Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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.1 Initially hired on October 4, 1984 on contractual basis, petitioner eventually became a regular employee on April 4, 1985. In 1988, he became head of the Security Checkers Section of 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

P R E S E N T

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,8 this Court upheld the termination of employment of three mechanics in a transportation company and their replacement by a company rendering maintenance and repair services. It held:

In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business judgment or management prerogative. And in the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary manner, the court will not interfere with the exercise of such prerogative.9

In Asian Alcohol Corporation v. National Labor Relations Commission,10 the Court likewise upheld the termination of employment of water pump tenders and their replacement by independent contractors. It ruled that an employer's good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of an independent contractor to replace the services of the terminated employees to promote economy and efficiency.

Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to what management decides."11 Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.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 1990.13 Such an 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.14 Indeed, that the phase-out of the security section constituted a "legitimate business decision" is a factual finding of an administrative agency which must be accorded respect and even finality by this Court since 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,16 workers in a garment factory were temporarily laid off due to the cancellation of orders and a garment embargo. The Labor Arbiter found that the workers had been illegally dismissed and ordered the company to pay separation pay and backwages. The NLRC, on the other hand, found that this was a case of retrenchment due to business losses and ordered the payment of separation pay without backwages. This Court sustained the NLRC's finding. However, as the company did not comply with the 30-day written notice in Art. 283 of the Labor Code, the Court ordered the employer to pay the workers P2,000.00 each as indemnity.

The decision followed the ruling in several cases involving dismissals which, although based on any of the just causes under Art. 282,17 were effected without notice and hearing to the employee as required by the implementing rules.18 As this Court said: "It is now settled that where the dismissal of one employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin requirements of notice and opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for non-compliance with 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.20 In announcing the change, this Court said: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.

x x x           x x x           x x x

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of 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 P1,000.0022 to P2,000.0023 to P5,000.0024 to P10,000.00.25

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 Sengbengco26 that "acts of Congress, as well as of the Executive, can deny due process only under the pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding." Justice Puno concludes that the dismissal of an employee without notice and hearing, even if for a just cause, as provided in Art. 282, or for an authorized cause, as provided in Arts. 283-284, is a nullity. Hence, even if just or authorized cause exist, the employee should be reinstated with full back pay. On the other hand, Justice Panganiban quotes from the statement in People v. Bocar27 that "[w]here the denial of the fundamental right of due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction."

Violation of Notice Requirement Not a Denial of Due Process

The cases cited by both 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.28 This provision was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice or the payment of compensation at the rate of 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.30 It was only on September 4, 1981 that notice was required to be given even where the dismissal or termination of an employee was for cause. This was made in the rules issued by the then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much later when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be that the former regime denied due process to the employee. Otherwise, there should now likewise be a rule that, in case an employee leaves his job without cause and without prior notice to his employer, his act should be void instead of simply making him liable for damages.

The third reason why the notice requirement under Art. 283 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,31 which Justice Puno cites, it was held that "Since the right of [an employee] to his labor is in itself a property and that the labor agreement between him and [his employer] is the law between the parties, his summary and arbitrary dismissal amounted to deprivation of his property without due process of law." But here we are dealing with dismissals and layoffs by employers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v. Araneta University Foundation,32 although a professor was dismissed without a hearing by his university, his dismissal for having made homosexual advances on a student was sustained, it appearing that in the NLRC, the employee was fully heard in his defense.

Lack of Notice Only Makes Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. Others are simply an application of the Justinian precept, embodied in the Civil Code,33 to act with justice, give everyone his due, and observe honesty and good faith toward one's fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure either of the employer or the employee to live up to this precept is to make him liable in damages, not to render his act (dismissal or resignation, as the case may be) void. The measure of damages is the amount of wages the employee should have received were it not for the termination of his employment without prior notice. If warranted, nominal and moral damages may also be awarded.

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 Code34 in rescinding a contract for the sale of immovable property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power even though the vendee defaults in the payment of the price, except by bringing an action in court or giving notice of rescission by means of a notarial demand.35 Consequently, a notice of rescission given in the letter of an attorney has no legal effect, and the vendee can make payment even after the due date since no valid notice of rescission has been given.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.38 This disparity in 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,39 in support of his view that an illegal dismissal results not only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case actually involved a dismissal for an alleged loss of trust and confidence which, as found by the Court, was not proven. The dismissal was, therefore, illegal, not because there was a denial of due process, but because the dismissal was without cause. The statement that the failure of management to comply with the notice requirement "taints the dismissal with illegality" was merely a dictum thrown in as additional grounds for holding the dismissal to be illegal.

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

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."40 But so does it declare that it "recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investment."41 The Constitution bids the State to "afford full protection to labor."42 But it is equally true that "the law, in protecting the right's of the laborer, authorizes neither oppression nor self-destruction of the employer."43 And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his interest to do so.

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with Art. 283, to wit:

In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one month for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) 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,1 is not the proper means by which NLRC decisions are appealed to this Court. Before St. Martin Funeral Home, it was only through a Petition for Certiorari under Rule 65 that NLRC decisions could be reviewed and nullified by us on the ground of lack of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. After St. Martin Funeral Home, petitions like the one at bar are initially filed in the Court of Appeals for proper adjudication.

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

Briefly, on 4 April 1985 private respondent Isetann Department Store, Inc. (ISETANN), employed petitioner Ruben Serrano as Security Checker until his appointment as Security Section Head. On 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 reconsideration3 Serrano filed the 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.5 Specifically, we held in International Harvester Macleod, Inc. v. Intermediate Appellate Court6 that the determination of whether to maintain or phase out an entire department or section or to reduce personnel lies with management. The determination of the need for the phasing out of a department as a labor and cost saving device because it is no longer economical to retain its services is a management prerogative.

After having established that the termination of petitioner Ruben Serrano was for an authorized cause, we now address the issue of whether proper procedures were observed in his dismissal.

Since the State affords protection to labor under the Constitution,7 workers enjoy security of tenure and may only be removed or terminated upon valid reason and through strict observance of proper procedure.8 Article 279 of the Labor Code specifically provides —

Art. 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his 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.11 It did not send a written notice to DOLE which is essential because the right to terminate an employee is not an absolute prerogative. The lack of written notice denied DOLE the opportunity to determine the validity of the termination.

