wages, nonpayment of salaries, 13th month pay for
1991 and overtime pay.
Whether or not Respondent is guilty of unfair labor practice.

Sometime in 1991, as a cost-cutting measure, private respondent decided to

phase out its entire security section and engage the services of an
independent security agency. For this reason, it wrote petitioner the following
memorandum:3
October 11, 1991
MR. RUBEN SERRANO
PRESENT
Dear Mr. Seranno,
In view of the retrenchment program of the company, we hereby
reiterate our verbal notice to you of your termination as Security
Section Head effective October 11, 1991.
Please secure your clearance from this office.

Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter
rendered a decision finding petitioner to have been illegally dismissed. He
ruled that private respondent failed to establish that it had retrenched its
security section to prevent or minimize losses to its business; that private
respondent failed to accord due process to petitioner; that private respondent
failed to use reasonable standards in selecting employees whose
employment would be terminated; that private respondent had not shown
that petitioner and other employees in the security section were so inefficient
so as to justify their replacement by a security agency, or that "cost-saving
devices [such as] secret video cameras (to monitor and prevent shoplifting)
and secret code tags on the merchandise" could not have been employed;
instead, the day after petitioner's dismissal, private respondent employed a
safety and security supervisor with duties and functions similar to those of
petitioner.1wphi1.nt
Accordingly, the Labor Arbiter ordered:6
WHEREFORE, above premises considered, judgment is hereby decreed:

(a) Finding the dismissal of the complainant to be illegal and

concomitantly, Respondent is ordered to pay complainant full
backwages without qualification or deduction in the amount
of P74,740.00 from the time of his dismissal until reinstatement.
(computed till promulgation only) based on his monthly salary of
P4,040.00/month at the time of his termination but limited to (3) three
years;
(b) Ordering the Respondent to immediately reinstate the
complainant to his former position as security section head or to a
reasonably equivalent supervisorial position in charges of security
without loss of seniority rights, privileges and benefits. This order is
immediately executory even pending appeal;
(c) Ordering the Respondent to pay complainant unpaid wages in the
amount of P2,020.73 and proportionate 13th month pay in the
amount of P3,198.30;
(d) Ordering the Respondent to pay complainant the amount
of P7,995.91, representing 10% attorney's fees based on the total
judgment award of P79,959.12.

apparently used the term "retrenchment" in its "plain and ordinary sense: to
layoff or remove from one's job, regardless of the reason therefor"; that the
rule of "reasonable criteria" in the selection of the employees to be
retrenched did not apply because all positions in the security section had
been abolished; and that the appointment of a safety and security supervisor
referred to by petitioner to prove bad faith on private respondent's part was of
no moment because the position had long been in existence and was
separate from petitioner's position as head of the Security Checkers Section.
Hence this petition. Petitioner raises the following issue:
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY
THE PRIVATE RESPONDENT TO REPLACE ITS CURRENT
SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF
THE EMPLOYEES CLASSED UNDER THE LATTER?7
Petitioner contends that abolition of private respondent's Security Checkers
Section and the employment of an independent security agency do not fall
under any of the authorized causes for dismissal under Art. 283 of the Labor
Code.
Petitioner Laid Off for Cause

All other claims of the complainant whether monetary or otherwise is

hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed to the NLRC which, in its resolution of March
30, 1994; reversed the decision of the Labor Arbiter and ordered petitioner to
be given separation pay equivalent to one month pay for every year of
service, unpaid salary, and proportionate 13th month pay. Petitioner filed a
motion for reconsideration, but his motion was denied.
The NLRC held that the phase-out of private respondent's security section
and the hiring of an independent security agency constituted an exercise by
private respondent of "[a] legitimate business decision whose wisdom we do
not intend to inquire into and for which we cannot substitute our judgment";
that the distinction made by the Labor Arbiter between "retrenchment" and
the employment of cost-saving devices" under Art. 283 of the Labor Code
was insignificant because the company official who wrote the dismissal letter

