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[SERRANO VS.

NLRC

Republic of the Philippines


SUPREME COURT
Manila

Please secure your clearance from this office.


Very truly yours,

EN BANC
G.R. No. 117040

GR NO. 117040 ]

[Sgd.] TERESITA A. VILLANUEVA


Human Resources Division Manager

January 27, 2000

RUBEN SERRANO, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT
STORE, respondents.

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

MENDOZA, J.:
Whether or not there is a valid ground for the dismissal of the complainant.
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

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.1wphi1.nt
Accordingly, the Labor Arbiter ordered:6
WHEREFORE, above premises considered, judgment is hereby decreed:

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.

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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.

Page 1

[SERRANO VS. NLRC

(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:

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GR NO. 117040 ]

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
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 costsaving 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.

[SERRANO VS. NLRC

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.

GR NO. 117040 ]

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 reexamined. 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.

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 fines imposed for violations of the notice requirement have varied from P1,000.00 22 to
P2,000.0023 to P5,000.0024 to P10,000.00.25

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

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

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Need for Reexamining the Wenphil Doctrine

[SERRANO VS. NLRC

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 30day 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.

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GR NO. 117040 ]

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."

[SERRANO VS. NLRC

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.

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GR NO. 117040 ]

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 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

[SERRANO VS. NLRC

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
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GR NO. 117040 ]

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.
Davide, Jr., C.J., Melo, Kapunan, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes and
De Leon, Jr., JJ.,concur.
Bellosillo J., Please see Separate Opinion.
Puno, J., Please see Dissenting Opinion.
Vitug, J., Please see Separate opinion.
Panganiban J., Please see Separate Opinion.
Ynares-Santiago, J., I join the dissenting opinion of J. Puno.

Separate Opinions

[SERRANO VS. NLRC

BELLOSILLO, J., separate opinion;

any immediate member of his family or his duly authorized representative; and, (e) other
causes analogous to the foregoing.

We point out at the outset that this Petition for Review which was filed before the
promulgation of St. Martin Funeral Home v. National Labor Relations Commission,1 is not the
proper means by which NLRC decisions are appealed to this Court. Before St. Martin Funeral
Home, it was only through a Petition for Certiorari under Rule 65 that NLRC decisions could
be reviewed and nullified by us on the ground of lack of jurisdiction or grave abuse of
discretion amounting to lack or excess of jurisdiction. After St. Martin Funeral Home, petitions
like the one at bar are initially filed in the Court of Appeals for proper adjudication.
In the interest of justice, however, and in order to write finis to the instant case which has
already dragged on for so long, we shall treat the petition pro hac vice as one
for certiorari under Rule 65 although it is captioned Petition for Review on Certiorari; after all,
it was filed within the reglementary period for the filing of a petition for certiorariunder Rule
65.
Briefly, on 4 April 1985 private respondent Isetann Department Store, Inc. (ISETANN),
employed petitioner Ruben Serrano as Security Checker until his appointment as Security
Section Head. On October 1991 ISETANN through its Human Resource Division Manager
Teresita A. Villanueva sent Serrano a memorandum terminating his employment effective
immediately "in view of the retrenchment program of the company," and directing him to
secure clearance from their office.2
Petitioner Serrano filed with the NLRC Adjudication Office a complaint for illegal dismissal
and underpayment of wages against ISETANN. Efforts at amicable settlement proved futile.
Ms. Cristina Ramos, Personnel Administration Manager of ISETANN, testified that the
security checkers and their section head were retrenched due to the installation of a labor
saving device, i.e., the hiring of an independent security agency.
Finding the dismissal to be illegal, the Labor Arbiter ordered the immediate reinstatement of
Serrano to his former or to an equivalent position plus payment of back wages, unpaid
wages, 13th month pay and attorney's fees.
On appeal the NLRC reversed the Labor Arbiter and ruled that ISETANN acted within its
prerogative when it phased out its Security Section and retained the services of an
independent security agency in order to cut costs and economize. Upon denial of his motion
for reconsideration3 Serrano filed the instant petition imputing grave abuse of discretion on
the part of the NLRC.
Art. 282 of the Labor Code enumerates the just causes for the termination of employment by
the employer: (a) serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or the latter's representative in connection with the employee's work;
(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 his duly authorized representative;
(d) commission of a crime or offense by the employee against the person of his employer or
ayah12

GR NO. 117040 ]

Page 7

On the other hand, Arts. 283 and 284 of the same Code enumerate the so-called authorized
causes: (a) installation of labor saving devices; (b) redundancy: (b) retrenchment to prevent
losses; (d) closure or cessation of the establishment or undertaking unless the closure or
cessation is for the purpose of circumventing the provisions of the law; and, (e) disease.
The Just causes enumerated under Art. 282 of the Labor Code are provided by the employee
who causes the infraction. The authorized causes are provided by the employer either
because of outside factors such as the general decline in the economy or merely part of its
long range plan for business profitability. Corollarily, in termination for a just cause, the
employee is not entitled to separation pay unlike in termination for an authorized cause. In
addition, the basis in computing the amount of separation pay varies depending on whether
the termination is due to the installation of a labor saving device, or redundancy, in which
case, the employee is entitled to receive separation pay equivalent to at least one (1) month
pay or to at least one (1) month pay for every year of service. In case the termination is due
to retrenchment in order to prevent losses or in case of closure or cessation of operation of
the establishment or undertaking not due to serious business losses or financial reverses, the
separation pay is lower, i.e., equivalent to one (1) month pay or at least one-half month pay
for every year of service, whichever is higher. As may be gleaned from the foregoing, where
the cause of termination is for the financial advantage or benefit of the employer, the basis in
computing for separation pay is higher compared to termination dictated by necessity with no
appreciable financial advantage to the employer.
In the instant case, we agree with the NLRC that the dismissal of petitioner Serrano was for
an authorized cause,i.e., redundancy, which exists where the services of an employee are in
excess of what are reasonably demanded by the actual requirements of the enterprise. A
position is redundant where it is superfluous, and the superfluity may be the outcome of other
factors such as overhiring of workers, decreased volume of other business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise.4
The hiring of an independent security agency is a business decision properly within the
exercise of management prerogative. As such, this Court is denied the authority to delve into
its wisdom although it is equipped with the power to determine whether the exercise of such
prerogative is in accordance with law. Consequently, the wisdom or soundness of the
management decision is not subject to the discretionary review of the Labor Arbiter nor of the
NLRC unless there is a violation of law or arbitrariness in the exercise thereof, in which case,
this Court will step in.5 Specifically, we held in International Harvester Macleod, Inc. v.
Intermediate Appellate Court6 that the determination of whether to maintain or phase out an
entire department or section or to reduce personnel lies with management. The determination
of the need for the phasing out of a department as a labor and cost saving device because it
is no longer economical to retain its services is a management prerogative.

[SERRANO VS. NLRC

GR NO. 117040 ]

After having established that the termination of petitioner Ruben Serrano was for an
authorized cause, we now address the issue of whether proper procedures were observed in
his dismissal.

to prepare himself for the legal battle to protect his tenure of employment, which can be long,
arduous, expensive and complicated by his own standards, but also to find other means of
employment and ease the impact of the loss of his job and, necessarily, has income.

Since the State affords protection to labor under the Constitution, 7 workers enjoy security of
tenure and may only be removed or terminated upon valid reason and through strict
observance of proper procedure.8 Article 279 of the Labor Code specifically provides

We are of the view that failure to send notice of termination to Serrano is not tantamount to
violation of his constitutional right to due process but merely constitutes non-compliance with
the provision on notice under Art. 283 of the Labor Code.

Art. 279. 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.
Security of tenure however does not guarantee perpetual employment. If there exists a just or
an authorized cause, the employer may terminate the services of an employee but subject
always to procedural requirements. The employer cannot be legally compelled to have in its
employ a person whose continued employment is patently inimical to its interest. The law,
while affording protection to the employee, does not authorize the oppression or destruction
of his employer.9
Subject then to the constitutional right of workers to security of tenure and to be protected
against dismissal except for a just or authorized cause, and without prejudice to the
requirement of notice under Art. 283 of the Labor Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the
cause of termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative, if he so desires, in accordance with
company rules and regulations promulgated pursuant to guidelines set by the DOLE.10
As specifically provided in Art. 283 of the Labor Code, the employer may terminate the
employment of any employee due to redundancy by serving a written notice on the worker
and the DOLE at least one (1) month before the intended date thereof. In the instant case,
ISETANN clearly violated the provisions of Art. 283 on notice.11 It did not send a written notice
to DOLE which is essential because the right to terminate an employee is not an absolute
prerogative. The lack of written notice denied DOLE the opportunity to determine the validity
of the termination.
The written notice ISETANN sent to Serrano was dated 11 October 1991 or on the same day
the intended termination was to take effect. This obviously did not comply with the 30-day
mandatory requirement. Although the cause for discharge may be just or authorized, it is still
necessary and obligatory to afford the employee concerned his basic and more important
right to notice. Serrano was not given the chance to make the needed adjustments brought
about by his termination. Significantly, the notice is intended to enable the employee not only

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Page 8

The legitimacy of a government is established and its functions delineated in the Constitution.
From the Constitution flows all the powers of government in the same manner that it sets the
limits for their proper exercise. In particular, the Bill of Rights functions primarily as a
deterrent to any display of arbitrariness on the part of the government or any of its
instrumentalities. It serves as the general safeguard, as is apparent in its first section which
states, "No person shall be deprived of life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws."12 Specifically, due process is a
requirement for the validity of any governmental action amounting to deprivation of liberty.13 It
is a restraint on state action not only in terms of what it amounts to but how it is
accomplished. Its range thus covers both the ends sough to be achieved by officialdom as
well as the means for their realization.14
Substantive due process is a weapon that may be utilized to challenge acts of the legislative
body, whether national or local, and presumably executive orders of the President and
administrative orders and regulations of a rule-making character. Procedural due process, on
the other hand, is available for the purpose of assailing arbitrariness or unreasonableness in
the administration of the law by executive department or the judicial branch. Procedural due
process likewise may aid those appearing before Congressional committees if the
proceedings are arbitrary or otherwise unfair.13
Procedural due process demands that governmental acts, more specifically so in the case of
the judiciary, not be affected with arbitrariness.16 The same disinterestedness required of men
on the bench must characterize the actuations of public officials, not excluding the President,
to satisfy the requirements of procedural due process.17
In his dissent Mr. Justice Puno states that "the new majority opinion limiting violations of due
process to government action alone is a throwback to a regime of law long discarded by more
progressive countries." He opines that "today, private due process is a settled norm in
administrative law," citing Schwartz, an authority in administrative law.
We beg to disagree. A careful reading of Schwartz would reveal that requirements of
procedural due process extended from governmental to private action only in instances
where there is "sufficient governmental involvement" or "the private action was so saturated
with governmental incidents."
The cardinal primary requirements of due process in administrative proceedings were
highlighted in Ang Tibay v. Court of Industrial Relations:18 (a) the right to a hearing, which

[SERRANO VS. NLRC

includes the right to present one's case and submit evidence in support thereof; (b) the
tribunal must consider the evidence presented; (c) the decision must have something to
support itself; (d) the evidence must be substantial; (e) the decision must be based on the
evidence presented at the hearing, or at least contained in the record and disclosed to the
parties affected; (f) the tribunal or body or any of its judges must act on its own independent
consideration of the law and facts of the controversy, and not simply accept the views of a
subordinate; (g) the board or body should, in all controversial questions, render its decision in
such manner that the parties to the proceeding may know the various issues involved, and
the reason for the decision rendered.
Also in Lumiqued v. Exevea19 it was held
In administrative proceedings, the essence of due process is simply the opportunity
to explain one's side. One may be heard, not solely by verbal presentation but also,
and perhaps even more creditably as it is more practicable than oral arguments,
through pleadings. An actual hearing is not always an indispensable aspect of due
process. As long as a party was given the opportunity to defend his interests in due
course, he cannot be said to have been denied due process of law, for this
opportunity to be heard is the very essence of due process.
From the foregoing, it is clear that the observance of due process is demanded in
governmental acts. Particularly in administrative proceedings, due process starts with the
tribunal or hearing officer and not with the employer. In the instant case, what is mandated of
the employer to observe is the 30-day notice requirement. Hence, non-observance of the
notice requirement is not denial of due process but merely a failure to comply with a legal
obligation for which we strongly recommend, we impose a disturbance compensation as
discussed hereunder.
In the instant case, we categorically declare that Serrano was not denied his right to due
process. Instead, his employer did not comply with the 30-day notice requirement. However,
while Serrano was not given the required 30-day notice, he was nevertheless given and, in
fact, took advantage of every opportunity to be heard, first, by the Labor Arbiter, second, by
the NLRC, and third, by no less than this Court. Before the Labor Arbiter and the NLRC,
petitioner had the opportunity to present his side not only orally but likewise through proper
pleadings and position papers.
It is not correct therefore to say that petitioner was deprived of his right to due process.
We have consistently upheld in the past as valid although irregular the dismissal of an
employee for a just or authorized cause but without notice and have imposed a sanction on
the erring employers in the form of damages for their failure to comply with the notice
requirement. We discussed the rationale behind this ruling in Wenphil Corporation v.
NLRC20 thus

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Page 9

GR NO. 117040 ]

The Court holds that the policy of ordering 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 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 reexamined. 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 . . . . 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 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 (emphasis supplied).
In Sebuguero v. National Labor Relations Commission21 Mr. Justice Davide Jr., now Chief
Justice, made this clear pronouncement
It is now settled that where the dismissal of an 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 the
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. The sanction, in the nature of indemnification or penalty, depends on
the facts of each case and the gravity of the omission committed by the employer.
This ruling was later ably amplified by Mr. Justice Puno in Nath v. National Labor Relations
Commission22 where he wrote
The rules require the employer to furnish the worker sought to be dismissed with
two written notices before termination of employment can be legally effected: (1)
notice which apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (2) the subsequent notice which informs the employee of
the employer's decision to dismiss him. In the instant case, private respondents
have failed to furnish petitioner with the first of the required two (2) notices and to
state plainly the reasons for the dismissal in the termination letter. Failure to comply
with the requirements taints the dismissal with illegality.

