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Serrano vs. National Labor Relations Commission


*

G.R. No. 117040. January 27, 2000.

RUBEN SERRANO, petitioner, vs. NATIONAL LABOR


RELATIONS
COMMISSION
and
ISETANN
DEPARTMENT STORE, respondents.
Labor Law Dismissal Absent proof that management acted
in a malicious or arbitrary manner, the Court will not interfere
with the exercise of judgment by an employer.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.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.
Same Same Termination of petitioners services was for an
authorized cause, i.e., redundancy.That the phaseout of the
security section constituted a legitimate business decisionis 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.
Accordingly, we hold
________________
*

EN BANC.

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that the termination of petitioners services was for an authorized


cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor
Code, petitioner should be given separation pay at the rate of one
month pay for every year of service.
Same Same Due Process It is now settled that where the
dismissal of one employee is in fact for a just and valid cause and
is so proven to be but he is not accorded his right to due process x x
x the dismissal shall be upheld but the employer must be
sanctioned for noncompliance with the requirements of or for
failure to observe, due process.This is not the first time this
question has arisen. In Sebuguero v. NLRC, workers in a garment
factory were temporarily laid off due to the cancellation of orders
and a garment embargo. The Labor Arbiter found that the
workers had been illegally dismissed and ordered the company to
pay separation pay and backwages. The NLRC, on the other hand,
found that this was a case of retrenchment due to business losses
and ordered the payment of separation pay without backwages.
This Court sustained the NLRCs finding. However, as the
company did not comply with the 30day written notice in Art.
283 of the Labor Code, the Court ordered the employer to pay the
workers P2,000.00 each as indemnity. The decision followed the
ruling in several cases involving dismissals which, although
based on any of the just causes under Art. 282, were effected
without notice and hearing to the employee as required by the
implementing rules. As this Court said: It is now settled that
where the dismissal of one employee is in fact for a just and valid
cause and is so proven to be but he is not accorded his right to due
process, i.e., he was not furnished the twin requirements of notice
and opportunity to be heard, the dismissal shall be upheld but the
employer must be sanctioned for noncompliance with the
requirements of, or for failure to observe, due process.
Same Same Same Rule reversed a long standing policy that
the dismissal or termination is illegal if effected without notice to
the employee.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. In announcing the change, this Court
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said: x x x However, the petitioner must nevertheless be held to


account for failure to extend to private respondent his right to an
investigation before
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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.
Same Same Same The Due Process Clause of the
Constitution is a limitation on government powers.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.
Same Same Same Notice and hearing under the Due Process
Clause before the power of organized society are brought to bear
upon the individual.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
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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.
Same Same Same Not all notice requirements are
requirements of due process.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,
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to act with justice, give everyone his due, and observe honesty and
good faith toward ones fellowmen. Such is the notice requirement
in Arts. 282283. 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.
Same Same Same Employers failure to comply with the
notice requirement does not constitute a denial of due process but a
mere failure to observe a procedure for the termination of
employment which makes the termination of employment merely
ineffectual.We hold, therefore, that, with respect to Art. 283 of
the Labor Code, the employers failure to comply with the notice
requirement does not constitute a denial of due process but a
mere failure to observe a procedure for the termination of
employment which makes the termination of employment merely
ineffectual. It is similar to the failure to observe the provisions of
Art. 1592, in relation to Art. 1191, of the Civil Code 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. Consequently, a notice
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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.
Same Same Same Whether the employee 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.
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 30day notice requirement. Instead, he must be granted
separation pay in accordance with Art. 283. x x x If the employees
separation is without cause, instead of being given separation
pay, he should be reinstated. In either case, whether he is
reinstated or only granted
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separation pay, he should be paid full backwages if he has been


laid off without written notice at least 30 days in advance.

BELLOSILLO, J., Separate Opinion:


Labor Law Dismissal Just and authorized causes for
termination of employment by the employer.Article 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 latters representative in connection with the employees
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 any immediate member of his family or
his duly authorized representative and, (e) other causes
analogous to the foregoing. On the other hand, Arts. 283 and 284
of the same Code enumerate the socalled authorized causes: (a)
installation of labor saving devices (b) redundancy (c)
retrenchment to prevent losses (d) closure or cessation of the
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establishment or undertaking unless the closure or cessation is


for the purpose of circumventing the provisions of the law and, (e)
disease.
Same Same When is a position redundant.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 business, or dropping
of a particular product line or service activity previously
manufactured or undertaken by the enterprise.
Same Same Hiring of an independent security agency is a
business decision properly within the exercise of management
prerogative The wisdom or soundness of the management decision
is not subject to the discretionary review of the Labor Arbiter nor of
the National Labor Relations Commission.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
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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. Specifically, we held in International
Harvester Macleod, Inc. v. Intermediate Appellate Court 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.
Same Same Due Process Employer may terminate the
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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.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. 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.
Same Same Same 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.
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 30day
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.
Same Same Same Failure to send notice of termination to
Serrano, not tantamount to violation of his constitutional right to
due process but merely constitutes noncompliance with the
provision on notice under Article 283 of the Labor Code.We are
of the view that
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failure to send notice of termination to Serrano is not tantamount


to violation of his constitutional right to due process but merely
constitutes noncompliance with the provision on notice under
Art. 283 of the Labor Code.
Same Same Same Nonobservance of the notice requirement
is not denial of due process but merely a failure to comply with
legal obligation.From the foregoing, it is clear that the
observance of due process is demanded in governmental acts.
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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 30day notice requirement. Hence, nonobservance 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.
Same Same Same Court has consistently upheld in the past
as valid although irregular the dismissal of an employee for a just
or authorized cause but without notice.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.
Same Same Same Petitioners dismissal being improper and
irregular, he is entitled to separation pay and backwages the
amounts of which to be determined by the Labor Arbiter, plus P
10,000.00 as disturbance compensation.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 nonobservance of the
30day 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.
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Serrano vs. National Labor Relations Commission

PUNO, J., Dissenting Opinion:


Labor Law Dismissal To justify dismissal of an employee for
a just cause, employee must be given two kinds of notice by his
employer Pre and post notice requirements are not mere
technicalities but are requirements of due process.The long
established jurisprudence is that to justify dismissal of an
employee for a just cause, he must be given two kinds of notice by
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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 employers 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.
Same Same Four (4) authorized causes for termination of
employment under Article 283 of the Labor Code The right to
dismiss on authorized causes is not an absolute prerogative of an
employer.The case at bar specifically involves Article 283 of the
Labor Code which lays down four (4) authorized causes for
termination of employment. These authorized causes are: (1)
installation of laborsaving 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 dismissalone 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.
Same Same The burden should be on the employer to
establish and justify the authorized causes.The burden should
be on the employer to establish and justify these 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.
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VITUG, J., Separate Opinion:


Labor Law Dismissal An employee whose employment is
terminated for a just cause is not entitled to the payment of
separation benefits Separation pay would be due, when the layoff
is on account of an authorized cause.An employee whose
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employment is terminated for a just cause is not entitled to the


payment of separation benefits. Separation pay would be due,
however, when the layoff is on account of an authorized cause.
The amount of separation pay would depend on the ground for the
termination of employment. A layoff 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 onehalf (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.
Same Same Due process in the context of a termination of
employment would be twofold, i.e., substantive and procedural
due process.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.
Same Same Same Damages 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 corresponding
damages to the employee.Where there is just cause or an
authorized cause for the dismissal or layoff but the required
written notices therefor have not been properly observed by an
employer, it would neither be right and justifiable nor likely
intended by law to order either the reinstatement of the dismissed
or laidoff 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
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that dismissal or layoff and to accordingly be heard thereon. In


the termination of employment for an authorized cause (this
cause being attributable to the employer), the laidoff 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.

