Serrano Vs NLRC 1

9/9/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 323
VOL. 323, JANUARY 27, 2000 445

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 petitioner’s services was for an authorized
cause, i.e., redundancy.—That the phase-out of the security section
constituted a “legitimate business decision”—is a factual finding of an
administrative agency which must be accorded respect and even finality by
this Court since nothing can be found in the record which fairly detracts
from such finding. Accordingly, we hold
________________
* EN BANC.
446
446 SUPREME COURT REPORTS ANNOTATED
that the termination of petitioner’s services was for an authorized cause, i.e.,
redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner
should be given separation pay at the rate of one month pay for every year
of service.
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 non-compliance 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 NLRC’s finding. However,
as the company did not comply with the 30-day written notice in Art. 283 of
the Labor Code, the Court ordered the employer to pay the workers
P2,000.00 each as indemnity. The decision followed the ruling in several
cases involving dismiss-als 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
http://www.central.com.ph/sfsreader/session/00000165bd803d79a155cd07003600fb002c009e/t/?o=False 1/65
that where the dismissal of one employee is in fact for a just and valid cause
and is so proven to be but he is not accorded his right to due process, i.e., he
was not furnished the twin requirements of notice and opportunity to be
heard, the dismissal shall be upheld but the employer must be sanctioned for
non-compliance with the requirements of, or for failure to observe, due
process.”—
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 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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VOL. 323, JANUARY 27, 2000 447
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 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,
448
to act with justice, give everyone his due, and observe honesty and good
faith toward one’s fellowmen. Such is the notice requirement in Arts. 282-
283. The consequence of the failure either of the employer or the employee
to live up to this precept is to make him liable in damages, not to render his
act (dismissal or resignation, as the case may be) void. The measure of
damages is the amount of wages the employee should have received were it
not for the termination of his employment without prior notice. If warranted,
nominal and moral damages may also be awarded.
Same; Same; Same; Employer’s failure to comply with the notice
requirement does not constitute a denial of due process but a mere failure to
observe a procedure for the termination of employment which makes the
termination of employment merely ineffectual.—We hold, therefore, that,
with respect to Art. 283 of the Labor Code, the employer’s failure to comply
with the notice requirement does not constitute a denial of due process but a
mere failure to observe a procedure for the termination of employment
which makes the termination of employment merely ineffectual. It is similar
to the failure to observe the provisions of Art. 1592, in relation to Art. 1191,
of the Civil 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 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 30-day notice requirement. Instead, he must be
granted separation pay in accordance with Art. 283. x x x If the employee’s
separation is without cause, instead of being given separation pay, he should
be reinstated. In either case, whether he is reinstated or only granted
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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 latter’s representative in connection with the
employee’s work; (b) gross and habitual neglect by the employee of his
duties; (c) fraud or willful breach by the employee of the trust reposed in
him by his employer or his duly authorized representative; (d) commission
of a crime or offense by the employee against the person of his employer or
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 so-called 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.
Same; Same; When is a position redundant.—In the instant case, we
agree with the NLRC that the dismissal of petitioner Ser-rano 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
450
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 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 30-day mandatory requirement. Although the cause for discharge
may be just or authorized, it is still necessary and obligatory to afford the
employee concerned his basic and more important right to notice. Serrano
was not given the chance to make the needed adjustments brought about by
his termination.
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 non-compliance with the provision on notice under
Article 283 of the Labor Code.—We are of the view that
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VOL. 323, JANUARY 27, 2000 451
failure to send notice of termination to Serrano is not tantamount to

violation of his constitutional right to due process but merely constitutes
non-compliance with the provision on notice under Art. 283 of the Labor
Code.
Same; Same; Same; Non-observance 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. Particularly in administrative proceedings,
due process starts with the tribunal or hearing officer and not with the
employer. In the instant case, what is mandated of the employer to observe
is the 30-day notice requirement. Hence, non-observance of the notice
requirement is not denial of due process but merely a failure to comply with
a legal obligation for which, we strongly recommend, we impose a
disturbance compensation as discussed hereunder.
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; Petitioner’s 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 non-
observance of the 30-day notice requirement to both Serrano and the DOLE.
Serrano was thus terminated for an authorized cause but was not accorded
his right to 30-day 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.
452

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 his
employer, viz.: (1) notice to apprise the employee of the particular acts or
omissions for which the dismissal is sought, and (2) subsequent notice to
inform him of the employer’s decision to dismiss him. Similarly, deeply
ingrained is our ruling that these pre and post notice requirements are not
mere technicalities but are requirements of due process.
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 labor-saving devices; (2) redundancy; (3)
retrenchment to prevent losses; and (4) closing or cessation of operation of
the establishment or undertaking unless the closing is for the purpose of
circumventing the law. It also provides that prior to the dismissal of an
employee for an authorized cause, the employer must send two written
notices at least one month before the intended 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 lay-off is on account of an
authorized cause.—An employee whose employment is terminated for a
just cause is not entitled to the payment of separation benefits. Separation
pay would be due, however, when the lay-off is on account of an authorized
cause. The amount of separation pay would depend on the ground for the
termination of employment. A lay-off due to the installation of a labor
saving device, redundancy (Article 283) or disease (Article 284), entitles the
worker to a separation pay equivalent to “one (1) month pay or at least one
(1) month pay for every year of service, whichever is higher.”—When the
termination of employment is due to retrenchment to prevent losses, or to
closure or cessation of operations of an establishment or undertaking not
due to serious business losses or financial reverses, the separation pay is
only an equivalent of “one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher.”—In the above instances,
a fraction of at least six (6) months is considered as one (1) whole year.
Same; Same; Due process in the context of a termination of
employment would be two-fold, i.e., substantive and procedural due process.
—Due process in the context of a termination of employment, particularly,
would be two-fold, 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 lay-off
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 laid-off employee
or the payment of back salaries to him simply for the lack of such notices if,
and so long as, the employee is not deprived of an opportunity to contest
454
that dismissal or lay-off and to accordingly be heard thereon. In the

termination of employment for an authorized cause (this cause being
attributable to the employer), the laid-off employee is statutorily entitled to
separation pay, unlike a dismissal for a just cause (a cause attributable to an
employee) where no separation pay is due. In either case, if an employer
fails to comply with the requirements of notice in terminating the services of
the employee, the employer must be made to pay, as so hereinabove
expressed, corresponding damages to the employee.
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 employee’s right to due process as mandated by law and the
Constitution. It implicitly allows the employer to simply ignore such right
and to just pay the employee. While it increases the payment to “full back
wages,” it doctrinally denigrates his right to due process to a mere statutory
right to notice.
Same; Same; Two essential requisites for an employer’s valid
termination of an employee’s 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 employer’s valid termination of an
employee’s 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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VOL. 323, JANUARY 27, 2000 455
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 Pepsi-Cola 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 non-existent.”
Same; Same; Due Process; Denial of a person’s 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
person’s fundamental right to due process amounts to the illegality of the
proceedings against him. Consequently, he is brought back to his status quo
ante, not merely awarded nominal (damages or indemnity.
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, quasi-judicial and administrative proceedings, some of
which I summarized earlier, the Court has held that the twin requirements of
notice and hearing (or, at the very least, an opportunity to be heard)
constitute the essential elements of due process. In labor proceedings, both
are 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
456

Relations Commission (NLRC) which reversed the decision of the

Labor Arbiter and dismissed petitioner Ruben Serrano’s complaint
for illegal dismissal and denied his motion for reconsideration. The
facts are as follows:
Petitioner was hired by private respondent Isetann Department
Store as a security checker 1
to apprehend 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
2
Section of private respondent. Sometime in 1991, as a cost-cutting
measure, private respondent decided to phase out its entire security
section and engage the services of an independent security agency.
3
For this reason, it wrote petitioner the 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 nonpayment of salary and
4
overtime pay.
________________
1 TSN of testimony of petitioner, pp. 24, 76-78, April 24, 1992.

2 Petitioner’s Position Paper, Annex C; Records, p. 19.
3 Id., AnnexB; id., p. 21.
4 Records, p. 2.
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VOL. 323, JANUARY 27, 2000 457

The parties were required to submit their position papers, on the

5
basis of which the Labor Arbiter defined the issues 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 “cost-saving devices
[such as] secret video cameras (to monitor and prevent shoplifting)
and secret code tags on the merchandise” could not have been
employed; instead, the day after petitioner’s dismissal, private
respondent employed a safety and security supervisor with duties
and functions similar to those of petitioner.
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.
6 Id., pp. 35-36.
458

from the time of his dismissal until reinstatement (computed till

promulgation only) based on his monthly salary of
P4,040.00/month at the time of his termination but limited to (3)
three years;
(b) Ordering the Respondent to immediately reinstate the complainant
to his former position as security section head or to a reasonably
equivalent supervisorial position in charges of security without loss
of seniority rights, privileges and benefits. This order is
immediately executory even pending appeal;
(c) Ordering the Respondent to pay complainant unpaid wages in the
amount of P2,020.73 and proportionate 13th month pay in the
amount of P3,198.30;
(d) Ordering the Respondent to pay complainant the amount of
P7,995.91, representing 10% attorney’s fees based on the total
judgment award of P79,959.12.
All other claims of the complainant whether monetary or otherwise
is hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed to the NLRC which, in its resolution of

March 30, 1994, reversed the decision of the Labor Arbiter and
ordered petitioner to be given separation pay equivalent to one
month pay for every year of service, unpaid salary, and
proportionate 13th month pay. Petitioner filed a motion for
reconsideration, but his motion was denied.
The NLRC held that the phase-out of private respondent’s
security section and the hiring of an independent security agency
constituted an exercise by private respondent of “[a] legitimate
business decision whose wisdom we do not intend to inquire into
and for which we cannot substitute our judgment”; that the
distinction made by the Labor Arbiter between “retrenchment” and
the employment of “cost-saving devices” under Art. 283 of the
Labor Code was insignificant because the company official who
wrote the dismissal letter apparently used the term “retrenchment” in
its “plain and ordinary sense: to layoff or remove from one’s job,
regardless of the reason therefor”; that the rule of “reasonable
criteria” in the selection of the employees to be retrenched did not
apply because all positions in the security section had been
abolished; and that the appointment of a safety and security su-
459
VOL. 323, JANUARY 27, 2000 459
pervisor referred to by petitioner to prove bad faith on private

respondent’s part was of no moment because the position had long
been in existence and was separate from petitioner’s position as head
of the Security Checkers Section.
Hence this petition. Petitioner raises the following issue:
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE

PRIVATE RESPONDENT TO REPLACE ITS CURRENT SECURITY
SECTION A VALID GROUND FOR THE DISMISSAL OF THE
7
EMPLOYEES CLASSED UNDER THE LATTER?
Petitioner contends that abolition of private respondent’s Security

Checkers Section and the employment of an independent security
agency do not fall under any of the authorized causes for dismissal
under Art. 283 of the Labor Code.
Petitioner Laid Off for Cause
Petitioner’s contention has no merit. Art. 283 provides:
Closure of establishment and reduction of personnel.The employer may also

terminate the employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operations of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof. In case
of termination due to the installation of labor-saving devices or redundancy,
the worker affected thereby shall be entitled to a separation pay equivalent
to at least one (1) month pay or to at least one (1) month pay for every year
of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to at least one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one (1) whole year.
________________
7 Petition, p. 10; id., p. 16.
460

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 company’s

cost-saving program, the services rendered by the mechanics became
redundant and superfluous, and therefore properly terminable. The company
merely exercised its business judgment or management prerogative. And in
the absence of any proof that the management abused its discretion or acted
in a malicious or arbitrary manner, the court will not interfere with the
9
exercise of such prerogative.
In Asian Alcohol
10
Corporation v. National Labor Relations
Commission, the Court likewise upheld the termination of
employment of water pump tenders and their replacement by
independent contractors. It ruled that an employer’s good faith in
implementing a redundancy program is not necessarily put in doubt
by the availment of the services of an independent contractor to
replace the services of the terminated employees to promote
economy and efficiency.
Indeed, as we pointed out in another case, the “[management of a

company] cannot be denied the faculty of promoting efficiency and
attaining economy by a study of what units are essential for its
operation. To it belongs the ultimate determination of whether
services should be performed by its personnel or contracted to
outside agencies . . . [While there] should be mutual consultation,11
eventually deference is to be paid to what management decides.”
Consequently, absent proof that management acted in a malicious or
arbitrary manner, the
________________
8 213 SCRA 652 (1992).

9 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, 284-285 (1971).
461
VOL. 323, JANUARY 27, 2000 461

Court will12 not 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 respondent’s real
purpose was to avoid payment to the security checkers of the wage
increases13 provided in the collective bargaining agreement approved
in 1990. Such an assertion is not a sufficient basis for concluding
that the termination of petitioner’s employment was not a bona fide
decision of management to obtain reasonable return from its
investment, which
14
is a right guaranteed to employers under the
Constitution. Indeed, that the phase-out of the security section
constituted a “legitimate business decision” is a factual finding of an
administrative agency which must be accorded respect and even
finality by this Court since nothing15can be found in the record which
fairly detracts from such finding. Accordingly, we hold that the
termination of petitioner’s
services was for an authorized cause, i.e., redundancy. Hence,
pursuant to Art. 283 of the Labor Code, petitioner should be given
separation pay at the rate of one month pay for every year of service.
Sanctions for Violations of the Notice Requirement
Art. 283 also provides that to terminate the employment of an

employee for any of the authorized causes the employer must serve
“a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date
thereof.” In the case at bar, petitioner was given a notice of
termination on October 11, 1991. On the
________________
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

same day, his services were terminated. He was thus denied his right
to be given written notice before the termination of his employment,
and the question is the appropriate sanction for the violation of

petitioner’s right.
To be sure, this 16
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 NLRC’s
finding. However, as the company did not comply with the 30-day
written notice in Art. 283 of the Labor Code, the Court ordered the
employer to pay the workers P2,000.00 each as indemnity.
The decision followed the ruling in several cases involving
dismissals
17
which, although based on any of the just causes under
Art. 282, were effected without notice and hearing to
________________
16 248 SCRA 532 (1995).

17 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.
463
VOL. 323, JANUARY 27, 2000 463

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-
compliance19
with the 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:
(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

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. 20The
shift in doctrine took place in 1989 in 21Wenphil Corp. v. NLRC. In
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 re-examined. It will be highly prejudicial
to the interests of the employer to impose on him the services of an
employee who has been shown to be guilty of the charges that warranted his
dismissal from employment. Indeed, it will demoralize the rank and file if
the undeserving, if not undesirable, remains in the service.
...
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
________________
20 170 SCRA 69 (1989).

21 Id., at 75-76.
465
VOL. 323, JANUARY 27, 2000 465

The fines imposed for violations of the notice requirement have

22 23 24
varied from25
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 30-day
written notice (in the case of termination of employment for an
authorized cause under Arts. 283-284) or to give notice and hearing
(in the case of dismissals for just causes under Art. 282).
For this reason, they regard any dismissal or layoff without the
requisite notice to be null and void even though there are just or
authorized causes for such dismissal or layoff. 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

quently, in their view, the employee concerned should be reinstated

and paid backwages.
Validity of Petitioner’s Layoff Not Affected by Lack of Notice
We agree with our esteemed colleagues, Justices Puno and

Panganiban, that we should rethink the sanction of fine for an
employer’s disregard of the notice requirement. We do not agree,
however, that disregard of this requirement by an employer renders
the dismissal or termination of employment null and void. Such a
stance is actually a reversion to the discredited pre-Wenphil rule of
ordering an employee to be reinstated and paid backwages when it is
shown that he has not been given notice and hearing although his
dismissal or layoff is later found to be for a just or authorized cause.
Such rule was abandoned in Wenphil because it is really unjust to
require an employer to keep in his service one who is guilty, for
example, of an attempt on the life of the employer or the latter’s
family, or when the employer is precisely retrenching in order to
prevent losses.
The need is for a rule which, while recognizing the employee’s
right to notice before he is dismissed or laid off, at the same time
acknowledges the right of the employer to dismiss for any of the just
causes enumerated in Art. 282 or to terminate employment for any
of the authorized causes mentioned in Arts. 283-284. If the Wenphil
rule imposing a fine on an employer who is found to have dismissed
an employee for cause without prior notice is deemed ineffective in
deterring employer violations of the notice requirement, the remedy
is not to declare the dismissal void if there are just or valid grounds
for such dismissal or if the termination is for an authorized cause.
That would be to uphold the right of the employee but deny the right
of the employer to dismiss for cause. Rather, the remedy is to order
the payment to the employee of full backwages from the time of his
dismissal until the court finds that the dismissal was for a just cause.
But,
467
VOL. 323, JANUARY 27, 2000 467

otherwise, his dismissal must be upheld and he should not be

reinstated. This is because his dismissal is ineffectual.
For the same reason, if an employee is laid off for any of the
causes in Arts. 283-284, i.e., installation of a labor-saving device,
but the employer did not give him and the DOLE a 30-day written
notice of termination in advance, then the termination of his
employment should be considered ineffectual and he should be paid
backwages. However, the termination of his employment should not
be considered void but he should simply be paid separation pay as
provided in Art. 283 in addition to backwages.
Justice Puno argues that an employer’s failure to comply with the
notice requirement constitutes a denial of the employee’s right to
due process. Prescinding from this premise, he quotes the statement
of Chief Justice
26
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. 283-284, is a nullity.
Hence, even if just or authorized causes exist, the employee should
be reinstated with full back pay. On the other hand, Justice 27
Panganiban quotes from the statement in People v. 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

the case here. There are three reasons why, on the other hand,
violation by the employer of the notice requirement cannot be
considered a denial of due process resulting in the nullity of the
employee’s dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a
limitation on governmental powers. It does not apply to the exercise
of private power, such as the termination of employment under the
labor Code. This is plain from the text of Art. III, §1 of the
Constitution, viz.: “No person shall be deprived of life, liberty, or
property without due process of law . . . .” The reason is simple:
Only the State has authority to take the life, liberty, or property of
the individual. The purpose of the Due Process Clause is to ensure
that the exercise of this power is consistent with what are considered
civilized methods.
The second reason is that notice and hearing are required under
the Due Process Clause before the power of organized society are
brought to bear upon the individual. This is obviously not the case of
termination of employment under Art. 283. Here the employee is not
faced with an aspect of the adversary system. The purpose for
requiring a 30-day written notice before an employee is laid off is
not to afford him an opportunity to be heard on any charge against
him, for there is none. The purpose rather is to-give him time to
prepare for the eventual loss of his job and the DOLE an opportunity
to determine whether economic causes do exist justifying the
termination of his employment.
Even in cases of dismissal under Art. 282, the purpose for the
requirement of notice and hearing is not to comply with Due Process
Clause of the Constitution. The time for notice and hearing is at the
trial stage. Then that is the time we speak of notice and hearing as
the essence of procedural due process. Thus, compliance by the
employer with the notice requirement before he dismisses an
employee does not foreclose the right of the latter to question the
legality of his dismissal. As Art. 277(b) provides, “Any decision
taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a
469
VOL. 323, JANUARY 27, 2000 469

complaint with the regional branch of the National Labor Relations

Commission.”
Indeed, to contend that the notice requirement in the Labor Code
is an aspect of due process is to overlook the fact that Art. 283 had
its origin in Art. 302 of the Spanish Code of Commerce of 1882
which gave either party to the employer-employee relationship the
right to terminate their relationship by giving notice to the other one
month in advance. In lieu of notice, an employee could be laid28off by
paying him a mesada equivalent to his salary for one 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
29
at the rate of one-half month for every year 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 one-half 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

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 30
a just
cause, 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 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 latter’s 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
VOL. 323, JANUARY 27, 2000 471

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 31why, 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 Montemayor v. Araneta
32
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 33an application of the
Justinian precept, embodied in the Civil Code, to act with justice,
give everyone his due, and observe honesty and good faith toward
one’s fellowmen. Such is the notice requirement in Arts. 282-283.
The consequence of the failure either of the employer or the
employee to live up to this precept is to make him liable in damages,
not to render his act (dismissal or resignation, as the case may be)
void. The measure of damages is the amount of wages the employee
________________
31 71 SCRA 470, 480 (1976).

32 77 SCRA 321 (1977).
33 CIVIL CODE, ART. 19.
472
should have received were it not for the termination of his

employment without prior notice. If warranted, nominal and moral
damages may also be awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor
Code, the employer’s failure to comply with the notice requirement
does not constitute a denial of due process but a mere failure to
observe a procedure for the termination of employment which
makes the termination of employment merely ineffectual. It is
similar to the failure to observe the 34provisions 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 in35court or giving 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
36
the due date since no valid notice of 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. L-8015, December 23, 1955, (unpub.), 98 Phil.
989.
473
VOL. 323, JANUARY 27, 2000 473

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

provides:
Security of Tenure.—In cases of regular employment, the employer shall not

terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
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

38
his resignation 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 employee-
employer relationship by serving a written notice on the employer at least one (1) month in
advance. The employer upon whom no such notice was served may hold the employee liable
for damages.
(b) An employee may put an end to the relationship without serving any notice on the
employer for any of the following just causes:
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

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 Magsaysay’s motto that “he who has less
in life should have more in law.”—That would be a misapplication
of this noble phrase originally from Professor Thomas Reed Powell
of the Harvard Law School. 39
Justice Panganiban cites Pepsi-Cola Bottling Co. v. 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 Pepsi-Cola case actually involved a dismissal for an
alleged loss of trust and confidence which, as found by the Court,
was not proven. The dismissal was, therefore, illegal, not because
there was a denial of due process, but because the dismissal was
without cause. The statement that the failure of management to
comply with the notice requirement “taints the dismissal with
illegality”—was merely a dictum thrown in as additional grounds
for holding the dismissal to be illegal.
Given the nature of the violation, therefore, the appropriate
sanction for the failure to give notice is the payment of backwages
for the period when the employee is considered not to have been
effectively dismissed or his employment terminated. The sanction is
not the payment alone of nominal damages as Justice Vitug
contends.
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
VOL. 323, JANUARY 27, 2000 475

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 40Constitution 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 41
enterprise, and provides incentives to needed investment.” 42 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,
43
authorizes neither oppression nor self-destruction of the employer.”
And it is oppression to compel the employer to continue in
employment one who is guilty or to force the employer to remain in
operation when it is not economically in his interest to do so.
In sum, we hold that if in proceedings for reinstatement under
Art. 283, it is shown that the termination of employment was due to
an authorized cause, then the employee concerned should not be
ordered reinstated even though there is failure to comply with the
30-day notice requirement. Instead, he must be granted separation
pay in accordance with Art. 283, to wit:
In case of termination due to the installation of labor-saving devices or

redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one month for
every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2)
________________
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 Palmolive Philippines, Inc. v. Ople, 163
SCRA 323 (1988).
476

month pay for every year of service, whichever is higher. A fraction of at

least six months shall be considered one (1) whole year.
If the employee’s separation is without cause, instead of being given

separation pay, he should be reinstated. In either case, whether he is
reinstated or only granted separation pay, he should be paid full
backwages if he has been laid off without written notice at least 30
days in advance. On the other hand, with respect to dismissals for
cause under Art. 282, if it is shown that the employee was dismissed
for any of the just causes mentioned in said Art. 282, then, in
accordance with that article, he should not be reinstated. However,
he must be paid backwages from the time his employment was
terminated until it is determined that the termination of employment
is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal
effect.
WHEREFORE, the petition is GRANTED and the resolution of
the National Labor Relations Commission is MODIFIED by
ordering private respondent Isetann Department Store, Inc. to pay
petitioner separation pay equivalent to one (1) month pay for every
year of service, his unpaid salary, and his proportionate 13th month
pay and, in addition, full backwages from the time his employment
was terminated on October 11, 1991 up to the time the decision
herein becomes final. For this purpose, this case is REMANDED to
the Labor Arbiter for computation of the separation pay, backwages,
and other monetary awards to petitioner.
SO ORDERED.
Davide, Jr. (C.J.), Melo, Kapunan, Quisumbing, Purisima,

Pardo, Buena, Gonzaga-Reyes and De Leon, Jr., JJ., concur.
Bellosillo, J., Please see separate opinion.
Puno, J., Please see dissenting opinion.
Vitug, J., Please see Separate Opinion.
Panganiban, J., Please see Separate Opinion.
477
VOL. 323, JANUARY 27, 2000 477

Ynares-Santiago, 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.1 Martin 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
Ap-peals 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 certio-rari 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 2company,” and directing
him to secure clearance from their office. Petitioner Serrano 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.

2 Exh. “B,”—Records, p. 21.
478

against ISETANN. Efforts at amicable settlement proved futile. Ms.

Cristina Ramos, Personnel Administration Manager of ISETANN,
testified that the security checkers and their section head were
retrenched due to the installation of a labor saving device, i.e., the
hiring of an independent security agency.
Finding the dismissal to be illegal, the Labor Arbiter ordered the
immediate reinstatement of Serrano to his former or to an equivalent
position plus payment of back wages, unpaid wages, 13th month pay
and attorney’s fees.
On appeal the NLRC reversed the Labor Arbiter and ruled that
ISETANN acted within its prerogative when it phased out its
Security Section and retained the services of an independent security
agency in order to cut costs and economize. 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 latter’s representative in connection with the
employee’s work, (b) gross and habitual neglect by the employee of
his duties; (c) fraud or willful breach by the employee of the trust
reposed in him by his employer or his duly authorized
representative; (d) commission of a crime or offense by the
employee against the person of his employer or 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 so-called 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

The just causes enumerated under Art. 282 of the Labor Code are
provided by the employee who causes the infraction. The authorized
causes are provided by the employer either because of outside
factors such as the general decline in the economy or merely part of
its long range plan for business profitability. Corollarily, in
termination for a just cause, the employee is not entitled to
separation pay unlike in termination for an authorized cause. In
addition, the basis in computing the amount of separation pay varies
depending on whether the termination is due to the installation of a
labor saving device, or redundancy, in which case, the employee is
entitled to receive separation pay equivalent to at least one (1)
month pay or to at least one (1) month pay for every year of service.
In case the termination is due to retrenchment in order to prevent
losses or in case of closure or cessation of operation of the
establishment or undertaking not due to serious business losses or
financial reverses, the separation pay is lower, i.e., equivalent to one
(1) month pay or at least one-half month pay for every year of
service, whichever is higher. As may be gleaned from the foregoing,
where the cause of termination is for the financial advantage or
benefit of the employer, the basis in computing for separation pay is
higher compared to termination dictated by necessity with no
appreciable financial advantage to the employer.
In the instant case, we agree with the NLRC that the dismissal of
petitioner Serrano was for an authorized cause, i.e., redundancy,
which exists where the services of an employee are in excess of
what are reasonably demanded by the actual requirements of the
enterprise. A position is redundant where it is superfluous, and the
superfluity may be the outcome of other factors such as overhiring
of workers, decreased volume of business, or dropping of a
particular product line or service
4
activity 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

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
5
in the exercise
thereof, in which case, this Court will step in. Specifically, we held
in International Harvester Macleod, Inc. v. Intermediate Appellate
6
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 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.
7 Art. XIII, Sec. 3, 1987 Constitution, reiterated in Art. 3, Labor Code.
8 Art. 3, Labor Code.
481
VOL. 323, JANUARY 27, 2000 481

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, 9 does not 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 and10 regulations promulgated
pursuant to guidelines set by the 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

notice to DOLE which is essential because the right to terminate an

employee is not an absolute prerogative. The lack of written notice
denied DOLE the opportunity to determine the validity of the
termination.
The written notice ISETANN sent to Serrano was dated 11
October 1991 or on the same day the intended termination was to
take effect. This obviously did not comply with the 30-day
mandatory requirement. Although the cause for discharge may be
just or authorized, it is still necessary and obligatory to afford the
employee concerned his basic and more important right to notice.
Serrano was not given the chance to make the needed adjustments
brought about by his termination. Significantly, the notice is
intended to enable the employee not only to prepare himself for the
legal battle to protect his tenure of employment, which can be long,
arduous, expensive and complicated by his own standards, but also
to find other means of employment and ease the impact of the loss of
his job and, necessarily, 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,12
nor shall any 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

13
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 to14be achieved 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 rule-making character. Procedural due
process, on the other hand, is available for the purpose of assailing
arbitrariness or unreasonableness in the administration of the law by
the executive department or the judicial branch. Procedural due
process likewise may aid those appearing before Congressional 15
committees if the proceedings are arbitrary or otherwise unfair.
Procedural due process demands that governmental acts, more
specifically so16
in the case of the judiciary, be not infected with
arbitrariness. The same disinterestedness required of men on the
bench must characterize the actuations of public officials, not
excluding the17
President, 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. 80-81.
16 Id., p. 94.
17 Id., p. 96.
484

The cardinal primary requirements of due process in administrative

proceedings18
were highlighted in Ang Tibay v. Court of Industrial
Relations: (a) the right to a hearing, which includes the right to
present one’s case and submit evidence in support thereof; (b) the
tribunal must consider the evidence presented; (c) the decision must
have something to support itself; (d) the evidence must be
substantial; (e) the decision must be based on the evidence presented
at the hearing, or at least contained in the record and disclosed to the
parties affected; (f) the tribunal or body or any of its judges must act
on its own independent consideration of the law and facts of the
controversy, and not simply accept the views of a subordinate; (g)
the board or body should, in all controversial questions, render its
decision in such manner that the parties to the proceeding may know
the various issues involved, and19the reason for the decision rendered.
Also in Lumiqued v. Exevea it was held
In administrative proceedings, the essence of due process is simply the

opportunity to explain one’s side. One may be heard, not solely by verbal
presentation but also, and perhaps even more creditably as it is more
practicable than oral arguments, through pleadings. An actual hearing is not
always an indispensable aspect of due process. As long as a party was given
the opportunity to defend his interests in due course, he cannot be said to
have been denied due process of law, for this opportunity to be heard is the
very essence of due process.
From the foregoing, it is clear that the observance of due process is

demanded in governmental acts. Particularly in administrative
proceedings, due process starts with the tribunal or hearing officer
and not with the employer. In the instant case, what is mandated of
the employer to observe is the 30-day notice requirement. Hence,
non-observance of the notice requirement is not denial of due
process but merely a failure to comply with a legal obligation for
which, we
________________
18 69 Phil. 635 (1940).