[SERRANO VS. NLRC

Be that as it may, private respondent can dismiss petitioner for just cause . . . . We
affirm the finding of the public respondent that there was just cause to dismiss
petitioner, a probationary employee (emphasis supplied).
Also, in Camua v. National Labor Relations Commission23 this Court through Mr. Justice
Mendoza decreed
In the case at bar, both the Labor Arbiter and the NLRC found that no written notice
of the charges had been given to petitioner by the respondent company. . . .
Accordingly, in accordance with the well-settled rule, private respondents should
pay petitioner P1,000.00 as indemnity for violation of his right to due process . . . .
Although an employee validy dismissed for cause he may nevertheless be given
separation pay as a measure of social justice provided the cause is not serious
misconduct reflecting on his moral character (emphasis supplied).
Non-observance of this procedural requirement before would cause the employer to be
penalized by way of paying damages to the employee the amounts of which fluctuated
through the years. Thus, for just cause the indemnity ranged from P1,000.00 to
P10,000.00.24 For authorized cause, as distinguished from just cause, the award ranged from
P2,000.00 to P5,000.00.25
This Court has also sanctioned the ruling that a dismissal for a just or authorized cause but
without observance of the mandatory 30-day notice requirement was valid although
considered irregular. The Court ratiocinated that employers should not be compelled to keep
in their employ undesirable and undeserving laborers. For the irregularity, i.e., the failure to
observe the 30-day notice of termination, the employer was made to pay a measly sum
ranging from P1,000.00 to P10,000.00.
With regard to the indemnity or penalty, which we prefer seriously to be referred to as
"disturbance compensation," the Court has awarded varying amounts depending on the
circumstances of each case and the gravity of the commission. We now propose that the
amount of the award be uniform and rational and not arbitrary. The reason for the proposal or
modification is that in their non-compliance with the 30-day notice requirement the erring
employers, regardless of the peculiar circumstances of each case, commit the infraction only
by the single act of not giving any notice to their workers. It cannot be gainfully said that the
infraction in one case is heavier than in the other as the non-observance constitutes one
single act. Thus, if the dismissal is illegal,i.e. there is no just or authorized cause, a
disturbance compensation in the amount of P10,000.00 may be considered reasonable. If the
dismissal is for a just cause but without notice, a disturbance compensation in the amount
P5,000.00 may be given. In termination for an authorized cause and the notice requirement
was not complied with, we distinguish further: If it is to save the employer from imminent
bankruptcy or business losses, the disturbance compensation to be given is P5,000.00. If the
authorized cause was intended for the employer to earn more profits, the amount of
disturbance compensation is P10,000.00. This disturbance compensation, again we strongly
recommend, should be given to the dismissed employee at the first instance, the moment it is

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Page 10

GR NO. 117040 ]

shown that his employer has committed the infraction of not complying with the 30-day
written notice requirement to tide him over during his economic dislocation.
The right of the laborers to be informed of their impending termination cannot be taken lightly,
and the award of any amount below P5,000.00 may be too anemic to satisfy the fundamental
protection especially accorded to labor and the workingman. In fact, it is hardly enough to
sustain a family of three; more so if the employee has five or more children, which seems to
be the average size of a Filipino family.
Henceforth, if the dismissal is for a just cause but without observance of the 30-day notice
requirement, the dismissal is deemed improper and irregular. If later the dismissal is
ascertained to be without just cause, the dismissed employee is entitled to reinstatement, if
this be feasible, otherwise to separation pay and back wages plus disturbance compensation
of P10,000.00 and moral damages, if warranted. On the other hand, if the dismissal is
ascertained to be with just cause, the dismissed employee is entitled nevertheless to a
disturbance compensation of P5,000.00 if the legal requirement of the 30-day notice to both
employee and DOLE has not been complied with.
In instances where there is obviously a ground for dismissal, as when the employee has
become violent and his presence would cause more harm to his co-workers and the security
and serenity of the workplace, the employee may be suspended in the meantime until he is
heard with proper observance of the 30-day notice requirement. Likewise, if the dismissal is
for an authorized cause but without the required notice, the dismissal is improper and
irregular and the employee should be paid separation pay, back wages and disturbance
compensation of P5,000.00 or P10,000.00.00 depending on the cause. As already intimated,
if the authorized cause is for the purpose of saving the employer from imminent bankruptcy
or business losses, the disturbance compensation should be P5,000.00; otherwise, if the
authorized cause is for the employer, in the exercise of management prerogative, to save and
earn more profits, the disturbance compensation should be P10,000.00.
In the instant case, Serrano was given his walking papers only on the very same day his
termination was to take effect. DOLE was not served any written notice. In other words, there
was non-observance of the 30-day notice requirement to both Serrano and the DOLE.
Serrano was thus terminated for an authorized cause but was not accorded his right to 30day notice. Thus, his dismissal being improper and irregular, he is entitled to separation pay
and back wages the amounts of which to be determined by the Labor Arbiter, plus
P10,000.00 as disturbance compensation which, from its very nature, must be paid
immediately to cushion the impact of his economic dislocation.
One last note. This Separate Opinion is definitely not advocating a new concept in imposing
the so-called "disturbance compensation." Since Wenphil Corporation v. NLRC 26 this Court
has already recognized the necessity of imposing a sanction in the form of indemnity or even
damages, when proper, not specifically provided by any law, upon employers who failed to
comply with the twin-notice requirement. At the very least, what is being proposed to be
adopted here is merely a change in the terminology used, i.e., from "sanction," "indemnity,"

[SERRANO VS. NLRC

"damages" or "penalty," to "disturbance compensation" as it is believed to be the more


appropriate term to accurately describe the lamentable situation of our displaced employees.

GR NO. 117040 ]

A review of our law on dismissal is in order.


I. DISMISSAL DUE TO JUST CAUSE

Indeed, from the time the employee is dismissed from the service without notice in this
case since 11 October 1991 to the termination of his case, assuming it results in his
reinstatement, or his being paid his back wages and separation pay, as the case may be,
how long must he be made to suffer emotionally and bear his financial burden? Will
reinstating him and/or paying his back wages adequately make up for the entire period that
he was indistress for want of any means of livelihood? Petitioner Serrano has been deprived
of his only source of income his employment for the past eight (8) years or so. Will his
reinstatement and/or the payment of his back wages and separation pay enable him to pay
off his debts incurred in abject usury to which he must have succumbed during his long
period of financial distress? Will it be adequate? Will it be just? Will it be fair? Thus, do we
really and truly render justice to the workingman by simply awarding him full back wages and
separation pay without regard for the long period during which he was wallowing in financial
difficulty?

The law allowing dismissal of an employee due to a just cause is provided in Article 282 of
the Labor Code:
Art. 282. Termination by employer. An employer may terminate an employment
for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;

FOR ALL THE FOREGOING, the Decision of respondent National Labor Relations
Commission should be MODIFIED. The termination of petitioner RUBEN SERRANO being
based on an authorized cause should be SUSTAINED AS VALID although DECLARED
IRREGULAR for having been effected without the mandatory 30-day notice.
ISETANN DEPARTMENT STORE INC. should PAY petitioner SERRANO back wages and
separation pay the amounts of which to be determined by the Labor Arbiter, plus P10,000.00
as disturbance compensation which must be paid immediately. Consequently, except as
regards the disturbance compensation, the case should be REMANDED to the Labor Arbiter
for the immediate computation and payment of the back wages and separation pay due
petitioner.

(d) Commission of the crime or offense by the employee against the


person of his employer or any immediate member of his family or his
duly authorized representative; and
(e) Other causes analogous to the foregoing.
The long established jurisprudence2 is that to justify dismissal of an employee for a just
cause, he must be given two kinds of notice by his employer, viz: (1) notice to apprise the
employee of the particular acts or omissions for which the dismissal is sought, and (2)
subsequent notice to inform him of the employer's decision to dismiss him. Similarly, deeply
ingrained is our ruling that these pre and post notice requirements are not mere technicalities
but are requirements of due process.3

EXCEPT as herein stated, I concur with the majority.

PUNO, J., dissenting opinion;


The rule of audi alteram partem hear the other side, is the essence of procedural due
process. That a "party is not to suffer in person or in purse without an opportunity of being
heard" is the oldest established principle in administrative law.1 Today, the majority is relies
that the all important right of an employee to be notified before he is dismissed for a just or
authorized cause is not a requirement of due process. This is a blow on the breadbasket of
our lowly employees, a considerable erosion of their constitutional right to security of tenure,
hence this humble dissenting opinion.

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(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;

Page 11

Then came the case of Wenphil Corporation vs. NLRC and Mallare in 1989.4 It is the majority
view that Wenphil reversed the long standing policy of this Court on dismissal. This is too
broad a reading of Wenphil. A careful statement of the facts of Wenphil and the ruling of this
Court is thus proper.
First, the facts. The private respondent Roberto Mallare is the assistant head of the backroom
department of petitioner Wenphil Corporation. At about 2:30 pm on May 20, 1985, Mallare
had an altercation with his co-employee, Job Barrameda, about tending the Salad Bar. He
slapped Barrameda's cap, stepped on his foot, picked up an ice scooper and brandished it
against the latter. He refused to be pacified by another employee who reported the incident to
Delilah Hermosura, assistant manager. Hermosura summoned Mallare but the latter refused

[SERRANO VS. NLRC

GR NO. 117040 ]

to see the former. It took a security guard to bring Mallare to Hermosura. Instead of making
an explanation, Mallare shouted profane words against Hermosura. He declared that their
altercation should only be settled by him and Barrameda.

for just cause. He was found guilty of grave misconduct and insubordination. This
is borne by the sworn statements of witnesses. The Court is bound by this finding
of the labor arbiter.

The following morning, Mallare was suspended. In the afternoon, he was dismissed from the
service. He received an official notice of his dismissal four (4) days later.

By the same token, the conclusion of the public respondent NLRC on appeal that
private respondent was not afforded due process before he was dismissed is
binding on this Court. Indeed, it is well taken and supported by the records.
However, it can not justify a ruling that private respondent should be reinstated with
back wages as the public respondent NLRC so decreed. Although belatedly,
private respondent was afforded due process before the labor arbiter wherein the
just cause of his dismissal had been established. With such finding, it would be
arbitrary and unfair to order his reinstatement with back wages.

Mallare filed with the Labor Arbiter a complaint for illegal suspension, illegal dismissal and
unfair labor practice. No hearing was conducted in view of the repeated absence of the
counsel of Mallare. The parties submitted their respective position papers. On December 3,
1986, the Arbiter denied the complaint as he found Mallare guilty of grave misconduct and
insubordination, which are just causes for dismissal. The Arbiter also ruled that Mallare was
not denied due process. On appeal, the NLRC reversed. It held that Mallare was denied due
process before he was dismissed. It ordered Mallare's reinstatement and the payment of his
one (1) year backwages.
On certiorari to this Court, we reversed the NLRC and reinstated the decision of the Arbiter
with the modification that petitioner should pay to Mallare an indemnity of P1,000.00 for
dismissing Mallare without any notice and hearing. We held:
Petitioner insists that private respondent was afforded due process but he refused
to avail of his right to the same; that when the matter was brought to the labor
arbiter he was able to submit his position paper although the hearing cannot
proceed due to the non-appearance of his counsel; and that the private respondent
is guilty of serious misconduct in threatening or coercing a co-employee which is a
ground for dismissal under Article 283 of the Labor Code.
The failure of petitioner to give private respondent the benefit of a hearing before
he was dismissed constitutes an infringement of his constitutional right to due
process of law and equal protection of the laws. The standards of due process in
judicial as well as administrative proceedings have long been established. In its
bare minimum due process of law simply means giving notice and opportunity to be
heard before judgment is rendered.
The claim of petitioner that a formal investigation was not necessary because the
incident, which gave rise to the termination of private respondent, was witnessed
by his co-employees and supervisors, is without merit. The basic requirement of
due process is that which hears before it condemns, which proceeds upon inquiry
and renders judgment only after trial.
However, it is a matter of fact that when the private respondent filed a complaint
against petitioner, he was afforded the right to an investigation by the labor arbiter.
He presented his position paper as did the petitioner. If no hearing was had, it was
the fault of private respondent as his counsel failed to appear at the scheduled
hearings. The labor arbiter concluded that the dismissal of private respondent was
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Page 12

Three member of the Court filed concurring and dissenting opinions. Madam Justice Herrera
opined that: (a) Mallare was dismissed for cause, hence, he is not entitled to reinstatement
and backwages; (b) he was not denied due process; and (c) he has no right to any indemnity
but to separation pay to cushion the impact of his loss of employment Mr. Justice Padilla took
the view that: (1) Mallare was not entitled to reinstatement and backwages as he was guilty of
grave misconduct and insubordination; (2) he was denied administrative due process; and (3)
for making such denial, Wenphil should pay "separation pay (instead of indemnity) in the sum
of P1,000.00." Madam Justice Cortes held that: (1) Mallare was not illegally dismissed; (2) he
was not denied due process; (3) he was not entitled to indemnity; and (4) if P1,000.00 was to
be imposed on Wenphil as an administrative sanction, it should form part of the public fund of
the government.
I shall discuss later that Wenphil did not change our ruling that violation of the pre-dismissal
notice requirement is an infringement of due process.
II. DISMISSAL DUE TO AUTHORIZED CAUSE
The applicable law on dismissal due to authorized cause is Article 283 of the Labor Code
which provides:
Art. 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installation of labor
serving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation 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 his 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 closures or cessation of operations
of establishment or undertaking not due to serious business losses or financial

[SERRANO VS. NLRC

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 (6) months shall be considered one (1) whole year.
In Sebuguero v. NLRC,5 we held thru our esteemed Chief Justice Davide that "the
requirement of notice to both the employees concerned and the Department of Labor and
Employment (DOLE) is mandatory and must be written and given at least one month before
the intended date of retrenchment." We explained that the "notice to the DOLE is essential
because the right to retrench is not an absolute prerogative of an employer but is subject to
the requirement of law that retrenchment be proved to prevent losses. The DOLE is the
agency that will determine whether the planned retrenchment is justified and adequately
supported by fact."6 Nonetheless, we ruled:
The lack of written notice to the petitioners and to the DOLE does not, however,
make the petitioners' retrenchment illegal such that they are entitled to the payment
of back wages and separation pay in lieu of reinstatement as they contend. Their
retrenchment, for not having been effected with the required notices, is merely
defective. In those cases where we found the retrenchment to be illegal and
ordered the employees' reinstatement and the payment of backwages, the validity
of the cruse for retrenchment, that is the existence of imminent or actual serious or
substantial losses, was not proven. But here, such a cause is present as found by
both the Labor Arbiter and the NLRC. There is only a violation by GTI of the
procedure prescribed in Article 283 of the Labor Code in effecting the retrenchment
of the petitioners.1wphi1.nt
It is now settled that where the dismissal of an 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 the 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. The sanction, in the nature of indemnification or penalty,
depends on the facts of each case and the gravity of the omission committed by the
employer and has ranged from P1,000.00 as in the cases of Wenphil vs. National Labor
Relations Commission, Seahorse Maritime Corp. v. National Labor Relations
Commission, Shoemart, Inc. vs. National Labor Relations Commission,Rubberworld (Phils.)
Inc. vs. National Labor Relations Commission, Pacific Mills, Inc. vs. Alonzo, and Aurelio vs.
National Labor Relations Commission to P10,000.00 in Reta vs. National Labor Relations
Commission andAlhambra Industries, Inc. vs. National Labor Relations Commission. More
recently, in Worldwide Papermills, Inc. vs. National Labor Relations Commission, the sum of
P5,000.00 was awarded to the employee as indemnification for the employer's failure to
comply with the requirements of procedural due process.
Accordingly, we affirm the deletion by the NLRC of the award of back wages, But because
the required notices of the petitioners' retrenchment were not served upon the petitioners and
the DOLE, GTI must be sanctioned for such failure and thereby required to indemnify each of
the petitioners the sum of P20,000.00 which we find to be just and reasonable under the
circumstances of this case.

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GR NO. 117040 ]

III. RE-EXAMINATION OF THE WENPHIL DOCTRINE:


FROM BAD TO WORSE
The minority of the Court has asked for a re-examination of Wenphil because as the majority
correctly observed, "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."
We must immediately set Wenphil in its proper perspective as it is a very exceptional case.
Its doctrine must be limited to its distinct facts. Its facts therefore ought to be carefully
examined again. In Wenphil, it was clearly established that the employee had a violent
temper, caused trouble during office hours and even defied his superiors as they tried to
pacify him. The employee was working for a fast food chain that served the public and where
violence has no place. These facts were established only in the proceedings before the Labor
Arbiter after the employee filed a complaint for illegal dismissal. There were no formal
investigation proceedings before the employer as the employment was dismissed without any
notice by the employer. Given these facts, we ruled that the pre-dismissal notice requirement
was part of due process; nonetheless, we held that the employee was given due process as
he was heard by the Labor Arbiter; we found that the proceedings before the Labor Arbiter
proved that the employer was guilty of grave misconduct and insubordination; we concluded
with the rule that it would be highly prejudicial to the interest of the employer to reinstate the
employee, but the employer must indemnify the employee the amount of P1,000.00 for
dismissing him without notice. We further held that "the measure of this award depends on
the facts or each case and the gravity of the omission committed by the employer." 7
At the outset, I wish to emphasize that Wenphil itself held, and repeatedly held that "the
failure of petitioner to give private respondent the benefit of a hearing before he was
dismissed, constitutes an infringement of his constitutional right to due process of law and
equal protection of the laws. The standards of due process of law in judicial as well as
administrative proceedings have long been established. In its bare minimum due process of
law simply means giving notice and opportunity to be heard before judgment is
rendered."8 The Court then satisfied itself with this bare minimum when it held that the post
dismissal hearing before the Labor Arbiter was enough compliance with demands of due
process and refused to reinstate an eminently undesirable employee. Heretofore, the Court
was far from satisfied with this bare minimum as it strictly imposed on an employer
compliance with the requirement of pre-dismissal notice, violation of which resulted in orders
of reinstatement of the dismissed employee. This is the only wrinkle wrought by Wenphil in
our jurisprudence on dismissal. Nonetheless, it should be stressed that the Court still
punished Wenphil's violation of the pre-dismissal notice requirement as it was ordered to pay
an indemnity of P1,000.00 to the employee. The indemnity was based on the iterated and
reiterated rule that "the dismissal of an employee must be for just or authorized cause and
after due process."9

[SERRANO VS. NLRC

Our ten (10) years experience with Wenphil is not a happy one. Unscrupulous employers
have abused the Wenphil ruling. They have dismissed without notice employees including
those who are not as eminently undesirable as the Wenphil employee. They dismissed
employees without notice as a general rule when it should be the exception. The purpose of
the pre-dismissal notice requirement was entirely defeated by employers who were just too
willing to pay an indemnity for its violation. The result, as the majority concedes, is that the
indemnity we imposed has not been effective to prevent unjust dismissals employees. To be
sure, this is even a supreme understatement. The ugly truth is that Wenphil is the mother of
many unjust and unauthorized dismissals of employees who are too weak to challenge their
powerful employees.
As the Wenphil indemnity doctrine has proved to be highly inimical to the interest of our
employees, I humbly submit a return to the pre-Wenphil rule where a reasonless violation of
the pre-dismissal notice requirement makes the dismissal of an employee illegal and results
in his reinstatement. In fine, we should strike down as illegal the dismissal of an employee
even if it is for a justified end if it is done thru unjustified means for we cannot be disciples of
the Machiavellian doctrine of the end justifies the means. With due respect, the majority
decision comes too near this mischievous doctrine by giving emphasis on the end and not the
means of dismissal of employees. What grates is that the majority today espouses a doctrine
more pernicious than Wenphil for now it announces that a violation of the pre-dismissal notice
requirement does not even concern due process. The reasons relied upon by the majority for
this new ruling against the job security of employees cannot inspire assent.
FIRST. I would like to emphasize that one undesirable effect of Wenphil is to compel
employees to seek relief against illegal dismissals with the DOLE whereas before, a remedy
can be sought before the employer. In shifting this burden, an employee's uneven fight
against his employer has become more uneven. Now, an illegally dismissed employee often
goes to the DOLE without an exact knowledge of the cause of his dismissal. As a matter of
strategy, some employers today dismiss employees without notice. They know that it is more
advantageous for them to litigate with an employee who has no knowledge of the cause of
dismissal. The probability is that said employee will fail to prove the illegality of his dismissal.
All that he can prove is that he was dismissed without notice and the penalty for the omission
is a mere fine, a pittance.
The case at bar demonstrates how disastrous Wenphil has been to our helpless employees.
In holding that the petitioner failed to prove his cause of action, the majority held ". . . 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." The bare
assertion of the petitioner is understandable. The notice given to him spoke of a general
ground retrenchment. No details were given about the employer's sudden retrenchment
program. Indeed, the employee was dismissed on the day he received the notice in violation
of the 30-day requirement. He was given no time, no opportunity to ascertain and verify the
real cause of his dismissal. Thus, he filed with the DOLE a complaint for illegal dismissal with
a hazy knowledge of its real cause. Heretofore, it is the employer whom we blame and
penalize if he does not notify his employee of the cause of his dismissal. Today, the majority
puts the blame on the employee for not knowing why he was dismissed when he was not
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GR NO. 117040 ]

given any notice of dismissal. In truth, the suspicion of the petitioner in the case at bar that he
was dismissed to avoid payment of their wage increases is not without basis. The DOLE itself
found that petitioner has unpaid wages which were ordered to be paid by the employer. The
majority itself affirmed this finding.
What hurts is that while the majority was strict with the petitioner-employee, it was not so with
the employer ISETANN. Immediately, it validated the finding of the NLRC that petitioner was
dismissed due to the redundancy of his position. This is inconsistent with the finding of the
Labor Arbiter that the employer failed to prove retrenchment, the ground it used to dismiss
the petitioner. A perusal of the records will show that Ms. Cristina Ramos, Personnel
Administration Manager of the employer ISETANN testified on the cause of dismissal of the
petitioner. She declared that petitioner was retrenched due to the installation of a labor saving
device. Allegedly, the labor saving device was the hiring of an independent security agency,
thus:10
xxx

xxx

xxx

Atty. Perdigon:
You said that your company decided to phase out the position of security
checkers . . .
Ms. Ramos:
Yes Sir.
Q: And instead hired the services of a security agency?
A: Yes, sir.
xxx

xxx

xxx

Q: Did you not retrench the position of security checkers?


A: We installed a labor saving device.
Q: So you did not retrench?
A: No. sir.
Q: How about the position of Section Head of Security Department?

[SERRANO VS. NLRC

A: It was abolished in 1991.


xxx

xxx

xxx

Q: Are you aware of the retrenchment program of the company as stated in this
letter?
A: Actually it's not a retrenchment program. It's an installation of a labor saving
device.
Q: So you are telling this Court now that there was no retrenchment program?
A: It was actually an installation of a labor saving device (emphasis supplied).
xxx

xxx

xxx

Q: . . . What (is) this labor saving device that you are referring to?
A: The labor saving device is that the services of a security agency were
contracted to handle the services of the security checkers of our company.
Q: Are you sure of what labor saving means, Madam witness?
A: Yes, sir.
Q: You said you installed a labor saving device, and you installed a security agency
as a labor saving device?
A: We hired the services of a security agency.
Q: So according to you . . . a security agency is a labor saving device?
Atty. Salonga:
Already answered, your Honor.
Obviously, Ms. Ramos could not even distinguish between retrenchment and redundancy.
The Labor Arbiter thus ruled that petitioner's dismissal was illegal. The NLRC, however,
reversed. The majority affirmed the NLRC ruling that ISETANN's phase out of its security
employees is a legitimate business decision, one that is necessary to obtain reasonable

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GR NO. 117040 ]

return from its investment. To use the phrase of the majority, this is a "bare assertion."
Nothing in the majority decision shows how the return of ISETANN's investment has been
threatened to justify its so-called business decision as legitimate.
SECOND. The majority holds that "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 consider the dismissal or termination to be simply ineffectual for failure of the
employer to comply with the procedure for dismissal or termination.
With due respect, I find it most difficult to follow the logic of the majority. Before Wenphil, we
protected employees with the ruling that dismissals without prior notice are illegal and the
illegally dismissed employee must be reinstated with backwages. Wenphil diluted that rule
when it held that due process is satisfied if the employee is given the opportunity to be heard
by the Labor Arbiter. It further held that an employee cannot be reinstated if it is established
in the hearing that his dismissal is for a just cause. The failure of the employer to give a predismissal notice is only to be penalized by payment of an indemnity. The dilution of the rule
has been abused by unscrupulous employers who then followed the "dismiss now, pay later"
strategy. This evil practice of employers was what I expected the majority to address in reexamining the Wenphil doctrine. At the very least, I thought that the majority would restore
the balance of rights between an employee and an employer by giving back the employee's
mandatory right to notice before dismissal. It is disquieting, however, that the majority rearranged this balance of right by tilting it more in favor of the employer's right to dismiss.
Thus, instead of weakening a bit the right to dismiss of employers, the majority further
strengthens it by insisting that a dismissal without prior notice is merely "ineffectual" and not
illegal.
The stubborn refusal of the majority to appreciate the importance of pre-dismissal notice is
difficult to understand. It is the linchpin of an employee's right against an illegal dismissal. The
notice tells him the cause of his dismissal. It gives him a better chance to contest his
dismissal in an appropriate proceeding as laid down in the parties' collective bargaining
agreement or the rules of employment established by the employer, as the case may be. In
addition, it gives to both the employee and employer more cooling time to settle their
differences amicably. In fine, the prior notice requirement and the hearing before the
employer give an employee a distinct, different and effective first level of remedy to protect
his job. In the event the employee is dismissed, he can still file a complaint with the DOLE
with better knowledge of the cause of his dismissal, with longer time to prepare his case, and
with greater opportunity to take care of the financial needs of his family pendente lite. The
majority has taken away from employees this effective remedy. This is not to say that the predismissal notice requirement equalizes the fight between an employee and an employer for

[SERRANO VS. NLRC

the fight will remain unequal. This notice requirement merely gives an employee a fighting
chance but that fighting chance is now gone.
It is equally puzzling why the majority believes that restoring the employee's right to predismissal notice will negate the right of an employer to dismiss for cause. The pre-Wenphil
rule simply requires that before the right of the employer to dismiss can be exercised, he
must give prior notice to the employee of its cause. There is nothing strange nor difficult
about this requirement. It is no burden to an employer. He is bereft of reason not to give the
simple notice. If he fails to give notice, he can only curse himself. He forfeits his right to
dismiss by failing to follow the procedure for the exercise of his right. Employees in the public
sector cannot be dismissed without prior notice. Equal protection of law demands similar
treatment of employees in the private sector.
THIRD. The case at bar specifically involves Article 283 of the Labor Code which lays down
four (4) authorized causes for termination of employment.11 These authorized causes are: (1)
installation of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and
(4) closing or cessation of operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the law. It also provides that prior to the dismissal of an
employee for an authorized cause, the employer must send two written notices at least one
month before the intended dismissal one notice to the employee and another notice to the
Department of Labor and Employment (DOLE). We have ruled that the right to dismiss on
authorized causes is not an absolute prerogative of an employer.12 We explained that the
notice to the DOLE is necessary to enable it to ascertain the truth of the cause of
termination.13 The DOLE is equipped with men and machines to determine whether the
planned closure or cessation of business or retrenchment or redundancy or installation of
labor saving device is justified by economic facts.14 For this reason too, we have held that
notice to the employee is required to enable him to contest the factual bases of the
management decision or good faith of the retrenchment or redundancy before the DOLE. 15 In
addition, this notice requirement gives an employee a little time to adjust to his joblessness. 16
The majority insists that if an employee is laid off for an authorized cause under Article 283 in
violation of the prior notice requirement, his dismissal should not be considered void but only
ineffectual. He shall not be reinstated but paid separation pay and some backwages. I
respectfully submit that an employee under Article 283 has a stronger claim to the right to a
pre-dismissal notice and hearing. To begin with, he is an innocent party for he has not
violated any term or condition of his employment. Moreover, an employee in an Article 283
situation may lose his job simply because of his employer's desire for more profit. Thus, the
installation of a labor saving device is an authorized cause to terminate employment even if
its non-installation need not necessarily result in an over-all loss to an employer possessed
by his possessions. In an Article 283 situation, it is easy to see that there is a greater need to
scrutinize the allegations of the employer that he is dismissing an employee for an authorized
cause. The acts involved here are unilateral acts of the employer. Their nature requires that
they should be proved by the employer himself. The need for a labor saving device, the
reason for redundancy, the cause for retrenchment, the necessity for closing or cessation of
business are all within the knowledge of the employer and the employer alone. They involve
a constellation of economic facts and factors usually beyond the ken of knowledge of an
ordinary employee. Thus, the burden should be on the employer to establish and justify these
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GR NO. 117040 ]