PANGANIBAN, J., Separate Opinion:


Labor Law Dismissal 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
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 employees 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.
Same Same Two essential requisites for an employers valid
termination of an employees services Where there has been no just
or authorized cause, the employee is awarded reinstatement or
separation pay and backwages.In the past, this Court has
untiringly reiterated that there are two essential requisites for an
employers valid termination of an employees services: (1) a just
or authorized cause and (2) due process. 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. 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.
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Serrano vs. National Labor Relations Commission

Same Same Illegal dismissal results not only from the


absence of a legal cause, but likewise from the failure to observe
due process.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 PepsiCola
Bottling Co. v. NLRC, the Court categorically ruled that the
failure of management to comply with the requirements of due
process made its judgment of dismissal void and nonexistent.
Same Same Due Process Denial of a persons fundamental
right to due process amounts to the illegality of the proceedings
against him.Clearly deducible from our extant jurisprudence is
that the denial of a persons 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.
Same Same Same The twin requirements of notice and
hearing constitute the essential elements of due process.In a long
line of cases involving judicial, quasijudicial 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 the
conditio sine qua non for a dismissal to be validly effected. 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.

SPECIAL CIVIL ACTION in the Supreme Court.


Certiorari.
The facts are stated in the opinion of the Court.
Buenaluz, Urbano Law Office for petitioner.
Romeo Batino for private respondent.
MENDOZA, J.:
This is a petition seeking review of the resolutions, dated
March 30, 1994 and August 26, 1994, of the National Labor
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Relations Commission (NLRC) which reversed the decision


of the Labor Arbiter and dismissed petitioner Ruben
Serranos complaint for illegal dismissal and denied his
motion for reconsideration. The facts are as follows:
Petitioner was hired by private respondent Isetann
Department Store as a security checker to apprehend
1
shoplifters and prevent pilferage of merchandise. 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
2
private respondent. Sometime in 1991, as a costcutting
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
3
following memorandum:
October 11, 1991
MR. RUBEN SERRANO
PRESENT
Dear Mr. Serrano,
In view of the retrenchment program of the
company, we hereby reiterate our verbal notice to you
of your termination as Security Section Head effecive
October 11, 1991. Please secure your clearance from
this office.
Very truly yours,
[Sgd.] TERESITA A. VILLANUEVA
Human Resources Division Manager
The loss of his employment prompted petitioner to file a
complaint on December 3, 1991 for illegal dismissal, illegal
layoff, unfair labor practice, underpayment
of wages, and
4
nonpayment of salary and overtime pay.
________________
1

TSN of testimony of petitioner, pp. 24, 7678, April 24, 1992.

Petitioners Position Paper, Annex C Records, p. 19.

Id., AnnexB id., p. 21.

Records, p. 2.
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The parties were required to submit their position papers,


on the basis
of which the Labor Arbiter defined the issues
5
as follows:
Whether or not there is a valid ground for the dismissal of the
complainant.
Whether or not complainant is entitled to his monetary claims
for underpayment of wages, nonpayment of salaries, 13th month
pay for 1991 and overtime pay.
Whether or not Respondent is guilty of unfair labor practice.

Thereafter, the case was heard. On April 30, 1993, the


Labor Arbiter rendered a decision finding petitioner to
have been illegally dismissed. He ruled that private
respondent failed to establish that it had retrenched its
security section to prevent or minimize losses to its
business that private respondent failed to accord due
process to petitioner that private respondent failed to use
reasonable standards in selecting employees whose
employment would be terminated that private respondent
had not shown that petitioner and other employees in the
security section were so inefficient so as to justify their
replacement by a security agency, or that costsaving
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 petitioners dismissal, private respondent
employed a safety and security supervisor with duties and
functions similar to those of petitioner.
6
Accordingly, the Labor Arbiter ordered:
WHEREFORE, above premises considered, judgment is hereby
decreed:
(a) Finding the dismissal of the complainant to be illegal and
concomitantly, Respondent is ordered to pay complainant
full backwages without qualification or deduction in the
amount of P74,740.00
________________
5

Decision, dated April 30, 1993 of Labor Arbiter Pablo C. Espiritu. Petition,

Annex A Rollo, p. 30.


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6

Id., pp. 3536.

458

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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% attorneys fees based on
the total judgment award of P79,959.12.
All other claims of the complainant whether monetary or
otherwise is hereby dismissed for lack of merit.
SO ORDERED.

Private respondent appealed to the NLRC which, in its


resolution of March 30, 1994, reversed the decision of the
Labor Arbiter and ordered petitioner to be given separation
pay equivalent to one month pay for every year of service,
unpaid salary, and proportionate 13th month pay.
Petitioner filed a motion for reconsideration, but his motion
was denied.
The NLRC held that the phaseout of private
respondents security section and the hiring of an
independent security agency constituted an exercise by
private respondent of [a] legitimate business decision
whose wisdom we do not intend to inquire into and for
which we cannot substitute our judgment that the
distinction made by the Labor Arbiter between
retrenchment and the employment of costsaving
devices under Art. 283 of the Labor Code was insignificant
because the company official who wrote the dismissal letter
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apparently used the term retrenchment in its plain and


ordinary sense: to layoff or remove from ones job,
regardless of the reason therefor that the rule of
reasonable criteria in the selection of the employees to be
retrenched did not apply because all positions in the
security section had been abolished and that the
appointment of a safety and security su
459

VOL. 323, JANUARY 27, 2000

459

Serrano vs. National Labor Relations Commission

pervisor referred to by petitioner to prove bad faith on


private respondents part was of no moment because the
position had long been in existence and was separate from
petitioners position as head of the Security Checkers
Section.
Hence this petition. Petitioner raises the following issue:
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY
BY THE PRIVATE RESPONDENT TO REPLACE ITS
CURRENT SECURITY SECTION A VALID GROUND FOR THE
DISMISSAL
OF THE EMPLOYEES CLASSED UNDER THE
7
LATTER?

Petitioner contends that abolition of private respondents


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
Petitioners contention has no merit. Art. 283 provides:
Closure of establishment and reduction of personnel.The employer
may also terminate the employment of any employee due to the
installation of laborsaving 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
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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 onehalf (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.
________________
7

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


460

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission
8

In De Ocampo v. National Labor Relations Commission,


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
companys 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, 9 the court will not interfere with
the exercise of such prerogative.

In Asian Alcohol
Corporation v. National Labor Relations
10
Commission, the Court likewise upheld the termination of
employment of water pump tenders and their replacement
by independent contractors. It ruled that an employers
good faith in implementing a redundancy program is not
necessarily put in doubt by the availment of the services of
an independent contractor to replace the services of the
terminated employees to promote economy and efficiency.
Indeed, as we pointed out in another case, the
[management of a company] cannot be denied the faculty
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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
11
decides. Consequently, absent proof that management
acted in a malicious or arbitrary manner, the
________________
8

213 SCRA 652 (1992).

Id., at 662.

10

G.R. No. 131108, March 25, 1999, 305 SCRA 416.

