G.R. No.

117040           January 27, 2000

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

MENDOZA, J.:

This is a Petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of
the National Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter
and dismissed petitioner Ruben Serrano's complaint for illegal dismissal and denied his motion for
reconsideration. The facts are as follows:

Petitioner was hired by private respondent Isetann Department Store as a security checker to
apprehend shoplifters and prevent pilferage of merchandise. Initially hired on October 4, 1984 on
1 

contractual basis, petitioner eventually became a regular employee on April 4, 1985. In 1988, he
became head of the Security Checkers Section of private respondent. 2

Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire
security section and engage the services of an independent security agency. For this reason, it
wrote petitioner the following memorandum: 3

October 11, 1991

MR. RUBEN SERRANO

PRESENT

Dear Mr. Seranno,

In view of the retrenchment program of the company, we hereby reiterate our verbal
notice to you of your termination as Security Section Head effective October 11,
1991.

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 overtime pay. 4

The parties were required to submit their position papers, on the basis of which the Labor
Arbiter defined the issues as follows: 5

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.
1âwphi1.nêt

Accordingly, the Labor Arbiter ordered: 6

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 from the time of his dismissal until reinstatement. (computed till promulgation
only) based on his monthly salary of P4,040.00/month at the time of his termination but
limited to (3) three years;

(b) Ordering the Respondent to immediately reinstate the complainant to his former position
as security section head or to a reasonably equivalent supervisorial position in charges of
security without loss of seniority rights, privileges and benefits. This order is immediately
executory even pending appeal;

(c) Ordering the Respondent to pay complainant unpaid wages in the amount
of P2,020.73 and proportionate 13th month pay in the amount of P3,198.30;

(d) Ordering the Respondent to pay complainant the amount of P7,995.91, representing 10%
attorney's fees based on the total judgment award of P79,959.12.

All other claims of the complainant whether monetary or otherwise is hereby dismissed for
lack of merit.

SO ORDERED.

Private respondent appealed to the NLRC which, in its resolution of March 30, 1994; reversed the
decision of the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one
month pay for every year of service, unpaid salary, and proportionate 13th month pay. Petitioner
filed a motion for reconsideration, but his motion was denied.

The NLRC held that the phase-out of private respondent's security section and the hiring of an
independent security agency constituted an exercise by private respondent of "[a] legitimate
business decision whose wisdom we do not intend to inquire into and for which we cannot substitute
our judgment"; that the distinction made by the Labor Arbiter between "retrenchment" and the
employment of cost-saving devices" under Art. 283 of the Labor Code was insignificant because the
company official who wrote the dismissal letter apparently used the term "retrenchment" in its "plain
and ordinary sense: to layoff or remove from one's job, regardless of the reason therefor"; that the
rule of "reasonable criteria" in the selection of the employees to be retrenched did not apply because
all positions in the security section had been abolished; and that the appointment of a safety and
security supervisor referred to by petitioner to prove bad faith on private respondent's part was of no
moment because the position had long been in existence and was separate from petitioner's position
as head of the Security Checkers Section.

Hence this petition. Petitioner raises the following issue:

IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE

RESPONDENT TO REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND
FOR THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER THE LATTER? 7

Petitioner contends that abolition of private respondent's Security Checkers Section and the
employment of an independent security agency do not fall under any of the authorized causes for
dismissal under Art. 283 of the Labor Code.

Petitioner Laid Off for Cause

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

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

In De Ocampo v. National Labor Relations Commission, this Court upheld the termination of
8 

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
exercise of such prerogative. 9

In Asian Alcohol Corporation v. National Labor Relations Commission, the Court likewise upheld the
10 

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,
eventually deference is to be paid to what management decides." Consequently, absent proof that
11 

management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of
judgment by an employer. 12

In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security
section, private respondent's real purpose was to avoid payment to the security checkers of the
wage increases provided in the collective bargaining agreement approved in 1990. Such an
13 

assertion is not sufficient basis for concluding that the termination of petitioner's employment was not
a bona fide decision of management to obtain reasonable return from its investment, which is a right
guaranteed to employers under the Constitution. Indeed, that the phase-out of the security section
14 

constituted a "legitimate business decision" is a factual finding of an administrative agency which

must be accorded respect and even finality by this Court since nothing can be found in the record
which fairly detracts from such finding. 15

Accordingly, we hold that the termination of petitioner's services was for an authorized cause, i.e.,
redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation
pay at the rate of one month pay for every year of service.

Sanctions for Violations of the Notice Requirement

Art. 283 also provides that to terminate the employment of an employee for any of the authorized
causes the employer must serve "a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof." In the case at bar, petitioner
was given a notice of termination on October 11, 1991. On the same day, his services were
terminated. He was thus denied his right to be given written notice before the termination of his
employment, and the question is the appropriate sanction for the violation of petitioner's right.

To be sure, this is not the first time this question has arisen. In Subuguero v. NLRC, workers in a
16 

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 which, although based on any
of the just causes under Art. 282, were effected without notice and hearing to the employee as
17 

required by the implementing rules. As this Court said: "It is now settled that where the dismissal of
18 

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."19
The rule reversed a long standing policy theretofore followed that even though the dismissal is
based on a just cause or the termination of employment is for an authorized cause, the dismissal or
termination is illegal if effected without notice to the employee. The shift in doctrine took place in
1989 in Wenphil Corp. v. NLRC. In announcing the change, this Court said:
20  21

The Court holds that the policy of ordering the reinstatement to the service of an employee
without loss of seniority and the payment of his wages during the period of his separation
until his actual reinstatement but not exceeding three (3) years without qualification or
deduction, when it appears he was not afforded due process, although his dismissal was
found to be for just and authorized cause in an appropriate proceeding in the Ministry of
Labor and Employment, should be 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.

xxx     xxx     xxx

However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as
above discussed. The dismissal of an employee must be for just or authorized cause and
after due process. Petitioner committed an infraction of the second requirement. Thus, it
must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from employment. Considering
the circumstances of this case petitioner must indemnify the private respondent the amount
of P1,000.00. The measure of this award depends on the facts of each case and the gravity
of the omission committed by the employer.

The fines imposed for violations of the notice requirement have varied from P1,000.00 to 22 

P2,000.00 to P5,000.00 to P10,000.00.

23  24  25

Need for Reexamining the Wenphil Doctrine

Today, we once again consider the question of appropriate sanctions for violations of the notice
experience during the last decade or so with the Wenphil doctrine. The number of cases involving
dismissals without the requisite notice to the employee, although effected for just or authorized
causes, suggest that the imposition of fine for violation of the notice requirement has not been
effective in deterring violations of the notice requirement. Justice Panganiban finds the monetary
sanctions "too insignificant, too niggardly, and sometimes even too late." On the other hand, Justice
Puno says there has in effect been fostered a policy of "dismiss now; pay later" which moneyed
employers find more convenient to comply with than the requirement to serve a 30-day written notice
(in the case of termination of employment for an authorized cause under Arts. 283-284) or to give
notice and hearing (in the case of dismissals for just causes under Art. 282).

For this reason, they regard any dismissal or layoff without the requisite notice to be null and void
even though there are just or authorized cause for such dismissal or layoff. Consequently, in their
view, the employee concerned should be reinstated and paid backwages.

Validity of Petitioner's Layoff Not Affected by Lack of Notice

We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the
sanction of fine for an employer's disregard of the notice requirement. We do not agree, however,
that disregard of this requirement by an employer renders the dismissal or termination of
employment null and void. Such a stance is actually a reversion to the discredited pre-Wenphil rule
of ordering an employee to be reinstated and paid backwages when it is shown that he has not been
given notice and hearing although his dismissal or layoff is later found to be for a just or authorized
cause. Such rule was abandoned in Wenphil because it is really unjust to require an employer to
keep in his service one who is guilty, for example, of an attempt on the life of the employer or the
latter's family, or when the employer is precisely retrenching in order to prevent losses.

The need is for a rule which, while recognizing the employee's right to notice before he is dismissed
or laid off, at the same time acknowledges the right of the employer to dismiss for any of the just
causes enumerated in Art. 282 or to terminate employment for any of the authorized causes
mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an employer who is found to have
dismissed an employee for cause without prior notice is deemed ineffective in deterring employer
violations of the notice requirement, the remedy is not to declare the dismissal void if there are just
or valid grounds for such dismissal or if the termination is for an authorized cause. That would be to
uphold the right of the employee but deny the right of the employer to dismiss for cause. Rather, the
remedy is to order the payment to the employee of full backwages from the time of his dismissal until
the court finds that the dismissal was for a just cause. But, otherwise, his dismissal must be upheld
and he should not be reinstated. This is because his dismissal is ineffectual.

For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e.,
installation of a labor-saving device, but the employer did not give him and the DOLE a 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 Concepcion Vda. de Cuaycong v. Vda. de Sengbengco that "acts of
26 

Congress, as well as of the Executive, can deny due process only under the pain of nullity, and
judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory
provision to the contrary notwithstanding." Justice Puno concludes that the dismissal of an employee
without notice and hearing, even if for a just cause, as provided in Art. 282, or for an authorized
cause, as provided in Arts. 283-284, is a nullity. Hence, even if just or authorized cause exist, the
employee should be reinstated with full back pay. On the other hand, Justice Panganiban quotes
from the statement in People v. Bocar that "[w]here the denial of the fundamental right of due
27 

process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction."

Violation of Notice Requirement Not a Denial of Due Process

The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process
by the State, which is not the case here. There are three reasons why, on the other hand, violation
by the employer of the notice requirement cannot be considered a denial of due process resulting in
the nullity of the employee's dismissal or layoff.