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."12 Specifically, due process is a requirement for the validity of any governmental action amounting to deprivation of liberty.13 It is a restraint on state action not only in terms of what it amounts to but how it is accomplished. Its range thus covers both the ends 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.16 The same disinterestedness required of men on the 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:18 (a) the right to a hearing, which includes the right to present one's case and submit evidence in support thereof; (b) the tribunal must consider the evidence presented; (c) the decision must have something to support itself; (d) the evidence must be substantial; (e) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (f) the tribunal or body or any of its judges must act on its own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate; (g) the board or body should, in all controversial questions, render its decision in such manner that the parties to the proceeding may know the various issues involved, and the reason for the decision rendered.

Also in Lumiqued v. Exevea19 it was held —

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

From the foregoing, it is clear that the observance of due process is demanded in governmental acts. Particularly in administrative proceedings, due process starts with the tribunal or hearing officer and not with the employer. In the instant case, what is mandated of the employer to observe is the 30-day notice requirement. Hence, non-observance of the notice requirement is not denial of due process but merely a failure to comply with a legal obligation for which we 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. NLRC20 thus —

The Court holds that the policy of ordering reinstatement to the service of an employee without loss of seniority and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding three years without qualification or deduction, when it appears he was not afforded due process, although his dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment should be re-examined. It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remains in the service . . . . 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 Commission21 Mr. Justice Davide Jr., now Chief Justice, made this clear pronouncement —

It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process, i.e. he was not furnished the twin requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for 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 Commission22 where he wrote —

The rules require the employer to furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him. In the instant case, private respondents have failed to furnish petitioner with the first of the required two (2) notices and to state plainly the reasons for the dismissal in the termination letter. Failure to comply with the requirements taints the dismissal with illegality.

Be that as it may, private respondent can dismiss petitioner for just cause . . . . 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 Commission23 this Court through Mr. Justice Mendoza decreed —

In the case at bar, both the Labor Arbiter and the NLRC found that no written notice of the charges had been given to petitioner by the respondent company. . . . 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 P10,000.00.24 For authorized cause, as 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 26 this Court has already recognized the necessity of imposing a sanction in the form of indemnity or even damages, when proper, not specifically provided by any law, upon employers who failed to comply with the twin-notice requirement. At the very least, what is being proposed to be adopted here is merely a change in the terminology used, i.e., from "sanction," "indemnity," "damages" or "penalty," to "disturbance compensation" as it is believed to be the more appropriate term to accurately describe the lamentable situation of our displaced employees.

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

A review of our law on dismissal is in order.

I. DISMISSAL DUE TO JUST CAUSE

The law allowing dismissal of an employee due to a just cause is provided in Article 282 of the Labor Code:

Art. 282. Termination by employer. — An employer 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 jurisprudence2 is that to justify dismissal of an employee for a just cause, he must be given two kinds of notice by his employer, viz: (1) notice to apprise the employee of the particular acts or omissions for which the dismissal is sought, and (2) subsequent notice to inform him of the employer's decision to dismiss him. Similarly, deeply ingrained is our ruling that these pre and post notice requirements are not mere technicalities but are requirements of due process.3

Then came the case of Wenphil Corporation vs. NLRC and Mallare in 1989.4 It is the majority view that Wenphil reversed the long standing policy of this Court on dismissal. This is too broad a reading of Wenphil. A careful statement of the facts of Wenphil and the ruling of this Court is thus proper.

First, the facts. The private respondent Roberto Mallare is the assistant head of the backroom department of petitioner Wenphil Corporation. At about 2:30 pm on May 20, 1985, Mallare had an altercation with his co-employee, Job Barrameda, about tending the Salad Bar. He slapped Barrameda's cap, stepped on his foot, picked up an ice scooper and brandished it against the latter. He refused to be pacified by another employee who reported the incident to Delilah Hermosura, assistant manager. Hermosura summoned Mallare but the latter refused to see the former. It took a security guard to bring Mallare to Hermosura. Instead of making an explanation, Mallare shouted profane words against Hermosura. He declared that their altercation should only be settled by him and Barrameda.

The following morning, Mallare was suspended. In the afternoon, he was dismissed from the service. He received an official notice of his dismissal four (4) days later.

Mallare filed with the Labor Arbiter a complaint for illegal suspension, illegal dismissal and unfair labor practice. No hearing was conducted in view of the repeated absence of the counsel of Mallare. The parties submitted their respective position papers. On December 3, 1986, the Arbiter denied the complaint as he found Mallare guilty 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,5 we held thru our esteemed Chief Justice Davide that "the requirement of notice to both the employees concerned and the Department of Labor and Employment (DOLE) is mandatory and must be written and given at least one month before the intended date of retrenchment." We explained that the "notice to the DOLE is essential because the right to retrench is not an absolute prerogative of an employer but is subject to the requirement of law that retrenchment be proved to prevent losses. The DOLE is the agency that will determine whether the planned retrenchment is justified and adequately supported by fact."6 Nonetheless, we ruled:

The lack of written notice to the petitioners and to the DOLE does not, however, make the petitioners' retrenchment illegal such that they are entitled to the payment of back wages and separation pay in lieu of reinstatement as they contend. Their retrenchment, for not having been effected with the required notices, is merely defective. In those cases where we found the retrenchment to be illegal and ordered the employees' reinstatement and the payment of backwages, the validity of the 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."8 The Court then satisfied itself with this bare minimum when 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

x x x           x x x           x x x

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.

x x x           x x x           x x x

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.

x x x           x x x           x x x

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).

x x x           x x x           x x x

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.11 These authorized causes are: (1) installation of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the law. It also provides that prior to the dismissal of an employee for an authorized cause, the employer must send two written notices at least one month before the intended 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.12 We explained that the notice to the DOLE is necessary to enable it to ascertain the truth of the cause of termination.13 The DOLE is equipped with men and machines to determine whether the planned closure or cessation of business or retrenchment or redundancy or installation of labor saving device is justified by economic facts.14 For this reason too, we have held that notice to the employee is required to enable him to contest the factual bases of the management decision or good faith of the retrenchment or redundancy before the DOLE.15 In addition, this notice requirement 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 17 that ". . . acts of Congress as well as those of the Executive, can deny due process only under pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding." With due respect to the majority, however, I part ways with the majority in its new ruling that the due process requirement does not apply to the exercise of private power. This overly restrictive majority opinion will sap the due process right of employees of its remaining utility. Indeed, the new majority opinion limiting violations of due process to government action alone is a throwback to a regime of law long discarded by more progressive countries. Today, private due process is a settled norm in administrative law. 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,19 this Court, 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 283,21 284,22 and 285.23 Batas Pambansa Blg. 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. . . .