11

Shell Oil Workers Union v. Shell Company of the Philippines, Ltd.,

39 SCRA 276, 284285 (1971).


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VOL. 323, JANUARY 27, 2000

461

Serrano vs. National Labor Relations Commission

Court will12not interfere with the exercise of judgment by an


employer.
In the case at bar, we have only the bare assertion of
petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the
security checkers of the wage increases provided 13in the
collective bargaining agreement approved in 1990. Such
an assertion is not a sufficient basis for concluding that the
termination of petitioners employment was not a bona fide
decision of management to obtain reasonable return from
its investment, which is14 a right guaranteed to employers
under the Constitution. Indeed, that the phaseout 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
15
from such finding.
Accordingly, we hold that the
termination of petitioners
services was for an authorized cause, i.e., redundancy.
Hence, pursuant to Art. 283 of the Labor Code, petitioner
should be given separation pay at the rate of one month
pay for every year of service.
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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
________________
12

Asian Alcohol Corporation v. National Labor Relations Commission,

G.R. No. 131108, March 25, 1999, 305 SCRA 416.


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).
462

462

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

same day, his services were terminated. He was thus


denied his right to be given written notice before the
termination of his employment, and the question is the
appropriate sanction for the violation of petitioners right.
To be sure, this is not the first
time this question has
16
arisen. In Sebuguero v. NLRC, workers in a garment
factory were temporarily laid off due to the cancellation of
orders and a garment embargo. The Labor Arbiter found
that the workers had been illegally dismissed and ordered
the company to pay separation pay and backwages. The
NLRC, on the other hand, found that this was a case of
retrenchment due to business losses and ordered the
payment of separation pay without backwages. This Court
sustained the NLRCs finding. However, as the company
did not comply with the 30day written notice in Art. 283 of
the Labor Code, the Court ordered the employer to pay the
workers P2,000.00 each as indemnity.
The decision followed the ruling in several cases
involving dismissals which, 17although based on any of the
just causes under Art. 282, were effected without notice
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and hearing to
________________
16
17

248 SCRA 532 (1995).


This provision reads: 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
(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.
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463

Serrano vs. National Labor Relations Commission


18

the employee as required by the implementing rules. As


this Court said: It is now settled that where the dismissal
of one employee is in fact for a just and valid cause and is
so proven to be but he is not accorded his right to due
process, i.e., he was not furnished the twin requirements of
notice and opportunity to be heard, the dismissal shall be
upheld but the employer must be sanctioned for non
compliance with the19 requirements of, or for failure to
observe, due process.
________________
18

Bk. VI, Rule 1, of the Omnibus Rules and Regulations to Implement

the Labor Code provides in pertinent parts:


Section 2. Security of tenure . . . .
(d) In all cases of termination of employment, the following standards
of due process shall be substantially observed:
For termination of employment based on just causes as defined in
Article 282 of the Labor Code:
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(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.
(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.
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. . . .
19

Sebuguero v. NLRC, 248 SCRA at 547.


464

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 shift20 in
doctrine took place in 1989 in Wenphil Corp.
v. NLRC. In
21
announcing the change, this Court said:
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.
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...
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.
________________
20

170 SCRA 69 (1989).

21

Id., at 7576.
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465

Serrano vs. National Labor Relations Commission

The fines imposed for violations


of the notice
requirement
22
23
24
have varied25from P1,000.00 to P2,000.00 to P5,000.00 to
P10,000.00.
Need for Reexamining the Wenphil Doctrine
Today, we once again consider the question of appropriate
sanctions for violations of the notice requirement in light of
our experience during the last decade or so with the
Wenphil doctrine. The number of cases involving dismissals
without the requisite notice to the employee, although
effected for just or authorized causes, suggests that the
imposition of fine for violation of the notice requirement
has not been effective in deterring violations of the notice
requirement. Justice Panganiban finds the monetary
sanctions too insignificant, too niggardly, and sometimes
even too late. On the other hand, Justice Puno says there
has in effect been fostered a policy of dismiss now, pay
later which moneyed employers find more convenient to
comply with than the requirement to serve a 30day
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written notice (in the case of termination of employment for


an authorized cause under Arts. 283284) or to give notice
and hearing (in the case of dismissals for just causes under
Art. 282).
For this reason, they regard any dismissal or layoff
without the requisite notice to be null and void even though
there are just or authorized causes for such dismissal or
layoff. Conse
_______________
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).
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).
466

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

quently, in their view, the employee concerned should be


reinstated and paid backwages.
Validity of Petitioners Layoff Not Affected by Lack of
Notice
We agree with our esteemed colleagues, Justices Puno and
Panganiban, that we should rethink the sanction of fine for
an employers disregard of the notice requirement. We do
not agree, however, that disregard of this requirement by
an employer renders the dismissal or termination of
employment null and void. Such a stance is actually a
reversion to the discredited preWenphil 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
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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 latters family, or
when the employer is precisely retrenching in order to
prevent losses.
The need is for a rule which, while recognizing the
employees right to notice before he is dismissed or laid off,
at the same time acknowledges the right of the employer to
dismiss for any of the just causes enumerated in Art. 282 or
to terminate employment for any of the authorized causes
mentioned in Arts. 283284. 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,
467

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467

Serrano vs. National Labor Relations Commission

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. 283284, 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.
Justice Puno argues that an employers failure to comply
with the notice requirement constitutes a denial of the
employees right to due process. Prescinding from this
premise, he quotes the statement of Chief Justice
26

Concepcion in Vda. de Cuaycong v. Vda. de Sengbengco

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Concepcion in Vda. de Cuaycong v. Vda. de Sengbengco


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. 283284, is a nullity.
Hence, even if just or authorized causes exist, the employee
should be reinstated with full back pay. On the other hand,
Justice
Panganiban quotes from the statement in People v.
27
Bocar that [w]here the denial of the fundamental right of
due process is apparent, a decision rendered in disregard of
that right is void for lack of jurisdiction.
Violation of Notice Requirement Not a Denial of Due
Process
The cases cited by both Justice Puno and Panganiban refer,
however, to the denial due process by the State, which is
not
________________
26

110 Phil. 113, 118 (1960).

27

138 SCRA 166, 170 (1985).

468

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

the case here. There are three reasons why, on the other
hand, violation by the employer of the notice requirement
cannot be considered a denial of due process resulting in
the nullity of the employees dismissal or layoff.
The first is that the Due Process Clause of the
Constitution is a limitation on governmental powers. It
does not apply to the exercise of private power, such as the
termination of employment under the labor Code. This is
plain from the text of Art. III, 1 of the Constitution, viz.:
No person shall be deprived of life, liberty, or property
without due process of law . . . . The reason is simple: Only
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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
30day 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 togive
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
469

VOL. 323, JANUARY 27, 2000

469

Serrano vs. National Labor Relations Commission

complaint with the regional branch of the National Labor


Relations Commission.
Indeed, to contend that the notice requirement in the
Labor Code is an aspect of due process is to overlook the
fact that Art. 283 had its origin in Art. 302 of the Spanish
Code of Commerce of 1882 which gave either party to the
employeremployee 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
28
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month. This provision was repealed by Art. 2270 of the

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28

month. 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 onehalf month for every year
29
of service.
_______________
28

ART. 302 of the Code of Commerce provided:

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


one of the parties thereto may dissolve it, advising the other party thereof
one month in advance.
The factory or shop clerk shall be entitled, in such case, to the salary due
for said month.
29