The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It
does not apply to the exercise of private power, such as the termination of employment under the
Labor Code. This is plain from the text of Art. III, §1 of the Constitution, viz.: "No person shall be
deprived of life, liberty, or property without due process of law. . . ." The reason is simple: Only the
State has authority to take the life, liberty, or property of the individual. The purpose of the Due
Process Clause is to ensure that the exercise of this power is consistent with what are considered
civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before the
power of organized society are brought to bear upon the individual. This is obviously not the case of
termination of employment under Art. 283. Here the employee is not faced with an aspect of the
adversary system. The purpose for requiring a 30-day written notice before an employee is laid off is
not to afford him an opportunity to be heard on any charge against him, for there is none. The
purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an
opportunity to determine whether economic causes do exist justifying the termination of his
employment.

Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is
not to comply with Due Process Clause of the Constitution. The time for notice and hearing is at the
trial stage. Then that is the time we speak of notice and hearing as the essence of procedural due
process. Thus, compliance by the employer with the notice requirement before he dismisses an
employee does not foreclose the right of the latter to question the legality of his dismissal. As Art.
277(b) provides, "Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch
of the National Labor Relations Commission."

Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to
overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882
which gave either party to the employer-employee relationship the right to terminate their
relationship by giving notice to the other one month in advance. In lieu of notice, an employee could
be laid off by paying him a mesada equivalent to his salary for one month. This provision was
28 

repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954,
R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On
June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice or
the payment of compensation at the rate of one-half month for every year of service. 29

The Termination Pay Law was held not to be a substantive law but a regulatory measure, the
purpose of which was to give the employer the opportunity to find a replacement or substitute, and
the employee the equal opportunity to look for another job or source of employment. Where the
termination of employment was for a just cause, no notice was required to be given to the,
employee. It was only on September 4, 1981 that notice was required to be given even where the
30 

dismissal or termination of an employee was for cause. This was made in the rules issued by the
then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code.
And it was still much later when the notice requirement was embodied in the law with the
amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be that the former regime
denied due process to the employee. Otherwise, there should now likewise be a rule that, in case an
employee leaves his job without cause and without prior notice to his employer, his act should be
void instead of simply making him liable for damages.

The third reason why the notice requirement under Art. 283 can not be considered a requirement of
the Due Process Clause is that the employer cannot really be expected to be entirely an impartial
judge of his own cause. This is also the case in termination of employment for a just cause under
Art. 282 (i.e., serious misconduct or willful disobedience by the employee of the lawful orders of the
employer, gross and habitual neglect of duties, fraud or willful breach of trust of the employer,
commission of crime against the employer or the latter's immediate family or duly authorized
representatives, or other analogous cases).

Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have
been won by employees before the grievance committees manned by impartial judges of the
company." The grievance machinery is, however, different because it is established by agreement of
the employer and the employees and composed of representatives from both sides. That is why,
in Batangas Laguna Tayabas Bus Co. ·v. Court of Appeals, which Justice Puno cites, it was held
31 

that "Since the right of [an employee] to his labor is in itself a property and that the labor agreement
between him and [his employer] is the law between the parties, his summary and arbitrary dismissal
amounted to deprivation of his property without due process of law." But here we are dealing with
dismissals and layoffs by employers alone, without the intervention of any grievance machinery.
Accordingly in Montemayor v. Araneta University Foundation, although a professor was dismissed
32 

without a hearing by his university, his dismissal for having made homosexual advances on a
student was sustained, it appearing that in the NLRC, the employee was fully heard in his defense.

Lack of Notice Only Makes Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a procedure to
be followed before a right granted to a party can be exercised. Others are simply an application of
the Justinian precept, embodied in the Civil Code, to act with justice, give everyone his due, and
33 

observe honesty and good faith toward one's fellowmen. Such is the notice requirement in Arts. 282-
283. The consequence of the failure either of the employer or the employee to live up to this precept
is to make him liable in damages, not to render his act (dismissal or resignation, as the case may be)
void. The measure of damages is the amount of wages the employee should have received were it
not for the termination of his employment without prior notice. If warranted, nominal and moral
damages may also be awarded.

We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employer's failure to comply
with the notice requirement does not constitute a denial of due process but a mere failure to observe
a procedure for the termination of employment which makes the termination of employment merely
ineffectual. It is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of
the Civil Code in rescinding a contract for the sale of immovable property. Under these provisions,
34 

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
35 

of an attorney has no legal effect, and the vendee can make payment even after the due date since
no valid notice of rescission has been given. 36

Indeed, under the Labor Code, only the absence of a just cause for the termination of employment
can make the dismissal of an employee illegal. This is clear from Art. 279 which provides:

Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly 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. 37

Thus, only if the termination of employment is not for any of the causes provided by law is it illegal
and, therefore, the employee should be reinstated and paid backwages. To contend, as Justices
Puno and Panganiban do, that even if the termination is for a just or authorized cause the employee
concerned should be reinstated and paid backwages would be to amend Art. 279 by adding another
ground for considering a dismissal illegal. What is more, it would ignore the fact that under Art. 285,
if it is the employee who fails to give a written notice to the employer that he is leaving the service of
the latter, at least one month in advance, his failure to comply with the legal requirement does not
result in making his resignation void but only in making him liable for damages. This disparity in
38 
legal treatment, which would result from the adoption of the theory of the minority cannot simply be
explained by invoking resident Ramon Magsaysay's motto that "he who has less in life should have
more in law." That would be a misapplication of this noble phrase originally from Professor Thomas
Reed Powell of the Harvard Law School.

Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC, in support of his view that an illegal
39 

dismissal results not only from want of legal cause but also from the failure to observe "due
process." The Pepsi-Cola case actually involved a dismissal for an alleged loss of trust and
confidence which, as found by the Court, was not proven. The dismissal was, therefore, illegal, not
because there was a denial of due process, but because the dismissal was without cause. The
statement that the failure of management to comply with the notice requirement "taints the dismissal
with illegality" was merely a dictum thrown in as additional grounds for holding the dismissal to be
illegal.

Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is
the payment of backwages for the period when the employee is considered not to have been
effectively dismissed or his employment terminated. The sanction is not the payment alone of
nominal damages as Justice Vitug contends.

Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal

The refusal to look beyond the validity of the initial action taken by the employer to terminate
employment either for an authorized or just cause can result in an injustice to the employer. For not
giving notice and hearing before dismissing an employee, who is otherwise guilty of, say, theft, or
even of an attempt against the life of the employer, an employer will be forced to keep in his employ
such guilty employee. This is unjust.

It is true the Constitution regards labor as "a primary social economic force." But so does it declare
40 

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
41 

to labor." But it is equally true that "the law, in protecting the right's of the laborer, authorizes neither
42 

oppression nor self-destruction of the employer." And it is oppression to compel the employer to
43 

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) month pay
for every year of service, whichever is higher. A fraction of at least six months shall be
considered one (1) whole year.

If the employee's separation is without cause, instead of being given separation pay, he should be
reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid
full backwages if he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the
employee was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance
with that article, he should not be reinstated. However, he must be paid backwages from the time his
employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination of his
employment without legal effect.

WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations
Commission is MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay
petitioner separation pay equivalent to one (1) month pay for every year of service, his unpaid
salary, and his proportionate 13th month pay and, in addition, full backwages from the time his
employment was terminated on October 11, 1991 up to the time the decision herein becomes final.
For this purpose, this case is REMANDED to the Labor Arbiter for computation of the separation
pay, backwages, and other monetary awards to petitioner.

SO ORDERED.

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

Separate Opinions

BELLOSILLO, J., separate opinion;

We point out at the outset that this Petition for Review which was filed before the promulgation of St.
Martin Funeral Home v. National Labor Relations Commission, is not the proper means by which
1 

NLRC decisions are appealed to this Court. Before St. Martin Funeral Home, it was only through a
Petition for Certiorari under Rule 65 that NLRC decisions could be reviewed and nullified by us on
the ground of lack of jurisdiction or grave abuse of discretion amounting to lack or excess of
jurisdiction. After St. Martin Funeral Home, petitions like the one at bar are initially filed in the Court
of Appeals for proper adjudication.

In the interest of justice, however, and in order to write finis to the instant case which has already
dragged on for so long, we shall treat the petition pro hac vice as one for certiorari under Rule 65
although it is captioned Petition for Review on Certiorari; after all, it was filed within the reglementary
period for the filing of a petition for certiorari under Rule 65.

Briefly, on 4 April 1985 private respondent Isetann Department Store, Inc. (ISETANN), employed
petitioner Ruben Serrano as Security Checker until his appointment as Security Section Head. On
October 1991 ISETANN through its Human Resource Division Manager Teresita A. Villanueva sent
Serrano a memorandum terminating his employment effective immediately "in view of the
retrenchment program of the company," and directing him to secure clearance from their office. 2

Petitioner Serrano filed with the NLRC Adjudication Office a complaint for illegal dismissal and
underpayment of wages against ISETANN. Efforts at amicable settlement proved futile. Ms. Cristina
Ramos, Personnel Administration Manager of ISETANN, testified that the security checkers and
their section head were retrenched due to the installation of a labor saving device, i.e., the hiring of
an independent security agency.

Finding the dismissal to be illegal, the Labor Arbiter ordered the immediate reinstatement of Serrano
to his former or to an equivalent position plus payment of back wages, unpaid wages, 13th month
pay and attorney's fees.

On appeal the NLRC reversed the Labor Arbiter and ruled that ISETANN acted within its prerogative
when it phased out its Security Section and retained the services of an independent security agency
in order to cut costs and economize. Upon denial of his motion for reconsideration Serrano filed the
3 

instant petition imputing grave abuse of discretion on the part of the NLRC.

Art. 282 of the Labor Code enumerates the just causes for the termination of employment by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latter's representative in connection with the employee's work; (b) gross and
habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
reposed in him by his employer or his duly authorized representative; (d) commission of a crime or
offense by the employee against the person of his employer or 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: (b) retrenchment to prevent losses; (d)
closure or cessation of the establishment or undertaking unless the closure or cessation is for the
purpose of circumventing the provisions of the law; and, (e) disease.

