SERRANO VS.

NLRC
January 27, 2000
Mendoza, J.

Petitioners: Ruben Serrano
Respondents: 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 Rubens 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 13
th
month pay and attorneys 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 Isetanns 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 Isetanns 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, Rubens 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
managements prerogative / business judgment to replace its regular
employees by independent contractors, ruling that an employers good faith
is not necessarily put in doubt by the availment of services of an
independent contractor to promote economy and efficiency.

Rubens 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. 289s 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 Panganibans 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. NLRC
November 17, 2004
Ynares-Santiago, J.

Petitioners: Jenny and Virgilio Agabon
Respondents: 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. RHIs
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
13
th
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
reason
b. 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 employers 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?
S
U
B
S
T
A
N
T
I
A
L

R
E
Q
U
I
R
E
M
E
N
T
S

C
O
M
P
L
I
E
D
?

YES NO
YES VALID, employer to not
suffer liability
UPHOLD DISMISSAL, but
ER to be held liable for
non-compliance of
procedural reqs.
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 CAs award of holiday pay, service incentive leave pay and 13th month
pay without deductions to both of them.

SALAW VS. NLRC
September 27, 1991
Sarmiento, J.

Petitioners: Espero Santos Salaw
Respondents: 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 ABs 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 Esperos 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 ABs 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. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio:


GENERAL MILLING VS. VIAJAR
January 30, 2013
Reyes, J.

Petitioners: General Milling Corporation
Respondents: Violeta Viajar

Facts:

LA:

NLRC:

CA:

Issues/Held:

Ratio: