RUBEN SERRANO vs.

NATIONAL LABOR RELATIONS COMMISSION and

ISETANN DEPARTMENT STORE
G.R. No. 117040
January 27, 2000

Facts:

Ruben Serrano was hired by private respondent, Isetann Department Store, as a

security checker to apprehend shoplifters and prevent pilferage of merchandise. He
became a regular employee on April 4, 1995 then head of Secuity Checkers Section in
of his termination which took immediate effect. On December 3, 1991 Serrano filed a
complaint for illegal dismissal, illegal layoff, unfair labor practice, underpayment, and
non-payment of salary and overtime.

On April 30, 1993, the Labor Arbiter ruled in favor of Serrano and ordered Isetann to
pay backwages,
- failure of Isettan to establish that the retrenchment was to prevent or minimize
losses to its business
- to accord due process
- establish reasonable standards in the termination selection
- no showing
- respondent of "[a] legitimate business decision
- 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
- 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 respondents part was of no moment because the position
had long been in existence and was separate from petitioners position as head of
the Security Checkers Section.

Petitioner filed a motion for reconsideration, but his motion was denied, hence this
petition.

ISSUE:

Whether or not the dismissal was legal.

Held:

Yes, the termination of petitioners services was for an authorized cause, i.e.,
redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given
separation
The Wenphil rule imposes a fine on an employer who is found to have dismissed an
employee for cause without prior notice. This has been found to be ineffective in
deterring employer violations of the notice requirement. Thus the present ruling of the
Court is that the dismissal of the employee is merely ineffectual, not void.

The decision in this case, providing for the payment of full backwages for failure of an
employer to give notice, seeks to vindicate the employee's right to notice before he is
dismissed or laid off, while recognizing the right of the employer to dismiss for any of the
just causes. 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.

The court responds to the arguments of Justice Puno - that the denial of due process
makes the decision a nullity; and Justice Panganiban - quoting from a statement in
People vs Bocar 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."
The denial of due process by the State does not apply to this case as founded on the
following reasons.

- Violation by the employer of the notice requirement cannot be considered a denial of

due process resulting in the nullity of the employees dismissal or layoff. The Due
Process Clause of the Constitution is a limitation on governmental powers. It does not
apply to the exercise of private power.
- Notice and hearing are required under the Due Process Clause before the power of
organized society are brought to bear upon the individual. The purpose of the 30 day
notice 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.
- The employer cannot really be expected to be entirely an impartial judge of his own
cause.

Thus the Court held, with respect to Art. 283 of the Labor Code, the employers 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.

Ruling:
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.