19 G.R. No. 117565, 18 November 1997, 282 SCRA 146-147.
485
VOL. 323, JANUARY 27, 2000 485

strongly recommend, we impose a disturbance compensation as

discussed hereunder.
In the instant case, we categorically declare that Serrano was not
denied his right to due process. Instead, his employer did not comply
with the 30-day notice requirement. However, while Serrano was not
given the required 30-day notice, he was nevertheless given and, in
fact, took advantage of every opportunity to be heard, first, by the
Labor Arbiter, second, by the NLRC, and third, by no less than this
Court. Before the Labor Arbiter and the NLRC, petitioner had the
opportunity to present his side not only orally but likewise through
proper pleadings and position papers. It is not correct therefore to
say that petitioner was deprived of his right to due process.
We have consistently upheld in the past as valid although
irregular the dismissal of an employee for a just or authorized cause
but without notice and have imposed a sanction on the erring
employers in the form of damages for their failure to comply with
the notice requirement. We discussed
20
the rationale behind this ruling
in Wenphil 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 re-examined. It will be highly prejudicial to the
interests of the employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his dismissal from
employment. Indeed, it will demoralize the rank and file if the undeserving,
if not undesirable, remains in the service 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

the second requirement. Thus, it must be imposed a sanction for its failure to
give a formal notice and conduct an investigation as required by law before
dismissing petitioner from employment. Considering the circumstances of
this case petitioner must indemnify private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case and
the gravity of the omission committed by the employer (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
This ruling was later ably amplified by

22
Mr. Justice Puno in 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 employer’s decision to dismiss him. In
the instant case, private respondents have failed to furnish petitioner with
the first of the required two (2) notices and to state plainly the reasons for
the dismissal in the termination letter. Failure to comply with the
requirements taints the dismissal with illegality.
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
________________

22 G.R. No. 122666, 19 June 1997, 274 SCRA 379.
487
VOL. 323, JANUARY 27, 2000 487

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 well-settled 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).
Non-observance of this procedural requirement before would cause

the employer to be penalized by way of paying damages to the
employee the amounts of which fluctuated through the years. Thus, 24
for just cause the indemnity ranged from P1,000.00 to P10,000.00.
For authorized cause, as dis-
________________

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 613—The employee was guilty
of inefficiency, negligence and insubordination but the company was fined
P10,000.00 for failure to observe the notice requirement.
488

tinguished from just cause, the award ranged from P2,000.00 to

25
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
30-day notice requirement was valid although considered irregular.
The Court ratiocinated that employers should not be compelled to
keep in their employ undesirable and undeserving laborers. For the
irregularity, i.e., the failure to observe the 30-day notice of
termination, the employer was made to pay a measly sum ranging
from P1,000.00 to P10,000.00.
With regard to the indemnity or penalty, which we prefer
seriously to be referred to as “disturbance compensation,”—the
Court has awarded varying amounts depending on the circumstances
of each case and the gravity of the commission. We now propose
that the amount of the award be uniform and rational and not
arbitrary. The reason for the proposal or modification is that in their
non-compliance with the 30-day notice requirement the erring
employers, regardless of the peculiar circumstances of each case,
commit the infraction only by the single act of not giving any notice
to their workers. It cannot be gainfully said that the infraction in one
case is heavier than in the other as the non-observance constitutes
one single act. Thus, if the dismissal is illegal, i.e. there is no just or
authorized cause, a disturbance compensation in the amount of
P10,000.00 may be considered reasonable. If the dismissal is for a
just cause but without notice, a disturbance compensation in the
amount P5,000.00 may be given. In termination for an authorized
cause and the notice requirement was not complied with, we
distinguish further: If it is to save
________________
25 Sebuguero v. NLRC, G.R. No. 115394, 27 September 1995, 248 SCRA 532—
The employees were retrenched in order to prevent further losses but the company
failed to observe the notice requirement, hence was fined P2,000.00 for each
employee; Balbalec, et al. v. NLRC, G.R. No. 107756, 19 December 1995, 251 SCRA
398—The employees were retrenched to prevent business losses but the company was
fined P5,000.00 for each employee for failure to observe the notice requirement.
489
VOL. 323, JANUARY 27, 2000 489

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
30-day 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 30-day notice requirement, the dismissal is
deemed improper and irregular. If later the dismissal is ascertained
to be without just cause, the dismissed employee, is entitled to
reinstatement, if this be feasible, otherwise to separation pay and
back wages plus disturbance compensation of P10,000.00 and moral
damages, if warranted. On the other hand, if the dismissal is
ascertained to be with just cause, the dismissed employee is entitled
nevertheless to a disturbance compensation of P5,000.00 if the legal
requirement of the 30-day notice to both employee and DOLE has
not been complied with.
In instances where there is obviously a ground for dismissal, as
when the employee has become violent and his presence would
cause more harm to his co-workers and the security and serenity of
the workplace, the employee may be suspended in the meantime
until he is heard with proper observance of the 30-day notice
requirement. Likewise, if the dismissal is for an authorized cause but
without the required notice, the dismissal is improper and irregular
and the employee should be paid separation pay, back wages and
distur-
490

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 non-observance
of the 30-day notice requirement to both Serrano and the DOLE.
Serrano was thus terminated for an authorized cause but was not
accorded his right to 30-day notice. Thus, his dismissal being
improper and irregular, he is entitled to separation pay and back
wages the amounts of which to be determined by the Labor Arbiter,
plus P10,000.00 as disturbance compensation which, from its very
nature, must be paid immediately to cushion the impact of his
economic dislocation.
One last note. This Separate Opinion is definitely not advocating
a new concept in imposing the so-called “disturbance 26
compensation.”—Since Wenphil Corporation 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 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
VOL. 323, JANUARY 27, 2000 491
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 30-day notice.
ISETANN DEPARTMENT STORE, INC. should PAY petitioner
SERRANO back wages and separation pay the amounts of which to
be determined by the Labor Arbiter, plus P10,000.00 as disturbance
compensation which must be paid immediately. Consequently,
except as regards the disturbance compensation, the case should be
REMANDED to the Labor Arbiter for the immediate computation
and payment of the back wages and separation pay due petitioner.
EXCEPT as herein stated, I concur with the majority.
DISSENTING OPINION
PUNO, J.:
The rule of audi alteram partem—hear the other side, is the essence
of procedural due process. That a “party is not to
492

suffer in person or in purse without an opportunity of being1

heard”—is the 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 J UST 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 may terminate an

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

lawful orders of his employer or representative in connection with
his work;
(c) Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative;
(d) Commission of the crime or offense by the employee against the
person of his employer or any immediate member of his family or
his duly authorized representative; and
(e) Other causes analogous to the foregoing.”
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
VOL. 323, JANUARY 27, 2000 493

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

employer’s decision to dismiss him. Similarly, deeply ingrained is
our ruling that these pre and post notice requirements
3
are not mere
technicalities but are requirements of due process.
Then came the 4
case of Wenphil Corporation vs. NLRC 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 co-employee, Job Barrameda, about tending the
Salad Bar. He slapped Barrameda’s cap, stepped on his foot, picked
up an ice scooper and brandished it against the latter. He refused to
be pacified by another employee who reported the incident to
Delilah Hermosura, assistant manager. Hermosura summoned
Mallare but the latter refused to see the former. It took a security
guard to bring Mallare to Hermosura. Instead of making an
explanation, Mallare shouted profane words against Hermosura. He
declared that their altercation should only be settled by him and
Barrameda.
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.
4 170 SCRA 69.
494

insubordination, which are just causes for dismissal. The Arbiter

also ruled that Mallare was not denied due process. On appeal, the
NLRC reversed. It held that Mallare was denied due process before
he was dismissed. It ordered Mallare’s reinstatement and the
payment of his one (1) year backwages.
On certiorari to this Court, we reversed the NLRC and reinstated

the decision of the Arbiter with the modification that petitioner
should pay to Mallare an indemnity of P1,000.00 for dismissing
Mallare without any notice and hearing. We held:
“Petitioner insists that private respondent was afforded due process but he
refused to avail of his right to the same; that when the matter was brought to
the labor arbiter he was able to submit his position paper although the
hearing cannot proceed due to the non-appearance of his counsel; and that
the private respondent is guilty of serious misconduct in threatening or
coercing a co-employee which is a ground for dismissal under Article 283
of the Labor Code.
The failure of petitioner to give private respondent the benefit of a
hearing before he was dismissed constitutes an infringement of his
constitutional right to due process of law and equal protection of the laws.
The standards of due process in judicial as well as administrative
proceedings have long been established. In its bare minimum due process of
law simply means giving notice and opportunity to be heard before
judgment is rendered.
The claim of petitioner that a formal investigation was not necessary
because the incident, which gave rise to the termination of private
respondent, was witnessed by his co-employees and supervisors, is without
merit. The basic requirement of due process is that which hears before it
condemns, which proceeds upon inquiry and renders judgment only after
trial.
However, it is a matter of fact that when the private respondent filed a
complaint against petitioner, he was afforded the right to an investigation by
the labor arbiter. He presented his position paper as did the petitioner. If no
hearing was had, it was the fault of private respondent as his counsel failed
to appear at the scheduled hearings. The labor arbiter concluded that the
dismissal of private respondent was 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.
495
VOL. 323, JANUARY 27, 2000 495

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 separation pay to cushion the impact of
his loss of employment. Mr. Justice Padilla took the view that: (1)
Mallare was not entitled to reinstatement and backwages as he was
guilty of grave misconduct and insubordination; (2) he was denied
administrative due process; and (3) for making such denial, Wenphil
should pay “separation pay (instead of indemnity) in the sum of
P1,000.00.”—Madam Justice Cortes held that: (1) Mallare was not
illegally dismissed; (2) he was not denied due process; (3) he was
not entitled to indemnity; and (4) if P1,000.00 was to be imposed on
Wenphil as an administrative sanction, it should form part of the
public fund of the government.
I shall discuss later that Wenphil did not change our ruling that
violation of the pre-dismissal notice requirement is an infringement
of due process.
II. DISMISSAL DUE TO AUTHORIZED CAUSE

The applicable law on dismissal due to authorized cause is Article

283 of the Labor Code which provides:
ART. 283. Closure of establishment and reduction of personnel.—The

employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of opera-
496

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 labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1)
month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.”
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 the6 planned retrenchment is
justified and 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).

6 Ibid., p. 546.
497
VOL. 323, JANUARY 27, 2000 497

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 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
employer’s failure to comply with the requirements of procedural due
process.
Accordingly, we affirm the deletion by the NLRC of the award of back
wages. But because the required notices of the petitioners’ retrenchment
were not served upon the petitioners and the DOLE, GTI must be sanctioned
for such failure and thereby required to indemnify each of the petitioners the
sum of P20,000.00 which we find to be just and reasonable under the
circumstances of this case.”
III. RE-EXAMINATION OF THE WENPHIL DOCTRINE:

F ROM BAD TO WORSE
The minority of the Court has asked for a re-examination of Wenphil

because as the majority correctly observed, “the number of cases
involving dismissals without the requisite notice to the employee
although effected for just or authorized causes suggests that the
imposition of fine for violation of the notice requirement has not
been effective in deterring violations of the notice requirement.”
498

We must immediately set Wenphil in its proper perspective as it is a

very exceptional case. Its doctrine must be limited to its distinct
facts. Its facts therefore ought to be carefully examined again. In
Wenphil, it was clearly established that the employee had a violent
temper, caused trouble during office hours and even defied his
superiors as they tried to pacify him. The employee was working for
a fast food chain that served the public and where violence has no
place. These facts were established only in the proceedings before
the Labor Arbiter after the employee filed a complaint for illegal
dismissal. There were no formal investigation proceedings before
the employer as the employee was dismissed without any notice by
the employer. Given these facts, we ruled that the pre-dismissal
notice requirement was part of due process; nonetheless, we held
that the employee was given due process as he was heard by the
Labor Arbiter; we found that the proceedings before the Labor
Arbiter proved that the 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 7
case and the gravity 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 8notice and opportunity to be heard before
judgment is rendered;” The Court then satisfied itself with this bare
minimum when
________________
7 Op cit., p. 76.
8 Op cit, pp. 74-75.
499
VOL. 323, JANUARY 27, 2000 499

it held that the post dismissal hearing before the Labor 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 pre-dismissal
notice, violation of which resulted in orders of reinstatement of the
dismissed employee. This is the only wrinkle wrought by Wenphil in
our jurisprudence on dismissal. Nonetheless, it should be stressed
that the Court still punished Wenphil’s violation of the 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
9
must 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 pre-dismissal notice requirement was
entirely defeated by employers who were just too willing to pay an
indemnity for its violation. The result, as the majority concedes, is
that the indemnity we imposed has not been effective to prevent
unjust dismissals 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 pre-Wenphil rule where a reasonless violation of the pre-
dismissal notice requirement makes the dismissal of an employee
illegal and results in his reinstatement. In fine, we should strike
down as illegal the dismissal of an employee
________________
9 Op cit., p. 76.
500

even if it is for a justified end if it is done thru unjustified means for

we cannot be disciples of the Machiavellian doctrine of the end
justifies the means. With due respect, the majority decision comes
too near this mischievous doctrine by giving emphasis on the end
and not the means of dismissal of employees. What grates is that the
majority today espouses a doctrine more pernicious than Wenphil for
now it announces that a violation of the pre-dismissal notice
requirement does 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 employee’s uneven
fight against his employer has become more uneven. Now, an
illegally dismissed employee often goes to the DOLE without an
exact knowledge of the cause of his dismissal. As a matter of
strategy, some employers today dismiss employees without notice.
They know that it is more advantageous for them to litigate with an
employee who has no knowledge of the cause of dismissal. The

probability is that said employee will fail to prove the illegality of
his dismissal. All that he can prove is that he was dismissed without
notice and the penalty for the omission is a mere fine, a pittance.
The case at bar demonstrates how disastrous Wenphil has been to
our helpless employees. In holding that the petitioner failed to prove
his cause of action, the majority held “. . . we have only the bare
assertion of petitioner that, in abolishing the security section, private
respondent's real purpose was to avoid payment to the security
checkers of the wage increases provided in the collective bargaining
agreement approved in 1990.” The bare assertion of the petitioner is
understandable. The notice given to him spoke of a general
groundretrenchment. No details were given about the employer’s
sudden retrenchment program. Indeed, the employee was dismissed
on the day he received the notice in violation of the 30-day
requirement. He was given no time, no opportunity to ascer-
501
VOL. 323, JANUARY 27, 2000 501

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
petitioner-employee, it was not so with the employer ISE-TANN.
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
10
device was 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
_______________
10 TSN, August 4, 1992, pp. 30, 37-38, 42-49.
502

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:
Already answered, your Honor.”
Obviously, Ms. Ramos could not even distinguish between

retrenchment and redundancy. The Labor Arbiter thus ruled that
petitioner’s dismissal was illegal. The NLRC, however, reversed.
The majority affirmed the NLRC ruling that ISE-TANN’s phase out
of its security employees is a legitimate
503
VOL. 323, JANUARY 27, 2000 503

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
ISETANN’s investment has been threatened to justify its so-called
business decision as legitimate.
SECOND. The majority holds that “the need is for a rule which,
while recognizing the employee’s right to notice before he is
dismissed or laid off, at the same time acknowledges the right of the
employer to dismiss for any of the just causes enumerated in Art.
282 or to terminate employment for any of the authorized causes
mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on
an employer who is found to have dismissed an employee for cause
without prior notice is deemed ineffective in deterring employer
violations of the notice requirement, the remedy is not to declare the
dismissal void if there are just or valid grounds for such dismissal or
if the termination is for an authorized cause. That would be to
uphold the right of the employee but deny the right of the employer
to dismiss for cause. Rather, the remedy is to consider the dismissal
or termination to be simply ineffectual for failure of the employer to
comply with the procedure for dismissal or termination.”
With due respect, I find it most difficult to follow the logic of the
majority. Before Wenphil, we protected employees with the ruling
that dismissals without prior notice are illegal and the illegally
dismissed employee must be reinstated with backwages. Wenphil
diluted that rule when it held that due process is satisfied if the
employee is given the opportunity to be heard by the Labor Arbiter.
It further held that an employee cannot be reinstated if it is
established in the hearing that his dismissal is for a just cause. The
failure of the employer to give a pre-dismissal 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

that the majority would restore the balance of rights between an

employee and an employer by giving back the employee’s
mandatory right to notice before dismissal. It is disquieting,
however, that the majority re-arranged this balance of right by tilting
it more in favor of the employer’s right to dismiss. Thus, instead of
weakening a bit the right to dismiss of employers, the majority
further strengthens it by insisting that a dismissal without prior
notice is merely “ineffectual” and not illegal.
The stubborn refusal of the majority to appreciate the importance
of 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 pre-dismissal notice requirement equalizes the fight 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
employee’s right to pre-dismissal notice will negate the right of an
employer to dismiss for cause. The pre-Wenphil rule simply requires
that before the right of the employer to dismiss can be exercised, he
must give prior notice to the employee of its cause. There is nothing
strange nor difficult about this requirement. It is no burden to an
employer.
505
VOL. 323, JANUARY 27, 2000 505

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 11
four (4) authorized causes for
termination of employment. These authorized causes are: (1)
installation of labor-saving devices; (2) redundancy; (3)
retrenchment to prevent losses; and (4) closing or cessation of

operation of the establishment or undertaking unless the closing is
for the purpose of circumventing the law. It also provides that prior
to the dismissal of an employee for an authorized cause, the
employer must send two written notices at least one month before
the intended 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
12
prerogative of an employer. We explained that the notice to the
DOLE is necessary
13
to enable it to ascertain the truth of the cause of
termination. The DOLE is equipped with men and machines to
determine whether the planned closure or cessation of business or
retrenchment or redundancy14or installation of labor saving device is
justified by economic 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 15good faith of the
retrenchment or redundancy before the DOLE. In addition, this
notice requirement
16
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 Sebuguero, supra.
13 International Hardware, Inc. v. National Labor Relations Commission, 176
SCRA 256, 259 (1989).
14 Sebuguero v. NLRC, supra.
15 Wiltshire File Co. v. NLRC, 193 SCRA 665, 676 (1991).
16 Balbalec v. NLRC, 251 SCRA 398, 406 (1995).
506

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
employer’s desire for more profit. Thus, the installation of a labor
saving device is an authorized cause to terminate employment even
if its non-installation need not necessarily result in an over-all loss to
an employer possessed by his possessions. In an Article 283
situation, it is easy to see that there is a greater need to scrutinize the
allegations of the employer that he is dismissing an employee for an
authorized cause. The acts involved here are unilateral acts of the
employer. Their nature requires that they should be proved by the
employer himself. The need for a labor saving device, the reason for
redundancy, the cause for retrenchment, the necessity for closing or
cessation of business are all within the knowledge of the employer
and the employer alone. They involve a constellation of economic
facts and factors usually beyond the ken of knowledge of an
ordinary employee. Thus, the burden should be on the employer to
establish and justify these authorized causes. Due to their
complexity, the law correctly directs that notice should be given to
the DOLE for it is the DOLE more than the lowly employee that has
the expertise to validate the alleged cause in an appropriate hearing.
In fine, the DOLE provides the equalizer to the powers of the
employer in an Article 283 situation. Without the equalizing
influence of DOLE, the employee can be abused by his employer.
Further, I venture the view that the employee’s right to security
of tenure guaranteed in our Constitution calls for a pre-dismissal
notice and hearing rather than a post facto dismissal hearing. The
need for an employee to be heard before
507
VOL. 323, JANUARY 27, 2000 507

he can be dismissed cannot be overemphasized. As aforestated, in

the case at bar, petitioner was a regular employee of ISETANN. He
had the right to continue with his employment. The burden to
establish that this right has ceased is with ISETANN, as petitioner’s
employer. In fine, ISETANN must be the one to first show that the
alleged authorized cause for dismissing petitioner is real. And on
this factual issue, petitioner must be heard. Before the validity of the
alleged authorized cause is established by ISETANN, the petitioner
cannot be separated from employment. This is the simple meaning
of security of tenure. With due respect, the majority opinion will
reduce this right of our employees to a mere illusion. It will allow
the employer to dismiss an employee for a cause that is yet to be
established. It tells the employee that if he wants to be heard, he can
file a case with the labor arbiter, then the NLRC, and then this Court.
Thus, it unreasonably shifts the burden to the employee to prove that
his dismissal is for an unauthorized cause.
The pernicious effects of the majority stance are self-evident in
the case at bar. For one, petitioner found himself immediately
jobless and without means to support his family. For another,
petitioner was denied the right to rely on the power of DOLE to
inquire whether his dismissal was for a genuine authorized cause.
This is a valuable right, for all too often, a lowly employee can only
rely on DOLE’S vast powers to check employer abuses on illegal
dismissals. Without DOLE, poor employees are preys to the claws of
powerful employers. Last but not the least, it was the petitioner who
was forced to file a complaint for illegal dismissal. To a jobless
employee, filing a complaint is an unbearable burden due to its
economic cost. He has to hire a lawyer and defray the other
expenses of litigation while already in a state of penury. At this
point, the hapless employee is in a no win position to fight for his
right. To use a local adage, “aanhin pa ang damo kung patay na ang
kabayo.”
In the case at bar, the job of the petitioner could have been saved
if DOLE was given notice of his dismissal. The records show that
petitioner worked in ISETANN as security checker
508

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
pre-Wenphil right of employees but even expanded the right to
dismiss of employer by holding that the pre-dismissal notice
requirement is not even a function of due process. This seismic shift
in our jurisprudence ought not to pass.
The key to the new majority ruling is that the “due process clause
of the Constitution is a limitation on governmental powers. It does
not apply to the exercise of private power such as the termination of
employment under the Labor Code.” The main reason alleged is that
“only the State has authority to take the life, liberty, or property of
the individual. The purpose of the Due Process Clause is to ensure
that the exercise of this power is consistent with settled usage of
civilized society.”
There can be no room for disagreement on the proposition that
the due process clause found in the Bill of Rights of the Constitution
is a limitation on governmental powers. Nor can there be any debate
that acts of government violative of due process are null and void.
Thus, former Chief Justice
17
Roberto Concepcion emphasized in
Cuaycong v. Senbengco that
_______________
17 110 Phil. 113 (1960).
509
VOL. 323, JANUARY 27, 2000 509

“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
18
law. Per Schwartz, a known
authority in the field, viz.:
“ 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 ever-widening area, covering virtually all aspects of agency
action, including those previously excluded under the privilege concept. The
expansion of due process has not been limited to the traditional areas of
administrative law. We saw how procedural rights have expanded into the
newer field of social welfare, as well as that of education. But due process
expansion has not been limited to these fields. The courts have extended
procedural protections to cases involving prisoners and parolees, as well as
the use of established adjudicatory procedures. Important Supreme Court
decisions go further and invalidate 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 state’s aid to sequester property of a defaulting debtor, that the
creditor furnish adequate security and make a specific showing of probable
cause before a judge.
________________
18 Schwartz, op cit., pp. 273-274.
510

