SERRANO V.

NATIONAL LABOR RELATIONS COMMISSION AND ISETANN DEPARTMENT STORE

Certiorari

FACTS

Serrano was a regular employee of Isetann Department Store as the head of Security Checker. In 1991, as a cost-cutting
measure, Isetann phased out its entire security section and engaged the services of an independent security agency.
Petitioner filed a complaint for illegal dismissal among others. Labor arbiter ruled in his favor as Isetann 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.
NLRC reversed the decision and ordered petitioner to be given separation pay.

Labor Arbiter held that Serrano was illegally dismissed

 Failed to establish that the cause of retrenchment is to minimize losses
 Did not accord due process to Serrano
 Did not use reasonable standards in selecting employees to be terminated
 Did not show employees’ inefficiency so as to justify their replacement
 The day after Serrano’s dismissal, Isetann hired another person as a safety and security supervisor
 Isetann ordered to pay backwages, reinstatement, unpaid wages, 13th month pay, attorney’s fees
NLRC reversed Labor Arbiter’s decision upon Isetann’s appeal

 Phase-out of security section, hiring of agency is a legitimate business decision

 Labor Arbiter’s distinction between retrenchment and employment of cost-saving devices insignificant
 Reasonable criteria does not apply because the entire Security Section was abolished
 No bad faith in appointing a supervisor because it was separate from Serrano’s position as Security Checkers head
 Isetann ordered to give separation pay, unpaid salary, 13th month pay
 Serrano’s MfR denied

ISSUE AND HOLDING

WON the abolition of the Security Checkers section and the employment of an independent security agency falls under
any of the authorized causes for dismissal under Article 283 of the Labor Code – 
YES, authorized cause is redundancy;

WON that private respondent failed to accord due process to petitioner.

Held:

Accordingly, The court held d that the termination of petitioner’s services was for an authorized
cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code .
Art. 283 also provides that to terminate the employment of an employee for any of the
authorized causes the employer must serve "a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date thereof.”

In the case at bar, petitioner was given a notice of termination on October 11, 1991. On the
same day, his services were terminated. He was thus denied his right to be given written notice
before the termination of his employment, and the question is the appropriate sanction for the
violation of petitioner’s right.
SERRANO vs. ISETANN et. al. abandoned the WENPHIL DOCTRINE and ruled that if the employee is dismissed under
just or authorized cause but the affected employee’s right to due process has been violated, his dismissal becomes
ineffectual. Therefore, the employee is entitled to backwages from the time he was dismissed until the determination of
the justness of the cause of the dismissal.

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.