authorized causes. Due to their complexity, the law correctly directs that notice should be
given to the DOLE for it is the DOLE more than the lowly employee that has the expertise to
validate the alleged cause in an appropriate hearing. In fine, the DOLE provides the equalizer
to the powers of the employer in an Article 283 situation. Without the equalizing influence of
DOLE, the employee can be abused by his employer.
Further, I venture the view that the employee's right to security of tenure guaranteed in our
Constitution calls for a pre-dismissal notice and hearing rather than a post facto dismissal
hearing. The need for an employee to be heard before he can be dismissed cannot be
overemphasized. As aforestated, in the case at bar, petitioner was a regular employee of
ISETANN. He had the right to continue with his employment. The burden to establish that this
right has ceased is with ISETANN, as petitioner's employer. In fine, ISETANN must be the
one to first show that the alleged authorized cause for dismissing petitioner is real. And on
this factual issue, petitioner must be heard. Before the validity of the alleged authorized
cause is established by ISETANN, the petitioner cannot be separated from employment. This
is the simple meaning of security of tenure. With due respect, the majority opinion will reduce
this right of our employees to a mere illusion. It will allow the employer to dismiss an
employee for a cause that is yet to be established. It tells the employee that if he wants to be
heard, he can file a case with the labor arbiter, then the NLRC, and then this Court. Thus, it
unreasonably shifts the burden to the employee to prove that his dismissal is for an
unauthorized cause.
The pernicious effects of the majority stance are self-evident in the case at bar. For one,
petitioner found himself immediately jobless and without means to support his family. For
another, petitioner was denied the right to rely on the power of DOLE to inquire whether his
dismissal was for a genuine authorized cause. This is a valuable right for all too often, a lowly
employee can only rely on DOLE's vast powers to check employer abuses on illegal
dismissals. Without DOLE, poor employees are preys to the claws of powerful employers.
Last but not the least, it was the petitioner who was forced to file a complaint for illegal
dismissal. To a jobless employee, filing a complaint is an unbearable burden due to its
economic cost. He has to hire a lawyer and defray the other expenses of litigation while
already in a state of penury. At this point, the hapless employee is in a no win position to fight
for his right. To use a local adage, "aanhin pa ang damo kung patay na ang kabayo."
In the case at bar, the job of the petitioner could have been saved if DOLE was given notice
of his dismissal. The records show that petitioner worked in ISETANN as security checker for
six (6) years. He served ISETANN faithfully and well. Nonetheless, in a desire for more
profits, and not because of losses, ISETANN contracted out the security work of the
company. There was no effort whatsoever on the part of ISETANN to accommodate petitioner
in an equivalent position. Yet there was the position of Safety and Security Supervisor where
petitioner fitted like a perfect T. Despite petitioner's long and loyal service, he was treated like
an outsider, made to apply for the job, and given a stringent examination which he failed.
Petitioner was booted out and given no chance to contest his dismissal. Neither was the
DOLE given the chance to check whether the dismissal of petitioner was really for an
authorized cause. All these because ISETANN did not follow the notice and hearing
requirement of due process.

[SERRANO VS. NLRC

FOURTH. The majority has inflicted a most serious cut on the job security of employees. The
majority did nothing to restore the pre-Wenphil right of employees but even expanded the
right to dismiss of employer by holding that the pre-dismissal notice requirement is not even a
function of due process. This seismic shift in our jurisprudence ought not to pass.
The key to the new majority ruling 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." The main reason alleged is that "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 settled
usage of civilized society."
There can be no room for disagreement on the proposition that the due process clause found
in the Bill of Rights of the Constitution is a limitation on governmental powers. Nor can there
be any debate that acts of government violative of due process are null and void. Thus,
former Chief Justice Roberto Concepcion emphasized inCuaycong v. Senbengco 17 that ". . .
acts of Congress as well as those of the Executive, can deny due process only under pain of
nullity, and judicial proceedings suffering from the same flaw are subject to the same
sanction, any statutory provision to the contrary notwithstanding." With due respect to the
majority, however, I part ways with the majority in its new ruling that the due process
requirement does not apply to the exercise of private power. This overly restrictive majority
opinion will sap the due process right of employees of its remaining utility. Indeed, the new
majority opinion limiting violations of due process to government action alone is a throwback
to a regime of law long discarded by more progressive countries. Today, private due process
is a settled norm in administrative law. Per Schwartz, a known authority in the field, viz:18

GR NO. 117040 ]

In addition, there has been an extension of procedural due process requirements


from governmental to private action. In Section 5.16 we saw that Goldberg
v. Kelly has been extended to the eviction of a tenant from a public housing project.
The courts have not limited the right to be heard to tenants who have governmental
agencies as landlords. Due process requirements also govern acts by "private"
landlords where there is sufficient governmental involvement in the rented
premises. Such an involvement exists in the case of housing aided by Federal
Housing Administration financing and tax advantages. A tenant may not be
summarily evicted from a building operated by a "private" corporation where the
corporation enjoyed substantial tax exemption and had obtained an FHA-insured
mortgage, with governmental subsidies to reduce interest payments. The "private"
corporation was so saturated with governmental incidents as to be limited in its
practices by constitutional process. Hence, it could not terminate tenancies without
notice and an opportunity to be heard.
But we need nor rely on foreign jurisprudence to repudiate the new majority ruling that due
process restricts government alone and not private employers like ISETANN. This Court has
always protected employees whenever they are dismissed for an unjust cause by private
employers. We have consistently held that before dismissing an employee for a just cause,
he must be given notice and hearing by his private employer. In Kingsize Manufacturing
Corporation vs. NLRC,19 this Court, thru Mr. Justice Mendoza, categorically ruled:
. . . (P)etitioners failure to give notice with warning to the private respondents
before their services were terminated puts in grave doubt petitioners' claim that
dismissal was for a just cause. Section 2 Rule XIV of the Rules implementing the
Labor Code provides:

Private Due Process


As already stressed, procedural due process has proved of an increasingly
encroaching nature. SinceGoldberg v. Kelly, the right to be heard has been
extended to an ever-widening area, covering virtually all aspects of agency action,
including those previously excluded under the privilege concept. The expansion of
due process has not been limited to the traditional areas of administrative law. We
saw how procedural rights have expanded into the newer field of social welfare, as
well as that of education. But due process expansion has not been limited to these
fields. The courts have extended procedural protections to cases involving
prisoners and parolees, as well as the use of established adjudicatory procedures.
Important Supreme Court decisions go further and invalidate prejudgment wage
garnishments and seizures of property under replevin statutes where no provision
is made for notice and hearing. But the Court has not gone so far as to lay down an
inflexible rule that due process requires an adversary hearing when an individual
may be deprived of any possessory interest, however brief the dispossession and
however slight the monetary interest in the property. Due process is not violated
where state law requires, as a precondition to invoking the state's aid to sequester
property of a defaulting debtor, that the creditor furnish adequate security and
make a specific showing of probable cause before a judge.

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Page 17

An employer who seeks to dismiss a worker shall furnish him a written


notice stating the particular acts or omission constituting the ground for
dismissal. In case of abandonment of work, the notice shall be served on
the worker's last known address.
The notice required, . . ., actually consists of two parts to be separately served on
the employee, to wit: (1) notice to apprise the employee of the particular acts or
omissions for which the dismissal is sought; and (2) subsequent notice to inform
him of the employer's decision to dismiss him.
This requirement is not a mere technicality but a requirement of due process to
which every employee is entitled to insure that the employer's prerogative to
dismiss or lay off is not abused or exercised in an arbitrary manner. This rule is
clear and unequivocal . . . .20
In other words, we have long adopted in our decisions the doctrine of private due process.
This is as it ought to be. The 1987 Constitution guarantees the rights of workers, especially
the right to security of tenure in a separate article section 3 of Article XIII entitled Social

[SERRANO VS. NLRC

Justice and Human Rights. Thus, a 20-20 vision of the Constitution will show that the more
specific rights of labor are not in the Bill of Rights which is historically directed against
government acts alone. Needless to state, the constitutional rights of labor should be
safeguarded against assaults from both government and private parties. The majority should
not reverse our settled rulings outlawing violations of due process by employers in just
causes cases.
To prop up its new ruling against our employees, the majority relates the evolution of our law
on dismissal starting from Article 302 of the Spanish Code of Commerce, to the New Civil
Code of 1950, to R.A. No. 1052 (Termination Pay Law), then to R.A. No. 1787. To complete
the picture, let me add that on May 1, 1974, the Labor Code (PD 442) was signed into law by
former President Marcos. It took effect on May 1, 1974 or six months after its promulgation.
The right of the employer to terminate the employment was embodied in Articles
283,21 284,22 and 285.23 Batas Pambansa Blg. 130 which was enacted on August 21, 1981
amended Articles 283 and 284, which today are cited as Arts. 282 and 283 of the Labor
Code.24
On March 2, 1989, Republic Act No. 6715 was approved which amended, among others,
Article 277 of the Labor Code. Presently, Article 277 (b) reads:
Art. 277. Miscellaneous provisions. (a) . . . .
(b) Subject to the constitutional right of workers to security of tenure and
their right to be protected against dismissal except for a just or
authorized cause and without prejudice to the requirement of notice
under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing
a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance
of his representative if he so desires in accordance with company rules
and regulations promulgated pursuant to the guidelines set by the
Department of Labor and Employment. 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. The burden
of proving that the termination was for a valid or authorized cause shall
rest on the employer. . . . .

service is continuous or broken, without prior written authority issued in


accordance with the rules and regulations as the Secretary may
promulgate.
Rule XIV, Book V of the 1997 Omnibus Rules Implementing the Labor Code provides:
Termination of Employment
Sec. 1. Security of tenure and due process. No worker shall be dismissed
except for a just or authorized cause provided by law and after due process.
Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omissions constituting the
grounds for his dismissal. . . .
xxx

xxx

xxx

Sec. 5. Answer and hearing. The worker may answer the allegations stated
against him in the notice of dismissal within a reasonable period from receipt of
such notice. The employer shall afford the worker ample opportunity to be heard
and to defend himself with the assistance of his representative, if he so desires.
These laws, rules and regulations should be related to our decisions interpreting them. Let
me therefore emphasize our rulings holding that the pre-dismissal notice requirement is part
of due process. In Batangas Laguna Tayabas Bus Co. vs. Court of Appeals,25 which was
decided under the provisions of RA No. 1052 as amended by RA No. 1787, this Court ruled
that "the failure of the employer to give the [employee] the benefit of a hearing before he was
dismissed constitute an infringement on his constitutional right to due process of law and not
to be denied the equal protection of the laws. . . . 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." Since then, we have consistently held that before dismissing
an employee for a just cause, he must be given notice and hearing by his private employer as
a matter of due process.
I respectfully submit that these rulings are more in accord with the need to protect the right of
employees against illegal dismissals. Indeed, our laws and our present Constitution are more
protective of the rights and interests of employees than their American counterpart. For one,
to justify private due process, we need not look for the factors of "sufficient governmental
involvement" as American courts do. Article 1700 of our Civil Code explicitly provides:

Previous to the amendment, Article 277 (b) read:


Art. 277. Miscellaneous provisions. (a) . . . .
(b) With or without a collective agreement, no employer may shut down
his establishment or dismiss or terminate the employment of employees
with at least one year of service during the last two years, whether such
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GR NO. 117040 ]

Page 18

Art. 1700. The relation between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the common
good. Therefore, such contracts are subject to the special laws on labor unions,

[SERRANO VS. NLRC

GR NO. 117040 ]

collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.

In case of termination, the foregoing notices shall be served on the employee's last
known address.

Nor do we have to strain on the distinction made by American courts between property and
privilege and follow their ruling that due process will not apply if what is affected is a mere
privilege. It is our hoary ruling that labor is property within the contemplation of the due
process clause of the Constitution. Thus, in Philippine Movie Pictures Workers Association
vs. Premiere Productions, Inc.,26 private respondent-employer filed with the Court of Industrial
Relations (CIR) a petition seeking authority to lay off forty-four of its employees. On the date
of the hearing of the petition, at the request of the counsel of the private respondent, the
judge of the CIR conducted an ocular inspection in the premises of the employer. He
interrogated fifteen laborers. On the basis of the ocular inspection, the judge concluded that
the petition for lay off was justified. We did not agree and we ruled that "the right of a person
to his labor is deemed to he property within the meaning of constitutional guarantees. That is
his means of livelihood. He can not be deprived of his labor or work without due process of
law. . . . (T)here are certain cardinal primary rights which the Court of Industrial Relations
must respect in the trial of every labor case. One of them is the right to a hearing which
includes the right of the party interested to present his own case and to submit evidence in
support thereof."

II. For termination of employment as based on authorized causes defined in Article


283 of the Code, the requirements of due process shall be deemed complied with
upon service of a written notice to the employee and the appropriate Regional
Office of the Department at least thirty (30) days before the effectivity of the
termination, specifying the ground or grounds for termination.

I wish also to stress that the 1999 Rules and Regulations implementing the Labor Code
categorically characterize this pre-dismissal notice requirement as a requirement of due
process. Rule XXIII provides:
Sec. 2. Standards of due process: requirements of notice. In all cases of
termination of employment, the following standards of due process shall be
substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of
the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity
to respond to the charge, present his evidence or rebut the evidence
presented against him; and
(c) A written notice of termination served on the employee indicating that
upon due consideration of all the circumstance, grounds have been
established to justify his termination.

