SERRANO VS. NLRCJanuary 27, 2000Mendoza, J.

Petitioners: Ruben SerranoRespondents: NLRC, Isetann Department Store

Facts: Ruben was hired by Isetann on October 4, 1984 as a Security

Checker on contractual basis to apprehend shoplifters and prevent theft of merchandise. He was eventually regularized on April 4, 1985 (after 6 months), rising up to be promoted to Head of Security Checkers in 1988.

In 1991 (after 7 years) however, Isetann decided to implement cost-cutting measures by phasing out its whole security section and procure the services of an independent security agency. As an effect, Ruben was served a memo on October 11, 1991 notifying Ruben’s termination effective on the day itself.

Ruben then filed a complaint on December 3, 1991 for illegal illegal dismissal, illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay.

LA: Ruben was illegally dismissed, Isetann failed to establish retrenchment of Security section was needed to prevent/minimize losses to its business. Furthermore, Isetann failed to accord due process to Ruben and the other members of the Security division. Isetann also failed to show that the Security section was so inefficient, with “cost-saving devices” not being employed and instead opting to employ a new Safety and Security supervisor with similar duties. Isetann ordered to pay full backwages, reinstatement, unpaid wages, proportional 13th month pay and attorney’s fees.

NLRC: Reversed LA, but ordered payment of separation pay equivalent to one month pay for every year of service, unpaid salary, and proportionate 13th month pay. Held that phase-out of the Security Section in lieu of an independent security agency was a valid and legitimate exercise of Isetann’s business prerogative. Furthermore, use of the terms “retrenchment” and “cost-saving devices” under Art. 289 (new) was insignificant due to the Isetann official using “retrenchment” in its plain and ordinary meaning.

Issues/Held:1. WON the abolition of Isetann’s Security Checkers section falls

under any of the authorized causes of dismissal under Art.

289 (new) of the Labor Code. YES, Court held that Ruben was dismissed validly for redundancy.

2. WON Isetann must be sanctioned by the Court for failing to accord due process to Ruben. YES, but not render dismissal null and void.

Ratio:1. According to the Court, Ruben’s case fell under Art. 289 (new)

and considered as falling under the case for redundancy. The Court cited De Ocampo vs NLRC and Asian Alcohol vs NLRC in its treatment of management’s prerogative / business judgment to replace its regular employees by independent contractors, ruling that an employer’s good faith is not necessarily put in doubt by the availment of services of an independent contractor to promote economy and efficiency.

Ruben’s assertion that the real purpose of Isetann was to avoid payment to security checkers of wage increases under a CBA in 1990 was not held as sufficient to conclude that the decision was not made bona fide to obtain reasonable returns from its investments, which was held as a right guaranteed to employers and businesses under the Constitution.

2. However, it was noticed by the Court that Isetann terminated Ruben on the same day he was given the notice of termination (Oct. 11, 1991). This was evidently a violation of Art. 289’s requirement of due notice to the employee, through "a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof." The Court also cited Sebuguero vs NLRC where there was a valid retrenchment, although there was non-compliance with the 30-day notice requirement, prompting the Court to award PHP 2,000.00 as indemnity to each worker dismissed. This doctrine started with Wenphil Corp. vs NLRC, which held that dismissal for a valid (just or authorized) cause [substantive] but is procedurally defective [due to lack of due notice to the employee] is still legal, however the employer must still be held accountable for its failure to accord the employee his/her procedural rights.

The Court saw a need to re-examine the Wenphil doctrine, as a number of cases over the decades have shown that the imposition of fines for violations of the notice requirement have not been effective deterrents, with Justice Panganiban stating that the monetary sanctions have been "too insignificant, too niggardly, and sometimes even too late." Even Justice Puno stated that the doctrine fostered a “dismiss

now, pay later” attitude of employers towards its employees. However, the Court still wanted to avoid returning to the pre-Wenphil doctrine of holding dismissals illegal due to lack of procedural due process despite the availability of substantive reasons to dismiss as this would compel employers to reinstate workers which have been grossly errant or even criminal toward its employers.

The Court saw a remedy to this problem through ordering payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause. However, the Court still insisted on upholding the dismissal, with the dismissal being held as ineffectual. In the same light, an employee dismissed for any of the causes according to Art. 289[authorized causes] and 290 [due to disease] without the requisite 30-day termination notice to the employee and DOLE should be considered ineffectual, warranting payment of backwages alongside separation pay as required by Art. 289.

Going against Justices Puno and Panganiban’s assertions that failure to comply with the notice requirement [and overall, the procedural due process rights of employees] renders the dismissal null and void, the Court through the ponente (Justice Mendoza) states that:

a. The Due Process clause of the Constitution pertains to a limitation on governmental powers, and does not apply to the exercise of private power, such as the termination of employment under the Labor Code.

b. Notice and hearing and required under the Due Process clause before the “power of organized society” (through the State) is brought upon an individual. This does not apply in the case of termination of employment under Art. 289 as the employee does not face an adversarial system where he will need to be afforded an opportunity to be heard on any charge against him. Rather, the 30-day notice is for the employee to give him adequate time to prepare for the eventual loss of his job and for the DOLE to have the opportunity to determine whether there really exists economic causes to justify termination.

c. Finally, the employer cannot also be expected to be an entirely “impartial judge of his own cause”, with the grievance machinery being composed of representatives from both sides.

