Serrano v NLRC 2000 Mendoza
EN BANC Security Section Head effective October 11,
[G.R. No. 117040. January 27, 2000]
RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and ISETANN DEPARTMENT STORE, respondents.
D E C I S I O N
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 Serranos 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
P R E S E N T
Dear Mr. Serrano,
......In view of the retrenchment program
of the company, we hereby reiterate our
verbal notice to you of your termination as
1
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
Serrano v NLRC 2000 Mendoza
petitioners dismissal, private respondent employed a
safety and security supervisor with duties and functions
similar to those of petitioner.
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;
2
(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% attorneys
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 respondents
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
Serrano v NLRC 2000 Mendoza
the term "retrenchment" in its "plain and ordinary
sense: to layoff or remove from ones 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
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.
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
respondents Security Checkers Section and the employment
of an independent security agency do not fall under any
In De Ocampo v. National Labor Relations
of the authorized causes for dismissal under Art. 283 of
Commission,[8] this Court upheld the termination of
the Labor Code.
employment of three mechanics in a transportation
company and their replacement by a company rendering
Petitioner Laid Off for Cause
maintenance and repair services. It held:
Petitioners 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
3
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 contracting the services of Gemac
Machineries, as part of the companys 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
Serrano v NLRC 2000 Mendoza
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
employers 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 respondents 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 a sufficient basis for
concluding that the termination of petitioners
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
4
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 petitioners
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 petitioners right.
To be sure, this is not the first time this question has
arisen. In Sebuguero 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 NLRCs finding.
However, as the company did not comply with the 30-day
written notice in Art. 283 of the Labor Code, the Court
Serrano v NLRC 2000 Mendoza
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
5
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.
. . . .
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 P1,000.00[22] to P2,000.00[23] to P5,000.00[24] 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
requirement in light of our experience during the last
Serrano v NLRC 2000 Mendoza
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, suggests 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 causes for such
dismissal or layoff. Consequently, in their view, the
employee concerned should be reinstated and paid
backwages.
Validity of Petitioners 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 employers 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
6
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 latters family, or when
the employer is precisely retrenching in order to
prevent losses.
The need is for a rule which, while recognizing the
employees 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.
Serrano v NLRC 2000 Mendoza
Justice Puno argues that an employers failure to comply
with the notice requirement constitutes a denial of the
employees right to due process. Prescinding from this
premise, he quotes the statement of Chief Justice
Concepcion in 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 causes exist, the employee should be
reinstated with full back pay. On the other hand,
Justice Panganiban quotes from the statement in People
v. Bocar[27] 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
employees 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
7
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
Serrano v NLRC 2000 Mendoza
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.
8
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 latters 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
Serrano v NLRC 2000 Mendoza
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 ones 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 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. 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]
9
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 isunjustly
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 President Ramon Magsaysays motto that "he who
has less in life should have more in law." That would be
Serrano v NLRC 2000 Mendoza
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."
ThePepsi-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
10
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 rights 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.
Serrano v NLRC 2000 Mendoza 11

If the employees separation is without cause, instead of TSN, p. 61, April 24, 1992.
[13]
[14] Const., Art. XIII, 3.
[15] E.g., Aurora Land Projects Corporation v. NLRC, 266 SCRA 48 (1997)
being given separation pay, he should be reinstated. In [16] 248 SCRA 532 (1995)
[17] This provision reads:

Termination by employer. - An employer may terminate an employment for any of the following causes:
either case, whether he is reinstated or only granted (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work;
separation pay, he should be paid full backwages if he (b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family
has been laid off without written notice at least 30 or his duly authorized representative; and
(e) Other causes analogous to the foregoing.

days in advance.
[18] Bk. VI, Rule 1, of the Omnibus Rules and Regulations to Implement the Labor Code provides in pertinent parts:

Section 2. Security of tenure. . . .

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee
reasonable opportunity within which to explain his side.
On the other hand, with respect to dismissals for cause (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given
opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances,
under Art. 282, if it is shown that the employee was grounds have been established to justify his termination.
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed
dismissed for any of the just causes mentioned in said complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor
and Employment at least thirty days before effectivity of the termination, specifying the ground or grounds for termination . .
. .
Art. 282, then, in accordance with that article, he [19] Sebuguero v. NLRC, 248 SCRA at 547.
[20] 170 SCRA 69 (1989)

should not be reinstated. However, he must be paid

[21] Id., at 75-76.
[22] E.g., Aurelio v. NLRC, 221 SCRA 432 (1993) (dismissal of a managerial employee for breach of trust); Rubberworld (Phils.),