The Just causes enumerated under Art. 282 of the Labor Code are provided by the employee who
causes the infraction. The authorized causes are provided by the employer either because of outside
factors such as the general decline in the economy or merely part of its long range plan for business
profitability. Corollarily, in termination for a just cause, the employee is not entitled to separation pay
unlike in termination for an authorized cause. In addition, the basis in computing the amount of
separation pay varies depending on whether the termination is due to the installation of a labor
saving device, or redundancy, in which case, the employee is entitled to receive separation pay
equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service. In
case the termination is due to retrenchment in order to prevent losses or in case of closure or
cessation of operation of the establishment or undertaking not due to serious business losses or
financial reverses, the separation pay is lower, i.e., equivalent to one (1) month pay or at least one-
half month pay for every year of service, whichever is higher. As may be gleaned from the foregoing,
where the cause of termination is for the financial advantage or benefit of the employer, the basis in
computing for separation pay is higher compared to termination dictated by necessity with no
appreciable financial advantage to the employer.

In the instant case, we agree with the NLRC that the dismissal of petitioner Serrano was for an
authorized cause, i.e., redundancy, which exists where the services of an employee are in excess of
what are reasonably demanded by the actual requirements of the enterprise. A position is redundant
where it is superfluous, and the superfluity may be the outcome of other factors such as overhiring of
workers, decreased volume of other business, or dropping of a particular product line or service
activity previously manufactured or undertaken by the enterprise. 4

The hiring of an independent security agency is a business decision properly within the exercise of
management prerogative. As such, this Court is denied the authority to delve into its wisdom
although it is equipped with the power to determine whether the exercise of such prerogative is in
accordance with law. Consequently, the wisdom or soundness of the management decision is not
subject to the discretionary review of the Labor Arbiter nor of the NLRC unless there is a violation of
law or arbitrariness in the exercise thereof, in which case, this Court will step in. Specifically, we held
5 

in International Harvester Macleod, Inc. v. Intermediate Appellate Court that the determination of
6 

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 State affords protection to labor under the Constitution, workers enjoy security of tenure
7 

and may only be removed or terminated upon valid reason and through strict observance of proper
procedure. Article 279 of the Labor Code specifically provides —
8 

Art. 279. Security of Tenure. — In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.

Security of tenure however does not guarantee perpetual employment. If there exists a just or an
authorized cause, the employer may terminate the services of an employee but subject always to
procedural requirements. The employer cannot be legally compelled to have in its employ a person
whose continued employment is patently inimical to its interest. The law, while affording protection to
the employee, does not authorize the oppression or destruction of his employer. 9

Subject then to the constitutional right of workers to security of tenure and to be protected against
dismissal except for a just or authorized cause, and without prejudice to the requirement of notice
under Art. 283 of the Labor Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the cause of termination and shall
afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires, in accordance with company rules and regulations promulgated
pursuant to guidelines set by the DOLE. 10

As specifically provided in Art. 283 of the Labor Code, the employer may terminate the employment
of any employee due to redundancy by serving a written notice on the worker and the DOLE at least
one (1) month before the intended date thereof. In the instant case, ISETANN clearly violated the
provisions of Art. 283 on notice. It did not send a written notice to DOLE which is essential because
11 

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, has 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 non-compliance with the provision on
notice under Art. 283 of the Labor Code.

The legitimacy of a government is established and its functions delineated in the Constitution. From
the Constitution flows all the powers of government in the same manner that it sets the limits for their
proper exercise. In particular, the Bill of Rights functions primarily as a deterrent to any display of
arbitrariness on the part of the government or any of its instrumentalities. It serves as the general
safeguard, as is apparent in its first section which states, "No person shall be deprived of life, liberty
or property without due process of law, nor shall any person be denied the equal protection of the
laws." Specifically, due process is a requirement for the validity of any governmental action
12 

amounting to deprivation of liberty. It is a restraint on state action not only in terms of what it
13 

amounts to but how it is accomplished. Its range thus covers both the ends sough to be achieved by
officialdom as well as the means for their realization. 14

Substantive due process is a weapon that may be utilized to challenge acts of the legislative body,
whether national or local, and presumably executive orders of the President and administrative
orders and regulations of a rule-making character. Procedural due process, on the other hand, is
available for the purpose of assailing arbitrariness or unreasonableness in the administration of the
law by executive department or the judicial branch. Procedural due process likewise may aid those
appearing before Congressional committees if the proceedings are arbitrary or otherwise unfair. 13

Procedural due process demands that governmental acts, more specifically so in the case of the
judiciary, not be affected with arbitrariness. The same disinterestedness required of men on the
16 

bench must characterize the actuations of public officials, not excluding the President, to satisfy the
requirements of procedural due process. 17

In his dissent Mr. Justice Puno states that "the new majority opinion limiting violations of due process
to government action alone is a throwback to a regime of law long discarded by more progressive
countries." He opines that "today, private due process is a settled norm in administrative law," citing
Schwartz, an authority in administrative law.

We beg to disagree. A careful reading of Schwartz would reveal that requirements of procedural due
process extended from governmental to private action only in instances where there is "sufficient
governmental involvement" or "the private action was so saturated with governmental incidents."

The cardinal primary requirements of due process in administrative proceedings were highlighted
in Ang Tibay v. Court of Industrial Relations: (a) the right to a hearing, which includes the right to
18 

present one's case and submit evidence in support thereof; (b) the tribunal must consider the
evidence presented; (c) the decision must have something to support itself; (d) the evidence must be
substantial; (e) the decision must be based on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected; (f) the tribunal or body or any of its
judges must act on its own independent consideration of the law and facts of the controversy, and
not simply accept the views of a subordinate; (g) the board or body should, in all controversial
questions, render its decision in such manner that the parties to the proceeding may know the
various issues involved, and the reason for the decision rendered.

Also in Lumiqued v. Exevea it was held —

19 

In administrative proceedings, the essence of due process is simply the opportunity to

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

From the foregoing, it is clear that the observance of due process is demanded in governmental
acts. Particularly in administrative proceedings, due process starts with the tribunal or hearing officer
and not with the employer. In the instant case, what is mandated of the employer to observe is the
30-day notice requirement. Hence, non-observance of the notice requirement is not denial of due
process but merely a failure to comply with a legal obligation for which we strongly recommend, we
impose a disturbance compensation as discussed hereunder.

In the instant case, we categorically declare that Serrano was not denied his right to due process.
Instead, his employer did not comply with the 30-day notice requirement. However, while Serrano
was not given the required 30-day notice, he was nevertheless given and, in fact, took advantage of
every opportunity to be heard, first, by the Labor Arbiter, second, by the NLRC, and third, by no less
than this Court. Before the Labor Arbiter and the NLRC, petitioner had the opportunity to present his
side not only orally but likewise through proper pleadings and position papers.

It is not correct therefore to say that petitioner was deprived of his right to due process.

We have consistently upheld in the past as valid although irregular the dismissal of an employee for
a just or authorized cause but without notice and have imposed a sanction on the erring employers
in the form of damages for their failure to comply with the notice requirement. We discussed the
rationale behind this ruling in Wenphil Corporation v. NLRC thus —
20 

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 . . . .
However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as
above discussed. The dismissal of an employee must be for just or authorized cause and
after due process. Petitioner committed an infraction of the second requirement. Thus, it
must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from employment. Considering
the circumstances of this case petitioner must indemnify private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case and the gravity of
the omission committed by the employer (emphasis supplied).
In Sebuguero v. National Labor Relations Commission Mr. Justice Davide Jr., now Chief Justice,
21 

made this clear pronouncement —

It is now settled that where the dismissal of an employee is in fact for a just and valid cause
and is so proven to be but he is not accorded his right to due process, i.e. he was not
furnished the twin requirements of notice and the opportunity to be heard, the dismissal shall
be upheld but the employer must be sanctioned for non-compliance with the requirements of
or for failure to observe due process. The sanction, in the nature of indemnification or
penalty, depends on the facts of each case and the gravity of the omission committed by the
employer.

This ruling was later ably amplified by Mr. Justice Puno in Nath v. National Labor Relations
Commission where he wrote —
22 

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 . . . . We affirm the
finding of the public respondent that there was just cause to dismiss petitioner, a
probationary employee (emphasis supplied).

Also, in Camua v. National Labor Relations Commission this Court through Mr. Justice Mendoza
23 

decreed —

In the case at bar, both the Labor Arbiter and the NLRC found that no written notice of the
charges had been given to petitioner by the respondent company. . . . Accordingly, in
accordance with the well-settled rule, private respondents should pay petitioner P1,000.00
as indemnity for violation of his right to due process . . . . Although an employee validy
dismissed for cause he may nevertheless be given separation pay as a measure of social
justice provided the cause is not serious misconduct reflecting on his moral character
(emphasis supplied).

Non-observance of this procedural requirement before would cause the employer to be penalized by
way of paying damages to the employee the amounts of which fluctuated through the years. Thus,
for just cause the indemnity ranged from P1,000.00 to P10,000.00. For authorized cause, as
24 

distinguished from just cause, the award ranged from P2,000.00 to P5,000.00. 25

This Court has also sanctioned the ruling that a dismissal for a just or authorized cause but without
observance of the mandatory 30-day notice requirement was valid although considered irregular.
The Court ratiocinated that employers should not be compelled to keep in their employ undesirable
and undeserving laborers. For the irregularity, i.e., the failure to observe the 30-day notice of
termination, the employer was made to pay a measly sum ranging from P1,000.00 to P10,000.00.