x x x           x x x           x x x

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,25 which was decided under the provisions of RA No. 1052 as amended by RA No. 1787, this Court ruled that "the failure of the employer to give the [employee] the benefit of a hearing before he was dismissed constitute an infringement on his constitutional right to due process of law and not to be denied the equal protection of the laws. . . . 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.,26 private respondent-employer filed with the Court of Industrial Relations (CIR) a petition seeking authority to lay off forty-four of its employees. On the date of the hearing of the petition, at the request of the counsel of the private respondent, the judge of the CIR conducted an ocular inspection in the premises of the employer. He interrogated fifteen laborers. On the basis of the ocular inspection, the judge concluded that the petition for lay off was justified. We did not agree and we ruled that "the right of a person to his labor is deemed to 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.27 It is not the employer who will adjudge whether 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 2821 and the authorized causes under Article 2832 and Article 284.3

An employee whose employment is terminated for a just cause is not entitled to the payment of separation benefits.4 Separation pay would be due, however, when the lay-off is on account of an authorized cause. The amount of separation pay would depend on the ground for the termination of employment. A lay-off due to the installation of a labor saving device, redundancy (Article 283) or disease (Article 284), entitles the worker to a separation pay equivalent to "one (1) month pay or at least one (1) month pay for every year of service, whichever is higher." When the termination of employment is due to retrenchment to prevent losses, or to closure or cessation of operations of an establishment or undertaking not due to serious business losses or financial reverses, the separation pay is only an equivalent of "one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher." In the above instances, a fraction of at least six (6) months is considered as one (1) whole year.

Due process of law, in its broad concept, is a principle in our legal system that mandates due protection to the basic rights, inherent or accorded, of every person against harm or transgression without an intrinsically just and valid law, as well as an opportunity to be heard before an impartial tribunal, that can warrant such an impairment. Due process guarantees against arbitrariness and bears on both substance and procedure. Substantive due process concerns itself with the law, its essence, and its concomitant efficacy; procedural due process focuses on the rules that are established in order to ensure 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 Code5 and its implementing rules6 that could, thereby, albeit unintendedly and without meaning to, confuse the latter with the notice requirement in adjudicatory proceedings. It is not seldom when the law puts up various conditions in the juridical relations of parties; it would not 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 fine7 —

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.

 

PANGANIBAN, J., separate opinion;

In the case before us, the Court is unanimous in at least two findings: (1) petitioner's dismissal was due to an authorized cause, redundancy; and (2) petitioner was notified of his dismissal only on the very day his employment was terminated. The contentious issue arising out of these two findings is as follows: What is the legal effect and the corresponding sanction for the failure of the employer to give the employee and the Department of Labor and Employment (DOLE) the 30-day notice of termination required under Article 283 of the Labor Code?

During the last ten (10) years, the Court has answered the foregoing question by ruling that the dismissal should be upheld although the employee should be given "indemnity or damages" ranging from P1,000 to P10,000 depending on the circumstances.

The present ponencia of Mr. Justice Mendoza holds that "the termination of his employment should be considered ineffectual and the [employee] should be paid back wages" from the time of his dismissal until the Court finds that the dismissal was for a just cause.

Reexamination of the "Indemnity Only" Rule

I am grateful that the Court has decided to reexamine our ten-year doctrine on this question and has at least, in the process, increased the monetary award that should go to the dismissed employee — from a nominal sum in the concept "indemnity or damages" to "full back wages." Shortly after my assumption of office on October 10, 1995, I already questioned this practice of granting "indemnity only" to employees who were dismissed for cause but without due process.1 I formally registered reservations on this rule in my ponencia in MGG Marine Services v. NLRC2 and gave it full discussion in my Dissents in Better Buildings v. NLRC3 and in Del Val v. NLRC.4

Without in any way diminishing my appreciation of this reexamination and of the more financially-generous treatment the Court has accorded labor, I write to take issue with the legal basis of my esteemed colleague, Mr. Justice Mendoza, in arriving at his legal conclusion that "the employer's failure to comply with the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of employment which makes the termination of employment merely ineffectual." In short, he believes that (1) the 30-day notice requirement finds basis only in the Labor Code, and (2) the sanction for its violation is only "full back wages."

With due respect, I submit the following counter-arguments:

(1) The notice requirement finds basis not only in the Labor Code but, more important, in the due process clause of the Constitution.

(2) Consequently, when the employee is dismissed without due process, the legal effect is an illegal dismissal and the appropriate sanction is full back wages plus reinstatement, not merely full back wages. It is jurisprudentially settled, as I will show presently, that when procedural due process is violated, the proceedings — in this case, the dismissal — will be voided, and the parties will have to be returned to their status quo ante; that is, the employee will have to be given back his old job and paid all benefits as if he were never dismissed.

(3) In any event, contrary to Mr. Justice Mendoza's premise, even the Labor Code expressly grants the dismissed employee not only the right to be notified but also the right to be heard.

In short, when an employee is dismissed without notice and hearing, the effect is an illegal dismissal and the appropriate reliefs are reinstatement and full back wages. In ruling that the dismissal should be upheld, the Court majority has virtually rendered nugatory the employee's right to due process as mandated by law and the Constitution. It implicitly allows the employer to simply ignore such right and to just pay the employee. While it increases the payment to "full back wages," it doctrinally denigrates his right to due process to a mere statutory right to notice.

Let me explain the foregoing by starting with a short background of our jurisprudence on the right to due process.

Without Due Process, the Proceedings Are Illegal

In the past, this Court has untiringly reiterated that there are two essential requisites for an employer's valid termination of an employee's services: (1) a just5 or authorized6 cause and (2) due process.7 During the last ten years, the Court has been quite firm in this doctrinal concept, but it has been less than consistent in declaring the illegality of a dismissal when due process has not been observed. This is particularly noticeable in the relief granted. Where there has been no just or authorized cause, the employee is awarded reinstatement or separation pay, and back wages.8 If only the second requisite (due process) has not been fulfilled, the employee, as earlier stated, is granted indemnity or damages amounting to a measly P1,000 up to P10,000.9

I respectfully submit that illegal dismissal results not only from the absence of a legal cause (enumerated in Arts. 282 to 284 of the Labor Code), but likewise from the failure to observe due process. Indeed, many are the cases, labor or otherwise, in which acts violative of due process are unequivocally voided or declared illegal by the Supreme Court. In Pepsi-Cola Bottling Co. v. NLRC,10 the Court categorically ruled that the failure of management to comply with the requirements of due process made its judgment of dismissal "void and non-existent."