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Page 19

The new ruling of the majority is not in consonance with this Rule XXIII.
If we are really zealous of protecting the rights of labor as called for by the Constitution, we
should guard against every violation of their rights regardless of whether the government or a
private party is the culprit. Section 3 of Article XIII of the Constitution requires the State to
give full protection to labor. We cannot be faithful to this duty if we give no protection to labor
when the violator of its rights happens to be private parties like private employers. A private
person does not have a better right than the government to violate an employee's right to due
process. To be sure, violation of the particular right of employees to security of tenure comes
almost always from their private employers. To suggest that we take mere geriatric steps
when it comes to protecting the rights of labor from infringement by private parties is farthest
from the intent of the Constitution. We trivialize the right of the employee if we adopt the rule
allowing the employer to dismiss an employee without any prior hearing and say let him be
heard later on. To a dismissed employee that remedy is too little and too late. The new
majority ruling is doubly to be regretted because it comes at a time when deregulation and
privatization are buzzwords in the world being globalized. In such a setting, the new gods will
not be governments but non-governmental corporations. The greater need of the day
therefore is protection from illegal dismissals sans due process by these non-governmental
corporations.
The majority also holds that the "third reason why the notice requirement under Art. 283 is not
a requirement of due process 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." Again, with due respect, I beg to disagree. In an Article 283 situation,
dismissal due to an authorized cause, the employer is not called upon to act as an impartial
judge. The employer is given the duty to serve a written notice on the worker and the DOLE
at least one month before the intended date of lay-off. It is the DOLE, an impartial agency
that will judge whether or not the employee is being laid off for an authorized caused.27 It is
not the employer who will adjudge whether the alleged authorized cause for dismissing the
employee is fact or fiction. On the other hand, in an Article 282 situation, dismissal for a just
cause, it is also incorrect to hold that an employer cannot be an impartial judge. Today, the
procedure on discipline and dismissal of employees is usually defined in the parties'
collective bargaining agreement or in its absence, on the rules and regulations made by the
employer himself. This procedure is carefully designed to be bias free for it is to the interest
of both the employee and the employer that only a guilty employee is disciplined or
dismissed. Hence, where the charge against an employee is serious, it is standard practice to
include in the investigating committee an employee representative to assure the integrity of

[SERRANO VS. NLRC

the process. In addition, it is usual practice to give the aggrieved employee an appellate body
to review an unfavorable decision. Stated otherwise, the investigators are mandated to act
impartially for to do otherwise can bring havoc less to the employee but more to the
employer. For one, if the integrity of the grievance procedure becomes suspect, the
employees may shun it and instead resort to coercive measures like picketing and strikes that
can financially bleed employers. For another, a wrong, especially a biased judgment can
always be challenged in the DOLE and the courts and can result in awards of huge damages
against the company. Indeed, the majority ruling that an employer cannot act as an impartial
judge has no empirical evidence to support itself. Statistics in the DOLE will prove the many
cases won by employees before the grievance committees manned by impartial judges of the
company.
Next, the majority holds that "the requirement to hear an employee before he is dismissed
should be considered simply as an application of the Justinian precept, embodied in the Civil
Code, to act with justice, give everyone his due, and observe honesty and good faith toward
one's fellowmen." It then rules that violation of this norm will render the employer liable for
damages but will not render his act of dismissal void. Again, I cannot join the majority stance.
The faultline of this ruling lies in the refusal to recognize that employer-employee relationship
is governed by special labor laws and not by the Civil Code. The majority has disregarded the
precept that relations between capital and labor are impressed with public interest. For this
reason, we have the Labor Code that specially regulates the relationship between employeremployee including dismissals of employees. Thus, Article 279 of the Labor Code specifically
provides that "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 instatement 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." This provision of the Labor Code clearly
gives the remedies that an unjustly dismissed employee deserves. It is not the Civil Code that
is the source of his remedies.
The majority also holds that lack of notice in an Article 283 situation merely makes an
employee dismissal "ineffectual" but not illegal. Again, the ruling is sought to be justified by
analogy and our attention is called to Article 1592, in relation to Article 1191 of the Civil Code.
It is contended that "under these provisions, while the power to rescind is implied in
reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the
vendor cannot rescind the contract 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." The analogy of the majority cannot be allowed both in law and in logic. The
legal relationship of an employer to his employee is not similar to that of a vendor and a
vendee. An employee suffers from a distinct disadvantage in his relationship with an
employer, hence, the Constitution and our laws give him extra protection. In contrast, a
vendor and a vendee in a sale of immovable property are at economic par with each other. To
consider an employer-employee relationship as similar to a sale of commodity is an archaic
abomination. An employer-employee relationship involves the common good and labor
cannot be treated as a mere commodity. As well-stated by former Governor General Leonard
Wood in his inaugural message before the 6th Philippine Legislature on October 27, 1922, "it

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GR NO. 117040 ]

is opportune that we strive to impress upon all the people that labor is neither a chattel nor a
commodity, but human and must be dealt with from the standpoint of human interests."
Next, the majority holds that under the Labor Code, only the absence of a just cause for the
termination of employment can make the dismissal of an employee illegal. Quoting Article
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.
it is then rationalized that "to hold that the employer's failure to give notice before dismissing
an employee . . . results in the nullity of the dismissal would, in effect, be to amend Article 279
by adding another ground, for considering a dismissal illegal." With due respect, the majority
has misread Article 279. To start with, the article is entitled "Security of Tenure" and therefore
protects an employee against dismissal not only for an unjust cause but also for an
unauthorized cause. Thus, the phrase "unjustly dismissed" refers to employees who are
dismissed without just cause and to employees who are laid off without any authorized
cause. As heretofore shown, we have interpreted dismissals without prior notice as illegal for
violating the right to due process of the employee. These rulings form part of the law of the
land and Congress was aware of them when it enacted the Labor Code and when its
implementing rules and regulations were promulgated especially the rule ordering employers
to follow due process when dismissing employees. Needless to state, it is incorrect for the
majority to urge that we are in effect amending Article 279.
In further explication of its ruling, the majority contends "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." Article 285(a) states: "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
employee liable for damages."
In effect, the majority view is that its new ruling puts at par both the employer and the
employee under Article 285, the failure of an employee to pre-notify in writing his employer
that he is terminating their relationship does not make his walk-out void; under its new ruling,
the failure of an employer to pre-notify an employee before his dismissal does not also render
the dismissal void. By this new ruling, the majority in a short stroke has rewritten the law on
dismissal and tampered its pro-employee philosophy. Undoubtedly, Article 285 favors the
employee as it does not consider void his act of terminating his employment relationship
before giving the required notice. But this favor given to an employee just like the other favors

[SERRANO VS. NLRC

in the Labor Code and the Constitution are precisely designed to level the playing field
between the employer and the employee. It cannot be gainsaid that employees are the
special subject of solicitous laws because they have been and they continue to be exploited
by unscrupulous employers. Their exploitation has resulted in labor warfare that has broken
industrial peace and slowed down economic progress. In the exercise of their wisdom, the
founding fathers of our 1935, 1973 and 1987 Constitutions as well as the members our past
and present Congresses, have decided to give more legal protection and better legal
treatment to our employees in their relationship with their employer. Expressive of this policy
is President Magsaysay's call that "he who has less in life should have more in law." I
respectfully submit that the majority cannot revise our laws nor shun the social justice thrust
of our Constitution in the guise of interpretation especially when its result is to favor
employers and disfavor employees. The majority talks of high nobility but the highest nobility
it to stoop down to reach the poor.
IV. NO UNJUST RESULTS OF CONSIDERING DISMISSALS WITHOUT PRIOR
NOTICE AS ILLEGAL
The majority further justifies its new ruling by holding:
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 having been given 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." But so
does it declare that it "recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investment." The
Constitution bids the State to "afford full protection to labor." But it is equally true
that "the law, in protecting the rights of the laborer, authorizes neither oppression
nor self-destruction of the employer." 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.
With due respect, I cannot understand this total turn around of the majority on the issue of the
unjustness of lack of pre-dismissal notice to an employee. Heretofore, we have always
considered this lack of notice as unjust to the employee. Even under Article 302 of the
Spanish Code of Commerce of 1882 as related by the majority, an employer who opts to
dismiss an employee without any notice has to pay a mesada equivalent to his salary for one
month because of its unjustness. This policy was modified by our legislators in favor of a
more liberal treatment of labor as our country came under the influence of the United States
whose major labor laws became the matrix of our own laws like R.A. 875, otherwise known
as the Industrial Peace Act. In accord with these laws, and as aforediscussed, we laid down
the case law that dismissals without prior notice offend due process. This is the case law
when the Labor Code was enacted on May 1, 1974 and until now despite its amendments.
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GR NO. 117040 ]

The 1935 and the 1973 Constitutions did not change this case law. So with the 1987
Constitution which even strengthened the rights of employees, especially their right to
security of tenure. Mr. Justice Laurel in his usual inimitable prose expressed this shift in social
policy in favor of employees as follows:
It should be observed at the outset that our Constitution was adopted in the midst
of surging unrest and dissatisfaction resulting from economic and social distress
which was threatening the stability of governments the world over. Alive to the
social and economic forces at work, the framers of our Constitution boldly met the
problems and difficulties which faced them and endeavored to crystallize, with
more or less fidelity, the political, social and economic propositions of their age,
and this they did, with the consciousness that the political and philosophical
aphorism of their generation will, in the language of a great jurist, "be doubted by
the next and perhaps entirely discarded by the third." (Chief Justice Winslow in
Gorgnis v. Falk Co., 147 Wis., 327; 133 N. W., 209). Embodying the spirit of the
present epoch, general provisions were inserted in the Constitution which are
intended to bring about the needed social and economic equilibrium between
component elements of society through the application of what may be termed as
the justitia communis advocated by Grotius and Leibnitz many years ago to be
secured through the counter-balancing of economic and social forces and
employers or landlords, and employees or tenants, respectively; and by prescribing
penalties for the violation of the orders" and later, Commonwealth Act No. 213,
entitled "An Act to define and regulate legitimate labor organizations." 28
This ingrained social philosophy favoring employees has now been weakened by the new
ruling of the majority. For while this Court has always considered lack of pre-dismissal notice
as unjust to employees, the new ruling of the majority now declares it is unjust to employers
as if employers are the ones exploited by employees. In truth, there is nothing unjust to
employers by requiring them to give notice to their employees before denying them their jobs.
There is nothing unjust to the duty to give notice for the duty is a reasonable duty. If the duty
is reasonable, then it is also reasonable to demand its compliance before the right to dismiss
on the part of an employer can be exercised. If it is reasonable for an employer to comply
with the duty, then it can never be unjust if non-compliance therewith is penalized by denying
said employer his right to dismiss. In fine, if the employer's right to dismiss an employee is
forfeited for his failure to comply with this simple, reasonable duty to pre-notify his employee,
he has nothing to blame but himself. If the employer is estopped from litigating the issue of
whether or not he is dismissing his employee for a just or an authorized cause, he brought
the consequence on to himself. The new ruling of the majority, however, inexplicably
considers this consequence as unjust to the employer and it merely winks at his failure to
give notice.
V. A LAST WORD
The new ruling of the majority erodes the sanctity of the most important right of an employee,
his constitutional right to security of tenure. This right will never be respected by the employer
if we merely honor the right with a price tag. The policy of "dismiss now and pay later" favors

[SERRANO VS. NLRC

monied employers and is a mockery of the right of employees to social justice. There is no
way to justify this pro-employer stance when the 1987 Constitution is undeniably more proemployee than our previous fundamental laws. Section 18 of Article II (State Policies)
provides that "the State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare." Section 1, Article XIII (Social Justice and Human
Rights) calls for the reduction of economic inequalities. Section 3, Article XIII (Labor) directs
the State to accord full protection to labor and to guaranty security of tenure. These are
constitutional polestars and not mere works of cosmetology. Our odes to the poor will be
meaningless mouthfuls if we cannot protect the employee's right to due process against the
power of the peso of employers.
To an employee, a job is everything. Its loss involves terrible repercussions stoppage of
the schooling of children, ejectment from leased premises, hunger to the family, a life without
any safety net. Indeed, to many employees, dismissal is their lethal injection. Mere payment
of money by way of separation pay and backwages will not secure food on the mouths of
employees who do not even have the right to choose what they will chew.
I vote to grant the petition.

VITUG, J., separate (concurring and dissenting) opinion;


The lawful severance by an employer of an employer-employee relationship would require a
valid cause. There are, under the Labor Code, two groups of valid causes, and these are the
just causes under Article 2821 and the authorized causes under Article 2832 and Article 284.3
An employee whose employment is terminated for a just cause is not entitled to the payment
of separation benefits.4 Separation pay would be due, however, when the lay-off is on
account of an authorized cause. The amount of separation pay would depend on the ground
for the termination of employment. A lay-off due to the installation of a labor saving device,
redundancy (Article 283) or disease (Article 284), entitles the worker to a separation pay
equivalent to "one (1) month pay or at least one (1) month pay for every year of service,
whichever is higher." When the termination of employment is due to retrenchment to prevent
losses, or to closure or cessation of operations of an establishment or undertaking not due to
serious business losses or financial reverses, the separation pay is only an equivalent of "one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher." In the above instances, a fraction of at least six (6) months is considered as one (1)
whole year.
Due process of law, in its broad concept, is a principle in our legal system that mandates due
protection to the basic rights, inherent or accorded, of every person against harm or
transgression without an intrinsically just and valid law, as well as an opportunity to be heard
before an impartial tribunal, that can warrant such an impairment. Due process guarantees
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GR NO. 117040 ]

against arbitrariness and bears on both substance and procedure. Substantive due process
concerns itself with the law, its essence, and its concomitant efficacy; procedural due process
focuses on the rules that are established in order to ensure meaningful adjudications
appurtenant thereto.
In this jurisdiction, the right to due process is constitutional and statutory.
Due process in the context of a termination of employment, particularly, would be twofold, i.e., substantive due process which is complied with when the action of the employer is
predicated on a just cause or an authorized cause, and procedural due process which is
satisfied when the employee has the opportunity to contest the existence of the ground
invoked by the employer in terminating the contract of employment and to be heard thereon. I
find it difficult to ascribe either a want of wisdom or a lack of legal basis to the early
pronouncements of this Court that sanction the termination of employment when a just or an
authorized cause to warrant the termination is clearly extant. Regrettably, the Court in some
of those pronouncements has used, less than guarded in my view, the term "due process"
when referring to the notices prescribed in the Labor Code5 and its implementing rules6 that
could, thereby, albeit unintendedly and without meaning to, confuse the latter with the notice
requirement in adjudicatory proceedings. It is not seldom when the law puts up various
conditions in the juridical relations of parties; it would not be accurate to consider, I believe,
an infraction thereof to ipso-facto raise a problem of due process. The mere failure of notice
of the dismissal or lay-off does not foreclose the right of an employee from disputing the
validity, in general, of the termination of his employment, or the veracity, in particular, of the
cause that has been invoked in order to justify that termination. In assailing the dismissal or
lay-off, an employee is entitled to be heard and to be given the corresponding due notice of
the proceedings. It would be when this right is withheld without cogent reasons that, indeed, it
can rightly be claimed that the fundamental demands of procedural due process have been
unduly discarded.
I do appreciate the fact that the prescribed notices can have consequential benefits to an
employee who is dismissed or laid off, as the case may be; its non-observance by an
employer, therefore, can verily entitle the employee to an award of damage but, to repeat, not
to the extent of rendering outrightly illegal that dismissal or lay-off predicated on valid
grounds. I would consider the indemnification to the employee not a penalty or a fine against
the employer, the levy of either of which would require an appropriate legislative enactment;
rather, I take the grant of indemnity as justifiable as an award of nominal damages in
accordance with the provisions of Articles 2221-2223 of the Civil Code, viz:
Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.
Art. 2222. The court may award nominal damages in every obligation arising from
any source enumerated in article 1157, or in every case where any property right
has been invaded.