With regard to the indemnity or penalty, which we prefer seriously to be referred to as "disturbance
compensation," the Court has awarded varying amounts depending on the circumstances of each
case and the gravity of the commission. We now propose that the amount of the award be uniform
and rational and not arbitrary. The reason for the proposal or modification is that in their non-
compliance with the 30-day notice requirement the erring employers, regardless of the peculiar
circumstances of each case, commit the infraction only by the single act of not giving any notice to
their workers. It cannot be gainfully said that the infraction in one case is heavier than in the other as
the non-observance constitutes one single act. Thus, if the dismissal is illegal, i.e. there is no just or
authorized cause, a disturbance compensation in the amount of P10,000.00 may be considered
reasonable. If the dismissal is for a just cause but without notice, a disturbance compensation in the
amount P5,000.00 may be given. In termination for an authorized cause and the notice requirement
was not complied with, we distinguish further: If it is to save the employer from imminent bankruptcy
or business losses, the disturbance compensation to be given is P5,000.00. If the authorized cause
was intended for the employer to earn more profits, the amount of disturbance compensation is
P10,000.00. This disturbance compensation, again we strongly recommend, should be given to the
dismissed employee at the first instance, the moment it is shown that his employer has committed
the infraction — of not complying with the 30-day written notice requirement — to tide him over
during his economic dislocation.

The right of the laborers to be informed of their impending termination cannot be taken lightly, and
the award of any amount below P5,000.00 may be too anemic to satisfy the fundamental protection
especially accorded to labor and the workingman. In fact, it is hardly enough to sustain a family of
three; more so if the employee has five or more children, which seems to be the average size of a
Filipino family.

Henceforth, if the dismissal is for a just cause but without observance of the 30-day notice
requirement, the dismissal is deemed improper and irregular. If later the dismissal is ascertained to
be without just cause, the dismissed employee is entitled to reinstatement, if this be feasible,
otherwise to separation pay and back wages plus disturbance compensation of P10,000.00 and
moral damages, if warranted. On the other hand, if the dismissal is ascertained to be with just cause,
the dismissed employee is entitled nevertheless to a disturbance compensation of P5,000.00 if the
legal requirement of the 30-day notice to both employee and DOLE has not been complied with.

In instances where there is obviously a ground for dismissal, as when the employee has become
violent and his presence would cause more harm to his co-workers and the security and serenity of
the workplace, the employee may be suspended in the meantime until he is heard with proper
observance of the 30-day notice requirement. Likewise, if the dismissal is for an authorized cause
but without the required notice, the dismissal is improper and irregular and the employee should be
paid separation pay, back wages and disturbance compensation of P5,000.00 or P10,000.00.00
depending on the cause. As already intimated, if the authorized cause is for the purpose of saving
the employer from imminent bankruptcy or business losses, the disturbance compensation should
be P5,000.00; otherwise, if the authorized cause is for the employer, in the exercise of management
prerogative, to save and earn more profits, the disturbance compensation should be P10,000.00.

In the instant case, Serrano was given his walking papers only on the very same day his termination
was to take effect. DOLE was not served any written notice. In other words, there was non-
observance of the 30-day notice requirement to both Serrano and the DOLE. Serrano was thus
terminated for an authorized cause but was not accorded his right to 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 compensation." Since Wenphil Corporation v. NLRC  this Court has already
26 

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.

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

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.

PUNO, J., dissenting opinion;

The rule of audi alteram partem — hear the other side, is the essence of procedural due process.
That a "party is not to suffer in person or in purse without an opportunity of being heard" is the oldest
established principle in administrative law. Today, the majority is relies that the all important right of
1 

an employee to be notified before he is dismissed for a just or authorized cause is not a requirement
of due process. This is a blow on the breadbasket of our lowly employees, a considerable erosion of
their constitutional right to security of tenure, hence this humble dissenting opinion.

A review of our law on dismissal is in order.

I. DISMISSAL DUE TO JUST CAUSE

The law allowing dismissal of an employee due to a just cause is provided in Article 282 of the Labor
Code:
 Art. 282. Termination by employer. — An employer 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 the crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and

(e) Other causes analogous to the foregoing.

The long established jurisprudence is that to justify dismissal of an employee for a just cause, he
2 

must be given two kinds of notice by his employer, viz: (1) notice to apprise the employee of the
particular acts or omissions for which the dismissal is sought, and (2) subsequent notice to inform
him of the employer's decision to dismiss him. Similarly, deeply ingrained is our ruling that these pre
and post notice requirements are not mere technicalities but are requirements of due process. 3

Then came the case of Wenphil Corporation vs. NLRC and Mallare in 1989. It is the majority view
4 

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 of grave misconduct and insubordination, which are just causes
for dismissal. The Arbiter also ruled that Mallare was not denied due process. On appeal, the NLRC
reversed. It held that Mallare was denied due process before he was dismissed. It ordered Mallare's
reinstatement and the payment of his one (1) year backwages.

On certiorari to this Court, we reversed the NLRC and reinstated the decision of the Arbiter with the
modification that petitioner should pay to Mallare an indemnity of P1,000.00 for dismissing Mallare
without any notice and hearing. We held:
 Petitioner insists that private respondent was afforded due process but he refused to avail of
his right to the same; that when the matter was brought to the labor arbiter he was able to
submit his position paper although the hearing cannot proceed due to the non-appearance of
his counsel; and that the private respondent is guilty of serious misconduct in threatening or
coercing a co-employee which is a ground for dismissal under Article 283 of the Labor Code.

The failure of petitioner to give private respondent the benefit of a hearing before he was
dismissed constitutes an infringement of his constitutional right to due process of law and
equal protection of the laws. The standards of due process in judicial as well as
administrative proceedings have long been established. In its bare minimum due process of
law simply means giving notice and opportunity to be heard before judgment is rendered.

The claim of petitioner that a formal investigation was not necessary because the incident,
which gave rise to the termination of private respondent, was witnessed by his co-employees
and supervisors, is without merit. The basic requirement of due process is that which hears
before it condemns, which proceeds upon inquiry and renders judgment only after trial.

However, it is a matter of fact that when the private respondent filed a complaint against
petitioner, he was afforded the right to an investigation by the labor arbiter. He presented his
position paper as did the petitioner. If no hearing was had, it was the fault of private
respondent as his counsel failed to appear at the scheduled hearings. The labor arbiter
concluded that the dismissal of private respondent was 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.

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

Three member of the Court filed concurring and dissenting opinions. Madam Justice Herrera opined
that: (a) Mallare was dismissed for cause, hence, he is not entitled to reinstatement and backwages;
(b) he was not denied due process; and (c) he has no right to any indemnity but to separation pay to
cushion the impact of his loss of employment Mr. Justice Padilla took the view that: (1) Mallare was
not entitled to reinstatement and backwages as he was guilty of grave misconduct and
insubordination; (2) he was denied administrative due process; and (3) for making such denial,
Wenphil should pay "separation pay (instead of indemnity) in the sum of P1,000.00." Madam Justice
Cortes held that: (1) Mallare was not illegally dismissed; (2) he was not denied due process; (3) he
was not entitled to indemnity; and (4) if P1,000.00 was to be imposed on Wenphil as an
administrative sanction, it should form part of the public fund of the government.

I shall discuss later that Wenphil did not change our ruling that violation of the pre-dismissal notice
requirement is an infringement of due process.

II. DISMISSAL DUE TO AUTHORIZED CAUSE

The applicable law on dismissal due to authorized cause is Article 283 of the Labor Code which
provides:
 Art. 283. Closure of establishment and reduction of personnel. — The employer may also
terminate the employment of any employee due to the installation of labor serving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the [Department] of
Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

In Sebuguero v. NLRC, we held thru our esteemed Chief Justice Davide that "the requirement of
5 

notice to both the employees concerned and the Department of Labor and Employment (DOLE) is
mandatory and must be written and given at least one month before the intended date of
retrenchment." We explained that the "notice to the DOLE is essential because the right to retrench
is not an absolute prerogative of an employer but is subject to the requirement of law that
retrenchment be proved to prevent losses. The DOLE is the agency that will determine whether the
planned retrenchment is justified and adequately supported by fact." Nonetheless, we ruled:
6 

The lack of written notice to the petitioners and to the DOLE does not, however, make the
petitioners' retrenchment illegal such that they are entitled to the payment of back wages and
separation pay in lieu of reinstatement as they contend. Their retrenchment, for not having
been effected with the required notices, is merely defective. In those cases where we found
the retrenchment to be illegal and ordered the employees' reinstatement and the payment of
backwages, the validity of the cruse for retrenchment, that is the existence of imminent or
actual serious or substantial losses, was not proven. But here, such a cause is present as
found by both the Labor Arbiter and the NLRC. There is only a violation by GTI of the
procedure prescribed in Article 283 of the Labor Code in effecting the retrenchment of the
petitioners.1âwphi1.nêt

It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is
so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin
requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the
employer must be sanctioned for non-compliance with the requirements of or for failure to observe
due process. The sanction, in the nature of indemnification or penalty, depends on the facts of each
case and the gravity of the omission committed by the employer and has ranged from P1,000.00 as
in the cases of Wenphil vs. National Labor Relations Commission, Seahorse Maritime Corp.
v. National Labor Relations Commission, Shoemart, Inc. vs. National Labor Relations
Commission, Rubberworld (Phils.) Inc. vs. National Labor Relations Commission, Pacific Mills, Inc.
vs. Alonzo, and Aurelio vs. National Labor Relations Commission to P10,000.00 in Reta vs. National
Labor Relations Commission 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:

FROM BAD TO WORSE

The minority of the Court has asked for a re-examination of Wenphil because as the majority
correctly observed, "the number of cases involving dismissals without the requisite notice to the
employee although effected for just or authorized causes suggests that the imposition of fine for
violation of the notice requirement has not been effective in deterring violations of the notice
requirement."

