RUBEN SERRANO, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION and ISETANN

DEPARTMENT STORE, respondents.Separate Opinions

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.5Specifically, 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

xxx xxx xxx

Atty. Perdigon:

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

Ms. Ramos:

Yes Sir.

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

A: Yes, sir.

xxx xxx xxx

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

A: We installed a labor saving device.

Q: So you did not retrench?

A: No. sir.

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

A: It was abolished in 1991.

xxx xxx xxx

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

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

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

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

 xxx xxx xxx

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

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

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

A: Yes, sir.

Q: You said you installed a labor saving device, and you installed a security agency as a labor
saving device?

A: We hired the services of a security agency.

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

Atty. Salonga:

Already answered, your Honor.

Obviously, Ms. Ramos could not even distinguish between retrenchment and redundancy. The Labor
Arbiter thus ruled that petitioner's dismissal was illegal. The NLRC, however, reversed. The majority
affirmed the NLRC ruling that ISETANN's phase out of its security employees is a legitimate business
decision, one that is necessary to obtain reasonable return from its investment. To use the phrase of
the majority, this is a "bare assertion." Nothing in the majority decision shows how the return of
ISETANN's investment has been threatened to justify its so-called business decision as legitimate.

SECOND. The majority holds that "the need is for a rule which, while recognizing the employee's right
to notice before he is dismissed or laid off, at the same time acknowledges the right of the employer
to dismiss for any of the just causes enumerated in Art. 282 or to terminate employment for any of the
authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an employer who
is found to have dismissed an employee for cause without prior notice is deemed ineffective in
deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void
if there are just or valid grounds for such dismissal or if the termination is for an authorized cause. That
would be to uphold the right of the employee but deny the right of the employer to dismiss for cause.
Rather, the remedy is to consider the dismissal or termination to be simply ineffectual for failure of the
employer to comply with the procedure for dismissal or termination.

With due respect, I find it most difficult to follow the logic of the majority. Before Wenphil, we protected
employees with the ruling that dismissals without prior notice are illegal and the illegally dismissed
employee must be reinstated with backwages. Wenphil diluted that rule when it held that due process
is satisfied if the employee is given the opportunity to be heard by the Labor Arbiter. It further held that
an employee cannot be reinstated if it is established in the hearing that his dismissal is for a just cause.
The failure of the employer to give a pre-dismissal notice is only to be penalized by payment of an
indemnity. The dilution of the rule has been abused by unscrupulous employers who then followed the
"dismiss now, pay later" strategy. This evil practice of employers was what I expected the majority to
address in re-examining the Wenphil doctrine. At the very least, I thought that the majority would
restore the balance of rights between an employee and an employer by giving back the employee's
mandatory right to notice before dismissal. It is disquieting, however, that the majority re-arranged this
balance of right by tilting it more in favor of the employer's right to dismiss. Thus, instead of weakening
a bit the right to dismiss of employers, the majority further strengthens it by insisting that a dismissal
without prior notice is merely "ineffectual" and not illegal.

The stubborn refusal of the majority to appreciate the importance of pre-dismissal notice is difficult to
understand. It is the linchpin of an employee's right against an illegal dismissal. The notice tells him
the cause of his dismissal. It gives him a better chance to contest his dismissal in an appropriate
proceeding as laid down in the parties' collective bargaining agreement or the rules of employment
established by the employer, as the case may be. In addition, it gives to both the employee and
employer more cooling time to settle their differences amicably. In fine, the prior notice requirement
and the hearing before the employer give an employee a distinct, different and effective first level of
remedy to protect his job. In the event the employee is dismissed, he can still file a complaint with the
DOLE with better knowledge of the cause of his dismissal, with longer time to prepare his case, and
with greater opportunity to take care of the financial needs of his family pendente lite. The majority has
taken away from employees this effective remedy. This is not to say that the pre-dismissal notice
requirement equalizes the fight between an employee and an employer for the fight will remain
unequal. This notice requirement merely gives an employee a fighting chance but that fighting chance
is now gone.

It is equally puzzling why the majority believes that restoring the employee's right to pre-dismissal
notice will negate the right of an employer to dismiss for cause. The pre-Wenphil rule simply requires
that before the right of the employer to dismiss can be exercised, he must give prior notice to the
employee of its cause. There is nothing strange nor difficult about this requirement. It is no burden to
an employer. He is bereft of reason not to give the simple notice. If he fails to give notice, he can only
curse himself. He forfeits his right to dismiss by failing to follow the procedure for the exercise of his
right. Employees in the public sector cannot be dismissed without prior notice. Equal protection of law
demands similar treatment of employees in the private sector.

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

xxx xxx xxx

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

These laws, rules and regulations should be related to our decisions interpreting them. Let me
therefore emphasize our rulings holding that the pre-dismissal notice requirement is part of due
process. In Batangas Laguna Tayabas Bus Co. vs. Court of Appeals,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 communisadvocated 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.4Separation 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.

AGABON SEPARATE OPINIONS

SEPARATE OPINION

TINGA, J:

I concur in the result, the final disposition of the petition being correct. There is no denying the
importance of the Court's ruling today, which should be considered as definitive as to the effect of the
failure to render the notice and hearing required under the Labor Code when an employee is being
dismissed for just causes, as defined under the same law. The Court emphatically reaffirms the rule
that dismissals for just cause are not invalidated due to the failure of the employer to observe the
proper notice and hearing requirements under the Labor Code. At the same time,
The Decision likewise establishes that the Civil Code provisions on damages serve as the proper
framework for the appropriate relief to the employee dismissed for just cause if the notice-hearing
requirement is not met. Serrano v. NLRC,1 insofar as it is controlling in dismissals for unauthorized
causes, is no longer the controlling precedent. Any and all previous rulings and statements of the
Court inconsistent with these determinations are now deemed inoperative.

My views on the questions raised in this petition are comprehensive, if I may so in all modesty. I offer
this opinion to discuss the reasoning behind my conclusions, pertaining as they do to questions of
fundamental importance.

Prologue

The factual backdrop of the present Petition for Review is not novel. Petitioners claim that they were
illegally dismissed by the respondents, who allege in turn that petitioners had actually abandoned their
employment. There is little difficulty in upholding the findings of the NRLC and the Court of Appeals
that petitioners are guilty of abandonment, one of the just causes for termination under the Labor
Code. Yet, the records also show that the employer was remiss in not giving the notice required by
the Labor Code; hence, the resultant controversy as to the legal effect of such failure vis-à-vis the
warranted dismissal.

Ostensibly, the matter has been settled by our decision in Serrano2, wherein the Court ruled that the
failure to properly observe the notice requirement did not render the dismissal, whether for just or
authorized causes, null and void, for such violation was not a denial of the constitutional right to due
process, and that the measure of appropriate damages in such cases ought to be the amount of wages
the employee should have received were it not for the termination of his employment without prior
notice.3 Still, the Court has, for good reason, opted to reexamine the so-called Serrano doctrine
through the present petition

Antecedent Facts

Respondent Riviera Home Improvements, Inc (Riviera Home) is engaged in the manufacture and
installation of gypsum board and cornice. In January of 1992, the Agabons were hired in January of
1992 as cornice installers by Riviera Home. According to their personnel file with Riviera Home, the
Agabon given address was 3RDS Tailoring, E. Rodriguez Ave., Moonwalk Subdivision, P-II
Parañaque City, Metro Manila.4

It is not disputed that sometime around February 1999, the Agabons stopped rendering services for
Riviera Home. The Agabons allege that beginning on 23 February 1999, they stopped receiving
assignments from Riviera Home.5When they demanded an explanation, the manager of Riviera
Homes, Marivic Ventura, informed them that they would be hired again, but on a "pakyaw" (piece-
work) basis. When the Agabons spurned this proposal, Riviera Homes refused to continue their
employment under the original terms and agreement.6 Taking affront, the Agabons filed a complaint
for illegal dismissal with the National Labor Relations Commission ("NLRC").