[SERRANO VS. NLRC

Art. 2223. The adjudication of nominal damages shall preclude further contest upon
the right involved and all accessory questions, as between the parties to the suit, or
their respective heirs and assigns.
There is no fixed formula for determining the precise amount of nominal damages. In fixing
the amount of nominal damages to be awarded, the circumstances of each case should thus
be taken into account, such as, to exemplify, the
(a) length of service or employment of the dismissed employee;
(b) his salary or compensation at the time termination of employment vis-a-vis the
capability of the employer to pay;
(c) question of whether the employer has deliberately violated the requirements for
termination of employment or has attempted to comply, at least substantially,
therewith; and/or
(d) reasons for the termination of employment.
I might stress the rule that the award of nominal damages is not for the purpose of
indemnification for a loss but for the recognition and vindication of a right. The degree of
recovery therefor can depend, on the one hand, on the constitution of the right, and, upon the
other hand, on the extent and manner by which that right is ignored to the prejudice of the
holder of that right.
In fine7

GR NO. 117040 ]

Art. 2232. In contracts and quasi-contracts, the court may award


exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner (Civil Code).
Separation pay can substitute for reinstatement if such reinstatement is not
feasible, such as in case of a clearly strained employer-employee relationship
(limited to managerial positions and contracts of employment predicated on trust
and confidence) or when the work or position formerly held by the dismissed
employee plainly has since ceased to be available.
C. Where there is just cause or an authorized cause for the dismissal or lay-off but
the required written notices therefor have not been properly observed by an
employer, it would neither be light and justifiable nor likely intended by law to order
either the reinstatement of the dismissed or laid-off employee or the payment of
back salaries to him simply for the lack of such notices if, and so long as, the
employee is not deprived of an opportunity to contest that dismissal or lay-off and
to accordingly be heard thereon. In the termination of employment for an
authorized cause (this cause being attributable to the employer), the laid-off
employee is statutorily entitled to separation pay, unlike a dismissal for a just cause
(a cause attributable to an employee) where no separation pay is due. In either
case, if an employer fails to comply with the requirements of notice in terminating
the services of the employee, the employer must be made to pay, as so
hereinabove expressed, corresponding damages to the employee.
WHEREFORE, I vote to hold (a) that the lay-off in the case at bar is due to redundancy and
that, accordingly, the separation pay to petitioner should be increased to one month, instead
of one-half month, pay for every year of service, and (b) that petitioner is entitled to his
unpaid wages, proportionate 13th-month pay, and an indemnity of P10,000.00 in keeping with
the nature and purpose of, as well as the rationale behind, the grant of nominal damages.

A. A just cause or an authorized cause and a written notice of dismissal or lay-off,


as the case may be, are required concurrently but not really equipollent in their
consequence, in terminating an employer-employee relationship.
PANGANIBAN, J., separate opinion;
B. Where there is neither just cause nor authorized cause, the reinstatement of the
employee and the payment of back salaries would be proper and should be
decreed. If the dismissal or lay-off is attended by bad faith or if the employer acted
in wanton or oppressive manner, moral and exemplary damages might also be a
warded. In this respect, the Civil Code provides:
Art. 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances,
such damages are just due. The same rule applies to breaches of
contract where the defendant acted fraudulently or in bad faith.

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Page 23

In the case before us, the Court is unanimous in at least two findings: (1) petitioner's
dismissal was due to an authorized cause, redundancy; and (2) petitioner was notified of his
dismissal only on the very day his employment was terminated. The contentious issue arising
out of these two findings is as follows: What is the legal effect and the corresponding sanction
for the failure of the employer to give the employee and the Department of Labor and
Employment (DOLE) the 30-day notice of termination required under Article 283 of the Labor
Code?
During the last ten (10) years, the Court has answered the foregoing question by ruling that
the dismissal should be upheld although the employee should be given "indemnity or
damages" ranging from P1,000 to P10,000 depending on the circumstances.

[SERRANO VS. NLRC

The present ponencia of Mr. Justice Mendoza holds that "the termination of his employment
should be considered ineffectual and the [employee] should be paid back wages" from the
time of his dismissal until the Court finds that the dismissal was for a just cause.

GR NO. 117040 ]

employee's right to due process as mandated by law and the Constitution. It implicitly allows
the employer to simply ignore such right and to just pay the employee. While it increases the
payment to "full back wages," it doctrinally denigrates his right to due process to a mere
statutory right to notice.

Reexamination of the "Indemnity Only" Rule


I am grateful that the Court has decided to reexamine our ten-year doctrine on this question
and has at least, in the process, increased the monetary award that should go to the
dismissed employee from a nominal sum in the concept "indemnity or damages" to "full
back wages." Shortly after my assumption of office on October 10, 1995, I already questioned
this practice of granting "indemnity only" to employees who were dismissed for cause but
without due process.1 I formally registered reservations on this rule in my ponencia in MGG
Marine Services v. NLRC2 and gave it full discussion in my Dissents in Better Buildings
v. NLRC3 and in Del Val v. NLRC.4
Without in any way diminishing my appreciation of this reexamination and of the more
financially-generous treatment the Court has accorded labor, I write to take issue with the
legal basis of my esteemed colleague, Mr. Justice Mendoza, in arriving at his legal conclusion
that "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." In short, he believes that (1)
the 30-day notice requirement finds basis only in the Labor Code, and (2) the sanction for its
violation is only "full back wages."
With due respect, I submit the following counter-arguments:
(1) The notice requirement finds basis not only in the Labor Code but, more
important, in the due process clause of the Constitution.
(2) Consequently, when the employee is dismissed without due process, the legal
effect is an illegal dismissal and the appropriate sanction is full back wages plus
reinstatement, not merely full back wages. It is jurisprudentially settled, as I will
show presently, that when procedural due process is violated, the proceedings
in this case, the dismissal will be voided, and the parties will have to be returned
to theirstatus quo ante; that is, the employee will have to be given back his old job
and paid all benefits as if he were never dismissed.
(3) In any event, contrary to Mr. Justice Mendoza's premise, even the Labor Code
expressly grants the dismissed employee not only the right to be notified but also
the right to be heard.
In short, when an employee is dismissed without notice and hearing, the effect is an illegal
dismissal and the appropriate reliefs are reinstatement and full back wages. In ruling that the
dismissal should be upheld, the Court majority has virtually rendered nugatory the

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Page 24

Let me explain the foregoing by starting with a short background of our jurisprudence on the
right to due process.
Without Due Process, the Proceedings Are Illegal
In the past, this Court has untiringly reiterated that there are two essential requisites for an
employer's valid termination of an employee's services: (1) a just5 or authorized6 cause and
(2) due process.7 During the last ten years, the Court has been quite firm in this doctrinal
concept, but it has been less than consistent in declaring the illegality of a dismissal when
due process has not been observed. This is particularly noticeable in the relief granted.
Where there has been no just or authorized cause, the employee is awarded reinstatement
or separation pay, and back wages.8 If only the second requisite (due process) has not been
fulfilled, the employee, as earlier stated, is granted indemnity or damages amounting to a
measly P1,000 up to P10,000.9
I respectfully submit that illegal dismissal results not only from the absence of a legal cause
(enumerated in Arts. 282 to 284 of the Labor Code), but likewise from the failure to observe
due process. Indeed, many are the cases, labor or otherwise, in which acts violative of due
process are unequivocally voided or declared illegal by the Supreme Court. In Pepsi-Cola
Bottling Co. v. NLRC,10 the Court categorically ruled that the failure of management to comply
with the requirements of due process made its judgment of dismissal "void and non-existent."
This Court in People v. Bocar 11 emphatically made the following pronouncement, which has
been reiterated in several cases:12
The cardinal precept is that where there is a violation of basis constitutional rights,
courts are ousted of their jurisdiction. Thus the violation of the State's right to due
process raises a serious jurisdictional issue (Gumabon vs. Director of the Bureau
of Prisons, L-30026, 37 SCRA 420 [Jan. 30, 1971]) which cannot be glossed over
or disregarded at will. Where the denial of the fundamental right of due process is
apparent, a decision rendered in disregarded of the right is void for lack of
jurisdiction (Aducayen vs. Flores, L-30370, [May 25, 1973] 51 SCRA 78; Shell Co.
vs. Enage, L-30111-12, 49 SCRA 416 [Feb. 27, 1973]). Any judgment or decision
rendered notwithstanding such violation may be regarded as a "lawless thing,
which can be treated as an outlaw and slain at sight, or ignored wherever it exhibits
its head" (Aducayen vs. Flores, supra).
In the earlier case Bacus v. Ople,13 this Court also nullified the then labor minister's clearance
to terminate the employment of company workers who had supposedly staged an illegal

[SERRANO VS. NLRC

strike. The reason for this ruling was the denial of sufficient opportunity for them to present
their evidence and prove their case. The Court explained:14
A mere finding of the illegality of a strike should not be automatically followed by a
wholesale dismissal of the strikers from their employment. What is more, the
finding of the illegality of the strike by respondent Minister of Labor and
Employment is predicated on the evidence ascertained through an irregular
procedure conducted under the semblance of summary methods and speedy
disposition of labor disputes involving striking employees.
While it is true that administrative agencies exercising quasi-judicial functions are
free from the rigidities of procedure, it is equally well-settled in this jurisdiction that
avoidance of such technicalities of law or procedure in ascertaining objectively the
facts in each case should not, however, cause a denial of due process. The relative
freedom of the labor arbiter from the rigidities of procedure cannot be invoked to
evade what was clearly emphasized in the landmark case of Ang Tibay v. Court of
Industrial Relations that all administrative bodies cannot ignore or disregard the
fundamental and essential requirements of due process.
In the said case, the respondent company was ordered to reinstate the dismissed workers,
pending a hearing "giving them the opportunity to be heard and present their evidence."
In Philippine National Bank v. Apalisok,15 Primitivo Virtudazo, an employee of PNB, was
served a Memorandum stating the finding against him of a prima facie case for dishonesty
and violation of bank rules and regulations. He submitted his Answer denying the charges
and explaining his defenses.
Later, two personnel examiners of the bank conducted a fact-finding investigation. They
stressed to him that a formal investigation would follow, in which he could confront and
examine the witnesses for the bank, as well as present his own. What followed, however, was
a Memorandum notifying him that he had been found guilty of the charges and that he was
being dismissed. After several futile attempts to secure a copy of the Decision rendered
against him, he instituted against PNB a Complaint for illegal dismissal and prayed for
reinstatement and damages.
The trial court held that Virtudazo had been deprived of his rights to be formally investigated
and to cross-examine the witnesses. This Court sustained the trial court, stating resolutely:
"The proceedings having been conducted without according to Virtudazo the "cardinal
primary rights of due process" guaranteed to every party in an administrative or quasi-judicial
proceeding, said proceedings must be pronounced null and void."16
Also in Fabella v. Court of Appeals,17 this Court declared the dismissal of the schoolteachers
illegal, because the administrative body that heard the charges against them had not afforded
them their right to procedural due process. The proceedings were declared void, and the
orders for their dismissal set aside. We unqualifiedly reinstated the schoolteachers, to whom
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Page 25

GR NO. 117040 ]

we awarded all monetary benefits that had accrued to them during the period of their
unjustified suspension or dismissal.
In People v. San Diego,18 People v. Sola,19 People v. Dactrdao,20 People v. Calo
Jr.21 and People v. Burgos,22this Court similarly voided the trial court's grant of bail to the
accused upon a finding that the prosecution had been deprived of procedural due process.
In People v. Sevilleno,23 the Court noted that the trial judge "hardly satisfied the requisite
searching inquiry" due the accused when he pleaded guilty to the capital offense he had
been charged with. We thus concluded that "the accused was not properly accorded his
fundamental right to be informed of the precise nature of the accusation leveled against him."
Because of the nonobservance of "the fundamental requirements of fairness and due
process," the appealed Decision was annulled and set aside, and the case was remanded for
the proper arraignment and trial of the accused.
Recently, the Court vacated its earlier Decision24 in People v. Parazo25 upon realizing that the
accused "a deaf-mute, a mental retardate, whose mental age [was] only seven (7) years
and nine (9) months, and with low IQ of 60 only" had not been ably assisted by a sign
language expert during his arraignment and trial. CitingPeople v. Crisologo,26 we ruled that
the accused had been deprived of "a full and fair trial and a reasonable opportunity to defend
himself." He had in effect been denied his fundamental right to due process of law. Hence,
we set aside the trial proceedings and granted the accused a re-arraignment and a retrial.
Of late, we also set aside a Comelec Resolution disallowing the use by a candidate of a
certain nickname for the purpose of her election candidacy. The Resolution was issued
pursuant to a letter-petition which was passed upon by the Comelec without affording the
candidate the opportunity to explain her side and to counter the allegations in said letterpetition. In invalidating the said Resolution, we again underscored the necessity of the
observance of the twin requirements of notice and hearing before any decision can be validly
rendered in a case.27
Clearly deducible from our extant jurisprudence is that the denial of a person's fundamental
right to due process amounts to the illegality of the proceedings against him. Consequently,
he is brought back to his status quo ante, not merely awarded nominal damages or
indemnity.
Our labor force deserves no less. Indeed, the State recognizes it as its primary social
economic force,28 to which it is constitutionally mandated to afford full protection.29 Yet,
refusing to declare the illegality of dismissals without due process, we have continued to
impose upon the erring employer the simplistic penalty of paying indemnity only. Hence, I
submit that it is time for us to denounce these dismissals as null and void and to grant our
workers these proper reliefs: (1) the declaration that the termination or dismissal is illegal and
unconstitutional and (2) the reinstatement of the employee plus full back wages. The present
ruling of the Court is manifestly inconsistent with existing prudence which holds that

