EN BANC

[G.R. No. 117040. January 27, 2000]

RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN
DEPARTMENT STORE, respondents.

DECISION

This is a petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of the National
Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter and dismissed petitioner
Ruben Serranos complaint for illegal dismissal and denied his motion for reconsideration. The facts are as
follows:

Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend
shoplifters and prevent pilferage of merchandise.[1] Initially hired on October 4, 1984 on contractual basis,
petitioner eventually became a regular employee on April 4, 1985. In 1988, he became head of the Security
Checkers Section of private respondent.[2]

Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section
and engage the services of an independent security agency. For this reason, it wrote petitioner the following
memorandum:[3]

October 11, 1991

MR. RUBEN SERRANO

PRESENT

Dear Mr. Serrano,

......In view of the retrenchment program of the company, we hereby reiterate our verbal notice
to you of your termination as Security Section Head effective October 11, 1991.

......Please secure your clearance from this office.

Very truly yours,

[Sgd.] TERESITA A. VILLANUEVA

Human Resources Division Manager

The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal dismissal,
illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay.[4]

The parties were required to submit their position papers, on the basis of which the Labor Arbiter defined the
issues as follows:[5]

Whether or not there is a valid ground for the dismissal of the complainant.
 Whether or not complainant is entitled to his monetary claims for underpayment of wages,
nonpayment of salaries, 13th month pay for 1991 and overtime pay.

Whether or not Respondent is guilty of unfair labor practice.

Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner to
have been illegally dismissed. He ruled that private respondent failed to establish that it had retrenched its
security section to prevent or minimize losses to its business; that private respondent failed to accord due process
to petitioner; that private respondent failed to use reasonable standards in selecting employees whose
employment would be terminated; that private respondent had not shown that petitioner and other employees in
the security section were so inefficient so as to justify their replacement by a security agency, or that "cost-
saving devices [such as] secret video cameras (to monitor and prevent shoplifting) and secret code tags on the
merchandise" could not have been employed; instead, the day after petitioners dismissal, private respondent
employed a safety and security supervisor with duties and functions similar to those of petitioner.

Accordingly, the Labor Arbiter ordered:[6]

WHEREFORE, above premises considered, judgment is hereby decreed:

(a)......Finding the dismissal of the complainant to be illegal and concomitantly, Respondent is

ordered to pay complainant full backwages without qualification or deduction in the amount
of P74,740.00 from the time of his dismissal until reinstatement (computed till promulgation
only) based on his monthly salary of P4,040.00/month at the time of his termination but limited
to (3) three years;

(b)......Ordering the Respondent to immediately reinstate the complainant to his former position
as security section head or to a reasonably equivalent supervisorial position in charges of security
without loss of seniority rights, privileges and benefits. This order is immediately executory even
pending appeal;

(c)......Ordering the Respondent to pay complainant unpaid wages in the amount

of P2,020.73 and proportionate 13th month pay in the amount of P3,198.30;

(d)......Ordering the Respondent to pay complainant the amount of P7,995.91, representing 10%
attorneys fees based on the total judgment award of P79,959.12.

All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack
of merit.

SO ORDERED.

Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of
the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every year
of service, unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for reconsideration, but
his motion was denied.

The NLRC held that the phase-out of private respondents security section and the hiring of an independent
security agency constituted an exercise by private respondent of "[a] legitimate business decision whose wisdom
we do not intend to inquire into and for which we cannot substitute our judgment"; that the distinction made by
the Labor Arbiter between "retrenchment" and the employment of "cost-saving devices" under Art. 283 of the
Labor Code was insignificant because the company official who wrote the dismissal letter apparently used the
term "retrenchment" in its "plain and ordinary sense: to layoff or remove from ones job, regardless of the reason
therefor"; that the rule of "reasonable criteria" in the selection of the employees to be retrenched did not apply
because all positions in the security section had been abolished; and that the appointment of a safety and security
supervisor referred to by petitioner to prove bad faith on private respondents part was of no moment because
the position had long been in existence and was separate from petitioners position as head of the Security
Checkers Section.