We must immediately set Wenphil in its proper perspective as it is a very exceptional case. Its
doctrine must be limited to its distinct facts. Its facts therefore ought to be carefully examined again.
In Wenphil, it was clearly established that the employee had a violent temper, caused trouble during
office hours and even defied his superiors as they tried to pacify him. The employee was working for
a fast food chain that served the public and where violence has no place. These facts were
established only in the proceedings before the Labor Arbiter after the employee filed a complaint for
illegal dismissal. There were no formal investigation proceedings before the employer as the
employment was dismissed without any notice by the employer. Given these facts, we ruled that the
pre-dismissal notice requirement was part of due process; nonetheless, we held that the employee
was given due process as he was heard by the Labor Arbiter; we found that the proceedings before
the Labor Arbiter proved that the employer was guilty of grave misconduct and insubordination; we
concluded with the rule that it would be highly prejudicial to the interest of the employer to reinstate
the employee, but the employer must indemnify the employee the amount of P1,000.00 for
dismissing him without notice. We further held that "the measure of this award depends on the facts
or each case and the gravity of the omission committed by the employer." 7

At the outset, I wish to emphasize that Wenphil itself held, and repeatedly held that "the failure of
petitioner to give private respondent the benefit of a hearing before he was dismissed, constitutes an
infringement of his constitutional right to due process of law and equal protection of the laws. The
standards of due process of law in judicial as well as administrative proceedings have long been
established. In its bare minimum due process of law simply means giving notice and opportunity to
be heard before judgment is rendered." The Court then satisfied itself with this bare minimum when
8 

it held that the post dismissal hearing before the Labor Arbiter was enough compliance with
demands of due process and refused to reinstate an eminently undesirable employee. Heretofore,
the Court was far from satisfied with this bare minimum as it strictly imposed on an employer
compliance with the requirement of pre-dismissal notice, violation of which resulted in orders of
reinstatement of the dismissed employee. This is the only wrinkle wrought by Wenphil in our
jurisprudence on dismissal. Nonetheless, it should be stressed that the Court still punished
Wenphil's violation of the pre-dismissal notice requirement as it was ordered to pay an indemnity of
P1,000.00 to the employee. The indemnity was based on the iterated and reiterated rule that "the
dismissal of an employee must be for just or authorized cause and after due process." 9

Our ten (10) years experience with Wenphil is not a happy one. Unscrupulous employers have
abused the Wenphil ruling. They have dismissed without notice employees including those who are
not as eminently undesirable as the Wenphil employee. They dismissed employees without notice
as a general rule when it should be the exception. The purpose of the pre-dismissal notice
requirement was entirely defeated by employers who were just too willing to pay an indemnity for its
violation. The result, as the majority concedes, is that the indemnity we imposed has not been
effective to prevent unjust dismissals employees. To be sure, this is even a supreme
understatement. The ugly truth is that Wenphil is the mother of many unjust and unauthorized
dismissals of employees who are too weak to challenge their powerful employees.

As the Wenphil indemnity doctrine has proved to be highly inimical to the interest of our employees, I
humbly submit a return to the pre-Wenphil rule where a reasonless violation of the pre-dismissal
notice requirement makes the dismissal of an employee illegal and results in his reinstatement. In
fine, we should strike down as illegal the dismissal of an employee even if it is for a justified end if it
is done thru unjustified means for we cannot be disciples of the Machiavellian doctrine of the end
justifies the means. With due respect, the majority decision comes too near this mischievous
doctrine by giving emphasis on the end and not the means of dismissal of employees. What grates
is that the majority today espouses a doctrine more pernicious than Wenphil for now it announces
that a violation of the pre-dismissal notice requirement does not even concern due process. The
reasons relied upon by the majority for this new ruling against the job security of employees cannot
inspire assent.

FIRST. I would like to emphasize that one undesirable effect of Wenphil is to compel employees to
seek relief against illegal dismissals with the DOLE whereas before, a remedy can be sought before
the employer. In shifting this burden, an employee's uneven fight against his employer has become
more uneven. Now, an illegally dismissed employee often goes to the DOLE without an exact
knowledge of the cause of his dismissal. As a matter of strategy, some employers today dismiss
employees without notice. They know that it is more advantageous for them to litigate with an
employee who has no knowledge of the cause of dismissal. The probability is that said employee will
fail to prove the illegality of his dismissal. All that he can prove is that he was dismissed without
notice and the penalty for the omission is a mere fine, a pittance.

The case at bar demonstrates how disastrous Wenphil has been to our helpless employees. In
holding that the petitioner failed to prove his cause of action, the majority held ". . . we have only the
bare assertion of petitioner that, in abolishing the security section, private respondent's real purpose
was to avoid payment to the security checkers of the wage increases provided in the collective
bargaining agreement approved in 1990." The bare assertion of the petitioner is understandable.
The notice given to him spoke of a general ground — retrenchment. No details were given about the
employer's sudden retrenchment program. Indeed, the employee was dismissed on the day he
received the notice in violation of the 30-day requirement. He was given no time, no opportunity to
ascertain and verify the real cause of his dismissal. Thus, he filed with the DOLE a complaint for
illegal dismissal with a hazy knowledge of its real cause. Heretofore, it is the employer whom we
blame and penalize if he does not notify his employee of the cause of his dismissal. Today, the
majority puts the blame on the employee for not knowing why he was dismissed when he was not
given any notice of dismissal. In truth, the suspicion of the petitioner in the case at bar that he was
dismissed to avoid payment of their wage increases is not without basis. The DOLE itself found that
petitioner has unpaid wages which were ordered to be paid by the employer. The majority itself
affirmed this finding.

What hurts is that while the majority was strict with the petitioner-employee, it was not so with the
employer ISETANN. Immediately, it validated the finding of the NLRC that petitioner was dismissed
due to the redundancy of his position. This is inconsistent with the finding of the Labor Arbiter that
the employer failed to prove retrenchment, the ground it used to dismiss the petitioner. A perusal of
the records will show that Ms. Cristina Ramos, Personnel Administration Manager of the employer
ISETANN testified on the cause of dismissal of the petitioner. She declared that petitioner was
retrenched due to the installation of a labor saving device. Allegedly, the labor saving device was the
hiring of an independent security agency, thus: 10

xxx     xxx     xxx
Atty. Perdigon:

You said that your company decided to phase out the position of security checkers . . .

Ms. Ramos:

Yes Sir.

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

A: Yes, sir.

xxx     xxx     xxx

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

A: We installed a labor saving device.

Q: So you did not retrench?

A: No. sir.

Q: How about the position of Section Head of Security Department?

A: It was abolished in 1991.

xxx     xxx     xxx

Q: Are you aware of the retrenchment program of the company as stated in this letter?

A: Actually it's not a retrenchment program. It's an installation of a labor saving device.

Q: So you are telling this Court now that there was no retrenchment program?

A: It was actually an installation of a labor saving device (emphasis supplied).

xxx     xxx     xxx

Q: . . . What (is) this labor saving device that you are referring to?

A: The labor saving device is that the services of a security agency were contracted to
handle the services of the security checkers of our company.

Q: Are you sure of what labor saving means, Madam witness?

A: Yes, sir.

Q: You said you installed a labor saving device, and you installed a security agency as a
labor saving device?
 A: We hired the services of a security agency.

Q: So according to you . . . a security agency is a labor saving device?

Atty. Salonga:

Already answered, your Honor.

Obviously, Ms. Ramos could not even distinguish between retrenchment and redundancy. The
Labor Arbiter thus ruled that petitioner's dismissal was illegal. The NLRC, however, reversed. The
majority affirmed the NLRC ruling that ISETANN's phase out of its security employees is a legitimate
business decision, one that is necessary to obtain reasonable 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 re-examining the Wenphil doctrine. At the very least, I thought
that the majority would restore the balance of rights between an employee and an employer by
giving back the employee's mandatory right to notice before dismissal. It is disquieting, however, that
the majority 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 pre-dismissal notice is difficult to
understand. It is the linchpin of an employee's right against an illegal dismissal. The notice tells him
the cause of his dismissal. It gives him a better chance to contest his dismissal in an appropriate
proceeding as laid down in the parties' collective bargaining agreement or the rules of employment
established by the employer, as the case may be. In addition, it gives to both the employee and
employer more cooling time to settle their differences amicably. In fine, the prior notice requirement
and the hearing before the employer give an employee a distinct, different and effective first level of
remedy to protect his job. In the event the employee is dismissed, he can still file a complaint with
the DOLE with better knowledge of the cause of his dismissal, with longer time to prepare his case,
and with greater opportunity to take care of the financial needs of his family pendente lite. The
majority has taken away from employees this effective remedy. This is not to say that the 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. He is bereft of reason not to give the simple notice. If he fails to give notice, he can
only curse himself. He forfeits his right to dismiss by failing to follow the procedure for the exercise of
his right. Employees in the public sector cannot be dismissed without prior notice. Equal protection
of law demands similar treatment of employees in the private sector.

THIRD. The case at bar specifically involves Article 283 of the Labor Code which lays down four (4)
authorized causes for termination of employment. These authorized causes are: (1) installation of
11 

labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the law. It also provides that prior to the dismissal of an employee for an authorized
cause, the employer must send two written notices at least one month before the intended dismissal
— one notice to the employee and another notice to the Department of Labor and Employment
(DOLE). We have ruled that the right to dismiss on authorized causes is not an absolute prerogative
of an employer. We explained that the notice to the DOLE is necessary to enable it to ascertain the
12 

truth of the cause of termination. The DOLE is equipped with men and machines to determine
13 

whether the planned closure or cessation of business or retrenchment or redundancy or installation

of labor saving device is justified by economic facts. For this reason too, we have held that notice to
14 

the employee is required to enable him to contest the factual bases of the management decision or
good faith of the retrenchment or redundancy before the DOLE. In addition, this notice requirement
15 