This Court in People v. Bocar 11 emphatically made the following pronouncement, which has been reiterated in several cases:12

The cardinal precept is that where there is a violation of basis constitutional rights, courts are ousted of their jurisdiction. Thus the violation of the State's right to due process raises a serious jurisdictional issue (Gumabon vs. Director of the Bureau of Prisons, L-30026, 37 SCRA 420 [Jan. 30, 1971]) which cannot be glossed over or disregarded at will. Where the denial of the fundamental right of due process is apparent, a decision rendered in disregarded of the right is void for lack of jurisdiction (Aducayen vs. Flores, L-30370, [May 25, 1973] 51 SCRA 78; Shell Co. vs. Enage, L-30111-12, 49 SCRA 416 [Feb. 27, 1973]). Any judgment or decision rendered notwithstanding such violation may be regarded as a "lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever it exhibits its head" (Aducayen vs. Flores, supra).

In the earlier case Bacus v. Ople,13 this Court also nullified the then labor minister's clearance to terminate the employment of company workers who had supposedly staged an illegal strike. The reason for this ruling was the denial of sufficient opportunity for them to present their evidence and prove their case. The Court explained:14

A mere finding of the illegality of a strike should not be automatically followed by a wholesale dismissal of the strikers from their employment. What is more, the finding of the illegality of the strike by respondent Minister of Labor and Employment is predicated on the evidence ascertained through an irregular procedure conducted under the semblance of summary methods and speedy disposition of labor disputes involving striking employees.

While it is true that administrative agencies exercising quasi-judicial functions are free from the rigidities of procedure, it is equally well-settled in this jurisdiction that avoidance of such technicalities of law or procedure in ascertaining objectively the facts in each case should not, however, cause a denial of due process. The relative freedom of the labor arbiter from the rigidities of procedure cannot be invoked to evade what was clearly emphasized in the landmark case of Ang Tibay v. Court of Industrial Relations that all administrative bodies cannot ignore or disregard the fundamental and essential requirements of due process.

In the said case, the respondent company was ordered to reinstate the dismissed workers, pending a hearing "giving them the opportunity to be heard and present their evidence."

In Philippine National Bank v. Apalisok,15 Primitivo Virtudazo, an employee of PNB, was served a Memorandum stating the finding against him of a prima facie case for dishonesty and violation of bank rules and regulations. He submitted his Answer denying the charges and explaining his defenses.

Later, two personnel examiners of the bank conducted a fact-finding investigation. They stressed to him that a formal investigation would follow, in which he could confront and examine the witnesses for the bank, as well as present his own. What followed, however, was a Memorandum notifying him that he had been found guilty of the charges and that he was being dismissed. After several futile attempts to secure a copy of the Decision rendered against him, he instituted against PNB a Complaint for illegal dismissal and prayed for reinstatement and damages.

The trial court held that Virtudazo had been deprived of his rights to be formally investigated and to cross-examine the witnesses. This Court sustained the trial court, stating resolutely: "The proceedings having been conducted without according to Virtudazo the "cardinal primary rights of due process" guaranteed to every party in an administrative or quasi-judicial proceeding, said proceedings must be pronounced null and void."16

Also in Fabella v. Court of Appeals,17 this Court declared the dismissal of the schoolteachers illegal, because the administrative body that heard the charges against them had not afforded them their right to procedural due process. The proceedings were declared void, and the orders for their dismissal set aside. We unqualifiedly reinstated the schoolteachers, to whom we awarded all monetary benefits that had accrued to them during the period of their unjustified suspension or dismissal.

In People v. San Diego,18 People v. Sola,19 People v. Dactrdao,20 People v. Calo Jr.21 and People v. Burgos,22 this Court similarly voided the trial court's grant of bail to the accused upon a finding that the prosecution had been deprived of procedural due process.

In People v. Sevilleno,23 the Court noted that the trial judge "hardly satisfied the requisite searching inquiry" due the accused when he pleaded guilty to the capital offense he had been charged with. We thus concluded that "the accused was not properly accorded his fundamental right to be informed of the precise nature of the accusation leveled against him." Because of the nonobservance of "the fundamental requirements of fairness and due process," the appealed Decision was annulled and set aside, and the case was remanded for the proper arraignment and trial of the accused.

Recently, the Court vacated its earlier Decision24 in People v. Parazo25 upon realizing that the accused — "a deaf-mute, a mental retardate, whose mental age [was] only seven (7) years and nine (9) months, and with low IQ of 60 only" — had not been ably assisted by a sign language expert during his arraignment and trial. Citing People v. Crisologo,26 we ruled that the accused had been deprived of "a full and fair trial and a reasonable opportunity to defend himself." He had in effect been denied his fundamental right to due process of law. Hence, we set aside the trial proceedings and granted the accused a re-arraignment and a retrial.

Of late, we also set aside a Comelec Resolution disallowing the use by a candidate of a certain nickname for the purpose of her election candidacy. The Resolution was issued pursuant to a letter-petition which was passed upon by the Comelec without affording the candidate the opportunity to explain her side and to counter the allegations in said letter-petition. In invalidating the said Resolution, we again underscored the necessity of the observance of the twin requirements of notice and hearing before any decision can be validly rendered in a case.27

Clearly deducible from our extant jurisprudence is that the denial of a person's fundamental right to due process amounts to the illegality of the proceedings against him. Consequently, he is brought back to his status quo ante, not merely awarded nominal damages or indemnity.

Our labor force deserves no less. Indeed, the State recognizes it as its primary social economic force,28 to which it is constitutionally mandated to afford full protection.29 Yet, refusing to declare the illegality of dismissals without due process, we have continued to impose upon the erring employer the simplistic penalty of paying indemnity only. Hence, I submit that it is time for us to denounce these dismissals as null and void and to grant our workers these proper reliefs: (1) the declaration that the termination or dismissal is illegal and unconstitutional and (2) the reinstatement of the employee plus full back wages. The present ruling of the Court is manifestly inconsistent with existing prudence which holds that proceedings held without notice and hearing are null and void, since they amount to a violation of due process, and therefore bring back the parties to the status quo ante.

