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ANTONIO M. SERRANO VS. GALLANT MARITIMESERVICES, INC. AND MARLOW NAVIGATION CO., INC.GR No. 167614 March 24, 2009En banc

FACTS:

Petitioner Antonio Serrano was hired by respondentsGallant Maritime Services, Inc. and Marlow NavigationCo., Inc., under a POEA-approved contract of

employment for 12 months, as Chief Officer, with thebasic monthly salary of US$1,400, plus $700/monthovertime pay, and 7 days paid vacation leave permonth.

On March 19, 1998, the date of his departure, Serranowas constrained to accept a downgraded employmentcontract for the position of Second Officer with amonthly salary of US$1,000 upon the assurance andrepresentation of respondents that he would be ChiefOfficer by the end of April 1998.

Respondents did not deliver on their promise to makeSerrano Chief Officer. Hence, Serrano refused to stay

on as second Officer and was repatriated to thePhilippines on May 26, 1998, serving only two (2)months and seven (7) days of his contract, leaving anunexpired portion of nine (9) months and twenty-three(23) days.

Serrano filed with the Labor Arbiter (LA) a Complaintagainst respondents for constructive dismissal and forpayment of his money claims in the total amount ofUS$26,442.73 (based on the computation of$2590/month from June 1998 to February 199, $413.90for March 1998, and $1640 for March 1999) as well asmoral and exemplary damages.

The LA declared the petitioners dismissal illegal andawarded him US$8,770, representing his salaray forthree (3) months of the unexpired portion of theaforesaid contract of employment, plus $45 for salarydifferential and for attorneys fees equivalent to 10% ofthe total amount; however, no compensation fordamages as prayed was awarded.

On appeal, the NLRC modified the LA decision andawarded Serrano $4669.50, representing three (3)months salary at $1400/month, plus 445 salarydifferential and 10% for attorneys fees. This decisionwas based on the provision of RA 8042, which wasmade into law on July 15, 1995.

Serrano filed a Motion for Partial Reconsideration, butthis time he questioned the constitutionality of the lastclause in the 5th paragraph of Section 10 of RA 8042,which reads:

Sec. 10. Money Claims. x x x In case oftermination of overseas employment withoutjust, valid or authorized cause as defined bylaw or contract, the workers shall be entitled tothe full reimbursement of his placement feewith interest of twelve percent (12%) perannum, plus his salaries for the unexpired

portion of his employment contract or for three(3) months for every year of the unexpiredterm, whichever is less.

The NLRC denied the Motion; hence, Serrano filed aPetition for Certiorari with the Court of Appeals (CA),reiterating the constitutional challenge against thesubject clause. The CA affirmed the NLRC ruling on thereduction of the applicable salary rate, but skirted theconstitutional issue raised by herein petitioner Serrano.

ISSUES:

1. Whether or not the subject clause violates Section10, Article III of the Constitution on non-impairment ofcontracts;

2. Whether or not the subject clause violate Section 1Article III of the Constitution, and Section 18, Article Iand Section 3, Article XIII on labor as a protectedsector.

HELD:

On the first issue.

The answer is in the negative. Petitioners claim thatthe subject clause unduly interferes with thestipulations in his contract on the term of hisemployment and the fixed salary package he wilreceive is not tenable.

Section 10, Article III of the Constitution provides: Nolaw impairing the obligation of contracts shall bepassed.

The prohibition is aligned with the general principle

that laws newly enacted have only a prospectiveoperation, and cannot affect acts or contracts alreadyperfected; however, as to laws already in existence,their provisions are read into contracts and deemed apart thereof. Thus, the non-impairment clause underSection 10, Article II is limited in application to lawsabout to be enacted that would in any way derogatefrom existing acts or contracts by enlarging, abridgingor in any manner changing the intention of the partiesthereto.

As aptly observed by the OSG, the enactment of R.ANo. 8042 in 1995 preceded the execution of theemployment contract between petitioner and

respondents in 1998. Hence, it cannot be argued thatR.A. No. 8042, particularly the subject clause, impairedthe employment contract of the parties. Rather, whenthe parties executed their 1998 employment contractthey were deemed to have incorporated into it all theprovisions of R.A. No. 8042.