gives an employee a little time to adjust to his joblessness. 16

The majority insists that if an employee is laid off for an authorized cause under Article 283 in
violation of the prior notice requirement, his dismissal should not be considered void but only
ineffectual. He shall not be reinstated but paid separation pay and some backwages. I respectfully
submit that an employee under Article 283 has a stronger claim to the right to a pre-dismissal notice
and hearing. To begin with, he is an innocent party for he has not violated any term or condition of
his employment. Moreover, an employee in an Article 283 situation may lose his job simply because
of his employer's desire for more profit. Thus, the installation of a labor saving device is an
authorized cause to terminate employment even if its non-installation need not necessarily result in
an over-all loss to an employer possessed by his possessions. In an Article 283 situation, it is easy
to see that there is a greater need to scrutinize the allegations of the employer that he is dismissing
an employee for an authorized cause. The acts involved here are unilateral acts of the employer.
Their nature requires that they should be proved by the employer himself. The need for a labor
saving device, the reason for redundancy, the cause for retrenchment, the necessity for closing or
cessation of business are all within the knowledge of the employer and the employer alone. They
involve a constellation of economic facts and factors usually beyond the ken of knowledge of an
ordinary employee. Thus, the burden should be on the employer to establish and justify these
authorized causes. Due to their complexity, the law correctly directs that notice should be given to
the DOLE for it is the DOLE more than the lowly employee that has the expertise to validate the
alleged cause in an appropriate hearing. In fine, the DOLE provides the equalizer to the powers of
the employer in an Article 283 situation. Without the equalizing influence of DOLE, the employee can
be abused by his employer.
Further, I venture the view that the employee's right to security of tenure guaranteed in our
Constitution calls for a pre-dismissal notice and hearing rather than a post facto dismissal hearing.
The need for an employee to be heard before he can be dismissed cannot be overemphasized. As
aforestated, in the case at bar, petitioner was a regular employee of ISETANN. He had the right to
continue with his employment. The burden to establish that this right has ceased is with ISETANN,
as petitioner's employer. In fine, ISETANN must be the one to first show that the alleged authorized
cause for dismissing petitioner is real. And on this factual issue, petitioner must be heard. Before the
validity of the alleged authorized cause is established by ISETANN, the petitioner cannot be
separated from employment. This is the simple meaning of security of tenure. With due respect, the
majority opinion will reduce this right of our employees to a mere illusion. It will allow the employer to
dismiss an employee for a cause that is yet to be established. It tells the employee that if he wants to
be heard, he can file a case with the labor arbiter, then the NLRC, and then this Court. Thus, it
unreasonably shifts the burden to the employee to prove that his dismissal is for an unauthorized
cause.

The pernicious effects of the majority stance are self-evident in the case at bar. For one, petitioner
found himself immediately jobless and without means to support his family. For another, petitioner
was denied the right to rely on the power of DOLE to inquire whether his dismissal was for a genuine
authorized cause. This is a valuable right for all too often, a lowly employee can only rely on DOLE's
vast powers to check employer abuses on illegal dismissals. Without DOLE, poor employees are
preys to the claws of powerful employers. Last but not the least, it was the petitioner who was forced
to file a complaint for illegal dismissal. To a jobless employee, filing a complaint is an unbearable
burden due to its economic cost. He has to hire a lawyer and defray the other expenses of litigation
while already in a state of penury. At this point, the hapless employee is in a no win position to fight
for his right. To use a local adage, "aanhin pa ang damo kung patay na ang kabayo."

In the case at bar, the job of the petitioner could have been saved if DOLE was given notice of his
dismissal. The records show that petitioner worked in ISETANN as security checker for six (6) years.
He served ISETANN faithfully and well. Nonetheless, in a desire for more profits, and not because of
losses, ISETANN contracted out the security work of the company. There was no effort whatsoever
on the part of ISETANN to accommodate petitioner in an equivalent position. Yet there was the
position of Safety and Security Supervisor where petitioner fitted like a perfect T. Despite petitioner's
long and loyal service, he was treated like an outsider, made to apply for the job, and given a
stringent examination which he failed. Petitioner was booted out and given no chance to contest his
dismissal. Neither was the DOLE given the chance to check whether the dismissal of petitioner was
really for an authorized cause. All these because ISETANN did not follow the notice and hearing
requirement of due process.

FOURTH. The majority has inflicted a most serious cut on the job security of employees. The
majority did nothing to restore the pre-Wenphil right of employees but even expanded the right to
dismiss of employer by holding that the pre-dismissal notice requirement is not even a function of
due process. This seismic shift in our jurisprudence ought not to pass.

The key to the new majority ruling is that the "due process clause of the Constitution is a limitation
on governmental powers. It does not apply to the exercise of private power such as the termination
of employment under the Labor Code." The main reason alleged is that "only the State has authority
to take the life, liberty, or property of the individual. The purpose of the Due Process Clause is to
ensure that the exercise of this power is consistent with settled usage of civilized society."

There can be no room for disagreement on the proposition that the due process clause found in the
Bill of Rights of the Constitution is a limitation on governmental powers. Nor can there be any debate
that acts of government violative of due process are null and void. Thus, former Chief Justice
Roberto Concepcion emphasized in Cuaycong v. Senbengco  that ". . . acts of Congress as well as
17 

those of the Executive, can deny due process only under pain of nullity, and judicial proceedings
suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary
notwithstanding." With due respect to the majority, however, I part ways with the majority in its new
ruling that the due process requirement does not apply to the exercise of private power. This overly
restrictive majority opinion will sap the due process right of employees of its remaining utility. Indeed,
the new majority opinion limiting violations of due process to government action alone is a throwback
to a regime of law long discarded by more progressive countries. Today, private due process is a
settled norm in administrative law. Per Schwartz, a known authority in the field, viz: 18

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 prejudgment wage
garnishments and seizures of property under replevin statutes where no provision is made
for notice and hearing. But the Court has not gone so far as to lay down an inflexible rule that
due process requires an adversary hearing when an individual may be deprived of any
possessory interest, however brief the dispossession and however slight the monetary
interest in the property. Due process is not violated where state law requires, as a
precondition to invoking the state's aid to sequester property of a defaulting debtor, that the
creditor furnish adequate security and make a specific showing of probable cause before a
judge.

In addition, there has been an extension of procedural due process requirements from
governmental to private action. In Section 5.16 we saw that Goldberg v. Kelly has been
extended to the eviction of a tenant from a public housing project. The courts have not
limited the right to be heard to tenants who have governmental agencies as landlords. Due
process requirements also govern acts by "private" landlords where there is sufficient
governmental involvement in the rented premises. Such an involvement exists in the case of
housing aided by Federal Housing Administration financing and tax advantages. A tenant
may not be summarily evicted from a building operated by a "private" corporation where the
corporation enjoyed substantial tax exemption and had obtained an FHA-insured mortgage,
with governmental subsidies to reduce interest payments. The "private" corporation was so
saturated with governmental incidents as to be limited in its practices by constitutional
process. Hence, it could not terminate tenancies without notice and an opportunity to be
heard.

But we need nor rely on foreign jurisprudence to repudiate the new majority ruling that due process
restricts government alone and not private employers like ISETANN. This Court has always
protected employees whenever they are dismissed for an unjust cause by private employers. We
have consistently held that before dismissing an employee for a just cause, he must be given notice
and hearing by his private employer. In Kingsize Manufacturing Corporation vs. NLRC, this Court,
19 

thru Mr. Justice Mendoza, categorically ruled:

 . . . (P)etitioners failure to give notice with warning to the private respondents before their
services were terminated puts in grave doubt petitioners' claim that dismissal was for a just
cause. Section 2 Rule XIV of the Rules implementing the Labor Code provides:

An employer who seeks to dismiss a worker shall furnish him a written notice stating
the particular acts or omission constituting the ground for dismissal. In case of
abandonment of work, the notice shall be served on the worker's last known address.

The notice required, . . ., actually consists of two parts to be separately served on the
employee, to wit: (1) notice to apprise the employee of the particular acts or omissions for
which the dismissal is sought; and (2) subsequent notice to inform him of the employer's
decision to dismiss him.

This requirement is not a mere technicality but a requirement of due process to which every
employee is entitled to insure that the employer's prerogative to dismiss or lay off is not
abused or exercised in an arbitrary manner. This rule is clear and unequivocal . . . . 20

In other words, we have long adopted in our decisions the doctrine of private due process. This is as
it ought to be. The 1987 Constitution guarantees the rights of workers, especially the right to security
of tenure in a separate article — section 3 of Article XIII entitled Social Justice and Human Rights.
Thus, a 20-20 vision of the Constitution will show that the more specific rights of labor are not in the
Bill of Rights which is historically directed against government acts alone. Needless to state, the
constitutional rights of labor should be safeguarded against assaults from both government and
private parties. The majority should not reverse our settled rulings outlawing violations of due
process by employers in just causes cases.

To prop up its new ruling against our employees, the majority relates the evolution of our law on
dismissal starting from Article 302 of the Spanish Code of Commerce, to the New Civil Code of
1950, to R.A. No. 1052 (Termination Pay Law), then to R.A. No. 1787. To complete the picture, let
me add that on May 1, 1974, the Labor Code (PD 442) was signed into law by former President
Marcos. It took effect on May 1, 1974 or six months after its promulgation. The right of the employer
to terminate the employment was embodied in Articles 283, 284, and 285. Batas Pambansa Blg.
21  22  23 

130 which was enacted on August 21, 1981 amended Articles 283 and 284, which today are cited as
Arts. 282 and 283 of the Labor Code. 24

On March 2, 1989, Republic Act No. 6715 was approved which amended, among others, Article 277
of the Labor Code. Presently, Article 277 (b) reads:

Art. 277. Miscellaneous provisions. — (a) . . . .

(b) Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just or authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations
promulgated pursuant to the guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission. The
 burden of proving that the termination was for a valid or authorized cause shall rest
on the employer. . . . .

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

Art. 277. Miscellaneous provisions. — (a) . . . .

(b) With or without a collective agreement, no employer may shut down his
establishment or dismiss or terminate the employment of employees with at least one
year of service during the last two years, whether such service is continuous or
broken, without prior written authority issued in accordance with the rules and
regulations as the Secretary may promulgate.

Rule XIV, Book V of the 1997 Omnibus Rules Implementing the Labor Code provides:

Termination of Employment

Sec. 1. Security of tenure and due process. — No worker shall be dismissed except for a just
or authorized cause provided by law and after due process.

