G.R. No.

117040 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

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.

Very truly yours,

[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.

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.1âwphi1.nêt

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.

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 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?
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

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 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.

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

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 Sengbengco26 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 Code34 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

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:

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
dismissed from 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
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.

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.

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.