Hence this petition. Petitioner raises the following issue:

IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE

RESPONDENT TO REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND
FOR THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER THE LATTER? [7]

Petitioner contends that abolition of private respondents Security Checkers Section and the employment of an
independent security agency do not fall under any of the authorized causes for dismissal under Art. 283 of the
Labor Code.

Petitioner Laid Off for Cause

Petitioners contention has no merit. Art. 283 provides:

Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operations 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 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 closure or
cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to at least 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 as one (1) whole year.

In De Ocampo v. National Labor Relations Commission,[8] this Court upheld the termination of employment of
three mechanics in a transportation company and their replacement by a company rendering maintenance and
repair services. It held:

In contracting the services of Gemac Machineries, as part of the companys cost-saving program,
the services rendered by the mechanics became redundant and superfluous, and therefore
properly terminable. The company merely exercised its business judgment or management
prerogative. And in the absence of any proof that the management abused its discretion or acted
in a malicious or arbitrary manner, the court will not interfere with the exercise of such
prerogative.[9]

In Asian Alcohol Corporation v. National Labor Relations Commission,[10] the Court likewise upheld the
termination of employment of water pump tenders and their replacement by independent contractors. It ruled
that an employers good faith in implementing a redundancy program is not necessarily put in doubt by the
availment of the services of an independent contractor to replace the services of the terminated employees to
promote economy and efficiency.

Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of
promoting efficiency and attaining economy by a study of what units are essential for its operation. To it belongs
the ultimate determination of whether services should be performed by its personnel or contracted to outside
agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to what management
decides."[11] Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court
will not interfere with the exercise of judgment by an employer.[12]

In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990.[13] Such an assertion is not a sufficient basis for concluding
that the termination of petitioners employment was not a bona fide decision of management to obtain reasonable
return from its investment, which is a right guaranteed to employers under the Constitution. [14] Indeed, that the
phase-out of the security section constituted a "legitimate business decision" is a factual finding of an
administrative agency which must be accorded respect and even finality by this Court since nothing can be
found in the record which fairly detracts from such finding.[15]

Accordingly, we hold that the termination of petitioners services was for an authorized cause, i.e., redundancy.
Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the rate of one
month pay for every year of service.

Sanctions for Violations of the Notice Requirement

Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes the
employer must serve "a written notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof." In the case at bar, petitioner was given a notice of termination
on October 11, 1991. On the same day, his services were terminated. He was thus denied his right to be given
written notice before the termination of his employment, and the question is the appropriate sanction for the
violation of petitioners right.

To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC,[16] workers in a garment
factory were temporarily laid off due to the cancellation of orders and a garment embargo. The Labor Arbiter
found that the workers had been illegally dismissed and ordered the company to pay separation pay and
backwages. The NLRC, on the other hand, found that this was a case of retrenchment due to business losses and
ordered the payment of separation pay without backwages. This Court sustained the NLRCs finding. However,
as the company did not comply with the 30-day written notice in Art. 283 of the Labor Code, the Court ordered
the employer to pay the workers P2,000.00 each as indemnity.

The decision followed the ruling in several cases involving dismissals which, although based on any of the just
causes under Art. 282,[17] were effected without notice and hearing to the employee as required by the
implementing rules.[18] As this Court said: "It is now settled that where the dismissal of one 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 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."[19]

The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just
cause or the termination of employment is for an authorized cause, the dismissal or termination is illegal if
effected without notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC.[20] In
announcing the change, this Court said:[21]

The Court holds that the policy of ordering the 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 (3) 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 the 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.

The 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.[25]
[22] [23] [24]

Need for Reexamining the Wenphil Doctrine

Today, we once again consider the question of appropriate sanctions for violations of the notice requirement in
light of our experience during the last decade or so with the Wenphil doctrine. 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. Justice Panganiban finds the monetary sanctions "too insignificant, too niggardly,
and sometimes even too late." On the other hand, Justice Puno says there has in effect been fostered a policy of
"dismiss now, pay later" which moneyed employers find more convenient to comply with than the requirement
to serve a 30-day written notice (in the case of termination of employment for an authorized cause under Arts.
283-284) or to give notice and hearing (in the case of dismissals for just causes under Art. 282).

For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even though
there are just or authorized causes for such dismissal or layoff. Consequently, in their view, the employee
concerned should be reinstated and paid backwages.

Validity of Petitioners Layoff Not Affected by Lack of Notice

We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of
fine for an employers disregard of the notice requirement. We do not agree, however, that disregard of this
requirement by an employer renders the dismissal or termination of employment null and void. Such a stance is
actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid
backwages when it is shown that he has not been given notice and hearing although his dismissal or layoff is
later found to be for a just or authorized cause. Such rule was abandoned in Wenphil because it is really unjust
to require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the
employer or the latters family, or when the employer is precisely retrenching in order to prevent losses.

The need is for a rule which, while recognizing the employees 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 order the 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. But, otherwise, his dismissal must be upheld and he
should not be reinstated. This is because his dismissal is ineffectual.

For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a labor-
saving device, but the employer did not give him and the DOLE a 30-day written notice of termination in
advance, then the termination of his employment should be considered ineffectual and he should be paid
backwages. However, the termination of his employment should not be considered void but he should simply
be paid separation pay as provided in Art. 283 in addition to backwages.

Justice Puno argues that an employers failure to comply with the notice requirement constitutes a denial of the
employees right to due process. Prescinding from this premise, he quotes the statement of Chief Justice
Concepcion in Vda. de Cuaycong v. Vda. de Sengbengco[26] that "acts of Congress, as well as of the Executive,
can deny due process only under the pain of nullity, and judicial proceedings suffering from the same flaw are
subject to the same sanction, any statutory provision to the contrary notwithstanding." Justice Puno concludes
that the dismissal of an employee without notice and hearing, even if for a just cause, as provided in Art. 282,
or for an authorized cause, as provided in Arts. 283-284, is a nullity. Hence, even if just or authorized causes
exist, the employee should be reinstated with full back pay. On the other hand, Justice Panganiban quotes from
the statement in People v. Bocar[27] that "[w]here the denial of the fundamental right of due process is apparent,
a decision rendered in disregard of that right is void for lack of jurisdiction."

Violation of Notice Requirement Not a Denial of Due Process

The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the State,
which is not the case here. 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 employees
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.

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

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.[28] 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 or the payment of compensation at the rate of one-half month for every year of service.[29]

The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of which
was to give the employer the opportunity to find a replacement or substitute, and the employee the equal
opportunity to look for another job or source of employment. Where the termination of employment was for a
just cause, no notice was required to be given to the employee.[30] 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. It cannot be that the former regime denied due
process to the employee. Otherwise, there should now likewise be a rule that, in case an employee leaves his
job without cause and without prior notice to his employer, his act should be void instead of simply making him
liable for damages.

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 latters
immediate family or duly authorized representatives, or other analogous cases).

Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by
employees before the grievance committees manned by impartial judges of the company." The grievance
machinery is, however, different because it is established by agreement of the employer and the employees and
composed of representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of
Appeals,[31] which Justice Puno cites, it was held that "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 of law." But here
we are dealing with dismissals and layoffs by employers alone, without the intervention of any grievance
machinery. Accordingly in Montemayor v. Araneta University Foundation,[32] although a professor was
dismissed without a hearing by his university, his dismissal for having made homosexual advances on a student
was sustained, it appearing that in the NLRC, the employee was fully heard in his defense.
Lack of Notice Only Makes Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed
before a right granted to a party can be exercised. Others are simply an application of the Justinian precept,
embodied in the Civil Code,[33] to act with justice, give everyone his due, and observe honesty and good faith
toward ones fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure either
of the employer or the employee to live up to this precept is to make him liable in damages, not to render his
act (dismissal or resignation, as the case may be) void. The measure of damages is the amount of wages the
employee should have received were it not for the termination of his employment without prior notice. If
warranted, nominal and moral damages may also be awarded.

