RUBEN SERRANO vs.
NATIONAL LABOR RELATIONS In the Wenphil doctrine, this was reversed; the said rule was
COMMISSION and ISETANN DEPARTMENT STORE
FACTS:
Ruben Serrano was the head of the security checkers section of
Isetann Department Store. On October 11, 1991, the management
sent him a letter immediately terminating his services as security
section head, effective on the same day. The reason given by the
management was retrenchment; they had opted to hire an
independent security agency as a cost-cutting measure. Serrano
filed a complaint for illegal dismissal, illegal layoff,
underpayment of wages and nonpayment of salary and OT pay
with the LA.
The LA rendered a decision in favor of Serrano. It stated that
Isetann failed to establish that it had retrenched its security
division, that the petitioner was not accorded due process. The
NLRC on the other hand reversed the LA but ordered Isetann to
pay separation pay equivalent to one month per year of service,
unpaid salary, et al. It held that the phase-out of the security
section was a valid exercise of management prerogative on the
part of Isetann.
ISSUE: Whether the petitioners dismissal was valid? Valid, but
ineffectual (without legal effect) payment of backwages, separation pay
and other monetary claims
RATIO:
No. The Court held that the dismissal was due to an authorized
cause under Art. 283 of the Labor Code, i.e. redundancy.
However, while an authorized cause exists, Isetann failed to
follow the procedural requirement provided by Art. 283 of LC. For
termination due to authorized causes, the employer must give a
written notice of termination to the employee concerned and to
the DOLE at least 30 days prior to its effectivity. This Isetann
failed to do.
The question now arises as to whether the failure of Isetann to
comply with the procedural requirements renders the dismissal
invalid, or, in the event that it is valid, what the appropriate
sanction or penalty must be meted out.
Prior to the doctrine laid down in the decision rendered in
Wenphil Corp. NLRC in 1989, the termination of an employee,
even for just cause but without following the requisite procedure,
renders such dismissal illegal, and therefore null and void.
unjust to employers. Instead, the dismissal was held to be still
valid but the employer was sanctioned by way of the payment of
indemnity. The amount of indemnity will be depended on the
circumstances of each case, taking into account the gravity of the
offense committed by the employer.
Now, the Court once again examines the Wenphil doctrine. Puno
says that the effect of the Wenphil doctrine was such that there
has been a dismiss now, pay later policy where the employers
were able to circumvent the procedural requisites of termination,
which is more convenient than the compliance with the 30-day
notice. Panganiban said that the monetary sanctions were too
insignificant, niggardly, sometimes even late. Both justices are
of the opinion that the deprivation of due process which
must be accorded to the employee renders the dismissal
illegal.
Puno quoted that Legislative, Executive and Judicial
proceedings that deny due process do so under the pain of
nullity. Panganiban stated that such denial of due process
renders decisions and proceedings void for lack of
jurisdiction.
The present ruling of the Court held that the dismissal of
the employee is merely ineffectual, not void. The dismissal
was upheld but it is ineffectual. The sanction provided
was the payment of backwages from the time of dismissal
up to the decision of the court finding just or authorized
cause. This was thought to balance the interests of both
parties, recognizing the employees right to notice and at
the same time the right of the employer to dismiss for any
of the just and authorized causes.
The Court also responded to the arguments of Justices Puno and
Panganiban by stating that the violation in the procedural
requirement of termination is not a denial of the fundamental
right to due process. This is because of the ff reasons:
1) The due process clause is a limitation on
governmental powers, inapplicable to the exercise
of private power, such as in this case. The
provision No person shall be deprived of life,
liberty and property without due process of law
pertains only to the State, as only it has the
authority to do the same.
2) The purpose of the notice and hearing under the
Due process clause is to provide an opportunity for
 the employee to be heard before the power of the
organized society is brought upon the individual.
Under Art. 283, however, the purpose is to give
him time to prepare for the eventual loss of his job
and for DOLE to determine whether economic
causes exist to justify termination. It is not to give
opportunity to be heard there is no charge
against the employee under Art. 283

3) The employer cannot be expected to be an

impartial judge of his own cause.

4) Not all notice requirements are requisites of due

process. Some are simply a part of a procedure to
be followed before a right granted to party can be
exercised; others are an application of the
Justinian precept. Such is the case here. The
failure of the employer to observe a procedure for
the termination of employment which makes the
termination of employment merely ineffectual.

5) Art. 279 of the LC provides that only dismissal

without just or authorized cause renders such dismissal
illegal. To consider termination without observing
procedural reqts as also ID is to add another ground for
ID, thereby amending Art. 279.; Further, there is a
disparity in legal treatment, as employees who resign
without giving due notice are only liable for damages; it
does not make their resignation void.

In this case, the separation pay was a distinct award from the
payment of backwages as a way of penalty.
Petition was denied.