Riviera Homes adverts to a different version of events leading to the filing of the complaint for illegal
dismissal. It alleged that in the early quarter of 1999, the Agabons stopped reporting for work with
Riviera. Two separate letters dated 10 March 1999, were sent to the Agabons at the address indicated
in their personnel file. In these notices, the Agabons were directed to report for work
immediately.7 However, these notices were returned unserved with the notation "RTS Moved." Then,
in June of 1999, Virgilio Agabon informed Riviera Homes by telephone that he and Jenny Agabon
were ready to return to work for Riviera Homes, on the condition that their wages be first adjusted. On
18 June 1999, the Agabons went to Riviera Homes, and in a meeting with management, requested a
wage increase of up to Two Hundred Eighty Pesos (P280.00) a day. When no affirmative response
was offered by Riviera Homes, the Agabons initiated the complaint before the NLRC.8

In their Position Paper, the Agabons likewise alleged that they were required to work even on holidays
and rest days, but were never paid the legal holiday pay or the premium pay for holiday or rest day.
They also asserted that they were denied Service Incentive Leave pay, and that Virgilio Agabon was
not given his thirteenth (13th) month pay for the year 1998.9

After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona rendered a Decision dated 28
December 1999, finding the termination of the Agabons illegal, and ordering Riviera Homes to pay
backwages in the sum of Fifty Six Thousand Two Hundred Thirty One Pesos and Ninety Three
Centavos (P56,231.93) each. The Labor Arbiter likewise ordered, in lieu of reinstatement, the payment
of separation pay of one (1) month pay for every year of service from date of hiring up to 29 November
1999, as well as the payment of holiday pay, service incentive leave pay, and premium pay for holiday
and restday, plus thirteenth (13th) month differential to Virgilio Agabon.10

In so ruling, the Labor Arbiter declared that Riviera Homes was unable to satisfactorily refute the
Agabons' claim that they were no longer given work to do after 23 February 1999 and that their rehiring
was only on "pakyaw" basis. The Labor Arbiter also held that Riviera Homes failed to comply with the
notice requirement, noting that Riviera Homes well knew of the change of address of the Agabons,
considering that the identification cards it issued stated a different address from that on the personnel
file.11 The Labor Arbiter asserted the principle that in all termination cases, strict compliance by the
employer with the demands of procedural and substantive due process is a condition sine qua non for
the same to be declared valid.12
On appeal, the NLRC Second Division set aside the Labor Arbiter's Decision and ordered the
dismissal of the complaint for lack of merit.13 The NLRC held that the Agabons were not able to refute
the assertion that for the payroll period ending on 15 February 1999, Virgilio and Jenny Agabon worked
for only two and one-half (2½) and three (3) days, respectively. It disputed the earlier finding that
Riviera Homes had known of the change in address, noting that the address indicated in the

identification cards was not the Agabons, but that of the persons who should be notified in case of
emergency concerning the employee.14 Thus, proper service of the notice was deemed to have been
accomplished. Further, the notices evinced good reason to believe that the Agabons had not been
dismissed, but had instead abandoned their jobs by refusing to report for work.

In support of its conclusion that the Agabons had abandoned their work, the NLRC also observed that
the Agabons did not seek reinstatement, but only separation pay. While the choice of relief was
premised by the Agabons on their purported strained relations with Riviera Homes, the NLRC pointed
out that such claim was amply belied by the fact that the Agabons had actually sought a conference
with Riviera Homes in June of 1999. The NLRC likewise found that the failure of the Labor Arbiter to
justify the award of extraneous money claims, such as holiday and service incentive leave pay,
confirmed that there was no proof to justify such claims.

A Petition for Certiorari was promptly filed with the Court of Appeals by the Agabons, imputing grave
abuse of discretion on the part of the NLRC in dismissing their complaint for illegal dismissal. In
a Decision15 dated 23 January 2003, the Court of Appeals affirmed the finding that the Agabons had
abandoned their employment. It noted that the two elements constituting abandonment had been
established, to wit: the failure to report for work or absence without valid justifiable reason, and; a clear
intention to sever the employer-employee relationship. The intent to sever the employer-employee
relationship was buttressed by the Agabon's choice to seek not reinstatement, but separation pay.
The Court of Appeals likewise found that the service of the notices were valid, as the Agabons did not
notify Riviera Homes of their change of address, and thus the failure to return to work despite notice
amounted to abandonment of work.

However, the Court of Appeals reversed the NLRC as regards the denial of the claims for holiday pay,
service incentive leave pay, and the balance of Virgilio Agabon's thirteenth (13th) month pay. It ruled
that the failure to adduce proof in support thereof was not fatal and that the burden of proving that
such benefits had already been paid rested on Riviera Homes.16 Given that Riviera Homes failed to
present proof of payment to the Agabons of their holiday pay and service incentive leave pay for the
years 1996, 1997 and 1998, the Court of Appeals chose to believe that such benefits had not actually
been received by the employees. It also ruled that the apparent deductions made by Riviera Homes
on the thirteenth (13th) month pay of Virgilio Agabon violated Section 10 of the Rules and Regulations
Implementing Presidential Decree No. 851.17 Accordingly, Riviera Homes was ordered to pay the
Agabons holiday for four (4) regular holidays in 1996, 1997 and 1998, as well as their service incentive
leave pay for said years, and the balance of Virgilio Agabon's thirteenth (13th) month pay for 1998 in
the amount of Two Thousand One Hundred Fifty Pesos (P2,150.00).18

In their Petition for Review, the Agabons claim that they had been illegally dismissed, reasserting their
version of events, thus: (1) that they had not been given new assignments since 23 February 1999;
(2) that they were told that they would only be re-hired on a "pakyaw" basis, and; (3) that Riviera
Homes had knowingly sent the notices to their old address despite its knowledge of their change of
address as indicated in the identification cards.19 Further, the Agabons note that only one notice was
sent to each of them, in violation of the rule that the employer must furnish two written notices before
termination — the first to apprise the employee of the cause for which dismissal is sought, and the
second to notify the employee of the decision of dismissal.20 The Agabons likewise maintain that they
did not seek reinstatement owing to the strained relations between them and Riviera Homes.
The Agabons present to this Court only one issue, i.e.: whether or not they were illegally dismissed
from their employment.21 There are several dimensions though to this issue which warrant full
consideration.