Petitioner's contention has no merit. Art. 283 provides:

Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operations of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the, workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof. In case
of termination due to the installation of labor-saving devices or redundancy,
the worker affected thereby shall be entitled to a separation pay equivalent to
at least one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closure or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay
shall be equivalent to at least one (1) month pay or at least one-half (1/2)

month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered as one (1) whole year.
In De Ocampo v. National Labor Relations Commission,8 this Court upheld
the termination of employment of three mechanics in a transportation
company and their replacement by a company rendering maintenance and
repair services. It held:
In contracting the services of Gemac Machineries, as part of the
company's cost-saving program, the services rendered by the
mechanics became redundant and superfluous, and therefore
properly terminable. The company merely exercised its business
judgment or management prerogative. And in the absence of any
proof that the management abused its discretion or acted in a
malicious or arbitrary manner, the court will not interfere with the
exercise of such prerogative.9
In Asian Alcohol Corporation v. National Labor Relations Commission,10 the
Court likewise upheld the termination of employment of water pump tenders
and their replacement by independent contractors. It ruled that an employer's
good faith in implementing a redundancy program is not necessarily put in
doubt by the availment of the services of an independent contractor to
replace the services of the terminated employees to promote economy and
efficiency.
Indeed, as we pointed out in another case, the "[management of a company]
cannot be denied the faculty of promoting efficiency and attaining economy
by a study of what units are essential for its operation. To it belongs the
ultimate determination of whether services should be performed by its
personnel or contracted to outside agencies . . . [While there] should be
mutual consultation, eventually deference is to be paid to what management
decides."11 Consequently, absent proof that management acted in a
malicious or arbitrary manner, the Court will not interfere with the exercise of
judgment by an employer.12
In the case at bar, we have only the bare assertion of petitioner that, in
abolishing the security section, private respondent's real purpose was to
avoid payment to the security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990. 13 Such an assertion is not
sufficient basis for concluding that the termination of petitioner's employment

was not a bona fide decision of management to obtain reasonable return

from its investment, which is a right guaranteed to employers under the
Constitution.14 Indeed, that the phase-out of the security section constituted a
"legitimate business decision" is a factual finding of an administrative agency
which must be accorded respect and even finality by this Court since nothing
can be found in the record which fairly detracts from such finding. 15
Accordingly, we hold that the termination of petitioner's services was for an
authorized cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor
Code, petitioner should be given separation pay at the rate of one month pay
for every year of service.
Sanctions for Violations of the Notice Requirement
Art. 283 also provides that to terminate the employment of an employee for
any of the authorized causes the employer must serve "a written notice on
the workers and the Department of Labor and Employment at least one (1)
month before the intended date thereof." In the case at bar, petitioner was
given a notice of termination on October 11, 1991. On the same day, his
services were terminated. He was thus denied his right to be given written
notice before the termination of his employment, and the question is the
appropriate sanction for the violation of petitioner's right.
To be sure, this is not the first time this question has arisen. In Subuguero v.
NLRC,16 workers in a garment factory were temporarily laid off due to the
cancellation of orders and a garment embargo. The Labor Arbiter found that
the workers had been illegally dismissed and ordered the company to pay
separation pay and backwages. The NLRC, on the other hand, found that
this was a case of retrenchment due to business losses and ordered the
payment of separation pay without backwages. This Court sustained the
NLRC's finding. However, as the company did not comply with the 30-day
written notice in Art. 283 of the Labor Code, the Court ordered the employer
to pay the workers P2,000.00 each as indemnity.
The decision followed the ruling in several cases involving dismissals which,
although based on any of the just causes under Art. 282, 17 were effected
without notice and hearing to the employee as required by the implementing
rules.18 As this Court said: "It is now settled that where the dismissal of one
employee is in fact for a just and valid cause and is so proven to be but he is
not accorded his right to due process, i.e., he was not furnished the twin

requirements of notice and opportunity to be heard, the dismissal shall be

upheld but the employer must be sanctioned for non-compliance with the
requirements of, or for failure to observe, due process." 19