In addition, there has been an extension of procedural due process
requirements from governmental to private action. In Section 5.16 we saw
that Goldberg v. Kelly has been extended to the eviction of a tenant from a
public housing project. The courts have not limited the right to be heard to
tenants who have governmental agencies as landlords. Due process
requirements also govern acts by “private” landlords where there is
sufficient governmental involvement in the rented premises. Such an
involvement exists in the case of housing aided by Federal Housing
Administration financing and tax advantages. A tenant may not be
summarily evicted from a building operated by a “private” corporation
where the corporation enjoyed substantial tax exemption and had obtained
an FHA-insured mortgage, with governmental subsidies to reduce interest
payments. The “private” corporation was so saturated with governmental
incidents as to be limited in its practices by constitutional 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
19
employer. In Kingsize 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.
511
VOL. 323, JANUARY 27, 2000 511

“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 of due
process to which every employee is entitled to insure that the employer’s
prerogative to dismiss or lay off is not abused or exercised in an arbitrary
20
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 20-20 vision of
the Constitution will show that the more specific rights of labor are
not in the Bill of Rights which is historically directed against
government acts alone. Needless to state, the constitutional rights of
labor should be safeguarded against assaults from both government
and private parties. The majority should not reverse our settled
rulings outlawing violations of due process by employers in just
causes cases.
To prop up its new ruling against our employees, the majority
relates the evolution of our law on dismissal starting from Article
302 of the Spanish Code of Commerce, to the New Civil Code of
1950, to R.A. No. 1052 (Termination Pay Law), then to 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.
512

1974 or six months after its promulgation. The right of the employer
21 22
to terminate
23
the employment was embodied in Articles 283, 284,
and 285. Batas Pambansa Blg. 130 which was enacted on August
21, 1981 amended Articles 283 and 24284, which today are cited as
Arts. 282 and 283 of 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 one-half (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 co-employees x x x.
24 The acljustment of the numbering of the Articles is due to the fact that there are
two (2) Article 238.
513
VOL. 323, JANUARY 27, 2000 513

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

amended, among others, Article 277 of the Labor Code. Presently,
Article 277(b) reads:
“Art. 277. Miscellaneous provisions.(a) 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
514

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 pre-dismissal notice requirement is part of due process.
25
In
Batangas Laguna 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).
515
VOL. 323, JANUARY 27, 2000 515

“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 26
Pictures Workers Association vs. Premiere Productions, Inc.,
private respondent-employer filed with the Court of Industrial
Relations (CIR) a petition seeking authority to lay off forty-four of
its employees. On the date of the hearing of the petition, at the
request of the counsel of the private respondent, the judge of the
CIR conducted an ocular inspection in the premises of the employer.
He interrogated fifteen laborers. On the basis of the ocular
inspection, the judge concluded that the petition for lay off was
justified. We did not agree and we ruled that “the right of a person to
his labor is deemed to 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 pre-
dismissal notice requirement as a requirement of due process. Rule
XXIII provides:
________________
26 92 Phil. 843 (1953).
516

“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
employee’s
517
VOL. 323, JANUARY 27, 2000 517

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 one’s fellowmen.” It then rules that violation of
this norm will render the employer liable for damages but will not
render his act of dismissal void. Again, I cannot join the majority
stance. The faultline of
518

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 employer-employee 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 an employer-employee
relationship as similar to a sale
519
VOL. 323, JANUARY 27, 2000 519

of commodity is an archaic abomination. An employer-employee

relationship involves the common good and labor cannot be treated
as a mere commodity. As well-stated by former Governor General
Leonard Wood in his inaugural message before the 6th Philippine
Legislature on October 27, 1922, “it is opportune that we strive to
impress upon all the people that labor is neither a chattel nor a
commodity, but human and must be dealt with from the standpoint
of human interests.”
Next, the majority holds that under the Labor Code, only the
absence of a just cause for the termination of employment can make
the dismissal of an employee illegal. Quoting Article 279 which
provides:
“ Security of Tenure.—In cases of regular employment, the employer shall

not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.”
it is then rationalized that “to hold that the employer’s failure to give
notice before dismissing an employee 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 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-
520

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 employee-employer relationship by serving a
written notice on the employer at least one (1) month in advance.
The employer upon whom no such notice was served may hold the
employee liable for damages.”
In effect, the majority view is that its new ruling puts at par both
the employer and the employeeunder Article 285, the failure of an
employee to pre-notify in writing his employer that he is terminating
their relationship does not make his walk-out void; under its new
ruling, the failure of an employer to pre-notify an employee before
his dismissal does not also render the dismissal void. By this new
ruling, the majority in a short stroke has rewritten the law on
dismissal and tampered its pro-employee philosophy. Undoubtedly,
Article 285 favors the employee as it does not consider void his act
of terminating his employment relationship before giving the
required notice. But this favor given to an employee just like the
other favors in the Labor Code and the Constitution are precisely
designed to level the playing field between the employer and the
employee. It cannot be gainsaid that employees are the special
subject of solicitous laws because they have been and they continue
to be exploited by unscrupulous employers. Their exploitation has
resulted in labor warfare that has broken industrial peace and slowed
down economic progress. In the exercise of their wisdom, the
founding fathers of our 1935, 1973 and 1987 Constitutions as well
as the members 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
521
VOL. 323, JANUARY 27, 2000 521

of this policy is President Magsaysay’s call that “he who has less in
life should have more in law.”—I respectfully submit that the
majority cannot revise our laws nor shun the social justice thrust of
our Constitution in the guise of interpretation especially when its
result is to favor employers and disfavor employees. The majority
talks of high nobility but the highest nobility it to stoop down to
reach the poor.
IV. NO UNJ UST RESULTS OF CONSIDERING DISMISSALS

WITHOUT PRIOR NOTICE AS ILLEGAL
The majority further justifies its new ruling by holding: “The refusal to look
beyond the validity of the initial action taken by the employer to terminate
employment either for an authorized or just cause can result in an injustice
to the employer. For not having been given notice and hearing before
dismissing an employee, who is otherwise guilty of, say, theft, or even of an
attempt against the life of the employer, an employer will be forced to keep
in his employ such guilty employee. This is unjust.
It is true the Constitution regards labor as “a primary social economic
force.” But so does it declare that it “recognizes the indispensable role of the
private sector, encourages private enterprise, and provides incentives to
needed investment.” The Constitution bids the State to “afford full
protection to Labor.” But it is equally true that “the law, in protecting the
rights of the laborer, authorizes neither oppression nor self-destruction of
the employer.” And it is oppression to compel the employer to continue in
employment one who is guilty or to force the employer to remain in
operation when it is not economically in his interest to do so.”
With due respect, I cannot understand this total turnaround of the

majority on the issue of the unjustness of lack of pre-dismissal
notice to an employee. Heretofore, we have always considered this
lack of notice as unjust to the employee. Even under Article 302 of
the Spanish Code of Commerce of 1882 as related by the majority,
an employer who opts to dismiss an employee without any notice
has to pay a mesada equivalent to his salary for one month because
of its unjustness. This policy was modified by our legislators in
favor of a more liberal treatment of labor as our country came
522

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 Constitution which are intended to
bring about the needed social and economic equilibrium between
component elements of society through the application of what may be
termed as the justitia communis advocated by Grotius and Leibnitz many
years ago to be secured through the counter-balancing of economic and
social forces and employers or landlords, and employees or tenants,
respectively; and by prescribing penalties for the violation of the orders and
later, Commonwealth Act No. 213, entitled ‘An Act to define and regulate
27
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
VOL. 323, JANUARY 27, 2000 523

this Court has always considered lack of pre-dismissal notice as

unjust to employees, the new ruling of the majority now declares it
is unjust to employers as if employers are the ones exploited by
employees. In truth, there is nothing unjust to employers by
requiring them to give notice to their employees before denying
them their jobs. There is nothing unjust to the duty to give notice for
the duty is a reasonable duty. If the duty is reasonable, then it is also
reasonable to demand its compliance before the right to dismiss on
the part of an employer can be exercised. If it is reasonable for an
employer to comply with the duty, then it can never be unjust if
noncompliance therewith is penalized by denying said employer his
right to dismiss. In fine, if the employer’s right to dismiss an
employee is forfeited for his failure to comply with this simple,
reasonable duty to pre-notify his employee, he has nothing to blame
but himself. If the employer is estopped from litigating the issue of
whether or not he is dismissing his employee for a just or an
authorized cause, he brought the consequence on to himself. The
new ruling of the majority, however, inexplicably considers his
consequence as unjust to the employer and it merely winks at his
failure to give notice.
V. A LAST WORD
The new ruling of the majority erodes the sanctity of the most
important right of an employee, his constitutional right to security of
tenure. This right will never be respected by the employer if we
merely honor the right with a price tag. The policy of “dismiss now
and pay later” favors monied employers and is a mockery of the
right of employees to social justice. There is no way to justify this
pro-employer stance when the 1987 Constitution is undeniably more
pro-employee 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

tenure. These are constitutional polestars and not mere works of

cosmetology. Our odes to the poor will be meaningless mouthfuls if
we cannot protect the employee’s right to due process against the
power of the peso of employers.
To an employee, a job is everything. Its loss involves terrible
repercussions—stoppage of the schooling of children, ejectment
from leased premises, hunger to the family, a life without any safety
net. Indeed, to many employees, dismissal is their lethal injection.
Mere payment of money by way of separation pay and backwages
will not secure food on the mouths of employees who do not even
have the right to choose what they will chew.
I vote to grant the petition.
SEPARATE (Concurring and Dissenting) OPINION
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 these are the just causes under
1
Article 282 and the authorized
_______________
1 ART. 282. Termination by employer—An employer may terminate an


(c) Fraud or willful breach by the employee of the trustreposed in him by his
representative; and
(e) Other causes analogous to the foregoing.
525
VOL. 323, JANUARY 27, 2000 525

2 3
causes under Article 283 and Article 284. An employee whose
employment is terminated for4 a just cause is not entitled to the
payment of separation benefits.
_______________
2 ART. 283. Closure of establishment and reduction of personnel.The employer

of operation of the establishment or undertaking unless the closing is for the purpose
of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) 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 one-half (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.
3 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
well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.
4 See San Miguel Corporation vs. NLRC, 255 SCRA 580. Section 7, Rule I, Book
VI, of the Omnibus Rules Implementing the Labor Code provides:
“Sec 7. Termination of employment by employer.The just causes for terminating the services of
an employee shall be those provided in Article 282 of the Code. The separation from work of
an employee for a just cause does not entitle him to the termination pay provided in Code,
without prejudice, however, to whatever rights, benefits and privileges he may have under the
applicable individual or collective bargaining
526