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

SECTION 1. In cases of employment without a definite period, in a


commercial, industrial, or agricultural establishment or enterprise, the
employer or the employee may terminate at any time the employment
with just cause, or without just cause in the case of an employee by
serving written notice on the employer at least one month in advance, or
in the case of an employer, by serving such notice to the employee at least
one month in advance or onehalf month for every year of service of the
employee, whichever is longer, a fraction of at least months being
considered as one whole year.
The employer, upon whom no such notice was served in case of
termination of employment without just cause may hold the employee
liable for damages.
470

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 30cause, no notice
was required to be given to the employee. It was only on
September 4, 1981 that notice was required to be given
even where the dismissal or termination of an employee
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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 cannot be considered a requirement of the Due Process
Clause is that the employer cannot really be expected to be
entirely an impartial judge of his own cause. This is also
the case in termination of employment for a just cause
under Art. 282 (i.e., serious misconduct or willful
disobedience by the employee of the lawful orders of the
employer, gross and habitual neglect of duties, fraud or
willful breach of trust of the employer, commission of crime
against the employer or the latters immediate family or
duly authorized representatives, or other analogous cases).
_________________
The employee, 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.
30

Abe v. Foster Wheeler Corp., 110 Phil. 198 (1960) Malate Taxicab

and Garage, Inc. v. CIR, 99 Phil. 41 (1956)


471

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471

Serrano vs. National Labor Relations Commission

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,

31

in Batangas Laguna Tayabas Bus Co. v. Court of Appeals,

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31

in Batangas Laguna Tayabas Bus Co. v. Court of Appeals,


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 wef are dealing with
dismissals and layoffs by employers alone, without the
intervention of any grievance machinery. Accordingly
in
32
Montemayor v. Araneta University Foundation, although a
professor was dismissed without a hearing by his
university, his dismissal for having made homosexual
advances on a student was sustained, it appearing that in
the NLRC, the employee was fully heard in his defense.
Lack of Notice Only Makes Termination Ineffectual
Not all notice requirements are requirements of due
process. Some are simply part of a procedure to be followed
before a right granted to a party can be exercised. Others
are simply an application 33of the Justinian precept,
embodied in the Civil Code, to act with justice, give
everyone his due, and observe honesty and good faith
toward ones fellowmen. Such is the notice requirement in
Arts. 282283. 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
________________
31

71 SCRA 470, 480 (1976).

32

77 SCRA 321 (1977).

33

CIVIL CODE, ART. 19.


472

472

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

should have received were it not for the termination of his


employment without prior notice. If warranted, nominal
and moral damages may also be awarded.
We hold, therefore, that, with respect to Art. 283 of the
Labor Code, the employers failure to comply with the
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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.
34
1191, of the Civil Code 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
35
notice of rescission by means of a notarial demand.
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
36
rescission has been given.
Indeed, under the Labor Code, only the absence of a just
cause for the termination of employment can make the dis
________________
34

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 . . . .
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).


36

See Maximo v. Fabian, G.R. No. L8015, December 23, 1955,

(unpub.), 98 Phil. 989.


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Serrano vs. National Labor Relations Commission

missal of an employee illegal. This is clear from Art. 279


which provides:
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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
37
reinstatement.

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 38resignation void
but only in making him liable for damages.
_________________
37

Emphasis added.

38

ART. 285 reads:

Termination by employee.(a) An employee may terminate without just cause the


employeeemployer 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:
1. Serious insult by the employer or his representative on the honor and
person of the employee
2. Inhuman and unbearable treatment accorded the employee by the
employer or his representative

474

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Serrano vs. National Labor Relations Commission

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This disparity in legal treatment, which would result from


the adoption of the theory of the minority cannot simply be
explained by invoking President Ramon Magsaysays motto
that he who has less in life should have more in law.
That would be a misapplication of this noble phrase
originally from Professor Thomas Reed Powell of the
Harvard Law School.
Justice
Panganiban cites PepsiCola Bottling Co. v.
39
NLRC, 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 PepsiCola 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 illegalitywas
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.
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
________________
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.
39

210 SCRA 277 (1992).


475

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475

Serrano vs. National Labor Relations Commission

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
40
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
41
needed investment. The Constitution
bids the State to
42
afford full protection to labor. But it is equally true that
the law, in protecting the rights of the laborer, authorizes
43
neither oppression nor selfdestruction 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.
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 30day 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 laborsaving
devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1)
month pay or to at least one month for every year of service,
whichever is higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month
pay or at least onehalf (1/2)
________________
40

Art. II, 18.

41

Id., 20.

42

Art. XIII, 3.

43

Manila Trading and Supply Co. v. Zulueta, 69 Phil. 485, 487 (1940) (per

Laurel, J.) Accord, Villanueva v. NLRC, 293 SCRA 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
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Palmolive Philippines, Inc. v. Ople, 163 SCRA 323 (1988).

476

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 employees 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, GonzagaReyes and De Leon, Jr.,
JJ., concur.
Bellosillo, J., Please see separate opinion.
Puno, J., Please see dissenting opinion.
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Vitug, J., Please see Separate Opinion.


Panganiban, J., Please see Separate Opinion.
477

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477

Serrano vs. National Labor Relations Commission

YnaresSantiago, J., I join the dissenting opinion of


J. Puno.

SEPARATE OPINION
BELLOSILLO, J.:
We point out at the outset that this Petition for Review,
which was filed before the promulgation of St. Martin
1
Funeral Home v. National Labor Relations Commission, 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 certiorari
under 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 11 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
2
to secure clearance from their office. Petitioner Serrano
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filed with the NLRC Adjudication Office a complaint for


illegal dismissal and underpayment of wages
________________
1

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

Exh. B,Records, p. 21.


478

478

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 attorneys 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.
3
Upon denial of his motion for reconsideration Serrano
filed the instant petition imputing grave abuse of discretion
on the part of the NLRC.
Article 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 latters
representative in connection with the employees 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 any
immediate member of his family or his duly authorized
representative and, (e) other causes analogous to the
foregoing.
On the other hand, Arts. 283 and 284 of the same Code
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enumerate the socalled authorized causes: (a) installation


of labor saving devices (b) redundancy (c) 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.
________________
3

Rollo, p. 63.
479

VOL. 323, JANUARY 27, 2000

479

Serrano vs. National Labor Relations Commission

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 onehalf 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
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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 business, or
dropping of a particular product line or service activity
4
previously manufactured or undertaken by the enterprise.
________________
4

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.
480

480

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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
5
Court will step in. Specifically, we held in International6
Harvester Macleod, Inc. v. Intermediate Appellate Court
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.
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.
Since the 7 State affords protection to labor under the
Constitution, workers enjoy security of tenure and may
only be removed or terminated upon valid 8 reason and
through strict observance of proper procedure. Article 279
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of the Labor Code specifically provides


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
________________
5

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.

481

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481

Serrano vs. National Labor Relations Commission

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 9not authorize the oppression or destruction
of his employer.
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
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regulations
promulgated pursuant to guidelines set by the
10
DOLE.
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
11
clearly violated the provisions of Art. 283 on notice. It did
not send a written
_________________
9

Alcantara, Samson S., Reviewer in Labor and Social Legislation, 1993

Ed., p. 347.
10

Art. 277, 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 x x x 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 x x x x.
482

482

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 30day 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 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
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means of employment and ease the impact of the loss of his


job and, necessarily, his income.
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
noncompliance with the provision on notice under Art. 283
of the Labor Code.
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 12any person be denied the equal protection of the
laws. Specifically, due process is a requirement for the
validity of any governmental action amounting to
deprivation of
________________
12

Sec. 1, Art. III, 1987 Constitution.