The Abandonment Dimension

Review of Factual Finding of Abandonment

As the Decision points out, abandonment is characterized by the failure to report for work or absence
without valid or justifiable reason, and a clear intention to sever the employer-employee relationship.
The question of whether or not an employee has abandoned employment is essentially a factual
issue.22 The NLRC and the Court of Appeals, both appropriate triers of fact, concluded that the
Agabons had actually abandoned their employment, thus there is little need for deep inquiry into the
correctness of this factual finding. There is no doubt that the Agabons stopped reporting for work
sometime in February of 1999. And there is no evidence to support their assertion that such absence
was due to the deliberate failure of Riviera Homes to give them work. There is also the fact, as noted
by the NLRC and the Court of Appeals, that the Agabons did not pray for reinstatement, but only for
separation

pay and money claims.23 This failure indicates their disinterest in maintaining the employer-employee
relationship and their unabated avowed intent to sever it. Their excuse that strained relations between
them and Riviera Homes rendered reinstatement no longer feasible was hardly given credence by the
NLRC and the Court of Appeals.24

The contrary conclusion arrived at by the Labor Arbiter as regards abandonment is of little bearing to
the case. All that the Labor Arbiter said on that point was that Riviera Homes was not able to refute
the Agabons' claim that they were terminated on 23 February 1999.25 The Labor Arbiter did not explain
why or how such finding was reachhy or how such finding was reachhe Agabons was more credible
than that of Riviera Homes'. Being bereft of reasoning, the conclusion deserves scant consideration.

Compliance with Notice Requirement

At the same time, both the NLRC and the Court of Appeals failed to consider the apparent fact that
the rules governing notice of termination were not complied with by Riviera Homes. Section 2, Book
V, Rule XXIII of the Omnibus Rules Implementing the Labor Code (Implementing Rules) specifically
provides that for termination of employment based on just causes as defined in Article 282, there must
be: (1) written notice served on the employee specifying the grounds for termination and giving
employee reasonable opportunity to explain his/her side; (2) a hearing or conference wherein the
employee, with the assistance of counsel if so desired, is given opportunity to respond to the charge,
present his evidence or rebut evidence presented against him/her; and (3) written notice of termination
served on the employee indicating that upon due consideration of all the circumstances, grounds have
been established to justify termination.

At the same time, Section 2, Book V, Rule XXIII of the Implementing Rules does not require strict
compliance with the above procedure, but only that the same be "substantially observed."

Riviera Homes maintains that the letters it sent on 10 March 1999 to the Agabons sufficiently complied
with the notice rule. These identically worded letters noted that the Agabons had stopped working
without permission that they failed to return for work despite having been repeatedly told to report to
the office and resume their employment.26 The letters ended with an invitation to the Agabons to report
back to the office and return to work.27
The apparent purpose of these letters was to advise the Agabons that they were welcome to return
back to work, and not to notify them of the grounds of termination. Still, considering that only substantial
compliance with the notice requirement is required, I am prepared to say that the letters sufficiently
conform to the first notice required under the Implementing Rules. The purpose of the first notice is to
duly inform the employee that a particular transgression is being considered against him or her, and
that an opportunity is being offered for him or her to respond to the charges. The letters served the
purpose of informing the Agabons of the pending matters beclouding their employment, and extending
them the opportunity to clear the air.

Contrary to the Agabons' claim, the letter-notice was correctly sent to the employee's last known
address, in compliance with the Implementing Rules. There is no dispute that these letters were not
actually received by the Agabons, as they had apparently moved out of the address indicated therein.
Still, the letters were sent to what Riviera Homes knew to be the Agabons' last known address, as
indicated in their personnel file. The Agabons insist that Riviera Homes had known of the change of
address, offering as proof their company IDs which purportedly print out their correct new address.
Yet, as pointed out by the NLRC and the Court of Appeals, the addresses indicated in the IDs are not
the Agabons, but that of the person who is to be notified in case on emergency involve either or both
of the Agabons.

The actual violation of the notice requirement by Riviera Homes lies in its failure to serve on the
Agabons the second notice which should inform them of termination. As the Decision notes, Riviera
Homes' argument that sending the second notice was useless due to the change of address is inutile,
since the Implementing Rules plainly require that the notice of termination should be served at the
employee's last known address.

The importance of sending the notice of termination should not be trivialized. The termination letter
serves as indubitable proof of loss of employment, and its receipt compels the employee to evaluate
his or her next options. Without such notice, the employee may be left uncertain of his fate; thus, its
service is mandated by the Implementing Rules. Non-compliance with the notice rule, as evident in
this case, contravenes the Implementing Rules. But does the violation serve to invalidate the
Agabons' dismissal for just cause?

The So-Called Constitutional Law Dimension

Justices Puno and Panganiban opine that the Agabons should be reinstated as a consequence of the
violation of the notice requirement. I respectfully disagree, for the reasons expounded below.

Constitutional Considerations
Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases

Justice Puno proposes that the failure to render due notice and hearing prior to dismissal for just cause
constitutes a violation of the constitutional right to due process. This view, as acknowledged by Justice
Puno himself, runs contrary to the Court's pronouncement in Serrano v. NLRC28 that the absence of
due notice and hearing prior to dismissal, if for just cause, violates statutory due process.

The ponencia of Justice Vicente V. Mendoza in Serrano provides this cogent overview of the history
of the doctrine:

Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process
is to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce
of 1882 which gave either party to the employer-employee relationship the right to terminate
 their relationship by giving notice to the other one month in advance. In lieu of notice, an
employee could be laid off by paying him a mesada equivalent to his salary for one month.
This provision was 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 for every year of service.29

Under Section 1 of the Termination Pay Law, an employer could dismiss an employee without just
cause by serving written notice on the employee at least one month in advance or one-half month for
every year of service of the employee, whichever was longer.30 Failure to serve such written notice
entitled the employee to compensation equivalent to his salaries or wages corresponding to the
required period of notice from the date of termination of his employment.

However, there was no similar written notice requirement under the Termination Pay Law if the
dismissal of the employee was for just cause. The Court, speaking through Justice JBL Reyes, ruled
in Phil. Refining Co. v. Garcia:31

[Republic] Act 1052, as amended by Republic Act 1787, impliedly recognizes the right of the
employer to dismiss his employees (hired without definite period) whether for just case, as
therein defined or enumerated, or without it. If there be just cause, the employer is not
required to serve any notice of discharge nor to disburse termination pay to the
employee. xxx32

Clearly, the Court, prior to the enactment of the Labor Code, was ill-receptive to the notion that
termination for just cause without notice or hearing violated the constitutional right to due process.
Nonetheless, the Court recognized an award of damages as the appropriate remedy. In Galsim v.
PNB,33 the Court held:

Of course, the employer's prerogative to dismiss employees hired without a definite period
may be with or without cause. But if the manner in which such right is exercised is abusive,
the employer stands to answer to the dismissed employee for damages.34

The Termination Pay Law was among the repealed laws with the enactment of the Labor Code in
1974. Significantly, the Labor Code, in its inception, did not require notice or hearing before an
employer could terminate an employee for just cause. As Justice Mendoza explained:

Where the termination of employment was for a just cause, no notice was required to be given
to the employee. It was only on September 4, 1981 that notice was required to be given even
where the 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, 1989.35

It cannot be denied though that the thinking that absence of notice or hearing prior to termination
constituted a constitutional violation has gained a jurisprudential foothold with the Court. Justice Puno,
in his Dissenting Opinion, cites several cases in support of this theory, beginning with Batangas
Laguna Tayabas Bus Co. v. Court of Appeals36 wherein we held that "the failure of petitioner to give
the private respondent the benefit of a hearing before he was dismissed constitutes an infringement
on his constitutional right to due process of law.37

Still, this theory has been refuted, pellucidly and effectively to my mind, by Justice Mendoza's
disquisition in Serrano, thus:
 xxx 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.

xxx

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).38

The Court in the landmark case of People v. Marti39 clarified the proper dimensions of the Bill of Rights.