Exception: When Due Process Is Impractical and Futile

I am fully aware that in a long line of cases starting with Wenphil v. NLRC,30 the Court has held: where there is just cause for the dismissal of an employee but the employer fails to follow the requirements of procedural due process, the former is not entitled to back wages, reinstatement (or separation pay in case reinstatement is no longer feasible) or other benefits. Instead, the employee is granted an indemnity (or penalty or damages) ranging from P1,00031 to as much as P10,000,32 depending on the circumstances of the case and the gravity of the employer's omission. Since then, Wenphil has perfunctorily been applied in most subsequent cases33 involving a violation of due process (although just cause has been duly proven), without regard for the peculiar factual milieu of each case. Indemnity or damages has become an easy substitute for due process.

Be it remembered, however, that the facts in Wenphil clearly showed the impracticality and the futility of observing the procedure laid down by law and by the Constitution for terminating employment. The employee involved therein appeared to have exhibited a violent temper and caused trouble during office hours. In an altercation with a co-employee, he "slapped [the latter's] cap, stepped on his foot and picked up the ice scooper and brandished it against [him]." When summoned by the assistant manager, the employee "shouted and uttered profane words" instead of giving an explanation. He was caught virtually in flagrante delicto in the presence of many people. Under the circumstances action was necessary to preserve order and discipline, as well as to safeguard the customers' confidence in the employer's business — a fastfood chain catering to the general public where courtesy is a prized virtue.

However, in most of the succeeding cases, including the present one before us in which the petitioner was dismissed on the very day he was served notice, there were ample opportunities for the employers to observe the requisites of due process. There were no exigencies that called for immediate response. And yet, Wenphil was instantly invoked and due process brushed aside.

I believe that the price that the Court has set for the infringement of the fundamental right to due process is too insignificant, too niggardly, and sometimes even too late. I believe that imposing a stiffer sanction is the only way to emphasize to employers the extreme importance of the right to due process in our democratic system. Such right is too sacred to be taken for granted or glossed over in a cavalier fashion. To hold otherwise, as by simply imposing an indemnity or even "full back wages," is to allow the rich and powerful to virtually purchase and to thereby stifle a constitutional right granted to the poor and marginalized.

It may be asked: If the employee is guilty anyway, what difference would it make if he is fired without due process? By the same token, it may be asked: If in the end, after due hearing, a criminal offender is found guilty anyway, what difference would it make if he is simply penalized immediately without the trouble and the expense of trial? The absurdity of this argument is too apparent to deserve further discourse.34

Worker's Right to Notice Is Constitutional, Not Merely Statutory

According to the ponencia of Mr. Justice Mendoza, the "violation of the notice requirement cannot be considered a denial of due process resulting in the nullity of the employee's dismissal or lay-off." He argues that the due process clause of the Constitution may be used against the government only. Since the Labor Code does not accord employees the right to a hearing, ergo, he concludes, they do not have the right to due process.

I disagree. True, as pointed out by Mr. Justice Mendoza, traditional doctrine holds that constitutional rights may be invoked only against the State. This is because in the past, only the State was in a position to violate these rights, including the due process clause. However, with the advent of liberalization, deregulation and privatization, the State tended to cede some of its powers to the "market forces." Hence, corporate behemoths and even individuals may now be sources of abuses and threats to human rights and liberties. I believe, therefore, that such traditional doctrine should be modified to enable the judiciary to cope with these new paradigms and to continue protecting the people from new forms of abuses.34-a

Indeed the employee is entitled to due process not because of the Labor code, but because of the Constitution. Elementary is the doctrine that constitutional provisions are deemed written into every statute, contract or undertaking. Worth noting is that "[o]ne's employment, profession, trade or calling is a property right within the protection of the constitutional guaranty of due process of law."35

In a long line of cases involving judicial, quasi-judicial and administrative proceedings, some of which I summarized earlier, the Court has held that the twin requirements of notice and hearing (or, at the very least, an opportunity to be heard) constitute the essential elements of due process. In labor proceedings, both are the conditio sine qua non for a dismissal to be validly effected.36 The perceptive Justice Irene Cortes has aptly stated: "One cannot go without the other, for otherwise the termination would, in the eyes of the law, be illegal."37

Even the Labor Code Grants the Right to a Hearing

Besides, it is really inaccurate to say that the Labor Code grants "notice alone" to employees being dismissed due to an authorized cause. Article 277 (b)38 of the said Code explicitly provides that the termination of employment by the employer is "subject to the constitutional right of workers to security of tenure[;] . . . 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 . . . ." Significantly, the provision requires the employer "to afford [the employee] ample opportunity to be heard" when the termination is due to a "just and authorized cause." I submit that this provision on "ample opportunity to be heard" applies to dismissals under Articles 282, 283 and 284 of the Labor Code.

In addition, to say that the termination is "simply ineffectual" for failure to comply with the 30-day written notice and, at the same time, to conclude that it has "legal effect" appears to be contradictory. Ineffectual means "having no legal force."39 If a dismissal has no legal force or effect, the consequence should be the reinstatement of the dismissed employee and the grant of full back wages thereto, as provided by law — not the latter only. Limiting the consequence merely to the payment of full back wages has no legal or statutory basis. No provision in the Labor Code or any other law authorizes such limitation of sanction, which Mr. Justice Mendoza advocates.

The majority contends that it is not fair to reinstate the employee, because the employer should not be forces to accommodate an unwanted worker. I believe however that it is not the Court that forces the employer to rehire the worker. By violating the latter's constitutional right to due process, the former brings this sanction upon itself. Is it unfair to imprison a criminal? No! By violating the law, one brings the penal sanction upon oneself. There is nothing unfair or unusual about this inevitable chain of cause and effect, of crime and punishment, of violation and sanction.

Due Process Begins With Each of Us

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

Truly, justice is dispensed not just by the courts and quasi-judicial bodies like public respondent here. The administration of justice begins with each of us, in our everyday dealings with one another and, as in this case, in the employers' affording their employees the right to be heard. If we, as a people and as individuals, cannot or will not deign to act with justice and render unto everyone his or her due in little, everyday things, can we honestly hope and seriously expect to do so when monumental, life-or-death issues are at stake? Unless each one is committed to a faithful observance of day-to-day fundamental rights, our ideal of a just society can never be approximated, not to say attained.