The fines imposed for violations of the notice requirement have varied from
P1,000.0022 to P2,000.0023 to P5,000.0024 to P10,000.00.25
Need for Reexamining the Wenphil Doctrine

The rule reversed a long standing policy theretofore followed that even
though the dismissal is based on a just cause or the termination of
employment is for an authorized cause, the dismissal or termination is illegal
if effected without notice to the employee. The shift in doctrine took place in
1989 in Wenphil Corp. v. NLRC.20 In announcing the change, this Court
said:21
The Court holds that the policy of ordering the reinstatement to the
service of an employee without loss of seniority and the payment of
his wages during the period of his separation until his actual
reinstatement but not exceeding three (3) years without qualification
or deduction, when it appears he was not afforded due process,
although his dismissal was found to be for just and authorized cause
in an appropriate proceeding in the Ministry of Labor and
Employment, should be re-examined. It will be highly prejudicial to
the interests of the employer to impose on him the services of an
employee who has been shown to be guilty of the charges that
warranted his dismissal from employment. Indeed, it will demoralize
the rank and file if the undeserving, if not undesirable, remains in the
service.
xxx

xxx

xxx

However, the petitioner must nevertheless be held to account for

failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed.
The dismissal of an employee must be for just or authorized cause
and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its
failure to give a formal notice and conduct an investigation as
required by law before dismissing petitioner from employment.
Considering the circumstances of this case petitioner must indemnify
the private respondent the amount of P1,000.00. The measure of this
award depends on the facts of each case and the gravity of the
omission committed by the employer.

Today, we once again consider the question of appropriate sanctions for

violations of the notice experience during the last decade or so with the
Wenphil doctrine. The number of cases involving dismissals without the
requisite notice to the employee, although effected for just or authorized
causes, suggest that the imposition of fine for violation of the notice
requirement has not been effective in deterring violations of the notice
requirement. Justice Panganiban finds the monetary sanctions "too
insignificant, too niggardly, and sometimes even too late." On the other hand,
Justice Puno says there has in effect been fostered a policy of "dismiss now;
pay later" which moneyed employers find more convenient to comply with
than the requirement to serve a 30-day written notice (in the case of
termination of employment for an authorized cause under Arts. 283-284) or to
give notice and hearing (in the case of dismissals for just causes under Art.
282).
For this reason, they regard any dismissal or layoff without the requisite
notice to be null and void even though there are just or authorized cause for
such dismissal or layoff. Consequently, in their view, the employee concerned
should be reinstated and paid backwages.
Validity of Petitioner's Layoff Not Affected by Lack of Notice
We agree with our esteemed colleagues, Justices Puno and Panganiban,
that we should rethink the sanction of fine for an employer's disregard of the
notice requirement. We do not agree, however, that disregard of this
requirement by an employer renders the dismissal or termination of
employment null and void. Such a stance is actually a reversion to the
discredited pre-Wenphil rule of ordering an employee to be reinstated and
paid backwages when it is shown that he has not been given notice and
hearing although his dismissal or layoff is later found to be for a just or
authorized cause. Such rule was abandoned in Wenphil because it is really
unjust to require an employer to keep in his service one who is guilty, for
example, of an attempt on the life of the employer or the latter's family, or
when the employer is precisely retrenching in order to prevent losses.