Separation pay would be due, however, when the lay-off is on

account of an authorized cause. The amount of separation pay would
depend on the ground for the termination of employment. A lay-off
due to the installation of a labor saving device, redundancy (Article
283) or disease (Article 284), entitles the worker to a separation pay

equivalent to “one (1) month pay or at least one (1) month pay for
every year of service, whichever is higher.” When the termination of
employment is due to retrenchment to prevent losses, or to closure
or cessation of operations of an establishment or undertaking not due
to serious business losses or financial reverses, the separation pay is
only an equivalent of “one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher.” In the
above instances, a fraction of at least six (6) months is considered as
one (1) whole year.
Due process of law, in its broad concept, is a principle in our
legal system that mandates due protection to the basic rights,
inherent or accorded, of every person against harm or transgression
without an intrinsically just and valid law, as well as an opportunity
to be heard before an impartial tribunal, that can warrant such an
impairment. Due process guarantees 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 two-fold, 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.”
527
VOL. 323, JANUARY 27, 2000 527

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”
5
when referring
to the6 notices prescribed in the Labor Code and its implementing
rules that could, thereby, albeit unintendedly and without meaning
to, confuse the latter with the notice requirement in adjudicatory
proceedings. It is not seldom when the law puts up various
conditions in the juridical relations of parties; it would not
_______________
5 See Foonote 2.
6 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 ter-mination.”
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

be accurate to consider, I believe, an infraction thereof to ipso-facto

raise a problem of due process. The mere failure of notice of the
dismissal or 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 in order to justify that termination. In assailing the dismissal
or lay-off, an employee is entitled to be heard and to be given the
corresponding due notice of the proceedings. It would be when this
right is withheld without cogent reasons that, indeed, it can rightly
be claimed that the fundamental demands of procedural due process
have been unduly discarded.
I do appreciate the fact that the prescribed notices can have
consequential benefits to an employee who is dismissed or laid off,
as the case may be; its non-observance by an employer, therefore,
can verily entitle the employee to an award of damages but, to
repeat, not to the extent of rendering outrightly illegal that dismissal
or lay-off predicated on valid grounds. I would consider the
indemnification to the employee not a penalty or a fine against the
employer, the levy of either of which would require an appropriate
legislative enactment; rather, I take the grant of indemnity as
justifiable as an award of nominal damages in accordance with the
provisions of Articles 2221-2223 of the Civil Code, viz.:
“Art. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.
“Art. 2222. The court may award nominal damages in every obligation
arising from any source enumerated in article 1157, or in every case where
any property right has been invaded.
“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
529
VOL. 323, JANUARY 27, 2000 529

damages to be awarded, the circumstances of each case should thus

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

employee;
(b) his salary or compensation at the time of the termination of
employment vis-a-vis the capability of the employer to pay;
(c) question of whether the employer has deliberately violated
the requirements for termination of employment or has
attempted to comply, at least substantially, therewith; and/or
(d) reasons for the termination of employment.
I might stress the rule that the award of nominal damages is not for
the purpose of indemnification for a loss but for the recognition and
vindication of a right. The degree of recovery therefor can depend,
on the one hand, on the constitution of the right, and, upon the other
hand, on the extent and manner by which that right is ignored to the
prejudice 7of the holder of that right.
In fine —
A. A just cause or an authorized cause and a written notice of

dismissal or lay-off, as the case may be, are required
concurrently but not really equipollent in their consequence,
in terminating an employer-employee relationship.
B. Where there is neither just cause nor authorized cause, the
reinstatement, of the employee and the payment of back
salaries would be proper and should be decreed. If the
dismissal or lay-off is attended by bad faith or if the
employer acted in wanton or oppressive manner, moral and
exemplary damages might also be 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

to breaches of contract where the defendant acted fraudulently or in bad

faith.”
“ART. 2232. In contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.” (Civil Code)
Separation pay can substitute for reinstatement if such reinstatement

is not feasible, such as in case of a clearly strained employer-
employee relationship (limited to managerial positions and contracts
of employment predicated on trust and confidence) or when the
work or position formerly held by the dismissed employee plainly
has since ceased to be available.
C. Where there is just cause or an authorized cause for the
dismissal or lay-off but the required written notices therefor have not
been properly observed by an employer, it would neither be right
and justifiable nor likely intended by law to order either the
reinstatement of the dismissed or laid-off employee or the payment
of back salaries to him simply for the lack of such notices if, and so
long as, the employee is not deprived of an opportunity to contest
that dismissal or lay-off and to accordingly be heard thereon. In the
termination of employment for an authorized cause (this cause being
attributable to the employer), the laid-off employee is statutorily
entitled to separation pay, unlike a dismissal for a just cause (a cause
attributable to an employee) where no separation pay is due. In
either case, if an employer fails to comply with the requirements of
notice in terminating the services of the employee, the employer
must be made to pay, as so hereinabove expressed, corresponding
damages to the employee.
WHEREFORE, I vote to hold (a) that the lay-off in the case at
bar is due to redundancy and that, accordingly, the separation pay to
petitioner should be increased to one month, instead of one-half
month, pay for every year of service, and (b) that petitioner is
entitled to his unpaid wages, proportionate 13th-month pay, and an
indemnity of P10,000.00 in keeping with the nature and purpose of,
as well as the rationale behind, the grant of nominal damages.
531
VOL. 323, JANUARY 27, 2000 531
SEPARATE OPINION
PANGANIBAN, J.:
In the case before us, the Court is unanimous in at least two findings:
(1) petitioner’s dismissal was due to an authorized cause,
redundancy; and (2) petitioner was notified of his dismissal only on
the very day his employment was terminated. The contentious issue
arising out of these two findings is as follows: What is the legal
effect and the corresponding sanction for the failure of the employer
to give the employee and the Department of Labor and Employment
(DOLE) the 30-day notice of termination required under Article 283
of the Labor Code?
During the last ten (10) years, the Court has answered the
foregoing question by ruling that the dismissal should be upheld
although the employee should be given “indemnity or damages”
ranging from P1,000 to P10,000 depending on the circumstances.
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 ten-year
doctrine on this question and has at least, in the process, increased
the monetary award that should go to the dismissed employee—
from a nominal sum in the concept “indemnity or damages” to “full
back wages.” Shortly after my assumption of office on October 10,
1995, I already questioned this practice of granting “indemnity only”
to employees
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.
532

registered reservations
2
on this rule in my ponencia in MGG Marine
Services v. NLRC and gave 3
it full discussion in4 my Dissents in
Better Buildings v. NLRC and in Del Val v. NLRC.
Without in any way diminishing my appreciation of this
reexamination and of the more financially-generous treatment the
Court has accorded labor, I write to take issue with the legal basis of
my esteemed colleague, Mr. Justice Mendoza, in arriving at his legal
conclusion that “the employer’s failure to comply with the notice
requirement does not constitute a denial of due process but a mere
failure to observe a procedure for the termination of employment
which makes the termination of employment merely ineffectual.” In
short, he believes that (1) the 30-day notice requirement finds basis
only in the Labor Code, and (2) the sanction for its violation is only
“full back wages.”
With due respect, I submit the following counter-arguments:
(1) The notice requirement finds basis not only in the Labor
Code but, more important, in the due process clause of the
Constitution.
(2) Consequently, when the employee is dismissed without due
process, the legal effect is an illegal dismissal and the
appropriate sanction is full back wages plus reinstatement,
not merely full back wages. It is jurisprudentially settled, as
I will show presently, that when procedural due process is

violated, the 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 Mendoza’s premise,
even the Labor Code expressly grants the dis-
________________
2 259 SCRA 665, July 29, 1996.

3 283 SCRA 242, December 15, 1997. In that case, I proposed to grant separation
pay in lieu of reinstatement because, by the em-ployee’s acts, he had made
reinstatement improper, a fact not present in the instant case.
4 296 SCRA 283, September 28, 1998.
533
VOL. 323, JANUARY 27, 2000 533

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 employee’s right to due process as mandated by law and the
Constitution. It implicitly allows the employer to simply ignore such
right and to just pay the employee. While it increases the payment to
“full back wages,” it doctrinally denigrates his right to due process
to a mere statutory right to notice.
Let me explain the foregoing by starting with a short background
of our jurisprudence on the right to due process.
Without Due Process, the Proceedings Are Illegal

In the past, this Court has untiringly reiterated that there are two
essential requisites for an employer’s
5
valid
6
termination of an
employee’s services: (1) a just or authorized cause
________________
5 Art. 282 of the Labor Code provides:

“ART. 282. Termination by employer.—An employer may terminate an

(c) Fraud or willful breach by the employee of the trust reposed in him by his
representative; and
(e) Other causes analogous to the foregoing.”
6 Arts. 283 & 284 provide:
534

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

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 one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year.
ART. 284. Disease as a ground for termination.—An employer may terminate the
services of an employee who has been found to be suffering from any disease and
well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater a fraction of at least six (6) months being
considered as one (1) whole year.”
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.
535
VOL. 323, JANUARY 27, 2000 535

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
10
by the Supreme Court. In Pepsi-Cola 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 non-existent.” 11
This Court in People v. Bocar emphatically made the 12 following
pronouncement, which has been reiterated in 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 State’s right to due process raises a serious jurisdictional
issue (Gumabon vs. Director of the Bureau of Prisons, L-30026, 37 SCRA
420 [Jan. 30, 1971]) which cannot be glossed over or disregarded at will.
Where the denial of the fundamental right of due process is apparent, a
decision rendered in disregard of that right is void for lack of jurisdiction
(Aducayen vs. Flores, L-30370,
_______________
8 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, 170-171, 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