That the Bill of Rights embodied in the Constitution is not meant to be invoked against acts of
private individuals finds support in the deliberations of the Constitutional Commission. True,
the liberties guaranteed by the fundamental law of the land must always be subject to
protection. But protection against whom? Commissioner Bernas in his sponsorship speech in
the Bill of Rights answers the query which he himself posed, as follows:

"First, the general reflections. The protection of fundamental liberties in the essence of
constitutional democracy. Protection against whom? Protection against the state. The
Bill of Rights governs the relationship between the individual and the state. Its concern
is not the relation between individuals, between a private individual and other
individuals. What the Bill of Rights does is to declare some forbidden zones in the
private sphere inaccessible to any power holder." (Sponsorship Speech of
Commissioner Bernas; Record of the Constitutional Commission, Vol. 1, p. 674; July
17,1986; Italics supplied)40

I do not doubt that requiring notice and hearing prior to termination for just cause is an admirable
sentiment borne out of basic equity and fairness. Still, it is not a constitutional requirement that can
impose itself on the relations of private persons and entities. Simply put, the Bill of Rights affords
protection against possible State oppression against its citizens, but not against an unjust or repressive
conduct by a private party towards another.

Justice Puno characterizes the notion that constitutional due process limits government action alone
as "passé,"and adverts to nouvelle vague theories which assert that private conduct may be
restrained by constitutional due process. His dissent alludes to the American experience making
references to the post-Civil War/pre-World War II era when the US Supreme Court seemed overly
solicitous to the rights of big business over those of the workers.

Theories, no matter how entrancing, remain theoretical unless adopted by legislation, or more
controversially, by judicial opinion. There were a few decisions of the US Supreme Court that,
ostensibly, imposed on private persons the values of the constitutional guarantees. However, in
deciding the cases, the American High Court found it necessary to link the actors to adequate elements
of the "State" since the Fourteenth Amendment plainly begins with the words "No State shall…"41

More crucially to the American experience, it had become necessary to pass legislation in order to
compel private persons to observe constitutional values. While the equal protection clause was
deemed sufficient by the Warren Court to bar racial segregation in public facilities, it necessitated
enactment of the Civil Rights Acts of 1964 to prohibit segregation as enforced by private persons within
their property. In this jurisdiction, I have trust in the statutory regime that governs the correction of
private wrongs. There are thousands of statutes, some penal or regulatory in nature, that are the
source of actionable claims against private persons. There is even no stopping the State, through the
legislative cauldron, from compelling private individuals, under pain of legal sanction, into observing
the norms ordained in the Bill of Rights.

Justice Panganiban's Separate Opinion asserts that corporate behemoths and even individuals may
now be sources of abuses and threats to human rights and liberties.42 The concern is not unfounded,
but appropriate remedies exist within our statutes, and so resort to the constitutional trump card is not
necessary. Even if we were to engage the premise, the proper juristic exercise should be to examine
whether an employer has taken the attributes of the State so that it could be compelled by the
Constitution to observe the proscriptions of the Bill of Rights. But the strained analogy simply does not
square since the attributes of an employer are starkly incongruous with those of the State. Employers
plainly do not possess the awesome powers and the tremendous resources which the State has at its
command.

The differences between the State and employers are not merely literal, but extend to their very
essences. Unlike the State, the raison d'etre of employers in business is to accumulate profits.
Perhaps the State and the employer are similarly capacitated to inflict injury or discomfort on persons
under their control, but the same power is also possessed by a school principal, hospital administrator,
or a religious leader, among many others. Indeed, the scope and reach of authority of an employer
pales in comparison with that of the State. There is no basis to conclude that an employer, or even the
employer class, may be deemed a de facto state and on that premise, compelled to observe the Bill
of Rights. There is simply no nexus in their functions, distaff as they are, that renders it necessary to
accord the same jurisprudential treatment.

It may be so, as alluded in the dissent of Justice Puno, that a conservative court system overly
solicitous to the concerns of business may consciously gut away at rights or privileges owing to the
labor sector. This certainly happened before in the United States in the early part of the twentieth
century, when the progressive labor legislation such as that enacted during President Roosevelt's New
Deal regime — most of them addressing problems of labor — were struck down by an arch-
conservative Court.43 The preferred rationale then was to enshrine within the constitutional order
business prerogatives, rendering them superior to the express legislative intent. Curiously, following
its judicial philosophy at the time the U. S. Supreme Court made due process guarantee towards
employers prevail over the police power to defeat the cause of labor.44

Of course, this Court should not be insensate to the means and methods by which the entrenched
powerful class may maneuver the socio-political system to ensure self-preservation. However, the
remedy to rightward judicial bias is not leftward judicial bias. The more proper judicial attitude is to give
due respect to legislative prerogatives, regardless of the ideological sauce they are dipped in.

While the Bill of Rights maintains a position of primacy in the constitutional hierarchy, 45 it has scope
and limitations that must be respected and asserted by the Court, even though they may at times
serve somewhat bitter ends. The dissenting opinions are palpably distressed at the effect of
the Decision, which will undoubtedly provoke those reflexively sympathetic to the labor class. But
haphazard legal theory cannot be used to justify the obverse result. The adoption of the dissenting
views would give rise to all sorts of absurd constitutional claims. An excommunicated Catholic might
demand his/her reinstatement into the good graces of the Church and into communion on the ground
that excommunication was violative of the constitutional right to due process. A celebrity contracted to
endorse Pepsi Cola might sue in court to void a stipulation that prevents him/her from singing the
praises of Coca Cola once in a while, on the ground that such stipulation violates the constitutional
right to free speech. An employee might sue to prevent the employer from reading outgoing e-mail
sent through the company server using the company e-mail address, on the ground that the
constitutional right to privacy of communication would be breached.

The above concerns do not in anyway serve to trivialize the interests of labor. But we must avoid
overarching declarations in order to justify an end result beneficial to labor. I dread the doctrinal
acceptance of the notion that the Bill of Rights, on its own, affords protection and sanctuary not just
from the acts of State but also from the conduct of private persons. Natural and juridical persons would
hesitate to interact for fear that a misstep could lead to their being charged in court as a constitutional
violator. Private institutions that thrive on their exclusivity, such as churches or cliquish groups, could
be forced to renege on their traditional tenets, including vows of secrecy and the like, if deemed by the
Court as inconsistent with the Bill of Rights. Indeed, that fundamental right of all private persons to be
let alone would be forever diminished because of a questionable notion that contravenes with centuries
of political thought.

It is not difficult to be enraptured by novel legal ideas. Their characterization is susceptible to the same
marketing traps that hook consumers to new products. With the help of unique wrapping, a catchy
label, and testimonials from professed experts from exotic lands, a malodorous idea may gain wide
acceptance, even among those self-possessed with their own heightened senses of perception. Yet
before we join the mad rush in order to proclaim a theory as "brilliant," a rigorous test must first be
employed to determine whether it complements or contradicts our own system of laws and juristic
thought. Without such analysis, we run the risk of abnegating the doctrines we have fostered for
decades and the protections they may have implanted into our way of life.

Should the Court adopt the view that the Bill of Rights may be invoked to invalidate actions by private
entities against private individuals, the Court would open the floodgates to, and the docket would be
swamped with, litigations of the scurrilous sort. Just as patriotism is the last refuge of scoundrels, the
broad constitutional claim is the final resort of the desperate litigant.