We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers 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. It is similar to the
failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code[34] in rescinding a contract
for the sale of immovable property. Under these provisions, while the power of a party to rescind a contract is
implied in reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the vendor
cannot exercise this power 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.[35] Consequently, a notice of
rescission given in the letter of an attorney has no legal effect, and the vendee can make payment even after the
due date since no valid notice of rescission has been given.[36]

Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the
dismissal of an employee illegal. This is clear from Art. 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.[37]

Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and,
therefore, the employee should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban
do, that even if the termination is for a just or authorized cause the employee concerned should be reinstated
and paid backwages would be to amend Art. 279 by adding another ground for considering a dismissal illegal.
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.[38] This disparity in legal treatment, which would result from the adoption of the theory of the minority
cannot simply be explained by invoking President Ramon Magsaysays motto that "he who has less in life should
have more in law." That would be a misapplication of this noble phrase originally from Professor Thomas Reed
Powell of the Harvard Law School.

Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,[39] in support of his view that an illegal dismissal
results not only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case
actually involved a dismissal for an alleged loss of trust and confidence which, as found by the Court, was not
proven. The dismissal was, therefore, illegal, not because there was a denial of due process, but because the
dismissal was without cause. The statement that the failure of management to comply with the notice
requirement "taints the dismissal with illegality" was merely a dictum thrown in as additional grounds for
holding the dismissal to be illegal.

Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the payment
of backwages for the period when the employee is considered not to have been effectively dismissed or his
employment terminated. The sanction is not the payment alone of nominal damages as Justice Vitug contends.

Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal

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 giving 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."[40] But so does it declare that it
"recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives
to needed investment."[41] The Constitution bids the State to "afford full protection to labor."[42] But it is equally
true that "the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of
the employer."[43] 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.

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of
employment was due to an authorized cause, then the employee concerned should not be ordered reinstated
even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation
pay in accordance with Art. 283, to wit:

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 month 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 months shall be considered one (1) whole year.

If the employees separation is without cause, instead of being given separation pay, he should be reinstated. In
either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has
been laid off without written notice at least 30 days in advance.

On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should
not be reinstated. However, he must be paid backwages from the time his employment was terminated until it
is determined that the termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.

WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is
MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay
equivalent to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th month
pay and, in addition, full backwages from the time his employment was terminated on October 11, 1991 up to
the time the decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for
computation of the separation pay, backwages, and other monetary awards to petitioner.
SO ORDERED.

This provision reads:

[17]

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 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.

[18]
Bk. VI, Rule 1, of the Omnibus Rules and Regulations to Implement the Labor Code provides in pertinent parts:

Section 2. Security of tenure. . . .

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee
reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given
opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.

For termination of employment as defined in Article 283 of the Labor Code, the requirement 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 of Labor and Employment
at least thirty days before effectivity of the termination, specifying the ground or grounds for termination . . . .

[28]
Art. 302 of the Code of Commerce provided:

In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may dissolve it, advising the other
party thereof one month in advance.

The factory or shop clerk shall be entitled, in such case, to the salary due for said month.

[29]
R.A. No. 1052, as amended by R.A. No. 1787, provided:

Section 1. In cases of employment without a definite period, in a commercial, industrial, or agricultural establishment or enterprise,
the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such
notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever is longer,
a fraction of at least six months being considered as one whole year.

The employer, upon whom no such notice was served in case of termination of employment without just cause may hold the employee
liable for damages.

The employee, upon whom no such notice was served in case of termination of employment without just cause shall be entitled to
compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the
required period of notice.
[34]
Art. 1191: "The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what
is incumbent upon him. . . ."

Art. 1592: "In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time
agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long
as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court
may not grant him a new term."

[38]
Art. 285 reads:

Termination by employee.
(a) 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.
(b) An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;

3. Commission of a crime or offense by the employer or his representative against the person of the employee or any of the
immediate members of his family; and