Therefore the Court concluded that failure to comply with the notice requirement is not a denial of due process but is a mere failure to observe procedures for termination of employment. The Court even cited the Labor Code, adding that Article 285 provides that:

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.

To hold otherwise, the Court claims, would be to amend Article 285 by adding another ground for considering dismissal illegal, as well as rendering a disparate treatment of the employer in law.

AGABON VS. NLRCNovember 17, 2004Ynares-Santiago, J.

Petitioners: Jenny and Virgilio AgabonRespondents: NLRC, Riviera Home Improvements (RHI) and Vicente Angeles

Facts: RHI, which is in the business of selling and installing

ornamental and construction materials, employed Virgilio and Jenny as gypsum board and cornice installers on Jan. 2, 1992 until February 23, 1999 (7 years) until they were dismissed for abandonment of work.

Virgilio and Jenny then filed a complaint for illegal dismissal and payment of money claims. Both of them assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a “pakyaw” basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing their benefits as SSS members. Further to this they also claim that RHI did not comply with the twin requirements of notice and hearing.

RHI, on the other hand, insists that Virgilio and Jenny were not dismissed but had abandoned their work. RHI stated that it sent two letters to the last known addresses of both of them, advising them to report for work. RHI’s manager also states that they were both assigned work on a project with Pacific

Plaza Towers involving 40,000 square meters of cornice installation. However, both of them did not report for work because they had already subcontracted themselves to perform installation work for another company. Both of them also demanded for an increase in their wage to P280.00 per day and when this was not granted, Virgilio and Jenny stopped reporting for work and filed the illegal dismissal case.

LA: Rendered dismissals illegal, ordered RHI to pay monetary claims (separation pay of 1 month for every year of service (from hiring until 1999 – 7 years), as well as holiday pay, premium pay and 13 th

month pay differential.

NLRC: Reversed LA, found that both abandoned their work, but still ordered payment of money claims – holiday pay for 4 regular holidays, service incentive leave pay and 13th month pay of Virgilio.

CA: Dismissal was for a just cause – Virgilio and Jenny already abandoned their employment after working for another employer.

Issues/Held:1. WON there was just and valid cause for dismissing the two.

YES, the two were considered to have abandoned their work.2. WON RHI observed the procedures for dismissal.

Ratio:1. The Court again cited the grounds for abandonment, and

found that existing in the case against Virgilio and Jenny. a. Failure to report for work/absence without valid or

justifiable reasonb. Clear intention to sever the employer-employee

relationship as the more determinative factor, shown by clear proof that it was deliberate and unjustified.

The Court took the actions of both Virgilio and Jenny in consideration, and found that the two instances [in January 1996 and February 1999] where the both of them subcontracted their services for another company despite a warning from RHI constituted the clear intention of the two to sever their relationship with RHI. The Court cited Sandoval Shipyard vs. Clave, stating that an employee who deliberately absented himself from work without leave or permission, to look for a job elsewhere, is considered to have abandoned his job. As per Judy Philippines vs NLRC and Phil-Singapore Transport vs NLRC, the Court recognizes that the employer has a right to expect from its workers not only performance and diligence, but also loyalty and good conduct. Employers

therefore cannot be compelled to continue employing someone who will be inimical to the employer’s interests.

2. The Court differentiates procedures for termination of an employee based on just or authorized causes. The procedure for dismissals under just causes involve Book VI, Rule I, Section 2(d) of the Labor Code IRR, stating the two-notice + hearing rule, while procedure for dismissals under authorized causes fall under Art. 289 of the Labor Code, which state the 30-day notice requirement to the employee and DOLE, plus payment of separation pay.

From this four possible scenarios were envisioned by the Court:

PROCEDURAL REQUIREMENTS COMPLIED?

SU

BS

TA

NTIA

L R

EQ

UIR

EM

EN

TS

C

OM

PLI

ED

?

YES NOYES

VALID, employer to not suffer liability

UPHOLD DISMISSAL, but ER to be held

liable for non-compliance of

procedural req’s.NO

ILLEGAL DISMISSAL, Follow Art. 285 – EE

entitled to reinstatement/SP and

backwages

ILLEGAL DISMISSAL, Follow Art. 285 – EE

entitled to reinstatement/SP and

backwages

The case was deemed to have had the substantial requirement [dismissal for a just cause – abandonment] but was procedurally infirm. The Court found that RHI not sending notices to the last known addresses would be useless because they did not reside there anymore was an invalid excuse as the law itself mandates the twin notice requirement.