Constitutional Protection of Labor

The provisions of the 1987 Constitution affirm the primacy of labor and advocate a multi-faceted state
policy that affords, among others, full protection to labor. Section 18, Article II thereof provides:
 The State affirms labor as a primary social economic force. It shall protect the rights of workers
and promote their welfare.

Further, Section 3, Article XIII states:

The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equal employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security to tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right
of labor to its just share in the fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.

The constitutional enshrinement of the guarantee of full protection of labor is not novel to the 1987
Constitution. Section 6, Article XIV of the 1935 Constitution reads:

The State shall afford protection to labor, especially to working women, and minors, and shall
regulate the relations between the landowner and tenant, and between labor and capital in
industry and in agriculture. The State may provide for compulsory arbitration.

Similarly, among the principles and state policies declared in the 1973 Constitution, is that provided in
Section 9, Article II thereof:

The State shall afford full protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race or creed, and regulate
the relations between workers and employers. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and humane conditions of
work. The State may provide for compulsory arbitration.

On the other hand, prior to the 1973 Constitution, the right to security of tenure could only be found in
legislative enactments and their respective implementing rules and regulations. It was only in the 1973
Constitution that security of tenure was elevated as a constitutional right. The development of the
concept of security of tenure as a constitutionally recognized right was discussed by this Court in BPI
Credit Corporation v. NLRC,46 to wit:

The enthronement of the worker's right to security or tenure in our fundamental law was not
achieved overnight. For all its liberality towards labor, our 1935 Constitution did not elevate
the right as a constitutional right. For a long time, the worker's security of tenure had only the
protective mantle of statutes and their interpretative rules and regulations. It was as uncertain
protection that sometimes yielded to the political permutations of the times. It took labor nearly
four decades of sweat and tears to persuade our people thru their leaders, to exalt the worker's
right to security of tenure as a sacrosanct constitutional right. It was Article II, section 2 [9] of
 our 1973 Constitution that declared as a policy that the State shall assure the right of worker's
to security tenure. The 1987 Constitution is even more solicitous of the welfare of labor.
Section 3 of its Article XIII mandates that the State shall afford full protection to labor and
declares that all workers shall be entitled to security of tenure. Among the enunciated State
policies are the

promotion of social justice and a just and dynamic social order. In contrast, the prerogative of
management to dismiss a worker, as an aspect of property right, has never been endowed
with a constitutional status.

The unequivocal constitutional declaration that all workers shall be entitled to security of tenure
spurred our lawmakers to strengthen the protective walls around this hard earned right. The
right was protected from undue infringement both by our substantive and procedural laws.
Thus, the causes for dismissing employees were more defined and restricted; on the other
hand, the procedure of termination was also more clearly delineated. These substantive and
procedural laws must be strictly complied with before a worker can be dismissed from his
employment.47

It is quite apparent that the constitutional protection of labor was entrenched more than eight decades
ago, yet such did not prevent this Court in the past from affirming dismissals for just cause without
valid notice. Nor was there any pretense made that this constitutional maxim afforded a laborer a
positive right against dismissal for just cause on the ground of lack of valid prior notice. As
demonstrated earlier, it was only after the enactment of the Labor Code that the doctrine relied upon
by the dissenting opinions became en vogue. This point highlights my position that the violation of the
notice requirement has statutory moorings, not constitutional.

It should be also noted that the 1987 Constitution also recognizes the principle of shared responsibility
between workers and employers, and the right of enterprise to reasonable returns, expansion, and
growth. Whatever perceived imbalance there might have been under previous incarnations of the
provision have been obviated by Section 3, Article XIII.

In the case of Manila Prince Hotel v. GSIS,48 we affirmed the presumption that all constitutional
provisions are self-executing. We reasoned that to declare otherwise would result in the pernicious
situation wherein by mere inaction and disregard by the legislature, constitutional mandates would be
rendered ineffectual. Thus, we held:

As against constitutions of the past, modern constitutions have been generally ed upon a
different principle and have often become in effect extensive codes of laws intended to operate
directly upon the people in a manner similar to that of statutory enactments, and the function
of constitutional conventions has evolved into one more like that of a legislative body. Hence,
unless it is expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-executing. If
the constitutional provisions are treated as requiring legislation instead of self-executing, the
legislature would have the power to ignore and practically nullify the mandate of the
fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has always
been, that —

. . . in case of doubt, the Constitution should be considered self-executing rather than

non-self-executing. . . . Unless the contrary is clearly intended, the provisions of the
Constitution should be considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall be effective. These
provisions would be subordinated to the will of the lawmaking body, which could make
 them entirely meaningless by simply refusing to pass the needed implementing
statute.49

In further discussing self-executing provisions, this Court stated that:

In self-executing constitutional provisions, the legislature may still enact legislation to facilitate
the exercise of powers directly granted by the constitution, further the operation of such a
provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for
the protection of the rights secured or the determination thereof, or place reasonable
safeguards around the exercise of the right. The mere fact that legislation may supplement
and add to or prescribe a penalty for the violation of a self-executing constitutional provision
does not render such a provision ineffective in the absence of such legislation. The omission
from a constitution of any express provision for a remedy for enforcing a right or liability is not
necessarily an indication that it was not intended to be self-executing. The rule is that a self-
executing provision of the constitution does not necessarily exhaust legislative power on the
subject, but any legislation must be in harmony with the constitution, further the exercise of
constitutional right and make it more available. Subsequent legislation however does not
necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.50

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-
executing in the sense that these are automatically acknowledged and observed without need for any
enabling legislation. However, to declare that the constitutional provisions are enough to guarantee
the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would
be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a
blanket shield in favor of labor against any form of removal regardless of circumstance. This
interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-
but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights
of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial
bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the
Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable
right to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice
or hearing. As manifested by several framers of the 1987 Constitution, the provisions on social justice
require legislative enactments for their enforceability. This is reflected in the record of debates on the
social justice provisions of the Constitution:

MS. [FELICITAS S.] AQUINO: We appreciate the concern of the Commissioner. But this
Committee [on Social Justice] has actually become the forum already of a lot of specific
grievances and specific demands, such that understandably, we may have been, at one
time or another, dangerously treading into the functions of legislation. Our only plea to
the Commission is to focus our perspective on the matter of social justice and its rightful place
in the Constitution. What we envision here is a mandate specific enough that would give
impetus for statutory implementation. We would caution ourselves in terms of the
judicious exercise of self-censorship against treading into the functions of legislation.
(emphasis supplied)51

xxx
 [FLORENZ D.] REGALADO: I notice that the 1935 Constitution had only one section on social
justice; the same is true with the 1973 Constitution. But they seem to have stood us in good
stead; and I am a little surprised why, despite that attempt at self-censorship, there are
certain provisions here which are properly for legislation.52

xxx

BISHOP [TEODORO S.] BACANI: [I] think the distinction that was given during the
presentation of the provisions on the Bill of Rights by Commissioner Bernas is very apropos
here. He spoke of self-executing rights which belong properly to the Bill of Rights, and
then he spoke of a new body of rights which are more of claims and that these have
come about largely through the works of social philosophers and then the teaching of
the Popes. They focus on the common good and hence, it is not as easy to pinpoint
precisely these rights nor the situs of the rights. And yet, they exist in relation to the
common good.53

xxx

MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of collaboration will
be left to legislation but the important thing now is the conservation, utilization or
maximization of the very limited resources. xxx

[RICARDO J.] ROMULO: The other problem is that, by and large, government services are
inefficient. So, this is a problem all by itself. On Section 19, where the report says that people's
organizations as a principal means of empowering the people to pursue and protect through
peaceful means…, I do not suppose that the Committee would like to either preempt or
exclude the legislature, because the concept of a representative and democratic system
really is that the legislature is normally the principal means.