483

VOL. 323, JANUARY 27, 2000

483

Serrano vs. National Labor Relations Commission


13

liberty or property. 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 sought to
be achieved14 by officialdom as well as the means for their
realization.
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
rulemaking 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 the executive department or the judicial branch.
Procedural due process likewise may aid those appearing
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before Congressional committees


if the proceedings are
15
arbitrary or otherwise unfair.
Procedural due process demands that governmental
acts, more specifically so in the
case of the judiciary, be not
16
infected with arbitrariness. The same disinterestedness
required of men on the bench must characterize the
actuations of public officials, not excluding the President,
17
to satisfy the requirements of procedural due process.
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.
________________
13

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

14

Id., p. 78.

15

Id., pp. 8081.

16

Id., p. 94.

17

Id., p. 96.
484

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Serrano vs. National Labor Relations Commission

The cardinal primary requirements of due process in


administrative proceedings were18 highlighted in Ang Tibay
v. Court of Industrial Relations: (a) the right to a hearing,
which includes the right to present ones 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
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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.
19
Also in Lumiqued v. Exevea it was held
In administrative proceedings, the essence of due process is
simply the opportunity to explain ones 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 30day 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
________________
18

69 Phil. 635 (1940).

19

G.R. No. 117565, 18 November 1997, 282 SCRA 146147.


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Serrano vs. National Labor Relations Commission

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 30day notice
requirement. However, while Serrano was not given the
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required 30day 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
20
Corporation v. NLRC thus
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 x x x x 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
________________
20

G.R. No. 80587, 8 February 1989, 170 SCRA 69.

486

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the second requirement. Thus, it must be imposed a sanction for


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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 (italics
supplied).
21

In Sebuguero v. National Labor Relations Commission 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
noncompliance 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
22
Nath v. National Labor Relations Commission 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 employers 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.
Be that as it may, private respondent can dismiss petitioner for
just cause x x x x We affirm the finding of the public respondent
that
________________
21

G.R. No. 115394, 27 September 1995, 248 SCRA 535.

22

G.R. No. 122666, 19 June 1997, 274 SCRA 379.

487

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Serrano vs. National Labor Relations Commission

there was just cause to dismiss petitioner, a probationary employee


(italics supplied).
23

Also, in Camua v. National Labor Relations Commission


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, x x x Accordingly, in accordance with
the wellsettled mle, private respondents should pay petitioner
P1,000.00 as indemnity for violation of his right to due process x x
x x Although an employee validly 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 (italics supplied).

Nonobservance 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
24
ranged from P1,000.00 to P10,000.00. For authorized
cause, as dis
________________
23

G.R. No. 116473, 12 September 1997, 279 SCRA 45.

24

Shoemart, Inc. v. NLRC, G.R. No. 74229, 11 August 1989, 176 SCRA

385The 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 617The
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 432The 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 125The 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 613The employee was guilty of
inefficiency, negligence and insubordination but the company was fined
P10,000.00 for failure to observe the notice requirement.
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tinguished from just 25 cause, the award ranged from


P2,000.00 to P5,000.00.
This Court has also sanctioned the ruling that a
dismissal for a just or authorized cause but without
observance of the mandatory 30day 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 30day
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 noncompliance with the 30day 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 nonobservance
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
________________
25

Sebuguero v. NLRC, G.R. No. 115394, 27 September 1995, 248 SCRA

532The 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
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December 1995, 251 SCRA 398The 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.
489

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489

Serrano vs. National Labor Relations Commission

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 shown that
his employer has committed the infractionof not complying
with the 30day written notice requirementto 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 30day 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
30day 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 coworkers and
the security and serenity of the workplace, the employee
may be suspended in the meantime until he is heard with
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proper observance of the 30day 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 distur
490

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

bance compensation of P5,000.00 or P10,000.00 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 nonobservance of the 30day 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 socalled
disturbance
compensation.Since Wenphil Corporation
26
v. NLRC 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,
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
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employees.
Ideed, from the time the employee is dismissed from the
service without noticein this case since 11 October 1991to
the termination of his case, assuming it results in his rein
________________
26

See Note 21.


491

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Serrano vs. National Labor Relations Commission

statement, 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 in distress for
want of any means of livelihood? Petitioner Serrano has
been deprived of his only source of incomehis
employmentfor 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 usuryto which he must have succumbedduring 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?
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 30day 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
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payment of the back wages and separation pay due


petitioner.
EXCEPT as herein stated, I concur with the majority.
DISSENTING OPINION
PUNO, J.:
The rule of audi alteram partemhear the other side, is
the essence of procedural due process. That a party is not
to
492

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

suffer in person or in purse without an opportunity of being


heardis
the 1 oldest
established
principle
in
administrative law. Today, the majority is ruling 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.
A review of our law on dismissal is in order.
I. DISMISSAL DUE TO JUST CAUSE
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
terminate an employment for any of the following causes:

may

(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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Commission of the crime or offense by the employee


(d) 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.
2

The long established jurisprudence 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
________________
1

Schwartz, Administrative Law, 1991 ed., p. 224 citing Painter v.

Liverpool Gas Co., 3 Ad. & EL 433, 449, 11 Eng. Rep. 478 (K.B. 1836).
2

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


493

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493

Serrano vs. National Labor Relations Commission

dismissal is sought, and (2) subsequent notice to inform


him of the employers decision to dismiss him. Similarly,
deeply ingrained is our ruling that these pre and post
notice requirements are not3 mere technicalities but are
requirements of due process.
Then came the case
of Wenphil Corporation vs. NLRC
4
and Mallare in 1989. 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 coemployee,
Job Barrameda, about tending the Salad Bar. He slapped
Barramedas 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 to see the former.
It took a security guard to bring Mallare to Hermosura.
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Instead of making an explanation, Mallare shouted profane


words against Hermosura. He declared that their
altercation should only be settled by him and Barrameda.
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.
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 or
grave misconduct and
________________
3

Ibid.

170 SCRA 69.


494

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Serrano vs. National Labor Relations Commission

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
Mallares 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
nonappearance 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
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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 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.
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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 cannot 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 ben
established. With such finding, it would be arbitrary and unfair to
order his reinstatement with back wages.

Three members 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
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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 predismissal 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 saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of opera
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tion 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
laborsaving 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 reverses, the separation pay shall be equivalent to one
(1) month pay or at least onehalf (1/2) month pay for every year
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of service, whichever is higher. A fraction of at least six (6)


months shall be considered one (1) whole year.
5

In Sebuguero v. NLRC, 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
6
adequately supported by fact. 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
cause for retrenchment, that is the existence of imminent or
actual serious or substantial losses, was
________________
5

248 SCRA 532, 545 (1995).

Ibid., p. 546.

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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.
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 he upheld but the employer must be sanctioned for
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noncompliance 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. vs. 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 and Alhambra
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 employers 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.

III.
REEXAMINATION
OF
THE
DOCTRINE: FROM BAD TO WORSE

WENPHIL

The minority of the Court has asked for a reexamination 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.
498

498

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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
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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 employee was
dismissed without any notice by the employer. Given these
facts, we ruled that the predismissal 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 employee 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 of each case
and the 7gravity of the omission committed by the
employer.
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
8
before judgment is rendered The Court then satisfied
itself with this bare minimum when
________________
7

Op cit., p. 76.