The Court delved further and re-examined the doctrine as held in Serrano vs. NLRC in light of its affirmation of the Wenphil vs NLRC (Belated Due Process) doctrine where the Court held that procedural infirmities in dismissing an employee will not render a dismissal for just/authorized causes null and void, but will make the employer liable for penalties. Serrano confronted the problem of employers adopting a “dismiss now, pay later” attitude by imposing full backwages as an additional penalty.

However, the Court held that the Serrano doctrine of justifying backwages as an additional penalty was misplaced due to a wrong appreciation of Article 285, which stated that payment of backwages and other benefits, including reinstatement (or separation pay) is justified only if the employee was unjustly dismissed. The Court therefore chose to abandon the Serrano doctrine and opted to return to the Wenphil doctrine, albeit implementing stiffer sanctions against the employer. The Court however insists on avoiding declaring dismissals as invalid due to procedural grounds as this was seen to “encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process”, stating that the constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers.

Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances.

Considering the prevailing circumstances in the case, the Court then ruled to set the amount of damages to PHP 30,000.00 each, as a vindicatory damage given to Virgilio and Jenny. Alongside this, the Court also decided to affirm the CA’s award of holiday pay, service incentive leave pay and 13th month pay without deductions to both of them.

SALAW VS. NLRCSeptember 27, 1991Sarmiento, J.

Petitioners: Espero Santos SalawRespondents: NLRC, Associated Bank, Jose Tengco (Chairman of the Board), Rollie Tuazon (Manager)

Facts: Espero was employed by AB as a credit investigator-appraiser

on September 1967. However, on November 27, 1984 (17 years) the Criminal

Investigation Service (CIS) of the Philippine Constabulary, National Capital Region, extracted from Espero — without the assistance of counsel — a Sworn Statement which made it appear that he was in cahoots with a co-employee, Reynaldo Madrigal, a supervisor in charge of the acquired assets of respondent Associated Bank, to sell twenty sewing machines and electric generators foreclosed by AB from Worldwide Garment and L.P. Money Garment, for P60,000.00, and

divided the proceeds thereof in equal shares of P30,000.00 between the two of them.

On December 5, 1984, Espero was requested by his Manager, Rollie, to appear before AB’s Personnel Discipline and Investigation Committee (PDIC), meeting the next day to discuss the case with Worldwide Garment. Espero signified his readiness to appear before the PDIC, and was subsequently acknowledged by Rollie, with emphasis that he was to come before the PDIC on February 28, 1985, specifically without counsel.

On April 1, 1985, Espero was terminated from his employment effective March 25, 1985, for alleged serious misconduct or willful disobedience and fraud or willful breach of trust. As a result, he filed a complaint before the NLRC on April 17, 1985 for illegal dismissal.

LA: Declared dismissal as illegal, ordered reinstatement plus backwages and benefits.

NLRC: Reversed LA decision and dismissed case.

Issues/Held:1. WON Espero’s dismissal was procedurally infirm. YES, Court

reinstated LA decision.

Ratio:1. The Court agreed with the decision of the Labor Arbiter,

finding that the convention of AB’s PDIC would have complied with the demands of due process if Espero was given the opportunity to present his own defense. However, as shown by the records in the case, Espero was denied his procedural rights when the hearing was set without allowing Espero to have his own counsel or representative.

The Court emphasized that the employer must be given ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires, as written in Book V, Rule XIV, of the Labor Code IRRs. The Court held that the right to counsel, a very basic requirement of substantive due process, has to be observed. Rights to counsel and to due process of law are two of fundamental rights guaranteed by the 1987 Constitution to person under investigation, may it be an administrative, civil, or criminal proceeding.

It was also considered that the admission extracted by the CIS of the Philippine Constabulary without the assistance of

counsel cannot be admitted in evidence against Espero, therefore there was no cause to pin Espero from.

NOTE: 1. The “fruit of the forbidden tree” doctrine applies to criminal

cases only. Proceedings before the NLRC are deemed as administrative in nature, therefore the Rules of Court apply only in a suppletory manner.

2. Furthermore, in criminal cases, the burden of proof is higher (proof beyond reasonable doubt), while in labor cases it is lower (preponderance of evidence). The decision seems to be disjoint in applying haphazardly constitutional doctrines.

3. Book VI, Rule I, Section 2 seems to be clear that assistance of counsel may be availed if the employee so desires. Espero should have already read that he is consenting to appear without counsel, which meant that he was aware that he was waiving his right accordingly. Why hold that waiver against AB?

4. Finally, it will be unjust for the employer to be forced by the Court to reinstate an employee who has lost the trust and confidence of the employer. It might be better for the Court to at least have awarded separation pay instead of allowing Espero to return.

GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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GENERAL MILLING VS. VIAJARJanuary 30, 2013Reyes, J.

Petitioners: General Milling CorporationRespondents: Violeta Viajar

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