But even if the Court were to disregard the timeline,the subject clause may not be declaredunconstitutional on the ground that it impinges on theimpairment clause, for the law was enacted in theexercise of the police power of the State to regulate abusiness, profession or calling, particularly the

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recruitment and deployment of OFWs, with the nobleend in view of ensuring respect for the dignity andwell-being of OFWs wherever they may be employed.Police power legislations adopted by the State topromote the health, morals, peace, education, goodorder, safety, and general welfare of the people aregenerally applicable not only to future contracts buteven to those already in existence, for all privatecontracts must yield to the superior and legitimatemeasures taken by the State to promote publicwelfare.

On the second issue.

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees: Noperson shall be deprived of life, liberty, or propertywithout due process of law nor shall any person bedenied the equal protection of the law.

Section 18, Article II and Section 3, Article XIII accordall members of the labor sector, without distinction asto place of deployment, full protection of their rights

and welfare.

To Filipino workers, the rights guaranteed under theforegoing constitutional provisions translate toeconomic security and parity: all monetary benefitsshould be equally enjoyed by workers of similarcategory, while all monetary obligations should beborne by them in equal degree; none should be deniedthe protection of the laws which is enjoyed by, orspared the burden imposed on, others in likecircumstances.

Such rights are not absolute but subject to the inherentpower of Congress to incorporate, when it sees fit, a

system of classification into its legislation; however, tobe valid, the classification must comply with theserequirements: 1) it is based on substantial distinctions;2) it is germane to the purposes of the law; 3) it is notlimited to existing conditions only; and 4) it appliesequally to all members of the class.

There are three levels of scrutiny at which the Courtreviews the constitutionality of a classificationembodied in a law: a) the deferential or rational basisscrutiny in which the challenged classification needsonly be shown to be rationally related to serving alegitimate state interest; b) the middle-tier orintermediate scrutiny in which the government must

show that the challenged classification serves animportant state interest and that the classification is atleast substantially related to serving that interest; andc) strict judicial scrutiny in which a legislativeclassification which impermissibly interferes with theexercise of a fundamental right or operates to thepeculiar disadvantage of a suspect class is presumedunconstitutional, and the burden is upon thegovernment to prove that the classification isnecessary to achieve a compelling state interest andthat it is the least restrictive means to protect suchinterest.

Upon cursory reading, the subject clause appearsfacially neutral, for it applies to all OFWs. However, acloser examination reveals that the subject clause hasa discriminatory intent against, and an invidious impacton, OFWs at two levels:

First, OFWs with employment contracts of less thanone year vis--vis OFWs with employment contracts ofone year or more;

Second, among OFWs with employment contracts omore than one year; and

Third, OFWs vis--vis local workers with fixed-periodemployment;

In sum, prior to R.A. No. 8042, OFWs and local workerswith fixed-term employment who were illegallydischarged were treated alike in terms of thecomputation of their money claims: they wereuniformly entitled to their salaries for the entireunexpired portions of their contracts. But with theenactment of R.A. No. 8042, specifically the adoptionof the subject clause, illegally dismissed OFWs with an

unexpired portion of one year or more in theiemployment contract have since been differentlytreated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed onlocal workers with fixed-term employment.

The Court concludes that the subject clause contains asuspect classification in that, in the computation of themonetary benefits of fixed-term employees who areillegally discharged, it imposes a 3-month cap on theclaim of OFWs with an unexpired portion of one year ormore in their contracts, but none on the claims of otherOFWs or local workers with fixed-term employmentThe subject clause singles out one classification of

OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving avulnerable sector protected by the Constitution, theCourt now subjects the classification to a strict judiciascrutiny, and determines whether it serves acompelling state interest through the least restrictivemeans.

What constitutes compelling state interest is measuredby the scale of rights and powers arrayed in theConstitution and calibrated by history. It is akin to theparamount interest of the state for which someindividual liberties must give way, such as the public

interest in safeguarding health or maintaining medicastandards, or in maintaining access to information onmatters of public concern.

In the present case, the Court dug deep into therecords but found no compelling state interest that thesubject clause may possibly serve.

In fine, the Government has failed to discharge itsburden of proving the existence of a compelling stateinterest that would justify the perpetuation of thediscrimination against OFWs under the subject clause.

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Assuming that, as advanced by the OSG, the purposeof the subject clause is to protect the employment ofOFWs by mitigating the solidary liability of placementagencies, such callous and cavalier rationale will haveto be rejected. There can never be a justification forany form of government action that alleviates theburden of one sector, but imposes the same burden onanother sector, especially when the favored sector iscomposed of private businesses such as placementagencies, while the disadvantaged sector is composedof OFWs whose protection no less than the Constitutioncommands. The idea that private business interest canbe elevated to the level of a compelling state interestis odious.

