[G.R. No. 117040.
January 27, 2000] depended on the circumstances of each case, taking into account the gravity of the offense
RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN
DEPARTMENT STORE, respondents.
FACTS
Ruben Serrano was the head of the security checkers section of Isetann Department Store.
He was charged with the task of supervising security checkers in their jobs (apprehending
shoplifters and preventing pilfirege of merchandise). On October 11, 1991, the management
sent him a letter immediately terminating his services as security section head, effective on
the same day. The reason given by the management was “retrenchment”; they had opted to
hire an independent security agency as a cost-cutting measure. Serrano filed a complaint for
ID, illegal layoff, ULP, underpayment of wages and nonpayment of salary and OT pay with the
LA.
The LA rendered a decision in favor of Serrano. It stated that Isetann failed to establish that it
had retrenched its security division, that the petitioner was not accorded due process, etc.
and even stated that the day after Serrano’s dismissal, Isetann employed a safety and
security supervisor with similar duties to that of the former.
The NLRC on the other hand reversed the LA but ordered Isetann to pay separation pay
equivalent to one month per year of service, unpaid salary, et al. It held that the phase-out of
the security section was a valid exercise of management prerogative on the part of Isetann,
for which the NLRC cannot substitute its judgment in the absence of bad faith or abuse of
discretion on the part of the latter; and that the security and safety supervisor’s position was
long in place prior to Serrano’s separation from the company, or the phase-out of the
Security Section.
ISSUE
Whether the petitioner’s dismissal was illegal.
RULING: Valid, but ineffectual (without legal effect) – payment of backwages, separation
pay and other monetary claims
No. The Court held that the dismissal was due to an authorized cause under Art. 283 of the
Labor Code, i.e. redundancy. However, while an authorized cause exists, Isetann failed to
follow the procedural requirement provided by Art. 283 of LC. For termination due to
authorized causes, the employer must give a written notice of termination to the employee
concerned and to the DOLE at least 30 days prior to its effectivity. This Isetann failed to do.
The question now arises as to whether the failure of Isetann to comply with the procedural
requirements renders the dismissal invalid, or, in the event that it is valid, what the
appropriate sanction or penalty must be meted out.
Prior to the doctrine laid down in the decision rendered in Wenphil Corp. NLRC in 1989, the
termination of an employee, even for just cause but without following the requisite
procedure, renders such dismissal illegal, and therefore null and void.
In the Wenphil doctrine, this was reversed; the said rule was unjust to employers. Instead,
the dismissal was held to be still valid but the employer was sanctioned by way of the
payment of indemnity (damages) – in that case, P1,000. The amount of indemnity will be
committed by the employer.
Now, the Court once again examines the Wenphil doctrine. Puno says that the effect of the
Wenphil doctrine was such that there has been a “dismiss now, pay later” policy where the
employers were able to circumvent the procedural requisites of termination, which is more
convenient than the compliance with the 30-day notice. Panganiban said that the monetary
sanctions were too insignificant, niggardly, sometimes even late. Both justices are of the
opinion that the deprivation of due process which must be accorded to the employee
renders the dismissal illegal. Puno quoted that Legislative, Executive and Judicial proceedings
that deny due process do so under the pain of nullity. Panganiban stated that such denial of
due process renders decisions and proceedings void for lack of jurisdiction.
The present ruling of the Court held that the dismissal of the employee is merely ineffectual,
not void. The dismissal was upheld but it is ineffectual. The sanction provided was the
payment of backwages from the time of dismissal up to the decision of the court finding just
or authorized cause. This was thought to balance the interests of both parties, recognizing
the employee’s right to notice and at the same time the right of the employer to dismiss for
any of the just and authorized causes.
The Court also responded to the arguments of Justices Puno and Panganiban by stating that
the violation in the procedural requirement of termination is not a denial of the fundamental
right to due process. This is because of the ff reasons:
1) The due process clause is a limitation on governmental powers, inapplicable to the
exercise of private power, such as in this case. The provision “No person shall be
deprived of life, liberty and property without due process of law” pertains only to
the State, as only it has the authority to do the same.
2) The purpose of the notice and hearing under the Due process clause is to provide
an opportunity for the employee to be heard before the power of the organized
society is brought upon the individual. Under Art. 283, however, the purpose is to
give him time to prepare for the eventual loss of his job and for DOLE to determine
whether economic causes exist to justify termination. It is not to give opportunity
to be heard – there is no charge against the employee under Art. 283
3) The employer cannot be expected to be an impartial judge of his own cause.
4) Not all notice requirements are requisites of due process. Some are simply a part of
a procedure to be followed before a right granted to party can be exercised; others
are an application of the Justinian precept. Such is the case here. The failure of the
employer to observe a procedure for the termination of employment which makes
the termination of employment merely ineffectual.
5) Art. 279 of the LC provides that only dismissal without just or authorized cause
renders such dismissal illegal. To consider termination without observing
procedural reqt’s as also ID is to add another ground for ID, thereby amending Art.
279.; Further, there is a disparity in legal treatment, as employees who resign
without giving due notice are only liable for damages; it does not make their
resignation void.
In this case, the separation pay was a distinct award from the payment of backwages as
a way of penalty.
Petition was denied.