Sec. 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him
a written notice stating the particular acts or omissions constituting the grounds for his
dismissal. . . .

xxx     xxx     xxx

Sec. 5. Answer and hearing. — The worker may answer the allegations stated against him in
the notice of dismissal within a reasonable period from receipt of such notice. The employer
shall afford the worker ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires.

These laws, rules and regulations should be related to our decisions interpreting them. Let me
therefore emphasize our rulings holding that the pre-dismissal notice requirement is part of due
process. In Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, which was decided under the
25 

provisions of RA No. 1052 as amended by RA No. 1787, this Court ruled that "the failure of the
employer to give the [employee] the benefit of a hearing before he was dismissed constitute an
infringement on his constitutional right to due process of law and not to be denied the equal
protection of the laws. . . . Since the right of [an employee] to his labor is in itself a property and that
the labor agreement between him and [his employer] is the law between the parties, his summary
and arbitrary dismissal amounted to deprivation of his property without due process." Since then, we
have consistently held that before dismissing an employee for a just cause, he must be given notice
and hearing by his private employer as a matter of due process.

I respectfully submit that these rulings are more in accord with the need to protect the right of
employees against illegal dismissals. Indeed, our laws and our present Constitution are more
protective of the rights and interests of employees than their American counterpart. For one, to
justify private due process, we need not look for the factors of "sufficient governmental involvement"
as American courts do. Article 1700 of our Civil Code explicitly provides:

Art. 1700. The relation between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good.
 Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and
similar subjects.

Nor do we have to strain on the distinction made by American courts between property and privilege
and follow their ruling that due process will not apply if what is affected is a mere privilege. It is our
hoary ruling that labor is property within the contemplation of the due process clause of the
Constitution. Thus, in Philippine Movie Pictures Workers Association vs. Premiere Productions,
Inc., private respondent-employer filed with the Court of Industrial Relations (CIR) a petition seeking
26 

authority to lay off forty-four of its employees. On the date of the hearing of the petition, at the
request of the counsel of the private respondent, the judge of the CIR conducted an ocular
inspection in the premises of the employer. He interrogated fifteen laborers. On the basis of the
ocular inspection, the judge concluded that the petition for lay off was justified. We did not agree and
we ruled that "the right of a person to his labor is deemed to he property within the meaning of
constitutional guarantees. That is his means of livelihood. He can not be deprived of his labor or
work without due process of law. . . . (T)here are certain cardinal primary rights which the Court of
Industrial Relations must respect in the trial of every labor case. One of them is the right to a hearing
which includes the right of the party interested to present his own case and to submit evidence in
support thereof."

I wish also to stress that the 1999 Rules and Regulations implementing the Labor Code categorically
characterize this pre-dismissal notice requirement as a requirement of due process. Rule XXIII
provides:

Sec. 2. Standards of due process: requirements of notice. — In all cases of termination of

employment, the following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;

(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstance, grounds have been established to justify his
termination.

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 ground 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 right to due process. To be sure, violation of the
particular right of employees to security of tenure comes almost always from their private employers.
To suggest that we take mere geriatric steps when it comes to protecting the rights of labor from
infringement by private parties is farthest from the intent of the Constitution. We trivialize the right of
the employee if we adopt the rule allowing the employer to dismiss an employee without any prior
hearing and say let him be heard later on. To a dismissed employee that remedy is too little and too
late. The new majority ruling is doubly to be regretted because it comes at a time when deregulation
and privatization are buzzwords in the world being globalized. In such a setting, the new gods will
not be governments but non-governmental corporations. The greater need of the day therefore is
protection from illegal dismissals sans due process by these non-governmental corporations.

The majority also holds that the "third reason why the notice requirement under Art. 283 is not a
requirement of due process is that the employer cannot really be expected to be entirely an impartial
judge of his own cause. This is also the case in termination of employment for a just cause under
Art. 282." Again, with due respect, I beg to disagree. In an Article 283 situation, dismissal due to an
authorized cause, the employer is not called upon to act as an impartial judge. The employer is
given the duty to serve a written notice on the worker and the DOLE at least one month before the
intended date of lay-off. It is the DOLE, an impartial agency that will judge whether or not the
employee is being laid off for an authorized caused. It is not the employer who will adjudge whether
27 

the alleged authorized cause for dismissing the employee is fact or fiction. On the other hand, in an
Article 282 situation, dismissal for a just cause, it is also incorrect to hold that an employer cannot be
an impartial judge. Today, the procedure on discipline and dismissal of employees is usually defined
in the parties' collective bargaining agreement or in its absence, on the rules and regulations made
by the employer himself. This procedure is carefully designed to be bias free for it is to the interest of
both the employee and the employer that only a guilty employee is disciplined or dismissed. Hence,
where the charge against an employee is serious, it is standard practice to include in the
investigating committee an employee representative to assure the integrity of the process. In
addition, it is usual practice to give the aggrieved employee an appellate body to review an
unfavorable decision. Stated otherwise, the investigators are mandated to act impartially for to do
otherwise can bring havoc less to the employee but more to the employer. For one, if the integrity of
the grievance procedure becomes suspect, the employees may shun it and instead resort to
coercive measures like picketing and strikes that can financially bleed employers. For another, a
wrong, especially a biased judgment can always be challenged in the DOLE and the courts and can
result in awards of huge damages against the company. Indeed, the majority ruling that an employer
cannot act as an impartial judge has no empirical evidence to support itself. Statistics in the DOLE
will prove the many cases won by employees before the grievance committees manned by impartial
judges of the company.

Next, the majority holds that "the requirement to hear an employee before he is dismissed should be
considered simply as an application of the Justinian precept, embodied in the Civil Code, to act with
justice, give everyone his due, and observe honesty and good faith toward one's fellowmen." It then
rules that violation of this norm will render the employer liable for damages but will not render his act
of dismissal void. Again, I cannot join the majority stance. The faultline of this ruling lies in the refusal
to recognize that employer-employee relationship is governed by special labor laws and not by the
Civil Code. The majority has disregarded the precept that relations between capital and labor are
impressed with public interest. For this reason, we have the Labor Code that specially regulates the
relationship between 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 instatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement." This provision of the Labor Code clearly gives
the remedies that an unjustly dismissed employee deserves. It is not the Civil Code that is the
source of his remedies.

The majority also holds that lack of notice in an Article 283 situation merely makes an employee
dismissal "ineffectual" but not illegal. Again, the ruling is sought to be justified by analogy and our
attention is called to Article 1592, in relation to Article 1191 of the Civil Code. It is contended that
"under these provisions, while the power to rescind is implied in reciprocal obligations, nonetheless,
in cases involving the sale of immovable property, the vendor cannot rescind the contract even
though the vendee defaults in the payment of the price, except by bringing an action in court or
giving notice of rescission by means of a notarial demand." The analogy of the majority cannot be
allowed both in law and in logic. The legal relationship of an employer to his employee is not similar
to that of a vendor and a vendee. An employee suffers from a distinct disadvantage in his
relationship with an employer, hence, the Constitution and our laws give him extra protection. In
contrast, a vendor and a vendee in a sale of immovable property are at economic par with each
other. To consider an employer-employee relationship as similar to a sale of commodity is an
archaic abomination. An employer-employee relationship involves the common good and labor
cannot be treated as a mere commodity. As well-stated by former Governor General Leonard Wood
in his inaugural message before the 6th Philippine Legislature on October 27, 1922, "it is opportune
that we strive to impress upon all the people that labor is neither a chattel nor a commodity, but
human and must be dealt with from the standpoint of human interests."

Next, the majority holds that under the Labor Code, only the absence of a just cause for the
termination of employment can make the dismissal of an employee illegal. Quoting Article 279 which
provides:

Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.

it is then rationalized that "to hold that the employer's failure to give notice before dismissing an
employee . . . results in the nullity of the dismissal would, in effect, be to amend Article 279 by
adding another ground, for considering a dismissal illegal." With due respect, the majority has
misread Article 279. To start with, the article is entitled "Security of Tenure" and therefore protects
an employee against dismissal not only for an unjust cause but also for an unauthorized cause.
Thus, the phrase "unjustly dismissed" refers to employees who are dismissed without just cause and
to employees who are laid off without any authorized cause. As heretofore shown, we have
interpreted dismissals without prior notice as illegal for violating the right to due process of the
employee. These rulings form part of the law of the land and Congress was aware of them when it
enacted the Labor Code and when its implementing rules and regulations were promulgated
especially the rule ordering employers to follow due process when dismissing employees. Needless
to state, it is incorrect for the majority to urge that we are in effect amending Article 279.

In further explication of its ruling, the majority contends "what is more, it would ignore the fact that
under Art. 285, if it is the employee who fails to give a written notice to the employer that he is
leaving the service of the latter, at least one month in advance, his failure to comply with the legal
requirement does not result in making his resignation void but only in making him liable for
damages." Article 285(a) states: "An employee may terminate without just cause the employee-
employer relationship by serving a written notice on the employer at least one (1) month in advance.
The employer upon whom no such notice was served may hold the employee liable for damages."

In effect, the majority view is that its new ruling puts at par both the employer and the employee —
under Article 285, the failure of an employee to pre-notify in writing his employer that he is
terminating their relationship does not make his walk-out void; under its new ruling, the failure of an
employer to pre-notify an employee before his dismissal does not also render the dismissal void. By
this new ruling, the majority in a short stroke has rewritten the law on dismissal and tampered its pro-
employee philosophy. Undoubtedly, Article 285 favors the employee as it does not consider void his
act of terminating his employment relationship before giving the required notice. But this favor given
to an employee just like the other favors in the Labor Code and the Constitution are precisely
designed to level the playing field between the employer and the employee. It cannot be gainsaid
that employees are the special subject of solicitous laws because they have been and they continue
to be exploited by unscrupulous employers. Their exploitation has resulted in labor warfare that has
broken industrial peace and slowed down economic progress. In the exercise of their wisdom, the
founding fathers of our 1935, 1973 and 1987 Constitutions as well as the members our past and
present Congresses, have decided to give more legal protection and better legal treatment to our
employees in their relationship with their employer. Expressive of this policy is President
Magsaysay's call that "he who has less in life should have more in law." I respectfully submit that the
majority cannot revise our laws nor shun the social justice thrust of our Constitution in the guise of
interpretation especially when its result is to favor employers and disfavor employees. The majority
talks of high nobility but the highest nobility it to stoop down to reach the poor.

