RUBEN SERRANO vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE (G.R. No. 117040)

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. 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 illegal dismissal, illegal layoff, Unjust Labor Practices, underpayment of wages and nonpayment of salary and OT pay with the LA.

The Labor Arbiter 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:

WON the petitioner’s dismissal was illegal.

Held:

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 depended on the circumstances of each case, taking into account the gravity of the offense 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.

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 back wages 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.

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 requirements as also illegal dismissal is to add another ground for ID, thereby amending Art. 279.

In this case, the separation pay was a distinct award from the payment of back wages as a way of penalty. 

Petition was denied.