[EDMUNDO G.] GARCIA: That is correct. In fact, people cannot even dream of
influencing the composition or the membership of the legislature, if they do not get
organized. It is, in fact, a recognition of the principle that unless a citizenry is organized and
mobilized to pursue its ends peacefully, then it cannot really participate effectively.54

There is no pretense on the part of the framers that the provisions on Social Justice, particularly
Section 3 of Article XIII, are self-executory. Still, considering the rule that provisions should be deemed
self-executing if enforceable without further legislative action, an examination of Section 3 of Article
XIII is warranted to determine whether it is complete in itself as a definitive law, or if it needs future
legislation for completion and enforcement.55 Particularly, we should inquire whether or not the
provision voids the dismissal of a laborer for just cause if no valid notice or hearing is attendant.

Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant comment on Section 3, Article
XIII of the 1987 Constitution:

The [cluster] of rights guaranteed in the second paragraph are the right "to security of tenure,
humane conditions of work, and a living wage." Again, although these have been set apart by
a period (.) from the next sentence and are therefore not modified by the final phrase "as may
be provided by law," it is not the intention to place these beyond the reach of valid laws.
xxx (emphasis supplied)56

At present, the Labor Code is the primary mechanism to carry out the Constitution's directives. This is
clear from Article 357 under Chapter 1 thereof which essentially restates the policy on the protection of
labor as worded in the 1973 Constitution, which was in force at the time of enactment of the Labor
Code. It crystallizes the fundamental law's policies on labor, defines the parameters of the rights
granted to labor such as the right to security of tenure, and prescribes the standards for the
enforcement of such rights in concrete terms. While not infallible, the measures provided therein tend
to ensure the achievement of the constitutional aims.

The necessity for laws concretizing the constitutional principles on the protection of labor is evident in
the reliance placed upon such laws by the Court in resolving the issue of the validity of a worker's
dismissal. In cases where that was the issue confronting the Court, it consistently recognized the
constitutional right to security of tenure and employed the standards laid down by prevailing laws in
determining whether such right was violated.58 The Court's reference to laws other than the
Constitution in resolving the issue of dismissal is an implicit acknowledgment that the right to security
of tenure, while recognized in the Constitution, cannot be implemented uniformly absent a law
prescribing concrete standards for its enforcement.

As discussed earlier, the validity of an employee's dismissal in previous cases was examined by the
Court in accordance with the standards laid down by Congress in the Termination Pay Law, and
subsequently, the Labor Code and the amendments thereto. At present, the validity of an employee's
dismissal is weighed against the standards laid down in Article 279, as well as Article 282 in relation
to Article 277(b) of the Labor Code, for a dismissal for just cause, and Article 283 for a dismissal for
an authorized cause.

The Effect of Statutory Violation

Of Notice and Hearing

There is no doubt that the dismissal of an employee even for just cause, without prior notice or hearing,
violates the Labor Code. However, does such violation necessarily void the dismissal?

Before I proceed with my discussion on dismissals for just causes, a brief comment regarding
dismissals for authorized cause under Article 283 of the Labor Code. While the justiciable question
in Serrano pertained to a dismissal for unauthorized cause, the ruling therein was crafted as definitive
to dismissals for just cause. Happily, the Decision today does not adopt the same unwise tack. It
should be recognized that dismissals for just cause and dismissals for authorized cause are governed
by different provisions, entail divergent requisites, and animated by distinct rationales. The language
of Article 283 expressly effects the termination for authorized cause to the service of written notice on
the workers and the Ministry of Labor at least one (1) month before the intended date of termination.
This constitutes an eminent difference than dismissals for just cause, wherein the causal relation
between the notice and the dismissal is not expressly stipulated. The circumstances distinguishing
just and authorized causes are too markedly different to be subjected to the same rules and reasoning
in interpretation.

Since the present petition is limited to a question arising from a dismissal for just cause, there is no
reason for making any pronouncement regarding authorized causes. Such declaration would be
merely obiter, since they are neither the law of the case nor dispositive of the present petition. When
the question becomes justiciable before this Court, we will be confronted with an appropriate factual
milieu on which we can render a more judicious disposition of this admittedly important question.

B. Dismissal for Just Cause

There is no express provision in the Labor Code that voids a dismissal for just cause on the ground
that there was no notice or hearing. Under Section 279, the employer is precluded from dismissing an
employee except for a just cause as provided in Section 282, or an authorized cause under Sections
283 and 284. Based on reading Section 279 alone, the existence of just cause by itself is sufficient to
validate the termination.

Just cause is defined by Article 282, which unlike Article 283, does not condition the termination on
the service of written notices. Still, the dissenting opinions propound that even if there is just cause, a
termination may be invalidated due to the absence of notice or hearing. This view is anchored mainly
on constitutional moorings, the basis of which I had argued against earlier. For determination now is
whether there is statutory basis under the Labor Code to void a dismissal for just cause due to the
absence of notice or hearing.

As pointed out by Justice Mendoza in Serrano, it was only in 1989 that the Labor Code was amended
to enshrine into statute the twin requirements of notice and hearing.59 Such requirements are found in
Article 277 of the Labor Code, under the heading "Miscellaneous Provisions." Prior to the amendment,
the notice-hearing requirement was found under the implementing rules issued by the then Minister of
Labor in 1981. The present-day implementing rules likewise mandate that the standards of due
process, including the requirement of written notice and hearing, "be substantially observed."60

Indubitably, the failure to substantially comply with the standards of due process, including the notice
and hearing requirement, may give rise to an actionable claim against the employer. Under Article
288, penalties may arise from violations of any provision of the Labor Code. The Secretary of Labor
likewise enjoys broad powers to inquire into existing relations between employers and employees.
Systematic violations by management of the statutory right to due process would fall under the broad
grant of power to the Secretary of Labor to investigate under Article 273.

However, the remedy of reinstatement despite termination for just cause is simply not authorized by
the Labor Code. Neither the Labor Code nor its implementing rules states that a termination for just
cause is voided because the requirement of notice and hearing was not observed. This is not simply
an inadvertent semantic failure, but a conscious effort to protect the prerogatives of the employer to
dismiss an employee for just cause. Notably, despite the several pronouncements by this Court in the
past equating the notice-hearing requirement in labor cases to a constitutional maxim, neither the
legislature nor the executive has adopted the same tack, even gutting the protection to provide that
substantial compliance with due process suffices.

The Labor Code significantly eroded management prerogatives in the hiring and firing of employees.
Whereas employees could be dismissed even without just cause under the Termination Pay Law61,
the Labor Code affords workers broad security of tenure. Still, the law recognizes the right of the
employer to terminate for just cause. The just causes enumerated under the Labor Code ¾ serious
misconduct or willful disobedience, gross and habitual neglect, fraud or willful breach of trust,
commission of a crime by the employee against the employer, and other analogous causes ¾ are
characterized by the harmful behavior of an employee against the business or the person of the
employer.

These just causes for termination are not negated by the absence of notice or hearing. An employee
who tries to kill the employer cannot be magically absolved of trespasses just because the employer
forgot to serve due notice. Or a less extreme example, the gross and habitual neglect of an employee
will not be improved upon just because the employer failed to conduct a hearing prior to termination.