Op cit, pp. 7475.


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Serrano vs. National Labor Relations Commission

it held that the post dismissal hearing before the Labor


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Arbiter was enough compliance with the 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 predismissal 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 Wenphils
violation of the predismissal 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 9must be for just or
authorized cause and after due process.
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 predismissal 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
of 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 preWenphil rule where a reasonless
violation of the predismissal 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
________________
9

Op cit., p. 76.
500

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Serrano vs. National Labor Relations Commission

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 predismissal
notice requirement does cot 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 employees 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 groundretrenchment. No details were given
about the employers sudden retrenchment program.
Indeed, the employee was dismissed on the day he received
the notice in violation of the 30day requirement. He was
given no time, no opportunity to ascer
501

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tain 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 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 petitioneremployee, 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 10was the hiring of an independent
security agency, thus:
x x x
Atty. Perdigon:

You said that your company decided to phase out the


position of security checkers xxx

Ms. Ramos:

Yes Sir.

Q: And instead hired the services of a security agency?


A:

Yes, sir.

xxx

_______________
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10

TSN, August 4, 1992, pp. 30, 3738, 4249.


502

502

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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?
A:

It was abolished in 1991.

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

Q: x x x 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 x x x a security agency is a labor


saving device?
Atty. Salonga:
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Already answered, your Honor.

Obviously, Ms. Ramos could not even distinguish between


retrenchment and redundancy. The Labor Arbiter thus
ruled that petitioners dismissal was illegal. The NLRC,
however, reversed. The majority affirmed the NLRC ruling
that ISETANNs phase out of its security employees is a
legitimate
503

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503

Serrano vs. National Labor Relations Commission

business decision, one that is necessary to obtain


reasonable 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 ISETANNs
investment has been threatened to justify its socalled
business decision as legitimate.
SECOND. The majority holds that the need is for a rule
which, while recognizing the employees right to notice
before he is dismissed or laid off, at the same time
acknowledges the right of the employer to dismiss for any
of the just causes enumerated in Art. 282 or to terminate
employment for any of the authorized causes mentioned in
Arts. 283284. 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
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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
504

504

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

that the majority would restore the balance of rights


between an employee and an employer by giving back the
employees 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 employers
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 predismissal notice is difficult to understand.
It is the linchpin of an employees 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
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between an employee and an employer for 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 employees right to predismissal notice will
negate the right of an employer to dismiss for cause. The
preWenphil 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.
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505

Serrano vs. National Labor Relations Commission

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
11
causes for termination of employment. These authorized
causes are: (1) installation of laborsaving 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 dismissalone 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
12
of an employer. We explained that the notice to the DOLE
is necessary to enable
it to ascertain the truth of the cause
13
of termination. 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
14
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facts. For this reason too, we have held that notice to the

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14

facts. 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 of15 the
retrenchment or redundancy before the DOLE.
In
addition, this notice requirement16 gives an employee a little
time to adjust to his joblessness.
________________
11

A fifth authorized cause is disease of the employee provided in

Article 284 of the Code.


12
13

Sebuguero, supra.
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).


506

506

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 predismissal 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 employers 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 overall 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
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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 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 employees right to
security of tenure guaranteed in our Constitution calls for a
predismissal notice and hearing rather than a post facto
dismissal hearing. The need for an employee to be heard
before
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Serrano vs. National Labor Relations Commission

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 petitioners 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
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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 DOLES
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
508

508

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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.
FOURTH. The majority has inflicted a most serious cut
on the job security of employees. The majority did nothing
to restore the preWenphil right of employees but even
expanded the right to dismiss of employer by holding that
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the predismissal 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 Justice17 Roberto Concepcion emphasized
in Cuaycong v. Senbengco that
_______________
17

110 Phil. 113 (1960).


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x x x 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.
18
Per Schwartz, a known authority in the field, viz.:
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Private Due Process


As already stressed, procedural due process has proved of an
increasingly encroaching nature. Since Goldberg v. Kelly, the
right to be heard has been extended to an everwidening 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 prejudgement 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 states 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.
________________
18

Schwartz, op cit., pp. 273274.

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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
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may not be summarily evicted from a building operated by a


private corporation where the corporation enjoyed substantial
tax exemption and had obtained an FHAinsured 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 due
process. Hence, it could not terminate tenancies without notice
and an opportunity to be heard.

But we need not rely on foreign jurisprudence to repudiate


the new majority ruling that due process restricts
government alone and not private employers like
ISETTAN. 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
19
Manufacturing Corporation vs. NLRC, this Court, thru
Mr. Justice Mendoza, categorically ruled:
x x x (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:
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.
________________
19

Supra.

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The notice required, x x x, 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
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of due process to which every employee is entitled to insure that


the employers prerogative to dismiss or lay off is not abused or
exercised in an 20arbitrary manner. This rule is clear and
unequivocal x x x.

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
articlesection 3 of Article XIII entitled Social Justice and
Human Rights. Thus, a 2020 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 RA 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,
________________
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.
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1974 or six months after its promulgation. The right of the


employer to 21terminate
the employment
was embodied in
22
23
Articles 283, 284, and 285. Batas Pambansa Blg. 130
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which was enacted on August 21, 1981 amended Articles


283 and 284, which
today are cited as Arts. 282 and 283 of
24
the Labor Code.
_______________
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 than onehalf (1/2) due to serious business reverses, unless
the closing is for the purpose of circumventing the provisions of
this chapter
(b) Serious misconduct or willful disobedience by the employee of the
orders of his employer or representative in connection with his
work
(c) 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
(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
(f) 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 x x x.
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 coemployees x x
x.
24

The acljustment of the numbering of the Articles is due to the fact

that there are two (2) Article 238.


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On March 2, 1989, Republic Act No. 6715 was approved


which amended, among others, Article 277 of the Labor
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Code. Presently, Article 277(b) reads:


Art. 277. Miscellaneous provisions.(a) x x x.
(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, x x x.

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


Article 277. Miscellaneous provisions.(a) x x x.
(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 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 997 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
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particular acts or omissions constituting the grounds for his


dismissal, x x x
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 predismissal notice
requirement is part of due process. In
Batangas Laguna
25
Tayabas Bus. Co. vs. Court of Appeals, 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. x x x. 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:
________________
25

71 SCRA 470 (1976).


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

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,
26
Inc., private respondentemployer filed with the Court of
Industrial Relations (CIR) a petition seeking authority to
lay off fortyfour 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 be property within the
meaning of constitutional guarantees. That is his means of
livelihood. He cannot be deprived of his labor or work
without due process of law. x x x (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.
I wish also to stress that the 1999 Rules and
Regulations implementing the Labor Code categorically
characterize this predismissal notice requirement as a
requirement of due process. Rule XXIII provides:
________________
26

92 Phil. 843 (1953).


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

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 gound or grounds for termination.