[SERRANO VS. NLRC

proceedings held without notice and hearing are null and void, since they amount to a
violation of due process, and therefore bring back the parties to the status quo ante.
Exception: When Due Process Is Impractical and Futile

penalized immediately without the trouble and the expense of trial? The absurdity of this
argument is too apparent to deserve further discourse.34
Worker's Right to Notice Is Constitutional, Not Merely Statutory

I am fully aware that in a long line of cases starting with Wenphil v. NLRC,30 the Court has
held: where there is just cause for the dismissal of an employee but the employer fails to
follow the requirements of procedural due process, the former is not entitled to back wages,
reinstatement (or separation pay in case reinstatement is no longer feasible) or other
benefits. Instead, the employee is granted an indemnity (or penalty or damages) ranging from
P1,00031 to as much as P10,000,32 depending on the circumstances of the case and the
gravity of the employer's omission. Since then, Wenphil has perfunctorily been applied in
most subsequent cases33 involving a violation of due process (although just cause has been
duly proven), without regard for the peculiar factual milieu of each case. Indemnity or
damages has become an easy substitute for due process.
Be it remembered, however, that the facts in Wenphil clearly showed the impracticality and
the futility of observing the procedure laid down by law and by the Constitution for terminating
employment. The employee involved therein appeared to have exhibited a violent temper and
caused trouble during office hours. In an altercation with a co-employee, he "slapped [the
latter's] cap, stepped on his foot and picked up the ice scooper and brandished it against
[him]." When summoned by the assistant manager, the employee "shouted and uttered
profane words" instead of giving an explanation. He was caught virtually in flagrante delicto in
the presence of many people. Under the circumstances action was necessary to preserve
order and discipline, as well as to safeguard the customers' confidence in the employer's
business a fastfood chain catering to the general public where courtesy is a prized virtue.
However, in most of the succeeding cases, including the present one before us in which the
petitioner was dismissed on the very day he was served notice, there were ample
opportunities for the employers to observe the requisites of due process. There were no
exigencies that called for immediate response. And yet, Wenphil was instantly invoked and
due process brushed aside.
I believe that the price that the Court has set for the infringement of the fundamental right to
due process is too insignificant, too niggardly, and sometimes even too late. I believe that
imposing a stiffer sanction is the only way to emphasize to employers the extreme
importance of the right to due process in our democratic system. Such right is too sacred to
be taken for granted or glossed over in a cavalier fashion. To hold otherwise, as by simply
imposing an indemnity or even "full back wages," is to allow the rich and powerful to virtually
purchase and to thereby stifle a constitutional right granted to the poor and marginalized.
It may be asked: If the employee is guilty anyway, what difference would it make if he is fired
without due process? By the same token, it may be asked: If in the end, after due hearing, a
criminal offender is found guilty anyway, what difference would it make if he is simply

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GR NO. 117040 ]

Page 26

According to the ponencia of Mr. Justice Mendoza, the "violation of the notice requirement
cannot be considered a denial of due process resulting in the nullity of the employee's
dismissal or lay-off." He argues that the due process clause of the Constitution may be used
against the government only. Since the Labor Code does not accord employees the right to a
hearing, ergo, he concludes, they do not have the right to due process.
I disagree. True, as pointed out by Mr. Justice Mendoza, traditional doctrine holds that
constitutional rights may be invoked only against the State. This is because in the past, only
the State was in a position to violate these rights, including the due process clause. However,
with the advent of liberalization, deregulation and privatization, the State tended to cede
some of its powers to the "market forces." Hence, corporate behemoths and even individuals
may now be sources of abuses and threats to human rights and liberties. I believe, therefore,
that such traditional doctrine should be modified to enable the judiciary to cope with these
new paradigms and to continue protecting the people from new forms of abuses.34-a
Indeed the employee is entitled to due process not because of the Labor code, but because
of the Constitution. Elementary is the doctrine that constitutional provisions are deemed
written into every statute, contract or undertaking. Worth noting is that "[o]ne's employment,
profession, trade or calling is a property right within the protection of the constitutional
guaranty of due process of law."35
In a long line of cases involving judicial, quasi-judicial and administrative proceedings, some
of which I summarized earlier, the Court has held that the twin requirements of notice and
hearing (or, at the very least, an opportunity to be heard) constitute the essential elements of
due process. In labor proceedings, both are theconditio sine qua non for a dismissal to be
validly effected.36 The perceptive Justice Irene Cortes has aptly stated: "One cannot go
without the other, for otherwise the termination would, in the eyes of the law, be illegal."37
Even the Labor Code Grants the Right to a Hearing
Besides, it is really inaccurate to say that the Labor Code grants "notice alone" to employees
being dismissed due to an authorized cause. Article 277 (b)38 of the said Code explicitly
provides that the termination of employment by the employer is "subject to the constitutional
right of workers to security of tenure[;] . . . without prejudice to the requirement of notice
under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination
and shall afford the latter ample opportunity to be heard . . . ." Significantly, the provision
requires the employer "to afford [the employee] ample opportunity to be heard" when the
termination is due to a "just and authorized cause." I submit that this provision on "ample

[SERRANO VS. NLRC

opportunity to be heard" applies to dismissals under Articles 282, 283 and 284 of the Labor
Code.
In addition, to say that the termination is "simply ineffectual" for failure to comply with the 30day written notice and, at the same time, to conclude that it has "legal effect" appears to be
contradictory. Ineffectual means "having no legal force."39 If a dismissal has no legal force or
effect, the consequence should be the reinstatement of the dismissed employee and the
grant of full back wages thereto, as provided by law not the latter only. Limiting the
consequence merely to the payment of full back wages has no legal or statutory basis. No
provision in the Labor Code or any other law authorizes such limitation of sanction, which Mr.
Justice Mendoza advocates.
The majority contends that it is not fair to reinstate the employee, because the employer
should not be forces to accommodate an unwanted worker. I believe however that it is not the
Court that forces the employer to rehire the worker. By violating the latter's constitutional right
to due process, the former brings this sanction upon itself. Is it unfair to imprison a criminal?
No! By violating the law, one brings the penal sanction upon oneself. There is nothing unfair
or unusual about this inevitable chain of cause and effect, of crime and punishment, of
violation and sanction.
Due Process Begins With Each of Us
To repeat, due process begins with the employer, not with the labor tribunals. An objective
reading of the Bill of Rights clearly shows that the due process protection is not limited to
government action alone. The Constitution does not say that the right cannot be claimed
against private individuals and entities. Thus, in PNB v. Apalisok, which I cited earlier, this
Court voided the proceedings conducted by petitioner bank because of its failure to observe
Apalisok's right to due process.
Truly, justice is dispensed not just by the courts and quasi-judicial bodies like public
respondent here. The administration of justice begins with each of us, in our everyday
dealings with one another and, as in this case, in the employers' affording their employees
the right to be heard. If we, as a people and as individuals, cannot or will not deign to act with
justice and render unto everyone his or her due in little, everyday things, can we honestly
hope and seriously expect to do so when monumental, life-or-death issues are at stake?
Unless each one is committed to a faithful observance of day-to-day fundamental rights, our
ideal of a just society can never be approximated, not to say attained.
In the final analysis, what is involved here is not simply the amount of monetary award,
whether insignificant or substantial; whether termed indemnity, penalty or "full back wages."
Neither is it merely a matter of respect for workers' rights or adequate protection of labor. The
bottom line is really the constitutionally granted right to due process. And due process is the
very essence of justice itself. Where the rule of law is the bedrock of our free society, justice
is its very lifeblood. Denial of due process is thus no less than a denial of justice itself.

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Page 27

GR NO. 117040 ]

In Addition to Reinstatement and Back Wages, Damages May Be Awarded


One last point. Justice Vitug argues in his Separate Opinion that the nonobservance of the
prescribed notices "can verily entitle the employee to an award of damages but . . . not to the
extent of rendering outrightly illegal that dismissal or lay-off . . . ." I, of course, disagree with
him insofar as he denies the illegality of the dismissal, because as I already explained, a
termination without due process is unconstitutional and illegal. But I do agree that, where the
employee proves the presence of facts showing liability for damages (moral, exemplary, etc.)
as provided under the Civil Code, the employee could be entitled to such award in addition to
reinstatement and back wages. For instance, where the illegal dismissal has caused the
employee "physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation and similar injury" due to the bad faith of
the employer, an award for moral damages would be proper, in addition to reinstatement and
back wages.
Summary
To conclude, I believe that even if there may be a just or an authorized cause for termination
but due process is absent, the dismissal proceedings must be declared null and void. The
dismissal should still be branded as illegal. Consequently, the employee must be reinstated
and given full back wages.
On the other hand, there is an exception. The employer can adequately prove that under the
peculiar circumstances of the case, there was no opportunity to comply with due process
requirements; or doing so would have been impractical or gravely adverse to the employer,
as when the employee is caught in flagrante delicto. Under any of these circumstances, the
dismissal will not be illegal and no award may properly be granted. Nevertheless, as a
measure of compassion, the employee may be given a nominal sum depending on the
circumstances, pursuant to Article 2221 of the Civil Code.
Depending on the facts of each case, damages as provided under applicable articles of the
Civil Code may additionally be awarded.
WHEREFORE, I vote to GRANT the petition. Ruben Serrano should be REINSTATED and
PAID FULL BACK WAGES from date of termination until actual reinstatement, plus all
benefits he would have received as if he were never dismissed.

Footnotes
1

TSN of testimony of petitioner, pp. 24, 76-78, April 24, 1992.

[SERRANO VS. NLRC

Petitioner's Position Paper, Annex C; Records, p. 19.

Id., Annex B; id., p. 21.

Records, p. 2.

GR NO. 117040 ]

(a) Serious misconduct or willful disobedience by the


employee of the lawful orders of his employer or
representative in connection with his work:
(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;

Decision, dated April 30, 1993, of Labor Arbiter Pablo C. Espiritu. Petition, Annex
A; Rollo, p. 30.
6

Id., pp. 35-36.

Petition, p. 10; id., p. 16.

21 SCRA 652 (1992).

Id., at 662.

(d) Commission of a crime or offense by the employee against


the person of his employer or any immediate member of his
family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
18

10

Bk. VI, Rule 1, of the Omnibus Rules and Regulations to Implement the Labor
Code provides in pertinent parts:
Sec. 2. Security of tenure . . . .

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).

(d) In all cases of termination of employment, the following


standards of due process shall be substantially observed.

12

For termination of employment based on just causes as


defined in Article 282 of the Labor Code:

Asian Alcohol Corporation v. National Labor Relations Commission, G.R. No.


131108, March 25, 1999.

(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.

13

TSN, p. 61, April 24, 1992.

14

CONST., ART. XIII, 3.

15

E.g., Aurora Land Projects Corporation v. NLRC., 266 SCRA 48 (1997).

16

248 SCRA 532 (1995).

17

This provision reads:


Termination by employer. An employer may terminate an employment
for any of the following causes.

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Page 28

(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, grounds have been
established to justify his termination.

[SERRANO VS. NLRC

For termination of employment as defined in Article 283 of the


Labor Code, the requirement of due process shall be deemed
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 . . .
xxx
19

Sebuguero v. NLRC, 248 SCRA at 547.

20

170 SCRA 69 (1989).

21

Id., at 75-76.

xxx

GR NO. 117040 ]

The factory or shop clerk shall be entitled, in such case, to the salary due
for said month.
29

Sec. 1. In cases of employment without a determine period, in a


commercial, industrial, or agricultural establishment or enterprises, 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.

xxx

The employer, upon whom no such notice was served in case of


termination of employment without just cause shall be entitled to
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.

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); Shoemart, Inc. v. NLRC, 176 SCRA 385 (1989) (dismissal for
abandonment of work).

R.A. No. 1052, as amended by R.A. No. 1787, provide:

30

Abe v. Foster Wheeler Corp. 110 Phil. 198 (1960); Malate Taxicab and Garage,
Inc. v. CIR, 99 Phil. 41 (1956).

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).
25

E.g., Reta v. NLRC, 232 SCRA 613 (1994) (dismissal for negligence and
insubordination).

31

71 SCRA 470, 480 (1976).

32

77 SCRA 321 (1977).

33

CIVIL CODE, ART. 19.

34
26

110 Phil. 113, 118 (1960).

27

138 SCRA 166, 170 (1985).

28

Art. 302 of the Code of Commerce provided:

Art. 1191: "The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him. . . . .

In cases in which no special time is fixed in the contracts of service, any


one of the parties thereto may dissolve it, advising the other party thereof
one month in advance.

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Page 29

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 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).

[SERRANO VS. NLRC

GR NO. 117040 ]

36

See Maximo v. Fabian, G.R. No. L-8015, December 23, 1955, (unpub.), 98 Phil.
989.
BELLOSILLO, J., separate opinion;
37

Emphasis added.

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 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 causes:

G.R. No. 130866 16 September 1998, 295 SCRA 494.

Exh. "B," Records, p. 21.

Rollo, p. 63.

Sebuguero v. National Labor Relations Commission, G.R. No. 115395, 27


September 1995, 248 SCRA 536; Almodiel v. National Labor Relations
Commission, G.R. No. 100641, 14 June 1993, 223 SCRA 341.
5

1. Serious insult by the employer of his representative on the


honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee
by the employer or his representative;
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.

De Ocampo v. National Labor Relations Commission, G.R. No. 101539, 4


September 1992, 213 SCRA 652, 662.
6

G.R. No. 73287, 18 May 1987, 149 SCRA 641.

Art. XIII, Sec. 3, 1987 Constitution, reiterated in Art. 3, Labor Code.

Art. 3, Labor Code.

Alcantara, Samson S., Reviewer in Labor and Social Legislation, 1993 Ed., p.
347.
10

39

210 SCRA 277 (1992).

40

Art, II, 18.

41

Id., 20.

42

Art. XIII, 3.

Art. 227, Labor Code.

11

Art. 283. 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 operation of the establishment or undertaking . . . by serving a written
notice on the worker and the Ministry of Labor and employment at least one (1)
month before the intended date thereof. . . .
12

Sec. 1. Art. III, 1987 Constitution.