In fact, the practical purpose of requiring notice and hearing is to afford the employee the opportunity
to dispute the contention that there was just cause in the dismissal. Yet it must be understood – if a
dismissed employee is deprived of the right to notice and hearing, and thus denied the
opportunity to present countervailing evidence that disputes the finding of just cause,
reinstatement will be valid not because the notice and hearing requirement was not observed,
but because there was no just cause in the dismissal. The opportunity to dispute the finding of the
just cause is readily available before the Labor Arbiter, and the subsequent levels of appellate review.
Again, as held in Serrano:

Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is
not to comply with the 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.62

The Labor Code presents no textually demonstrable commitment to invalidate a dismissal for just
cause due to the absence of notice or hearing. This is not surprising, as such remedy will not restore
the employer or employee into equity. Absent a showing of integral causation, the mutual infliction of
wrongs does not negate either injury, but instead enforces two independent rights of relief.

The Damages' Dimensions

Award for Damages Must Have Statutory Basis

The Court has grappled with the problem of what should be the proper remedial relief of an employee
dismissed with just cause, but not afforded either notice or hearing. In a long line of cases, beginning
with Wenphil Corp. v. NLRC63 and up until Serrano in 2000, the Court had deemed an indemnification
award as sufficient to answer for the violation by the employer against the employee. However, the
doctrine was modified in Serrano.

I disagree with Serrano insofar as it held that employees terminated for just cause are to be paid
backwages from the time employment was terminated "until it is determined that the termination is for
just cause because the failure to hear him before he is dismissed renders the termination of his
employment without legal effect."64 Article 279 of the Labor Code clearly authorizes the payment of
backwages only if an employee is unjustly dismissed. A dismissal for just cause is obviously
antithetical to an unjust dismissal. An award for backwages is not clearly warranted by the law.

The Impropriety of Award for Separation Pay

The formula of one month's pay for every year served does have statutory basis. It is found though in
the Labor Code though, not the Civil Code. Even then, such computation is made for separation pay
under the Labor Code. But separation pay is not an appropriate as a remedy in this case, or in any
case wherein an employee is terminated for just cause. As Justice Vitug noted in his separate opinion
in Serrano, an employee whose employment is terminated for a just cause is not entitled to the
payment of separation benefits.65 Separation pay is traditionally a monetary award paid as an
alternative to reinstatement which can no longer be effected in view of the long passage of time or
because of the realities of the situation.66 However, under Section 7, Rule 1, Book VI of the Omnibus
Rules Implementing the Labor Code, "[t]he separation from work of an employee for a just cause does
not entitle him to the termination pay provided in the Code."67 Neither does the Labor Code itself
provide instances wherein separation pay is warranted for dismissals with just cause. Separation pay
is warranted only for dismissals for authorized causes, as enumerated in Article 283 and 284 of the
Labor Code.
The Impropriety of Equity Awards

Admittedly, the Court has in the past authorized the award of separation pay for duly terminated
employees as a measure of social justice, provided that the employee is not guilty of serious
misconduct reflecting on moral character.68 This doctrine is inapplicable in this case, as the Agabons
are guilty of abandonment, which is the deliberate and unjustified refusal of an employee to resume
his employment. Abandonment is tantamount to serious misconduct, as it constitutes a willful breach
of the employer-employee relationship without cause.

The award of separation pay as a measure of social justice has no statutory basis, but clearly
emanates from the Court's so-called "equity jurisdiction." The Court's equity jurisdiction as a basis for
award, no matter what form it may take, is likewise unwarranted in this case. Easy resort to equity
should be avoided, as it should yield to positive rules which pre-empt and prevail over such
persuasions.69 Abstract as the concept is, it does not admit to definite and objective standards.

I consider the pronouncement regarding the proper monetary awards in such cases as Wenphil Corp.
v. NLRC,70Reta,71 and to a degree, even Serrano as premised in part on equity. This decision is
premised in part due to the absence of cited statutory basis for these awards. In these cases, the
Court deemed an indemnity award proper without exactly saying where in statute could such award
be derived at. Perhaps, equity or social justice can be invoked as basis for the award. However, this
sort of arbitrariness, indeterminacy and judicial usurpation of legislative prerogatives is precisely the
source of my discontent. Social justice should be the aspiration of all that we do, yet I think it the more
mature attitude to consider that it ebbs and flows within our statutes, rather than view it as an
independent source of funding.

Article 288 of the Labor Code as a Source of Liability

Another putative source of liability for failure to render the notice requirement is Article 288 of the Labor
Code, which states:

Article 288 states:

Penalties. — Except as otherwise provided in this Code, or unless the acts complained of
hinges on a question of interpretation or implementation of ambiguous provisions of an existing
collective bargaining agreement, any violation of the provisions of this Code declared to be
unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos
(P1,000.00) nor more than Ten Thousand Pesos (P10,000.00), or imprisonment of not less
than three months nor more than three years, or both such fine and imprisonment at the
discretion of the court.

It is apparent from the provision that the penalty arises due to contraventions of the provisions of the
Labor Code. It is also clear that the provision comes into play regardless of who the violator may be.
Either the employer or the employee may be penalized, or perhaps even officials tasked with
implementing the Labor Code.

However, it is apparent that Article 288 is a penal provision; hence, the prescription for penalties such
as fine and imprisonment. The Article is also explicit that the imposition of fine or imprisonment is at
the "discretion of the court." Thus, the proceedings under the provision is penal in character. The
criminal case has to be instituted before the proper courts, and the Labor Code violation subject thereof
duly proven in an adversarial proceeding. Hence, Article 288 cannot apply in this case and serve as
basis to impose a penalty on Riviera Homes.
I also maintain that under Article 288 the penalty should be paid to the State, and not to the person or
persons who may have suffered injury as a result of the violation. A penalty is a sum of money which
the law requires to be paid by way of punishment for doing some act which is prohibited or for not
doing some act which is required to be done.72 A penalty should be distinguished from damages which
is the pecuniary compensation or indemnity to a person who has suffered loss, detriment, or injury,
whether to his person, property, or rights, on account of the unlawful act or omission or negligence of
another. Article 288 clearly serves as a punitive fine, rather than a compensatory measure, since the
provision penalizes an act that violates the Labor Code even if such act does not cause actual injury
to any private person.

Independent of the employee's interests protected by the Labor Code is the interest of the State in
seeing to it that its regulatory laws are complied with. Article 288 is intended to satiate the latter
interest. Nothing in the language of Article 288 indicates an intention to compensate or remunerate a
private person for injury he may have sustained.

It should be noted though that in Serrano, the Court observed that since the promulgation of Wenphil
Corp. v. NLRC73 in 1989, "fines imposed for violations of the notice requirement have varied
from P1,000.00 to P2,000.00 to P5,000.00 to P10,000.00."74 Interestingly, this range is the same
range of the penalties imposed by Article 288. These "fines" adverted to in Serrano were paid to the
dismissed employee. The use of the term "fines," as well as the terminology employed a few other
cases,75 may have left an erroneous impression that the award implemented beginning
with Wenphil was based on Article 288 of the Labor Code. Yet, an examination of Wenphil reveals that
what the Court actually awarded to the employee was an "indemnity", dependent on the facts of each
case and the gravity of the omission committed by the employer. There is no mention in Wenphil of
Article 288 of the Labor Code, or indeed, of any statutory basis for the award.