[May 25, 1973] 51 SCRA 78; Shell Co. vs. Enage, L-30111-12, 49 SCRA
416 [Feb. 27, 1973]). Any judgment or decision rendered notwithstanding
such violation may be regarded as a ‘lawless thing, which can be treated as
an outlaw and slain at sight, or ignored wherever it exhibits its head’
(Aducayen vs. Flores, supra).”
13
In the earlier case Bacus v. Ople, this court also nullified the then
labor minister’s 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 them14 to
present their 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 well-settled
in this jurisdiction that avoidance of such technicalities of law or procedure
in ascertaining objectively the facts in each case should not, however, cause
a denial of due process. The relative freedom of the labor arbiter from the
rigidities of procedure cannot be invoked to evade what was clearly
emphasized in the landmark case of Ang Tibay v. Court of Industrial
Relations that all administrative bodies cannot ignore or disregard the
fundamental and essential requirements of due process.”
In the said case, the respondent company was ordered to reinstate

the dismissed workers, pending a hearing “giving them the
opportunity to be heard and15 present their 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

and violation of bank rules and regulations. He submitted his

Answer denying the charges and explaining his defenses.
Later, two personnel examiners of the bank conducted a fact-
finding investigation. They stressed to him that a formal
investigation would follow, in which he could confront and examine
the witnesses for the bank, as well as present his own. What
followed, however, was a Memorandum notifying him that he had
been found guilty of the charges and that he was being dismissed.
After several futile attempts to secure a copy of the Decision
rendered against him, he instituted against PNB a Complaint for
illegal dismissal and prayed for reinstatement and damages.
The trial court held that Virtudazo had been deprived of his rights
to be formally investigated and to cross-examine the witnesses. This
Court sustained the trial court, stating resolutely: “The proceedings
having been conducted without according to Virtudazo the ‘cardinal
primary rights of due process’ guaranteed to every party in an
administrative or quasijudicial
16
proceeding, said 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 20
In People v. San21
Diego, People v. Sola,
22
People v. 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

similarly voided the trial court’s grant of bail to the accused upon a
finding that the prosecution had been deprived of procedural due
process. 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
accused. 24
Recently,
25
the Court vacated its earlier Decision in People v.
Parazo upon realizing that the accused“a deaf-mute, a mental
retardate, whose mental age [was] only seven (7) years and nine (9)
months, and with low IQ of 60 only”had not been ably assisted by a
sign language26 expert during his arraignment and trial. Citing People
v. 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 letter-
petition which was passed upon by the Comelec without affording
the candidate the opportunity to explain her side and to counter the
allegations in said letter-petition. 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

necessity of the observance of the twin requirements of notice 27

and
hearing before any decision can be validly rendered in a case.
Clearly deducible from our extant jurisprudence is that the denial
of a person’s fundamental right to due process amounts to the
illegality of the proceedings against him. Consequently, he is
brought back to his status quo ante, not merely awarded nominal
damages or indemnity.
Our labor force deserves no less.28Indeed, the State recognizes it
as its primary social economic force,29 to which 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
30
aware that in a long line of cases starting with 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

benefits. Instead, the employee is granted

31
an indemnity (or penalty32
or damages) ranging from P1,000 to as much as P10,000,
depending on the circumstances of the case and the gravity of the
employer’s omission. Since then, 33Wenphil 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 factual milieu of each case. Indemnity or damages
has become an easy substitute for due process.
Be it remembered, however that the facts in Wenphil clearly
showed the impracticality and the futility of observing the procedure
laid down by law and by the Constitution for terminating
employment. The employee involved therein appeared to have
exhibited a violent temper and caused trouble during office hours. In
an altercation with a co-employee, he “slapped [the latter’s] cap,
stepped on his foot and picked up the ice scooper and brandished it
against [him].” When summoned by the assistant manager, the
employee “shouted and uttered profane words” instead of giving an
explanation. He was caught virtually in flagrante delicto in the
presence of many people. Under the circumstances obtaining, swift
action was necessary to preserve order and discipline, as well as to

safeguard the customers’ confidence in the employer’s 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 Alham-bra 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

ness—a fast-food chain catering to the general public where courtesy

is a prized virtue.
However, in most of the succeeding cases, including the present
one before us in which the petitioner was dismissed on the very day
he was served notice, there were ample opportunities for the
employers to observe the requisites of due process. There were no
exigencies that called for immediate response. And yet, Wenphil was
instantly invoked and due process brushed aside.
I believe that the price that the Court has set for the infringement
of the fundamental right to due process is too insignificant, too
niggardly, and sometimes even too late. I believe that imposing a
stiffer sanction is the only way to emphasize to employers the
extreme importance of the right to due process in our democratic
system. Such right is too sacred to be taken for granted or glossed
over in a cavalier fashion. To hold otherwise, as by simply imposing
an indemnity or even “full back wages,” is to allow the rich and
powerful to virtually purchase and to thereby stifle a constitutional
right granted to the poor and marginalized.
It may be asked: If the employee is guilty anyway, what
difference would it make if he is fired without due process? By the
same token, it may be asked: If in the end, after due hearing, a
criminal offender is found guilty anyway, what difference would it
make if he is simply penalized immediately without the trouble and
the expense of trial? The absurdity
34
of this argument is too apparent
to deserve further discourse.
Worker’s 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 employee’s
________________
34 See Concurring and Dissenting Opinion in Better Buildings, Inc. v. NLRC, 283
SCRA 242, 256, December 15, 1997.
542

dismissal or lay-off.” He argues that the due process clause of the

Constitution may be used against the government only. Since the
Labor Code does not accord employees the right to a hearing, ergo,
he concludes, they do not have the right to due process.
I disagree. True, as pointed out by Mr. Justice Mendoza,

traditional doctrine holds that constitutional rights may be invoked
only against the State. This is because in the past, only the State was
in a position to violate these rights, including the due process clause.
However, with the advent of liberalization, deregulation and
privatization, the State tended to cede some of its powers to the
“market forces.” Hence, corporate behemoths and even individuals
may now be sources of abuses and threats to human rights and
liberties. I believe, therefore, that such traditional doctrine should be
modified to enable the judiciary to cope with these new paradigms 34-a
and 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]ne’s
employment, profession, trade or calling is a property right within
the protection
35
of the constitutional, guaranty of due process of
law.”
In a long line of cases involving judicial, quasi-judicial and
administrative proceedings, some of which I summarized earlier, the
Court has held that the twin requirements of notice and hearing (or,
at the very least, an opportunity to be heard) constitute the essential
elements of due process. In labor proceedings, both are the conditio
sine qua non for a
________________
34-a See Panganiban, Leadership by Example, 1999 ed., pp. 60-61.

35 Wallem Maritime Services, Inc. v. NLRC, 263 SCRA 174, October 15, 1996; per
Romero, J. Bernas, The 1987 Constitution of the Republic of the Philippines: A
Commentary, 1996 ed., p. 101.
543
VOL. 323, JANUARY 27, 2000 543

36
dismissal to be validly effected. The perceptive Justice Irene Cortes
has aptly stated: “One cannot go without the other, for37
otherwise 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 an authorized
38
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 lay-off.”
544

is “subject to constitutional right of workers to security of 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 30-day written notice and, at the same
time, to conclude that it has “legal effect” appears 39to be
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 latter’s
constitutional right to due process, the former brings this sanction
upon itself. Is it unfair to imprison a criminal? No! By violating the
law, one brings the penal sanction upon oneself. There is nothing
unfair or unusual about this inevitable chain of cause and effect, of
crime and punishment, of violation and sanction.
________________
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
VOL. 323, JANUARY 27, 2000 545

Due Process Begins With Each of Us

To repeat, due process begins with the employer, not with the labor
tribunals. An objective reading of the Bill of Rights clearly shows
that the due process protection is not limited to government action
alone. The Constitution does not say that the right cannot be claimed
against private individuals and entities. Thus, in PNB v. Apalisok,
which I cited earlier, this Court voided the proceedings conducted by
petitioner bank because of its failure to observe Apalisok’s right to
due process.
Truly, justice is dispensed not just by the courts and 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, life-or-death issues are at stake?

Unless each one is committed to a faithful observance of day-to-day
fundamental rights, our ideal of a just society can never be
approximated, not to say attained.
In the final analysis, what is involved here is not simply the
amount of monetary award, whether insignificant or substantial;
whether termed indemnity, penalty or “full back wages.” Neither is
it merely a matter of respect for workers’ rights or adequate
protection of labor. The bottom line is really the constitutionally
granted right to due process. And due process is the very essence of
justice itself. Where the rule of law is the bedrock of our free society,
justice is its very lifeblood. Denial of due process is thus no less than
a denial of justice itself.
546

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 Opinion that the
non-observance 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 lay-off 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.
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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9/9/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 323

VOL. 323, JANUARY 27, 2000 445

RUBEN SERRANO, petitioner, vs. NATIONAL LABOR

Labor Law; Dismissal; Absent proof that management acted in a

446 SUPREME COURT REPORTS ANNOTATED

Serrano vs. National Labor Relations Commission

VOL. 323, JANUARY 27, 2000 447

Serrano vs. National Labor Relations Commission

448 SUPREME COURT REPORTS ANNOTATED

Serrano vs. National Labor Relations Commission

VOL. 323, JANUARY 27, 2000 449

Serrano vs. National Labor Relations Commission

BELLOSILLO, J., Separate Opinion:

Labor Law; Dismissal; Just and authorized causes for termination of

450 SUPREME COURT REPORTS ANNOTATED

Serrano vs. National Labor Relations Commission

power to determine whether the exercise of such prerogative is in

VOL. 323, JANUARY 27, 2000 451

Serrano vs. National Labor Relations Commission

failure to send notice of termination to Serrano is not tantamount to

452 SUPREME COURT REPORTS ANNOTATED

PUNO, J., Dissenting Opinion:

Labor Law; Dismissal; To justify dismissal of an employee for a just

Same; Same; The burden should be on the employer to establish and

VOL. 323, JANUARY 27, 2000 453

VITUG, J., Separate Opinion:

Labor Law; Dismissal; An employee whose employment is terminated

454 SUPREME COURT REPORTS ANNOTATED

Serrano vs. National Labor Relations Commission

that dismissal or lay-off and to accordingly be heard thereon. In the

PANGANIBAN, J., Separate Opinion:

Labor Law; Dismissal; When an employee is dismissed without notice

VOL. 323, JANUARY 27, 2000 455

Serrano vs. National Labor Relations Commission

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

This is a petition seeking review of the resolutions, dated March 30,

456 SUPREME COURT REPORTS ANNOTATED

Relations Commission (NLRC) which reversed the decision of the

October 11, 1991

The loss of his employment prompted petitioner to ﬁle a complaint

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

VOL. 323, JANUARY 27, 2000 457

The parties were required to submit their position papers, on the

employees in the security section were so inefﬁcient so as to justify

WHEREFORE, above premises considered, judgment is hereby decreed:

(a) Finding the dismissal of the complainant to be illegal and

458 SUPREME COURT REPORTS ANNOTATED

from the time of his dismissal until reinstatement (computed till

Private respondent appealed to the NLRC which, in its resolution of

pervisor referred to by petitioner to prove bad faith on private

IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE

Petitioner contends that abolition of private respondent’s Security

Petitioner Laid Off for Cause

Petitioner’s contention has no merit. Art. 283 provides:

Closure of establishment and reduction of personnel.The employer may also

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

460 SUPREME COURT REPORTS ANNOTATED

In contracting the services of Gemac Machineries, as part of the company’s

Indeed, as we pointed out in another case, the “[management of a

8 213 SCRA 652 (1992).

VOL. 323, JANUARY 27, 2000 461

Court will12 not interfere with the exercise of judgment by an