In the final analysis, what is involved here is not simply the amount of monetary award, whether insignificant or substantial; whether termed indemnity, penalty or "full back wages." Neither is it merely a matter of respect for workers' rights or adequate protection of labor. The bottom line is really the constitutionally granted right to due process. And due process is the very essence of justice itself. Where the rule of law is the bedrock of our free society, justice is its very lifeblood. Denial of due process is thus no less than a denial of justice itself.

In Addition to Reinstatement and Back Wages, Damages May Be Awarded

One last point. Justice Vitug argues in his Separate Opinion that the nonobservance of the prescribed notices "can verily entitle the employee to an award of damages but . . . not to the extent of rendering outrightly illegal that dismissal or lay-off . . . ." I, of course, disagree with him insofar as he denies the illegality of the dismissal, because as I already explained, a termination without due process is unconstitutional and illegal. But I do agree that, where the employee proves the presence of facts showing liability for damages (moral, exemplary, etc.) as provided under the Civil Code, the employee could be entitled to such award in addition to reinstatement and back wages. For instance, where the illegal dismissal has caused the employee "physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury" due to the bad faith of the employer, an award for moral damages would be proper, in addition to reinstatement and back wages.

Summary

To conclude, I believe that even if there may be a just or an authorized cause for termination but due process is absent, the dismissal proceedings must be declared null and void. The dismissal should still be branded as illegal. Consequently, the employee must be reinstated and given full back wages.

On the other hand, there is an exception. The employer can adequately prove that under the peculiar circumstances of the case, there was no opportunity to comply with due process requirements; or doing so would have been impractical or gravely adverse to the employer, as when the employee is caught in flagrante delicto. Under any of these circumstances, the dismissal will not be illegal and no award may properly be granted. Nevertheless, as a measure of compassion, the employee may be given a nominal sum depending on the circumstances, pursuant to Article 2221 of the Civil Code.

Depending on the facts of each case, damages as provided under applicable articles of the Civil Code may additionally be awarded.

WHEREFORE, I vote to GRANT the petition. Ruben Serrano should be REINSTATED and PAID FULL BACK WAGES from date of termination until actual reinstatement, plus all benefits he would have received as if he were never dismissed.


Footnotes

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

2 Petitioner's Position Paper, Annex C; Records, p. 19.

3 Id., Annex B; id., p. 21.

4 Records, p. 2.

5 Decision, dated April 30, 1993, of Labor Arbiter Pablo C. Espiritu. Petition, Annex A; Rollo, p. 30.

6 Id., pp. 35-36.

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

8 21 SCRA 652 (1992).

9 Id., at 662.

10 G.R. No. 131108, March 25, 1999.

11 Shell Oil Workers Union v. Shell Company of the Philippines, Ltd., 39 SCRA 276, 284-285 (1971).

12 Asian Alcohol Corporation v. National Labor Relations Commission, G.R. No. 131108, March 25, 1999.

13 TSN, p. 61, April 24, 1992.

14 CONST., ART. XIII, §3.

15 E.g., Aurora Land Projects Corporation v. NLRC., 266 SCRA 48 (1997).

16 248 SCRA 532 (1995).

17 This provision reads:

Termination by employer. — An employer may terminate an employment for any of the following causes.

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work:

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

18 Bk. VI, Rule 1, of the Omnibus Rules and Regulations to Implement the Labor Code provides in pertinent parts:

Sec. 2. Security of tenure . . . .

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed.

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

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

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

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

For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground or grounds for termination . . .

x x x           x x x           x x x

19 Sebuguero v. NLRC, 248 SCRA at 547.

20 170 SCRA 69 (1989).

21 Id., at 75-76.

22 E.g., Aurelio v. NLRC, 221 SCRA 432 (1993) (dismissal of a managerial employee for breach of trust); Rubberworld (Phils.), Inc. v. NLRC, 183 SCRA 421 (1990) (dismissal for absenteeism, leaving the work place without notice, tampering with machines); Shoemart, Inc. v. NLRC, 176 SCRA 385 (1989) (dismissal for abandonment of work).

23 Sebuguero v. NLRC, 248 SCRA 536 (1995) (termination of employment due to retrenchment).

24 E.g., Worldwide papermills, Inc. v. NLRC, 244 SCRA 125 (1995) (dismissal for gross and habitual neglect of duties).

25 E.g., Reta v. NLRC, 232 SCRA 613 (1994) (dismissal for negligence and insubordination).

26 110 Phil. 113, 118 (1960).

27 138 SCRA 166, 170 (1985).

28 Art. 302 of the Code of Commerce provided:

In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may dissolve it, advising the other party thereof one month in advance.

The factory or shop clerk shall be entitled, in such case, to the salary due for said month.

29 R.A. No. 1052, as amended by R.A. No. 1787, provide:

Sec. 1. In cases of employment without a determine period, in a commercial, industrial, or agricultural establishment or enterprises, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever is longer, a fraction of at least six months being considered as one whole year.

The employer, upon whom no such notice was served in case of termination of employment without just cause shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice.

30 Abe v. Foster Wheeler Corp. 110 Phil. 198 (1960); Malate Taxicab and Garage, Inc. v. CIR, 99 Phil. 41 (1956).

31 71 SCRA 470, 480 (1976).

32 77 SCRA 321 (1977).

33 CIVIL CODE, ART. 19.

34 Art. 1191: "The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. . . . .

Art. 1592: "In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.

35 De la Cruz v. Legaspi, 98 Phil. 43 (1955); Taguba v. Vda. de Leon, 132 SCRA 722 (1984).

36 See Maximo v. Fabian, G.R. No. L-8015, December 23, 1955, (unpub.), 98 Phil. 989.

37 Emphasis added.

38 Art. 285 reads:

Termination by employee. — (a) An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages.

(b) An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes:

1. Serious insult by the employer of his representative on the honor and person of the employee;

2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;

3. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and

4. Other causes analogous to any of the foregoing.

39 210 SCRA 277 (1992).