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 employees
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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 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 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 att 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 ones
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
518
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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 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 of 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
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an employeremployee relationship as similar to a sale


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of commodity is an archaic abomination. An employer


employee relationship involves the common good and labor
cannot be treated as a mere commodity. As wellstated by
former Governor General Leonard Wood in his inaugural
message before the 6th Philippine Legislature on October
27, 1922, it 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 employers


failure to give notice before dismissing an employee x x x
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
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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 dis
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missing 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
employeeemployer 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 employeeunder Article 285,
the failure of an employee to prenotify in writing his
employer that he is terminating their relationship does not
make his walkout void under its new ruling, the failure of
an employer to prenotify 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 proemployee 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 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
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economic progress. In the exercise of their wisdom, the


founding fathers of our 1935, 1973 and 1987 Constitutions
as well as the members of 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
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of this policy is President Magsaysays 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 selfdestruction 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.
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With due respect, I cannot understand this total


turnaround of the majority on the issue of the unjustness of
lack of predismissal 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
522

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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. 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
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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 counterbalancing 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
27
define and regulate legitimate labor organizations.

This ingrained social philosophy favoring employees has


now been weakened by the new ruling of the majority. For
while
________________
27

Concurring opinion in Ang Tibay, et al. vs. Court of Industrial

Relations, et al., 69 Phil. 635 (1940).


523

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Serrano vs. National Labor Relations Commission

this Court has always considered lack of predismissal


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 noncompliance
therewith is penalized by denying said employer his right
to dismiss. In fine, if the employers right to dismiss an
employee is forfeited for his failure to comply with this
simple, reasonable duty to prenotify 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 his consequence
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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 monied employers and is a mockery of the right of
employees to social justice. There is no way to justify this
proemployer 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
524

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SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

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 employees
right to due process against the power of the peso of
employers.
To an employee, a job is everything. Its loss involves
terrible repercussionsstoppage 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.
SEPARATE (Concurring and Dissenting) OPINION
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VITUG, J.:
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
1
these are the just causes under Article 282 and the
authorized
_______________
1

ART. 282. Termination by employerAn 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 trustreposed in him
by his employer or duly authorized representative
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or
his duly authorized representative and
(e) Other causes analogous to the foregoing.
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525

Serrano vs. National Labor Relations Commission


2

causes under Article 283 and Article 284. An employee


whose employment is terminated for a just 4cause is not
entitled to the payment of separation benefits.
_______________
2

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
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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 closure or
cessation of operations of establishment or undetaking not due to serious
business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least onehalf (1/2) month pay for
every year of service, whichever is higher. A fraction of at least (6) months
shall be considered one (1) whole year.
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 coemployees:
Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to onehalf (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

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Serrano vs. National Labor Relations Commission

Separation pay would be due, however, when the layoff is


on account of an authorized cause. The amount of
separation pay would depend on the ground for the
termination of employment. A layoff 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
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onehalf (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 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 meanigful 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
________________
agreement with the employer or voluntary employer policy or practice.
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Serrano vs. National Labor Relations Commission

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
5
6
Labor Code and its implementing rules that could,
thereby, albeit unintendedly and without meaning to,
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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
_______________
5

See Foonote 2.
Section 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.
Section 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
(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.
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 east thirty days before the
effectivity of the termination, specifying the ground/s therefor.
528

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Serrano vs. National Labor Relations Commission

be accurate to consider, I believe, an infraction thereof to


ipsofacto raise a problem of due process. The mere failure
of notice of the dismissal or layoff 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
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in order to justify that termination. In assailing the


dismissal or layoff, 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 nonobservance
by an employer, therefore, can verily entitle the employee
to an award of damages but, to repeat, not to the extent of
rendering outrightly illegal that dismissal or layoff
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 22212223 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.
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
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Serrano vs. National Labor Relations Commission

damages to be awarded, the circumstances of each case


should thus be taken into account, such as, to exemplify,
the
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(a) length of service or employment of the dismissed


employee
(b) his salary or compensation at the time of the
termination of employment visavis 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 7of the holder of that right.
In fine
A. A just cause or an authorized cause and a written
notice of dismissal or layoff, as the case may be,
are required concurrently but not really equipollent
in their consequence, in terminating an employer
employee relationship.
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 layoff is
attended by bad faith or if the employer acted in
wanton or oppressive manner, moral and exemplary
damages might also be awarded. 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 justly due. The same rule
applies
________________
7

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

530

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to breaches of contract where the defendant acted fraudulently or


in bad faith.
ART. 2232. In contracts and quasicontracts, 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 employeremployee 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 layoff but the required written notices
therefor have not been properly observed by an employer, it
would neither be right and justifiable nor likely intended
by law to order either the reinstatement of the dismissed or
laidoff 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 layoff and to accordingly be heard thereon. In
the termination of employment for an authorized cause
(this cause being attributable to the employer), the laidoff
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 layoff 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 onehalf month, pay for every year of
service, and (b) that petitioner is entitled to his unpaid
wages, proportionate 13thmonth 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.
531
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Serrano vs. National Labor Relations Commission

SEPARATE OPINION
PANGANIBAN, J.:
In the case before us, the Court is unanimous in at least
two findings: (1) petitioners 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 30day 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.
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.
Reexamination of the Indemnity Only Rule
I am grateful that the Court has decided to reexamine our
tenyear doctrine on this question and has at least, in the
process, increased the monetary award that should go to
the dismissed employeefrom 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 1 who were dismissed for cause but
without due process. I formally
________________
1

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

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registered reservations on2 this rule in my ponencia in MGG


Marine Services v. NLRC and gave it full
discussion in my
3
Dissents
in Better Buildings v. NLRC and in Del Val v.
4
NLRC.
Without in any way diminishing my appreciation of this
reexamination and of the more financiallygenerous
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 employers failure to comply with the notice
requirement does not constitute a denial of due process but
a mere failure to observe a procedure for the termination of
employment which makes the termination of employment
merely ineffectual. In short, he believes that (1) the 30day
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 proceedingsin this case, the
dismissalwill be voided, and the parties will have to
be returned to their status 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 Mendozas
premise, even the Labor Code expressly grants the
dis
________________
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2

259 SCRA 665, July 29, 1996.

283 SCRA 242, December 15, 1997. In that case, I proposed to grant

separation pay in lieu of reinstatement because, by the employees acts,


he had made reinstatement improper, a fact not present in the instant
case.
4

296 SCRA 283, September 28, 1998.


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533

Serrano vs. National Labor Relations Commission

missed employee not only the right to be notified but


alsothe 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 employees
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.
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 employers valid
5
termination
of
an
employees
services:
(1)
a
just
or
6
authorized cause
________________
5

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
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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
(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.
6

Arts. 283 & 284 provide:


534

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Serrano vs. National Labor Relations Commission
7

and (2) due process. 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
_______________
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 at least onehalf (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
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is prejudicial to his health as well as to the health of his coemployees:


Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to onehalf (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.
7

Mapal 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.
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535

Serrano vs. National Labor Relations Commission


8

separation pay, and back wages. If only the second


requisite (due process) has not been fulfilled, the employee,
as earlier stated, is granted indemnity 9 or damages
amounting to a measly P1,000 up to P10,000.
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
10
Court. In PepsiCola Bottling Co. v. NLRC, the Court
categorically ruled that the failure of management to
comply with the requirements of due process made its
judgment of dismissal void and nonexistent.
11
This Court in People v. Bocar emphatically made the
following pronouncement,
which has been reiterated in
12
several cases:
The cardinal precepts is that where there is a violation of basic
constitutional rights, courts are ousted of their jurisdiction. Thus
the violation of the States right to due process raises a serious
jurisdictional issue (Gumabon vs. Director of the Bureau of
Prisons, L30026, 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 disregard of that right is void for lack of jurisdiction (Aducayen
vs. Flores, L30370,
_______________
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Conti v. NLRC, 271 SCRA 114 April 10, 1997 Alhambra Industries, Inc. v.