Inc. v. NLRC, 183 SCRA 421 (1990) (dismissal for absenteeism, leaving the work place without notice, tampering with machines);
backwages from the time his employment was terminated Shoemart, Inc. v. NLRC, 176 SCRA 385 (1989) (dismissal for abandonment of work)
[23] Sebuguero v. NLRC, 248 SCRA 536 (1995) (termination of employment due to retrenchment)
[24] E.g., Worldwide Papermills, Inc. v. NLRC, 244 SCRA 125 (1995) (dismissal for gross and habitual neglect of duties)

until it is determined that the termination of [25] E.g., Reta v. NLRC, 232 SCRA 613 (1994) (dismissal for negligence and insubordination)
[26] 110 Phil. 113, 118 (1960)

employment is for a just cause because the failure to [27] 138 SCRA 166, 170 (1985)
[28] Art. 302 of the Code of Commerce provided:

In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may dissolve it,
hear him before he is dismissed renders the termination advising the other party thereof one month in advance.
The factory or shop clerk shall be entitled, in such case, to the salary due for said month.

of his employment without legal effect.

[29] R.A. No. 1052, as amended by R.A. No. 1787, provided:

Section 1. In cases of employment without a definite period, in a commercial, industrial, or agricultural establishment or
enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the
case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by
serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee,
whichever is longer, a fraction of at least six months being considered as one whole year.
WHEREFORE, the petition is GRANTED and the resolution of The employer, upon whom no such notice was served in case of termination of employment without just cause may hold the employee
liable for damages.
The employee, upon whom no such notice was served in case of termination of employment without just cause shall be entitled to
the National Labor Relations Commission is MODIFIED by compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to
the required period of notice.
ordering private respondent Isetann Department Store, [30] Abe v. Foster Wheeler Corp., 110 Phil. 198 (1960); Malate Taxicab and Garage, Inc. v. CIR, 99 Phil. 41 (1956)
[31] 71 SCRA 470, 480 (1976)
[32] 77 SCRA 321 (1977)

Inc. to pay petitioner separation pay equivalent to one [33] Civil Code, Art. 19.
[34] Art. 1191: "The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply

(1) month pay for every year of service, his unpaid with what is incumbent upon him. . . ."
Art. 1592: "In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at
the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of
salary, and his proportionate 13th month pay and, in the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act.
After the demand, the court may not grant him a new term."
[35] De la Cruz v. Legaspi, 98 Phil. 43 (1955); Taguba v. Vda. de Leon, 132 SCRA 722 (1984)

addition, full backwages from the time his employment [36] See Maximo v. Fabian, G.R. No. L-8015, December 23, 1955, (unpub.), 98 Phil. 989.
[37] Emphasis added.

was terminated on October 11, 1991 up to the time the [38] Art. 285 reads:

Termination by employee. - (a) An employee may terminate without just cause the employee-employer relationship by serving a
written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the
decision herein becomes final. For this purpose, this employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice on the employer for any of the following just

case is REMANDED to the Labor Arbiter for computation of causes:

1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
the separation pay, backwages, and other monetary awards 3. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the
immediate members of his family; and
4. Other causes analogous to any of the foregoing.
to petitioner. [39] 210 SCRA 277 (1992)
[40] Art. II, 18.
[41] Id., 20.
[42] Art. XIII, 3.
[43] Manila Trading and Supply Co. v. Zulueta, 69 Phil. 485, 487 (1940) (per Laurel, J.) Accord, Villanueva v. NLRC, 293 SCRA

SO ORDERED. 259 (1998); DI Security and General Services, Inc. v. NLRC, 264 SCRA 458 (1996); Flores v. NLRC, 256 SCRA 735 (1996); San
Miguel Corporation v. NLRC, 218 SCRA 293 (1993); Colgate Palmolive Philippines, Inc. v. Ople, 163 SCRA 323 (1988)
Davide, Jr., C.J., Melo, Kapunan, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes, and De Leon, Jr., JJ., concur.
Bellosillo, J., see separate opinion.
Puno, J., see dissenting opinion.
Vitug, J., see separate opinion.
Panganiban, J., see separate opinion.
Ynares-Santiago, J., joins the dissenting opinion of J. Puno.

[1] TSN of testimony of petitioner, pp. 24, 76-78, April 24, 1992.
[2] Petitioners Position Paper, Annex C; Records, p. 19.
[3] Id., Annex B; id., p. 21.
[4] Records, p. 2.
[5] Decision, dated April 30, 1993, of Labor Arbiter Pablo C. Espiritu. Petition, Annex A; Rollo, p. 30.
[6] Id., pp. 35-36.
[7] Petition, p. 10; id., p. 16.
[8] 213 SCRA 652 (1992)
[9] Id., at 662.
[10] G.R. No. 131108, March 25, 1999.
[11] Shell Oil Workers Union v. Shell Company of the Philippines, Ltd., 39 SCRA 276, 284-285 (1971)
[12] Asian Alcohol Corporation v. National Labor Relations Commission, G.R. No. 131108, March 25, 1999.