13

Fernando, Enrique M., The Bill of Rights, 1972, ed., p. 71.

14

Id., p. 78.

43

Manila Trading and Supply Co. v. Zulueta, 69 Phil, 485, 487 (1940) (per Laurel,
J.) Accord, Villanueva v. NLRC, 293 SCRA 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).

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Page 30

[SERRANO VS. NLRC

15

Id., pp. 80-81.

16

Id., p. 94.

17

Id., p. 96.

18

19

20

21

22

23

GR NO. 117040 ]

PUNO, J., dissenting opinion;


1

Schwartz, Administrative Law, 1991 ed., p. 224 citing Painter v. Liverpool Gas
Co., 3 Ad. & E I. 433, 449, 11 Eng. Rep. 478 (K. B. 1836).
2

Kingsize Manufacturing Corp. vs. NLRC, 238 SCRA 349 (1994).

Ibid.

170 SCRA 69.

248 SCRA 532, 545 (1995).

Ibid., p. 546.

Op cit., p. 76.

Op cit., pp. 74-75.

Op cit., p. 76.

69 Phil. 635 (1940).


G.R. No. 117565, 18 November 1997, 282 SCRA 146-147.
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
G.R. No. 115394, 27 September 1995, 248 SCRA 535.
G.R. No. 122666, 19 June 1997, 274 SCRA 379.
G.R. No. 116473, 12 September 1997, 279 SCRA 45.

24

Shoemart, Inc. v. NLRC, G.R. No. 74229, 11 August 1989, 176 SCRA 385 The
employee was found to have abandoned his job but for failure to observe the notice
requirement, the employer was fined P1,000.00; Pacific Mills, Inc. v. Alonzo, G.R.
No. 78090, 26 July 1991, 199 SCRA 617 The employee violated company rules
and regulations but because of procedural lapse the company was fined
P1,000.00; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432 The
managerial employee breached the trust and confidence of his employer but for
failure to observe the notice requirement the company was fined P1,000.00;
Worldwide Papermills Inc. v. NLRC, G.R. No. 113081, 12 May 1995, 244 SCRA
125 The employee was found guilty of gross and habitual neglect of his duties
and of excessive absences. For failure to comply with the notice requirement the
company was fined P5,000.00; Reta v. NLRC, G.R. No. 112100, 27 May 1994, 232
SCRA 613 The employee was guilty of inefficiency negligence and
insubordination but the company was fined P10,000.00 for failure to observe the
notice requirement.1wphi1.nt

10

11

A fifth authorized cause is "disease of the employee" provided in Article 284 of


the Code.
12

26

ayah12

See Note 21.


Page 31

Sebuguero, supra.

13

International Hardware, Inc. v. National Labor Relations Commission, 176 SCRA


256, 259 (1989).
14

Sebuguero v. NLRC, supra.

15

Wiltshire File Co. v. NLRC, 193 SCRA 665, 676 (1991).

16

Balbalec v. NLRC, 251 SCRA 398, 406 (1995).

17

110 Phil 113 (1960).

25

Sebuguero v. NLRC, G.R. No. 115394, 27 September 1995, 248 SCRA 532
The employees were retrenched in order to prevent further losses but the company
failed to observe the notice requirement, hence was fined P2,000.00 for each
employee; Balbalec et al. v. NLRC, G.R. No. 107756, 19 December 1995, 251
SCRA 398 The employees were retrenched to prevent business losses but the
company was fined P5,000.00 for each employee for failure to observe the notice
requirement.

TSN, August 4, 1992, pp. 30, 37-38, 42-49.

[SERRANO VS. NLRC

18

Schwartz, op cit., pp. 273-274.

19

Supra.

GR NO. 117040 ]

24

The adjustment of the numbering of the Articles is due to the fact that there are
two (2) Article 238.
25

71 SCRA 470 (1976).

26

92 Phil. 843 (1953).

20

See also JGB and Associates, Inc. vs. NLRC, 254 SCRA 457 (1996); Philippine
Savings Bank v. NLRC, 261 SCRA 409 (1996); Pasudeco Inc. vs. NLRC, 272
SCRA 737 (1997); P.I. Manpower, Inc. vs. NLRC, 267 SCRA 451 (1997); Canura v.
NLRC, 279 SCRA 45 (1997); International Pharmaceuticals, Inc. vs. NLRC, 287
SCRA 213 (1998); Mabuhay Development Industries vs. NLRC, 288 SCRA 1
(1998), all ponencias of Mr. Justice Mendoza.
21

Art. 283. Termination by employer. An employer may terminate an


employment without a definite period for any of the following just causes:
(a) The closing or cessation of operation of the establishment or
enterprise, or where the employer has to reduce his work force by more
then one-half (1/2) due to serious business reverses, unless the closing
is for the purpose of circumventing the provisions of this chapter;

27

International Hardware, Inc. vs. NLRC, 176 SCRA 256 (1989); Sebuguero v.
NLRC, supra.
28

Concurring opinion in Ang Tibay et al. vs. Court of Industrial Relations, et al., 69
Phil. 635 (1940).
VITUG, J., separate (concurring and dissenting) opinion;
1

Art. 282. Termination by employer. An employer may terminate an employment


for any of the following causes:

(b) Serious misconduct or willful disobedience by the employee of the


orders of his employer or representative in connection with his work;

(a) Serious misconduct or willful disobedience by the employee of the


lawful orders of his employer or representative in connection with his
work;

(c) Gross and habitual neglect by the employee of his duties;


(b) Gross and habitual neglect by the employee of his duties;
(d) Fraud or willful breach by the employee of the trust reposed in him by
his employer or representative;

(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;

(e) Commission of a crime or offense by the employee against the


person of his employer or any immediate member of his family or
representative; and

(d) Commission of a crime or offense by the employee against the


person of his employer or any immediate member of his family or his
duly authorized representative; and

(f) Other causes analogous to the foregoing.


(e) Other causes analogous to the foregoing.
22

Art. 284. Reduction of personnel. The termination of employment of any


employee due to the installation of labor saving devices, redundancy, retrenchment
to prevent losses, and other similar causes, shall entitle the employee affected
thereby to separation pay . . . .
23

Art. 285. Disease as a ground for termination. An employer may terminate the
services of an employee who have been found to be suffering from any disease
and whose continued employment is prohibited by law or is prejudicial to his health
as well as to the health of his co-employees . . . .

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Page 32

Art. 283. 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 operation 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 Ministry 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 his one (1) month pay or to at least one (1)

[SERRANO VS. NLRC

GR NO. 117040 ]

month pay 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
(6) months shall be considered one (1) whole year.

(b) A hearing or conference during which the employee


concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present
his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.

Art. 284. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for
every year of service, whichever is greater, a fraction of at least six (6) months
being considered as one (1) whole year.
4

See San Miguel Corporation vs. NLRC, 255 SCRA 580. Section 7, Rule I, Book
VI, of the Omnibus Rules Implementing the Labor Code provides:
Sec. 7. Termination of employment by employer. The just causes for
terminating the services of an employee shall be those provided in Article
282 of the Code. The separation from work of an employee for a just
cause does not entitle him to the termination pay provided in Code,
without prejudice, however, to whatever rights, benefits and privileges he
may have under the applicable individual or collective bargaining
agreement with the employer or voluntary employer policy or practice.

In cases of termination based on authorized causes under Article 283 of


the Labor Code, Section 2, II, of the same Rule mandates that there be
"a written notice to the employee and the appropriate Regional Office of
the Department (of Labor and Employment) at least thirty days before
the effectivity of the termination," specifying the ground/s therefor.
7

See MGG Marine Services, Inc. vs. NLRC, 259 SCRA 664.

PANGANIBAN, J., separate opinion;


1

See Panganiban, Battles in the Supreme Court, 1998 ed., p. 155 et seq.

259 SCRA 665, July 29, 1996.

3
5

283 SCRA 242, December 15, 1997. In that case, I proposed to grant separation
pay in lieu of reinstatement because, by the employee's acts, he had made
reinstatement improper, a fact not present in the instant case.

See Footnote 2.

Sec. 1, Rule XXIII, of the Rules Implementing the Labor Code clearly states that
"(i)n cases of regular employment, the employer shall not terminate the services of
an employee except for just or authorized causes as provided by law, and subject
to the requirements of due process.
Sec. 2, I, of the same Rule provides that in case of termination of
employment based on just causes under Article 282 of the Labor Code,
is it required that there be
(a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side;

296 SCRA 283, September 28, 1998.

Art. 282 of the Labor Code provides:


Art. 282. Termination by employer. An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(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;

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Page 33

[SERRANO VS. NLRC

GR NO. 117040 ]

(d) Commission of a crime or offense by the employee against


the person of his employer or any immediate member of his
family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

10

210 SCRA 277, 286, June 23, 1992, per Gutierrez Jr., J.

11

138 SCRA 166, 170-171, August 16, 1985, per Makasiar, CJ.

Arts. 283 & 284 provide:


Art. 283. 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 or operation 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 his 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 closures or cessation of operations of
establishments or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1)
month pay or to as 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 one (1) whole year.
Art. 284. Disease as a ground for termination. An employer may
terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the health of
his co-employees: Provided, That he is paid separation pay equivalent to
at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater a fraction of at least six (6) months
being considered as one (1) whole year.

Alhambra Industries, Inc. v. NLRC, ibid.; Segismundo v. NLRC, 239 SCRA 167,
December 13, 1994; Sebuguero v. NLRC, 248 SCRA 532, September 27, 1995;
Wenphil Corp. v. NLRC, 170 SCRA 69, February 8, 1989.

12

Among those are Galman v. Sandiganbayan, 144 SCRA 43, 87, September 12,
1986; People v. Albano, 163 SCRA 511, July 26, 1988; Saldana v. Court of
Appeals, 190 SCRA 396, 403, October 11, 1990; Paulin v. Gimenez, 217 SCRA
386, 392, January 21, 1993.
13

132 SCRA 690, October 23, 1984, per Cuevas, J.

14

Ibid., p. 703.

15

199 SCRA 92, July 12, 1991, per Narvasa, J., (later CJ).

16

Ibid., p. 101.

17

282 SCRA 256, November 28, 1997.

18

26 SCRA 252, December 24, 1968.

19

103 SCRA 393, March 17, 1981.

20

170 SCRA 489, February 21, 1989.

21

186 SCRA 620, June 18, 1990.

22

200 SCRA 67, August 2, 1991.

23

G.R. No. 129058, March 29, 1999, per Bellosillo, J.

24

G.R. No, 121176, May 14, 1997.

25

July 8, 1999 Resolution on the Motion for Reconsideration, per Purisima, J.

26

150 SCRA 653, 656, June 17, 1987, per Padilla, J.

Mapalo v. NLRC, 233 SCRA 266, June 17, 1994; Ala Mode Garments, Inc. v.
NLRC, 268 SCRA 497, February 17, 1997; Pizza Hut/Progressive Development
Corp. v. NLRC, 252 SCRA 531, January 29, 1996; MGG Marine Services, Inc. v.
NLRC, 259 SCRA 664, July 29, 1996; Ranises v. NLRC, 262 SCRA 671,
September 24, 1996.
8

Conti v. NLRC, 271 SCRA 114, April 10, 1997; Alhambra Industries, Inc. v. NLRC,
238 SCRA 232, November 18, 1994; JBG and Associates, Inc. v. NLRC, 254 SCRA
457, March 7, 1996; Samillano v. NLRC, 265 SCRA 788, December 23, 1996.

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Page 34

[SERRANO VS. NLRC

27

Villasora v. Comelec, G.R. No. 133927, November 29, 1999.

28

18, Art II, 1987 Constitution.

GR NO. 117040 ]

36

RCPI v. NLRC, 223 SCRA 656, June 25, 1993; Samillano v. NLRC, 265 SCRA
788, December 23, 1996.
37

29

San Miguel Corporation v. NLRC, 173 SCRA 314, May 12, 1989.

3, Art. XIII, ibid.


Art. 277. . . .

30

170 SCRA 69, February 8, 1989, per Gancayco, J.


(b) Subject to the constitutional right of workers to security of tenure and
their right to be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement of notice
under Article 283 of this Code the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing
a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance
of his representative if he so desires in accordance with company rules
and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. 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. The burden
of proving that the termination was for a valid or authorized cause shall
rest on the employer. The Secretary of the Department of Labor and
Employment may suspend the effects of the termination pending
resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before
whom such dispute is pending that the termination may cause a serious
labor dispute or is in implementation of a mass lay-off.

31

In Wenphil Corp. v. NLRC, ibid.; Sampaguita Garments Corp. v. NLRC, 233


SCRA 260, June 17, 1994; Villarama v. NLRC, 236 SCRA 280, September 2, 1994;
Rubberworld (Phils.), Inc. v. NLRC, 183 SCRA 421, March 21, 1990; Kwikway
Engineering Works v. NLRC, 195 SCRA 526, March 22, 1991, and several other
cases.
32

In Reta v. NLRC, 232 SCRA 613, May 27, 1994; and Alhambra Industries, Inc. v.
NLRC, 238 SCRA 232, November 18, 1994.
33

Seahorse Maritime Corp. v. NLRC, 173 SCRA 390, May 15, 1989; Rubberworld
(Phils.), Inc. v. NLRC,supra; Cario v. NLRC, 185 SCRA 177, May 8, 1990; Great
Pacific Life Assurance Corp. v. NLRC, 187 SCRA 694, July 23, 1990; Cathedral
School of Technology v. NLRC, 214 SCRA 551, October 13, 1992; Aurelio v. NLRC,
221 SCRA 432, April 12, 1993; Sampaguita Garments Corp. v. NLRC, 233 SCRA
260, June 17, 1994; Villarama v. NLRC, supra.
34

See Concurring and Dissenting Opinion in Better Buildings, Inc. v. NLRC, 283
SCRA 242, 256, December 15, 1997.
39
34-a

See Panganiban, Leadership by Example, 1999 ed., pp. 60-61.

The New World Dictionary, Second College Ed (1974), defines effectual as


"having legal force; valid." Thus, ineffectual, being its opposite, means having no
legal force or not valid.

35

Wallem Maritime Services, Inc. v. NLRC, 263 SCRA 174, October 15, 1996; per
Romero, J. Bernas, The 1987 Constitution of the Republic of the Philippines: A
Commentary, 1996 ed., p. 101.

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Page 35

The Lawphil Project - Arellano Law Foundation

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