The need is for a rule which, while recognizing the employee's right to notice
before he is dismissed or laid off, at the same time acknowledges the right of
the employer to dismiss for any of the just causes enumerated in Art. 282 or
to terminate employment for any of the authorized causes mentioned in Arts.
283-284. If the Wenphil rule imposing a fine on an employer who is found to
have dismissed an employee for cause without prior notice is deemed
ineffective in deterring employer violations of the notice requirement, the
remedy is not to declare the dismissal void if there are just or valid grounds
for such dismissal or if the termination is for an authorized cause. That would
be to uphold the right of the employee but deny the right of the employer to
dismiss for cause. Rather, the remedy is to order the payment to the
employee of full backwages from the time of his dismissal until the court finds
that the dismissal was for a just cause. But, otherwise, his dismissal must be
upheld and he should not be reinstated. This is because his dismissal is
ineffectual.
For the same reason, if an employee is laid off for any of the causes in Arts.
283-284, i.e., installation of a labor-saving device, but the employer did not
give him and the DOLE a 30-day written notice of termination in advance,
then the termination of his employment should be considered ineffectual and
he should be paid backwages. However, the termination of his employment
should not be considered void but he should simply be paid separation pay
as provided in Art. 283 in addition to backwages.
Justice Puno argues that an employer's failure to comply with the notice
requirement constitutes a denial of the employee's right to due process.
Prescinding from this premise, he quotes the statement of Chief Justice
Concepcion Vda. de Cuaycong v. Vda. de Sengbengco 26 that "acts of
Congress, as well as of the Executive, can deny due process only under the
pain of nullity, and judicial proceedings suffering from the same flaw are
subject to the same sanction, any statutory provision to the contrary
notwithstanding." Justice Puno concludes that the dismissal of an employee
without notice and hearing, even if for a just cause, as provided in Art. 282, or
for an authorized cause, as provided in Arts. 283-284, is a nullity. Hence,
even if just or authorized cause exist, the employee should be reinstated with
full back pay. On the other hand, Justice Panganiban quotes from the
statement in People v. Bocar27 that "[w]here the denial of the fundamental
right of due process is apparent, a decision rendered in disregard of that right
is void for lack of jurisdiction."

Violation of Notice Requirement Not a Denial of Due Process

The cases cited by both Justices Puno and Panganiban refer, however, to
the denial of due process by the State, which is not the case here. There are
three reasons why, on the other hand, violation by the employer of the notice
requirement cannot be considered a denial of due process resulting in the
nullity of the employee's dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on
governmental powers. It does not apply to the exercise of private power,
such as the termination of employment under the Labor Code. This is plain
from the text of Art. III, 1 of the Constitution, viz.: "No person shall be
deprived of life, liberty, or property without due process of law. . . ." The
reason is simple: Only the State has authority to take the life, liberty, or
property of the individual. The purpose of the Due Process Clause is to
ensure that the exercise of this power is consistent with what are considered
civilized methods.
The second reason is that notice and hearing are required under the Due
Process Clause before the power of organized society are brought to bear
upon the individual. This is obviously not the case of termination of
employment under Art. 283. Here the employee is not faced with an aspect of
the adversary system. The purpose for requiring a 30-day written notice
before an employee is laid off is not to afford him an opportunity to be heard
on any charge against him, for there is none. The purpose rather is to give
him time to prepare for the eventual loss of his job and the DOLE an
opportunity to determine whether economic causes do exist justifying the
termination of his employment.
Even in cases of dismissal under Art. 282, the purpose for the requirement of
notice and hearing is not to comply with Due Process Clause of the
Constitution. The time for notice and hearing is at the trial stage. Then that is
the time we speak of notice and hearing as the essence of procedural due
process. Thus, compliance by the employer with the notice requirement
before he dismisses an employee does not foreclose the right of the latter to
question the legality of his dismissal. As Art. 277(b) provides, "Any decision
taken by the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations Commission."