40 Art, II, §18.

41 Id., §20.

42 Art. XIII, §3.

43 Manila Trading and Supply Co. v. Zulueta, 69 Phil, 485, 487 (1940) (per Laurel, J.) Accord, Villanueva v. NLRC, 293 SCRA 259 (1998); DI Security and General Services, Inc. v. NLRC, 264 SCRA 458 (1996); Flores v. NLRC, 256 SCRA 735 (1996); San Miguel Corporation v. NLRC, 218 SCRA 293 (1993); Colgate Palmolive Philippines, Inc. v. Ople, 163 SCRA 323 (1988).


BELLOSILLO, J., separate opinion;

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

2 Exh. "B," Records, p. 21.

3 Rollo, p. 63.

4 Sebuguero v. National Labor Relations Commission, G.R. No. 115395, 27 September 1995, 248 SCRA 536; Almodiel v. National Labor Relations Commission, G.R. No. 100641, 14 June 1993, 223 SCRA 341.

5 De Ocampo v. National Labor Relations Commission, G.R. No. 101539, 4 September 1992, 213 SCRA 652, 662.

6 G.R. No. 73287, 18 May 1987, 149 SCRA 641.

7 Art. XIII, Sec. 3, 1987 Constitution, reiterated in Art. 3, Labor Code.

8 Art. 3, Labor Code.

9 Alcantara, Samson S., Reviewer in Labor and Social Legislation, 1993 Ed., p. 347.

10 Art. 227, Labor Code.

11 Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking . . . by serving a written notice on the worker and the Ministry of Labor and employment at least one (1) month before the intended date thereof. . . .

12 Sec. 1. Art. III, 1987 Constitution.

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

14 Id., p. 78.

15 Id., pp. 80-81.

16 Id., p. 94.

17 Id., p. 96.

18 69 Phil. 635 (1940).

19 G.R. No. 117565, 18 November 1997, 282 SCRA 146-147.

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

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

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

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

24 Shoemart, Inc. v. NLRC, G.R. No. 74229, 11 August 1989, 176 SCRA 385 — The employee was found to have abandoned his job but for failure to observe the notice requirement, the employer was fined P1,000.00; Pacific Mills, Inc. v. Alonzo, G.R. No. 78090, 26 July 1991, 199 SCRA 617 — The employee violated company rules and regulations but because of procedural lapse the company was fined P1,000.00; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432 — The managerial employee breached the trust and confidence of his employer but for failure to observe the notice requirement the company was fined P1,000.00; Worldwide Papermills Inc. v. NLRC, G.R. No. 113081, 12 May 1995, 244 SCRA 125 — The employee was found guilty of gross and habitual neglect of his duties and of excessive absences. For failure to comply with the notice requirement the company was fined P5,000.00; Reta v. NLRC, G.R. No. 112100, 27 May 1994, 232 SCRA 613 — The employee was guilty of inefficiency negligence and insubordination but the company was fined P10,000.00 for failure to observe the notice requirement.1âwphi1.nêt

25 Sebuguero v. NLRC, G.R. No. 115394, 27 September 1995, 248 SCRA 532 — The employees were retrenched in order to prevent further losses but the company failed to observe the notice requirement, hence was fined P2,000.00 for each employee; Balbalec et al. v. NLRC, G.R. No. 107756, 19 December 1995, 251 SCRA 398 — The employees were retrenched to prevent business losses but the company was fined P5,000.00 for each employee for failure to observe the notice requirement.

26 See Note 21.

PUNO, J., dissenting opinion;

1 Schwartz, Administrative Law, 1991 ed., p. 224 citing Painter v. Liverpool Gas Co., 3 Ad. & E I. 433, 449, 11 Eng. Rep. 478 (K. B. 1836).

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

3 Ibid.

4 170 SCRA 69.

5 248 SCRA 532, 545 (1995).

6 Ibid., p. 546.

7 Op cit., p. 76.

8 Op cit., pp. 74-75.

9 Op cit., p. 76.

10 TSN, August 4, 1992, pp. 30, 37-38, 42-49.

11 A fifth authorized cause is "disease of the employee" provided in Article 284 of the Code.

12 Sebuguero, supra.

13 International Hardware, Inc. v. National Labor Relations Commission, 176 SCRA 256, 259 (1989).

14 Sebuguero v. NLRC, supra.

15 Wiltshire File Co. v. NLRC, 193 SCRA 665, 676 (1991).

16 Balbalec v. NLRC, 251 SCRA 398, 406 (1995).

17 110 Phil 113 (1960).

18 Schwartz, op cit., pp. 273-274.

19 Supra.

20 See also JGB and Associates, Inc. vs. NLRC, 254 SCRA 457 (1996); Philippine Savings Bank v. NLRC, 261 SCRA 409 (1996); Pasudeco Inc. vs. NLRC, 272 SCRA 737 (1997); P.I. Manpower, Inc. vs. NLRC, 267 SCRA 451 (1997); Canura v. NLRC, 279 SCRA 45 (1997); International Pharmaceuticals, Inc. vs. NLRC, 287 SCRA 213 (1998); Mabuhay Development Industries vs. NLRC, 288 SCRA 1 (1998), all ponencias of Mr. Justice Mendoza.

21 Art. 283. Termination by employer. — An employer may terminate an employment without a definite period for any of the following just causes:

(a) The closing or cessation of operation of the establishment or enterprise, or where the employer has to reduce his work force by more then one-half (1/2) due to serious business reverses, unless the closing is for the purpose of circumventing the provisions of this chapter;

(b) Serious misconduct or willful disobedience by the employee of the orders of his employer or representative in connection with his work;

(c) Gross and habitual neglect by the employee of his duties;

(d) Fraud or willful breach by the employee of the trust reposed in him by his employer or representative;

(e) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or representative; and

(f) Other causes analogous to the foregoing.

22 Art. 284. Reduction of personnel. — The termination of employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses, and other similar causes, shall entitle the employee affected thereby to separation pay . . . .

23 Art. 285. Disease as a ground for termination. — An employer may terminate the services of an employee who have been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees . . . .

24 The adjustment of the numbering of the Articles is due to the fact that there are two (2) Article 238.

25 71 SCRA 470 (1976).

26 92 Phil. 843 (1953).

27 International Hardware, Inc. vs. NLRC, 176 SCRA 256 (1989); Sebuguero v. NLRC, supra.

28 Concurring opinion in Ang Tibay et al. vs. Court of Industrial Relations, et al., 69 Phil. 635 (1940).

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

1 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 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.