NLRC, 238 SCRA 232, November 18, 1994 JGB and Associates, Inc. v. NLRC, 254
SCRA 457, March 7, 1996 Samillano v. NLRC, 265 SCRA 788, December 23,
1996.
9

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.
10

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

11

138 SCRA 166, 170171, August 16, 1985, per Makasiar, CJ.

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, 211 SCRA 386,
392, January 21, 1993.

536

536

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

[May 25, 1973] 51 SCRA 78 Shell Co. vs. Enage, L3011112, 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).
13

In the earlier case Bacus v. Ople, this court also nullified


the then labor ministers clearance to terminate the
employment of company workers who had supposedly
staged an illegal strike. The reason for this ruling was the
denial of sufficient opportunity for them to present
their
14
evidence and prove their case. The Court explained:
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
quasijudicial functions are free from the rigidities of procedure, it
is equally wellsettled in this jurisdiction that avoidance of such
technicalities of law or procedure in ascertaining objectively the
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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
15
evidence. In Philippine National Bank v. Apalisok,
Primitivo Virtudazo, an employee of PNB, was served a
Memorandum stating the finding against him of a prima
facie case for dishonesty
________________
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).
537

VOL. 323, JANUARY 27, 2000

537

Serrano vs. National Labor Relations Commission

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
factfinding 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 crossexamine
the witnesses. This Court sustained the trial court, stating
resolutely: The proceedings having been conducted
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without according to Virtudazo the cardinal primary rights


of due process guaranteed to every party in an
administrative
or
quasijudicial
proceeding,
said
16
proceedings must be pronounced null and
void.
17
Also in Fabella v. Court of Appeals, 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 we awarded all
monetary benefits that had accrued to them during the
period of their unjustified suspension
or dismissal.
18
19
In People
v.
San
Diego,
People
v.
Sola,
People
v.
20
21
22
Dacudao, People v. Calo, Jr. and People v. Burgos, this
Court
_________________
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.


538

538

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

similarly voided the trial courts grant of bail to the accused


upon a finding that the prosecution had been deprived of
procedural due process. 23
In People v. Sevilleno 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
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accused.
24
Recently, the25 Court vacated its earlier Decision in
People v. Parazo upon realizing that the accuseda deaf
mute, a mental retardate, whose mental age [was] only
seven (7) years and nine (9) months, and with low IQ of 60
onlyhad not been ably assisted by a sign language expert
during his
arraignment and trial. Citing People v.
26
Crisologo, 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 rearraignment 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 letterpetition 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
________________
23

GR No. 129058, March 29, 1999, 305 SCRA 29, per Bellosillo, J.

24

GR No. 121176, May 14, 1997, 272 SCRA 512.

25

July 8, 1999 Resolution on the Motion for Reconsideration, per

Purisima, J.
26

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


539

VOL. 323, JANUARY 27, 2000

539

Serrano vs. National Labor Relations Commission

necessity of the observance of the twin requirements of


notice and hearing
before any decision can be validly
27
rendered in a case.
Clearly deducible from our extant jurisprudence is that
the denial of a persons 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, 28the State
recognizes it as its primary social economic force, to which
29
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29

it is constitutionally mandated to afford full protection.


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 jurisprudence which holds that proceedings held
without notice and bearing 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
I am fully aware that
in a long line of cases starting with
30
Wenphil v. NLRC, 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
________________
27

Villarosa v. Comelec, GR No. 133927, November 29, 1999, 319 SCRA

470.
28

18, Art. II, 1987 Constitution.

29

3, Art. XIII, ibid.

30

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


540

540

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

benefits. Instead, the employee is granted an


indemnity (or
31
penalty or
damages) ranging from P1,000 to as much as
32
P10,000, depending on the circumstances of the case and
the gravity of the employers omission. Since then, Wenphil
33
has perfunctorily been applied in most subsequent cases
involving a violation of due process (although just cause
has been duly proven), without regard for the peculiar
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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 coemployee, he slapped [the latters]
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 obtaining, swift
action was necessary to preserve order and discipline, as
well as to safeguard the customers confidence in the
employers busi
________________
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 Carino 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.
541

VOL. 323, JANUARY 27, 2000

541

Serrano vs. National Labor Relations Commission

nessa fastfood chain catering to the general public where


courtesy is a prized virtue.
However, in most of the succeeding cases, including the
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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 penalized
immediately without the trouble and the expense of trial?
The absurdity of 34
this argument is too apparent to deserve
further discourse.
Workers Right to Notice Is Constitutional Not Merely
Statutory
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
employees
________________
34

See Concurring and Dissenting Opinion in Better Buildings, Inc. v.

NLRC, 283 SCRA 242, 256, December 15, 1997.


542

542

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

dismissal or layoff. He argues that the due process clause


of the Constitution may be used against the government
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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 34a
to continue protecting the people
from new forms of abuses.
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]nes employment,
profession, trade or calling is a property right within the
protection
of the constitutional, guaranty of due process of
35
law.
In a long line of cases involving judicial, quasijudicial
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 the conditio
sine qua non for a
________________
34a
35

See Panganiban, Leadership by Example, 1999 ed., pp. 6061.

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.
543

VOL. 323, JANUARY 27, 2000

543

Serrano vs. National Labor Relations Commission


36

dismissal to be validly effected.

The perceptive Justice

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Irene Cortes has aptly stated: One cannot go without the


other, for otherwise37 the termination would, in the eyes of
the law, be illegal.
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
38
an authorized cause. Article 277 (b) of the said Code
explicitly provides that the termination of employment by
the employer
_______________
36

RCPI v. NLRC, 223 SCRA 656, June 25, 1993 Samillano v. NLRC,

265 SCRA 788, December 23, 1996.


37

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

38

Art. 277. x x x

(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 layoff.
544

544

SUPREME COURT REPORTS ANNOTATED


Serrano vs. National Labor Relations Commission

is subject to constitutional right of workers to security of


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tenure[] x x x 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 x x x. 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 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 be39 contradictory. Ineffectual means
having no legal force. 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 lawnot 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 forced 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 latters 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.
________________
39

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.
545

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Serrano vs. National Labor Relations Commission


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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
Apalisoks right to due process.
Truly, justice is dispensed not just by the courts and
quasijudicial 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, lifeor
death issues are at stake? Unless each one is committed to
a faithful observance of daytoday 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.
546

546

SUPREME COURT REPORTS ANNOTATED


Serrano, vs. National Labor Relations Commission

In Addition to Reinstatement and Back Wages, Damages


May Be Awarded
One last point. Justice Vitug argues in his Separate
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Opinion that the nonobservance of the prescribed notices


can verily entitle the employee to an award of damages
but x x x not to the extent of rendering outrightly illegal
that dismissal or layoff x x x. 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 em
547

VOL. 323, JANUARY 27, 2000

547

People vs. Borromeo

ployee may be given a nominal sum depending on the


circumstances, pursuant to Article 2221 of the Civil Code.
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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.
Petition granted, resolution modified. Case remanded to
Labor Arbiter for computation of separation pay, backwages
and other monetary awards.
Note.The requisites before an employee can be validly
dismissed are: a) the employee must be afforded due
process and b) the dismissal must be for any of the causes
specified in Article 282 of the Labor Code. (Mirano vs.
National Labor Relations Commission, 270 SCRA 96
[1997])
o0o

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