IV. NO UNJUST RESULTS OF CONSIDERING DISMISSALS WITHOUT PRIOR NOTICE

AS ILLEGAL

The majority further justifies its new ruling by holding:

The refusal to look beyond the validity of the initial action taken by the employer to terminate
employment either for an authorized or just cause can result in an injustice to the employer.
For not having been given notice and hearing before dismissing an employee, who is
otherwise guilty of, say, theft, or even of an attempt against the life of the employer, an
employer will be forced to keep in his employ such guilty employee. This is unjust.

It is true the Constitution regards labor as "a primary social economic force." But so does it
declare that it "recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investment." The Constitution bids the State to
"afford full protection to labor." But it is equally true that "the law, in protecting the rights of
the laborer, authorizes neither oppression nor self-destruction of the employer." And it is
oppression to compel the employer to continue in employment one who is guilty or to force
the employer to remain in operation when it is not economically in his interest to do so.

With due respect, I cannot understand this total turn around of the majority on the issue of the
unjustness of lack of pre-dismissal notice to an employee. Heretofore, we have always considered
this lack of notice as unjust to the employee. Even under Article 302 of the Spanish Code of
Commerce of 1882 as related by the majority, an employer who opts to dismiss an employee without
any notice has to pay a mesada equivalent to his salary for one month because of its unjustness.
This policy was modified by our legislators in favor of a more liberal treatment of labor as our country
came under the influence of the United States whose major labor laws became the matrix of our own
laws like R.A. 875, otherwise known as the Industrial Peace Act. In accord with these laws, and as
aforediscussed, we laid down the case law that dismissals without prior notice offend due process.
This is the case law when the Labor Code was enacted on May 1, 1974 and until now despite its
amendments. The 1935 and the 1973 Constitutions did not change this case law. So with the 1987
Constitution which even strengthened the rights of employees, especially their right to security of
tenure. Mr. Justice Laurel in his usual inimitable prose expressed this shift in social policy in favor of
employees as follows:

It should be observed at the outset that our Constitution was adopted in the midst of surging
unrest and dissatisfaction resulting from economic and social distress which was threatening
the stability of governments the world over. Alive to the social and economic forces at work,
the framers of our Constitution boldly met the problems and difficulties which faced them and
endeavored to crystallize, with more or less fidelity, the political, social and economic
propositions of their age, and this they did, with the consciousness that the political and
philosophical aphorism of their generation will, in the language of a great jurist, "be doubted
by the next and perhaps entirely discarded by the third." (Chief Justice Winslow in Gorgnis v.
Falk Co., 147 Wis., 327; 133 N. W., 209). Embodying the spirit of the present epoch, general
provisions were inserted in the Constitution which are intended to bring about the needed
social and economic equilibrium between component elements of society through the
application of what may be termed as the justitia communis advocated by Grotius and
Leibnitz many years ago to be secured through the counter-balancing of economic and
social forces and employers or landlords, and employees or tenants, respectively; and by
prescribing penalties for the violation of the orders" and later, Commonwealth Act No. 213,
entitled "An Act to define and regulate legitimate labor organizations." 28

This ingrained social philosophy favoring employees has now been weakened by the new ruling of
the majority. For while this Court has always considered lack of pre-dismissal notice as unjust to
employees, the new ruling of the majority now declares it is unjust to employers as if employers are
the ones exploited by employees. In truth, there is nothing unjust to employers by requiring them to
give notice to their employees before denying them their jobs. There is nothing unjust to the duty to
give notice for the duty is a reasonable duty. If the duty is reasonable, then it is also reasonable to
demand its compliance before the right to dismiss on the part of an employer can be exercised. If it
is reasonable for an employer to comply with the duty, then it can never be unjust if non-compliance
therewith is penalized by denying said employer his right to dismiss. In fine, if the employer's right to
dismiss an employee is forfeited for his failure to comply with this simple, reasonable duty to pre-
notify his employee, he has nothing to blame but himself. If the employer is estopped from litigating
the issue of whether or not he is dismissing his employee for a just or an authorized cause, he
brought the consequence on to himself. The new ruling of the majority, however, inexplicably
considers this consequence as unjust to the employer and it merely winks at his failure to give
notice.

V. A LAST WORD

The new ruling of the majority erodes the sanctity of the most important right of an employee, his
constitutional right to security of tenure. This right will never be respected by the employer if we
merely honor the right with a price tag. The policy of "dismiss now and pay later" favors 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 tenure. These are constitutional polestars and not mere works of cosmetology.
Our odes to the poor will be meaningless mouthfuls if we cannot protect the employee's right to due
process against the power of the peso of employers.

To an employee, a job is everything. Its loss involves terrible repercussions — stoppage of the
schooling of children, ejectment from leased premises, hunger to the family, a life without any safety
net. Indeed, to many employees, dismissal is their lethal injection. Mere payment of money by way
of separation pay and backwages will not secure food on the mouths of employees who do not even
have the right to choose what they will chew.

I vote to grant the petition.

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

The lawful severance by an employer of an employer-employee relationship would require a valid

cause. There are, under the Labor Code, two groups of valid causes, and these are the just causes
under Article 282 and the authorized causes under Article 283 and Article 284.
1  2  3

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
4 

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 meaningful adjudications appurtenant thereto.

In this jurisdiction, the right to due process is constitutional and statutory.

Due process in the context of a termination of employment, particularly, would be 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. I find it difficult to ascribe either a
want of wisdom or a lack of legal basis to the early pronouncements of this Court that sanction the
termination of employment when a just or an authorized cause to warrant the termination is clearly
extant. Regrettably, the Court in some of those pronouncements has used, less than guarded in my
view, the term "due process" when referring to the notices prescribed in the Labor Code and its
5 
implementing rules that could, thereby, albeit unintendedly and without meaning to, confuse the
6 

latter with the notice requirement in adjudicatory proceedings. It is not seldom when the law puts up
various conditions in the juridical relations of parties; it would not be accurate to consider, I believe,
an infraction thereof to ipso-facto raise a problem of due process. The mere failure of notice of the
dismissal or lay-off does not foreclose the right of an employee from disputing the validity, in general,
of the termination of his employment, or the veracity, in particular, of the cause that has been
invoked in order to justify that termination. In assailing the dismissal or lay-off, an employee is
entitled to be heard and to be given the corresponding due notice of the proceedings. It would be
when this right is withheld without cogent reasons that, indeed, it can rightly be claimed that the
fundamental demands of procedural due process have been unduly discarded.

I do appreciate the fact that the prescribed notices can have consequential benefits to an employee
who is dismissed or laid off, as the case may be; its non-observance by an employer, therefore, can
verily entitle the employee to an award of damage but, to repeat, not to the extent of rendering
outrightly illegal that dismissal or lay-off predicated on valid grounds. I would consider the
indemnification to the employee not a penalty or a fine against the employer, the levy of either of
which would require an appropriate legislative enactment; rather, I take the grant of indemnity as
justifiable as an award of nominal damages in accordance with the provisions of Articles 2221-2223
of the Civil Code, viz:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him.

Art. 2222. The court may award nominal damages in every obligation arising from any
source enumerated in article 1157, or in every case where any property right has been
invaded.

Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right
involved and all accessory questions, as between the parties to the suit, or their respective
heirs and assigns.

There is no fixed formula for determining the precise amount of nominal damages. In fixing the
amount of nominal damages to be awarded, the circumstances of each case should thus be taken
into account, such as, to exemplify, the —

(a) length of service or employment of the dismissed employee;

(b) his salary or compensation at the time termination of employment vis-a-vis the capability

of the employer to pay;

(c) question of whether the employer has deliberately violated the requirements for
termination of employment or has attempted to comply, at least substantially, therewith;
and/or

(d) reasons for the termination of employment.

I might stress the rule that the award of nominal damages is not for the purpose of indemnification
for a loss but for the recognition and vindication of a right. The degree of recovery therefor can
depend, on the one hand, on the constitution of the right, and, upon the other hand, on the extent
and manner by which that right is ignored to the prejudice of the holder of that right.
In fine —
7 

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 a warded. In this respect, the Civil Code
provides:

Art. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
just due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages
if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner (Civil Code).

Separation pay can substitute for reinstatement if such reinstatement is not feasible, such as
in case of a clearly strained employer-employee relationship (limited to managerial positions
and contracts of employment predicated on trust and confidence) or when the work or
position formerly held by the dismissed employee plainly has since ceased to be available.

C. Where there is just cause or an authorized cause for the dismissal or lay-off but the
required written notices therefor have not been properly observed by an employer, it would
neither be light and justifiable nor likely intended by law to order either the reinstatement of
the dismissed or laid-off employee or the payment of back salaries to him simply for the lack
of such notices if, and so long as, the employee is not deprived of an opportunity to contest
that dismissal or lay-off and to accordingly be heard thereon. In the termination of
employment for an authorized cause (this cause being attributable to the employer), the laid-
off employee is statutorily entitled to separation pay, unlike a dismissal for a just cause (a
cause attributable to an employee) where no separation pay is due. In either case, if an
employer fails to comply with the requirements of notice in terminating the services of the
employee, the employer must be made to pay, as so hereinabove expressed, corresponding
damages to the employee.

WHEREFORE, I vote to hold (a) that the lay-off in the case at bar is due to redundancy and that,
accordingly, the separation pay to petitioner should be increased to one month, instead of one-half
month, pay for every year of service, and (b) that petitioner is entitled to his unpaid wages,
proportionate 13th-month pay, and an indemnity of P10,000.00 in keeping with the nature and
purpose of, as well as the rationale behind, the grant of nominal damages.