2 Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of 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.

3 Art. 284. Disease as ground for termination. — An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

4 See San Miguel Corporation vs. NLRC, 255 SCRA 580. Section 7, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code provides:

Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an employee shall be those provided in Article 282 of the Code. The separation from work of an employee for a just cause does not entitle him to the termination pay provided in Code, without prejudice, however, to whatever rights, benefits and privileges he may have under the applicable individual or collective bargaining agreement with the employer or voluntary employer policy or practice.

5 See Footnote 2.

6 Sec. 1, Rule XXIII, of the Rules Implementing the Labor Code clearly states that "(i)n cases of regular employment, the employer shall not terminate the services of an employee except for just or authorized causes as provided by law, and subject to the requirements of due process.

Sec. 2, I, of the same Rule provides that in case of termination of employment based on just causes under Article 282 of the Labor Code, is it required that there be —

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

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

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

In cases of termination based on authorized causes under Article 283 of the Labor Code, Section 2, II, of the same Rule mandates that there be "a written notice to the employee and the appropriate Regional Office of the Department (of Labor and Employment) at least thirty days before the effectivity of the termination," specifying the ground/s therefor.

7 See MGG Marine Services, Inc. vs. NLRC, 259 SCRA 664.

PANGANIBAN, J., separate opinion;

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

2 259 SCRA 665, July 29, 1996.

3 283 SCRA 242, December 15, 1997. In that case, I proposed to grant separation pay in lieu of reinstatement because, by the employee's acts, he had made reinstatement improper, a fact not present in the instant case.

4 296 SCRA 283, September 28, 1998.

5 Art. 282 of the Labor Code provides:

Art. 282. Termination by employer. — An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

6 Arts. 283 & 284 provide:

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

Art. 284. Disease as a ground for termination. — An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater a fraction of at least six (6) months being considered as one (1) whole year.

7 Mapalo v. NLRC, 233 SCRA 266, June 17, 1994; Ala Mode Garments, Inc. v. NLRC, 268 SCRA 497, February 17, 1997; Pizza Hut/Progressive Development Corp. v. NLRC, 252 SCRA 531, January 29, 1996; MGG Marine Services, Inc. v. NLRC, 259 SCRA 664, July 29, 1996; Ranises v. NLRC, 262 SCRA 671, September 24, 1996.

8 Conti v. NLRC, 271 SCRA 114, April 10, 1997; Alhambra Industries, Inc. v. NLRC, 238 SCRA 232, November 18, 1994; JBG and Associates, Inc. v. NLRC, 254 SCRA 457, March 7, 1996; Samillano v. NLRC, 265 SCRA 788, December 23, 1996.

9 Alhambra Industries, Inc. v. NLRC, ibid.; Segismundo v. NLRC, 239 SCRA 167, December 13, 1994; Sebuguero v. NLRC, 248 SCRA 532, September 27, 1995; Wenphil Corp. v. NLRC, 170 SCRA 69, February 8, 1989.

10 210 SCRA 277, 286, June 23, 1992, per Gutierrez Jr., J.

11 138 SCRA 166, 170-171, August 16, 1985, per Makasiar, CJ.

12 Among those are Galman v. Sandiganbayan, 144 SCRA 43, 87, September 12, 1986; People v. Albano, 163 SCRA 511, July 26, 1988; Saldana v. Court of Appeals, 190 SCRA 396, 403, October 11, 1990; Paulin v. Gimenez, 217 SCRA 386, 392, January 21, 1993.

13 132 SCRA 690, October 23, 1984, per Cuevas, J.

14 Ibid., p. 703.

15 199 SCRA 92, July 12, 1991, per Narvasa, J., (later CJ).

16 Ibid., p. 101.

17 282 SCRA 256, November 28, 1997.

18 26 SCRA 252, December 24, 1968.

19 103 SCRA 393, March 17, 1981.

20 170 SCRA 489, February 21, 1989.

21 186 SCRA 620, June 18, 1990.

22 200 SCRA 67, August 2, 1991.

23 G.R. No. 129058, March 29, 1999, per Bellosillo, J.

24 G.R. No, 121176, May 14, 1997.

25 July 8, 1999 Resolution on the Motion for Reconsideration, per Purisima, J.

26 150 SCRA 653, 656, June 17, 1987, per Padilla, J.

27 Villasora v. Comelec, G.R. No. 133927, November 29, 1999.

28 § 18, Art II, 1987 Constitution.

29 § 3, Art. XIII, ibid.

30 170 SCRA 69, February 8, 1989, per Gancayco, J.

31 In Wenphil Corp. v. NLRC, ibid.; Sampaguita Garments Corp. v. NLRC, 233 SCRA 260, June 17, 1994; Villarama v. NLRC, 236 SCRA 280, September 2, 1994; Rubberworld (Phils.), Inc. v. NLRC, 183 SCRA 421, March 21, 1990; Kwikway Engineering Works v. NLRC, 195 SCRA 526, March 22, 1991, and several other cases.

32 In Reta v. NLRC, 232 SCRA 613, May 27, 1994; and Alhambra Industries, Inc. v. NLRC, 238 SCRA 232, November 18, 1994.

33 Seahorse Maritime Corp. v. NLRC, 173 SCRA 390, May 15, 1989; Rubberworld (Phils.), Inc. v. NLRC, supra; Cariño v. NLRC, 185 SCRA 177, May 8, 1990; Great Pacific Life Assurance Corp. v. NLRC, 187 SCRA 694, July 23, 1990; Cathedral School of Technology v. NLRC, 214 SCRA 551, October 13, 1992; Aurelio v. NLRC, 221 SCRA 432, April 12, 1993; Sampaguita Garments Corp. v. NLRC, 233 SCRA 260, June 17, 1994; Villarama v. NLRC, supra.

34 See Concurring and Dissenting Opinion in Better Buildings, Inc. v. NLRC, 283 SCRA 242, 256, December 15, 1997.

34-a See Panganiban, Leadership by Example, 1999 ed., pp. 60-61.

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

36 RCPI v. NLRC, 223 SCRA 656, June 25, 1993; Samillano v. NLRC, 265 SCRA 788, December 23, 1996.

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

Art. 277. . . .

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

39 The New World Dictionary, Second College Ed (1974), defines effectual as "having legal force; valid." Thus, ineffectual, being its opposite, means having no legal force or not valid.


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