Indeed, to contend that the notice requirement in the Labor Code is an

aspect of due process is to overlook the fact that Art. 283 had its origin in Art.
302 of the Spanish Code of Commerce of 1882 which gave either party to
the employer-employee relationship the right to terminate their relationship
by giving notice to the other one month in advance. In lieu of notice, an
employee could be laid off by paying him a mesada equivalent to his salary
for one month.28 This provision was repealed by Art. 2270 of the Civil Code,
which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052,
otherwise known as the Termination Pay Law, was enacted reviving
the mesada. On June 21, 1957, the law was amended by R.A. No. 1787
providing for the giving of advance notice or the payment of compensation at
the rate of one-half month for every year of service. 29
The Termination Pay Law was held not to be a substantive law but a
regulatory measure, the purpose of which was to give the employer the
opportunity to find a replacement or substitute, and the employee the equal
opportunity to look for another job or source of employment. Where the
termination of employment was for a just cause, no notice was required to be
given to the, employee.30 It was only on September 4, 1981 that notice was
required to be given even where the dismissal or termination of an employee
was for cause. This was made in the rules issued by the then Minister of
Labor and Employment to implement B.P. Blg. 130 which amended the Labor
Code. And it was still much later when the notice requirement was embodied
in the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2,
1989. It cannot be that the former regime denied due process to the
employee. Otherwise, there should now likewise be a rule that, in case an
employee leaves his job without cause and without prior notice to his
employer, his act should be void instead of simply making him liable for
damages.
The third reason why the notice requirement under Art. 283 can not be
considered a requirement of the Due Process Clause is that the employer
cannot really be expected to be entirely an impartial judge of his own cause.
This is also the case in termination of employment for a just cause under Art.
282 (i.e., serious misconduct or willful disobedience by the employee of the
lawful orders of the employer, gross and habitual neglect of duties, fraud or
willful breach of trust of the employer, commission of crime against the
employer or the latter's immediate family or duly authorized representatives,
or other analogous cases).

Justice Puno disputes this. He says that "statistics in the DOLE will prove
that many cases have been won by employees before the grievance
committees manned by impartial judges of the company." The grievance
machinery is, however, different because it is established by agreement of
the employer and the employees and composed of representatives from both
sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of
Appeals,31 which Justice Puno cites, it was held that "Since the right of [an
employee] to his labor is in itself a property and that the labor agreement
between him and [his employer] is the law between the parties, his summary
and arbitrary dismissal amounted to deprivation of his property without due
process of law." But here we are dealing with dismissals and layoffs by
employers alone, without the intervention of any grievance machinery.
Accordingly in Montemayor v. Araneta University Foundation,32 although a
professor was dismissed without a hearing by his university, his dismissal for
having made homosexual advances on a student was sustained, it appearing
that in the NLRC, the employee was fully heard in his defense.
Lack of Notice Only Makes Termination Ineffectual
Not all notice requirements are requirements of due process. Some are
simply part of a procedure to be followed before a right granted to a party can
be exercised. Others are simply an application of the Justinian precept,
embodied in the Civil Code,33 to act with justice, give everyone his due, and
observe honesty and good faith toward one's fellowmen. Such is the notice
requirement in Arts. 282-283. The consequence of the failure either of the
employer or the employee to live up to this precept is to make him liable in
damages, not to render his act (dismissal or resignation, as the case may be)
void. The measure of damages is the amount of wages the employee should
have received were it not for the termination of his employment without prior
notice. If warranted, nominal and moral damages may also be awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the
employer's failure to comply with the notice requirement does not constitute a
denial of due process but a mere failure to observe a procedure for the
termination of employment which makes the termination of employment
merely ineffectual. It is similar to the failure to observe the provisions of Art.
1592, in relation to Art. 1191, of the Civil Code 34 in rescinding a contract for
the sale of immovable property. Under these provisions, while the power of a
party to rescind a contract is implied in reciprocal obligations, nonetheless, in
cases involving the sale of immovable property, the vendor cannot exercise

this power even though the vendee defaults in the payment of the price,
except by bringing an action in court or giving notice of rescission by means
of a notarial demand.35 Consequently, a notice of rescission given in the letter
of an attorney has no legal effect, and the vendee can make payment even
after the due date since no valid notice of rescission has been given. 36

found by the Court, was not proven. The dismissal was, therefore, illegal, not
because there was a denial of due process, but because the dismissal was
without cause. The statement that the failure of management to comply with
the notice requirement "taints the dismissal with illegality" was merely a
dictum thrown in as additional grounds for holding the dismissal to be illegal.