The Proper Basis: Employer's Liability under the Civil Code

As earlier stated, Wenphil allowed the payment of indemnity to the employee dismissed for just cause
is dependent on the facts of each case and the gravity of the omission committed by the employer.
However, I considered Wenphil flawed insofar as it is silent as to the statutory basis for the indemnity
award. This failure, to my mind, renders it unwise for to reinstate the Wenphil rule, and foster the
impression that it is the judicial business to invent awards for damages without clear statutory basis.

The proper legal basis for holding the employer liable for monetary damages to the employee
dismissed for just cause is the Civil Code. The award of damages should be measured against
the loss or injury suffered by the employee by reason of the employer's violation or, in case of
nominal damages, the right vindicated by the award. This is the proper paradigm authorized
by our law, and designed to obtain the fairest possible relief.

Under Section 217(4) of the Labor Code, the Labor Arbiter has jurisdiction over claims for actual,
moral, exemplary and other forms of damages arising from the employer-employee relations. It is thus
the duty of Labor Arbiters to adjudicate claims for damages, and they should disabuse themselves of
any inhibitions if it does appear that an award for damages is warranted. As triers of facts in a
specialized field, they should attune themselves to the particular conditions or problems attendant to
employer-employee relationships, and thus be in the best possible position as to the nature and
amount of damages that may be warranted in this case.

The damages referred under Section 217(4) of the Labor Code are those available under the Civil
Code. It is but proper that the Civil Code serve as the basis for the indemnity, it being the law that
regulates the private relations of the members of civil society, determining their respective rights and
obligations with reference to persons, things, and civil acts.76 No matter how impressed with the public
interest the relationship between a private employer and employee is, it still is ultimately a relationship
between private individuals. Notably, even though the Labor Code could very well have provided set
rules for damages arising from the employer-employee relationship, referral was instead made to the
concept of damages as enumerated and defined under the Civil Code.

Given the long controversy that has dogged this present issue regarding dismissals for just cause, it
is wise to lay down standards that would guide the proper award of damages under the Civil Code in
cases wherein the employer failed to comply with statutory due process in dismissals for just cause.

First. I believe that it can be maintained as a general rule, that failure to comply with the statutory
requirement of notice automatically gives rise to nominal damages, at the very least, even if the
dismissal was sustained for just cause.

Nominal damages are adjudicated in order that a right of a plaintiff which has been violated or invaded
by another may be vindicated or recognized without having to indemnify the plaintiff for any loss
suffered by him.77 Nominal damages may likewise be awarded in every obligation arising from law,
contracts, quasi-contracts, acts or omissions punished by law, and quasi-delicts, or where any property
right has been invaded.

Clearly, the bare act of failing to observe the notice requirement gives rise to nominal damages
assessable against the employer and due the employee. The Labor Code indubitably entitles the
employee to notice even if dismissal is for just cause, even if there is no apparent intent to void such
dismissals deficiently implemented. It has also been held that one's employment, profession, trade, or
calling is a "property right" and the wrongful interference therewith gives rise to an actionable wrong.78

In Better Buildings, Inc. v. NLRC,79 the Court ruled that the while the termination therein was for just
and valid cause, the manner of termination was done in complete disregard of the necessary
procedural safeguards.80 The Court found nominal damages as the proper form of award, as it was
purposed to vindicate the right to procedural due process violated by the employer.81 A similar holding
was maintained in Iran v. NLRC82 and Malaya Shipping v. NLRC.83 The doctrine has express statutory
basis, duly recognizes the existence of the right to notice, and vindicates the violation of such right. It
is sound, logical, and should be adopted as a general rule.

The assessment of nominal damages is left to the discretion of the court,84 or in labor cases, of the
Labor Arbiter and the successive appellate levels. The authority to nominate standards governing the
award of nominal damages has clearly been delegated to the judicial branch, and it will serve good
purpose for this Court to provide such guidelines. Considering that the affected right is a property right,
there is justification in basing the amount of nominal damages on the particular characteristics
attaching to the claimant's employment. Factors such as length of service, positions held, and received
salary may be considered to obtain the proper measure of nominal damages. After all, the degree by
which a property right should be vindicated is affected by the estimable value of such right.

At the same time, it should be recognized that nominal damages are not meant to be compensatory,
and should not be computed through a formula based on actual losses. Consequently, nominal
damages usually limited in pecuniary value.85 This fact should be impressed upon the prospective
claimant, especially one who is contemplating seeking actual/compensatory damages.

Second. Actual or compensatory damages are not available as a matter of right to an employee
dismissed for just cause but denied statutory due process. They must be based on clear factual and
legal bases,86 and correspond to such pecuniary loss suffered by the employee as duly
proven.87 Evidently, there is less degree of discretion to award actual or compensatory damages.
I recognize some inherent difficulties in establishing actual damages in cases for terminations
validated for just cause. The dismissed employee retains no right to continued employment from the
moment just cause for termination exists, and such time most likely would have arrived even before
the employer is liable to send the first notice. As a result, an award of backwages disguised as actual
damages would almost never be justified if the employee was dismissed for just cause. The possible
exception would be if it can be proven the ground for just cause came into being only after the
dismissed employee had stopped receiving wages from the employer.

Yet it is not impossible to establish a case for actual damages if dismissal was for just cause.
Particularly actionable, for example, is if the notices are not served on the employee, thus hampering
his/her opportunities to obtain new employment. For as long as it can be demonstrated that the failure
of the employer to observe procedural due process mandated by the Labor Code is the proximate
cause of pecuniary loss or injury to the dismissed employee, then actual or compensatory damages
may be awarded.

Third. If there is a finding of pecuniary loss arising from the employer violation, but the amount cannot
be proved with certainty, then temperate or moderate damages are available under Article 2224 of the
Civil Code. Again, sufficient discretion is afforded to the adjudicator as regards the proper award, and
the award must be reasonable under the circumstances.88 Temperate or nominal damages may yet
prove to be a plausible remedy, especially when common sense dictates that pecuniary loss was
suffered, but incapable of precise definition.

Fourth. Moral and exemplary damages may also be awarded in the appropriate circumstances. As
pointed out by the Decision, moral damages are recoverable where the dismissal of the employee was
attended by bad faith, fraud, or was done in a manner contrary to morals, good customs or public
policy, or the employer committed an act oppressive to labor.89 Exemplary damages may avail if the
dismissal was effected in a wanton, oppressive or malevolent manner.

Appropriate Award of Damages to the Agabons

The records indicate no proof exists to justify the award of actual or compensatory damages, as it has
not been established that the failure to serve the second notice on the Agabons was the proximate
cause to any loss or injury. In fact, there is not even any showing that such violation caused any sort
of injury or discomfort to the Agabons. Nor do they assert such causal relation. Thus, the only
appropriate award of damages is nominal damages. Considering the circumstances, I agree that an
award of Fifteen Thousand Pesos (P15,000.00) each for the Agabons is sufficient.

All premises considered, I VOTE to:

(1) DENY the PETITION for lack of merit, and AFFIRM the Decision of the Court of Appeals
dated 23 January 2003, with the MODIFICATION that in addition, Riviera Homes be

ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos (P15,000.00) each, as
nominal damages.

(2) HOLD that henceforth, dismissals for just cause may not be invalidated due to the failure
to observe the due process requirements under the Labor Code, and that the only indemnity
award available to the employee dismissed for just cause are damages under the Civil Code
as duly proven. Any and all previous rulings and statements of the Court inconsistent with this
holding are now deemed INOPERATIVE.
DANTE O. TINGA
Associate Justice