Indeed, under the Labor Code, only the absence of a just cause for the
termination of employment can make the dismissal of an employee illegal.
This is clear from Art. 279 which provides:

Given the nature of the violation, therefore, the appropriate sanction for the
failure to give notice is the payment of backwages for the period when the
employee is considered not to have been effectively dismissed or his
employment terminated. The sanction is not the payment alone of nominal
damages as Justice Vitug contends.

Security of Tenure. In cases of regular employment, the employer

shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissedfrom work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement. 37
Thus, only if the termination of employment is not for any of the causes
provided by law is it illegal and, therefore, the employee should be reinstated
and paid backwages. To contend, as Justices Puno and Panganiban do, that
even if the termination is for a just or authorized cause the employee
concerned should be reinstated and paid backwages would be to amend Art.
279 by adding another ground for considering a dismissal illegal. What is
more, it would ignore the fact that under Art. 285, if it is the employee who
fails to give a written notice to the employer that he is leaving the service of
the latter, at least one month in advance, his failure to comply with the legal
requirement does not result in making his resignation void but only in making
him liable for damages.38 This disparity in legal treatment, which would result
from the adoption of the theory of the minority cannot simply be explained by
invoking resident Ramon Magsaysay's motto that "he who has less in life
should have more in law." That would be a misapplication of this noble
phrase originally from Professor Thomas Reed Powell of the Harvard Law
School.
Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,39 in support of his
view that an illegal dismissal results not only from want of legal cause but
also from the failure to observe "due process." The Pepsi-Cola case actually
involved a dismissal for an alleged loss of trust and confidence which, as

Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As

Illegal
The refusal to look beyond the validity of the initial action taken by the
employer to terminate employment either for an authorized or just cause can
result in an injustice to the employer. For not giving notice and hearing before
dismissing an employee, who is otherwise guilty of, say, theft, or even of an
attempt against the life of the employer, an employer will be forced to keep in
his employ such guilty employee. This is unjust.
It is true the Constitution regards labor as "a primary social economic
force."40 But so does it declare that it "recognizes the indispensable role of
the private sector, encourages private enterprise, and provides incentives to
needed investment."41 The Constitution bids the State to "afford full protection
to labor."42 But it is equally true that "the law, in protecting the right's of the
laborer, authorizes neither oppression nor self-destruction of the
employer."43 And it is oppression to compel the employer to continue in
employment one who is guilty or to force the employer to remain in operation
when it is not economically in his interest to do so.
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is
shown that the termination of employment was due to an authorized cause,
then the employee concerned should not be ordered reinstated even though
there is failure to comply with the 30-day notice requirement. Instead, he
must be granted separation pay in accordance with Art. 283, to wit:
In case of termination due to the installation of labor-saving devices
or redundancy, the worker affected thereby shall be entitled to a

separation pay equivalent to at least his one (1) month pay or to at

least one month for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of
at least six months shall be considered one (1) whole year.
If the employee's separation is without cause, instead of being given
separation pay, he should be reinstated. In either case, whether he is
reinstated or only granted separation pay, he should be paid full backwages if
he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is
shown that the employee was dismissed for any of the just causes
mentioned in said Art. 282, then, in accordance with that article, he should
not be reinstated. However, he must be paid backwages from the time his

employment was terminated until it is determined that the termination of

employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.
WHEREFORE, the petition is GRANTED and the resolution of the National
Labor Relations Commission is MODIFIED by ordering private respondent
Isetann Department Store, Inc. to pay petitioner separation pay equivalent to
one (1) month pay for every year of service, his unpaid salary, and his
proportionate 13th month pay and, in addition, full backwages from the time
his employment was terminated on October 11, 1991 up to the time the
decision herein becomes final. For this purpose, this case is REMANDED to
the Labor Arbiter for computation of the separation pay, backwages, and
other monetary awards to petitioner.
SO ORDERED.