Moreover, even if the purpose of the subject clause isto lessen the solidary liability of placement agenciesvis-a-vis their foreign principals, there are mechanismsalready in place that can be employed to achieve thatpurpose without infringing on the constitutional rightsof OFWs.

The POEA Rules and Regulations Governing theRecruitment and Employment of Land-Based OverseasWorkers, dated February 4, 2002, imposesadministrative disciplinary measures on erring foreignemployers who default on their contractual obligationsto migrant workers and/or their Philippine agents.These disciplinary measures range from temporarydisqualification to preventive suspension. The POEARules and Regulations Governing the Recruitment andEmployment of Seafarers, dated May 23, 2003,contains similar administrative disciplinary measuresagainst erring foreign employers.

Resort to these administrative measures isundoubtedly the less restrictive means of aiding localplacement agencies in enforcing the solidary liability oftheir foreign principals.

Thus, the subject clause in the 5th paragraph ofSection 10 of R.A. No. 8042 is violative of the right ofpetitioner and other OFWs to equal protection.

The subject clause or for three months for every yearof the unexpired term, whichever is less in the 5thparagraph of Section 10 of Republic Act No. 8042 isDECLARED UNCONSTITUTIONAL.

Manila Prince Hotel vs. GSIS 267 SCRA 402 February1997FACTS:

Pursuant to the privatization program of thegovernment, GSIS chose to award during bidding inSeptember 1995 the 51% outstanding shares of therespondent Manila Hotel Corp. (MHC) to the RenongBerhad, a Malaysian firm, for the amount of Php 44.00per share against herein petitioner which is a Filipinocorporation who offered Php 41.58 per share. Pendingthe declaration of Renong Berhad as the winningbidder/strategic partner of MHC, petitioner matchedthe formers bid prize also with Php 44.00 per sharefollowed by a managers check worth Php 33 million asBid Security, but the GSIS refused to accept both thebid match and the managers check.

One day after the filing of the petition in October 1995,the Court issued a TRO enjoining the respondents fromperfecting and consummating the sale to the RenongBerhad. In September 1996, the Supreme Court EnBanc accepted the instant case.

ISSUE:

Whether or not the GSIS violated Section 10, secondparagraph, Article 11 of the 1987 Constitution

COURT RULING:

The Supreme Court directed the GSIS and otherespondents to cease and desist from selling the 51%shares of the MHC to the Malaysian firm RenongBerhad, and instead to accept the matching bid of thepetitioner Manila Prince Hotel.

According to Justice Bellosillo, ponente of the case atbar, Section 10, second paragraph, Article 11 of the1987 Constitution is a mandatory provision, a positivecommand which is complete in itself and needs nofurther guidelines or implementing laws to enforce it

The Court En Banc emphasized that qualified Filipinosshall be preferred over foreigners, as mandated by theprovision in question.

The Manila Hotel had long been a landmark, thereforemaking the 51% of the equity of said hotel to fall withinthe purview of the constitutional shelter for it emprisesthe majority and controlling stock. The Court alsoreiterated how much of national pride will vanish if thenations cultural heritage will fall on the hands oforeigners.

In his dissenting opinion, Justice Puno said that theprovision in question should be interpreted as proFilipino and, at the same time, not anti-alien in itself

because it does not prohibit the State from grantingrights, privileges and concessions to foreigners in theabsence of qualified Filipinos. He also argued that thepetitioner is estopped from assailing the winning bid ofRenong Berhad because the former knew the rules ofthe bidding and that the foreigners are qualified, too.

Tanada vs Angara

272 SCRA 18

Facts:On April 15, 1994, the Philippine Governmentrepresented by its Secretary of the Department o

Trade and Industry signed the Final Act binding thePhilippine Government to submit to its respectivecompetent authorities the WTO (World TradeOrganization) Agreements to seek approval for suchOn December 14, 1994, Resolution No. 97 was adoptedby the Philippine Senate to ratify the WTOAgreement .This is a petition assailing theconstitutionality of the WTO agreement as it violatessec 19,Article II,providing for the development of a self-reliant and independent national economy, andSections 10 and 12 ,Article XII,providing for the"Filipino First " Policy

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Issue:

Whether or not the Resolution No. 97 ratifying the WTOAgreement is unconstitutional

Ruling:

No, the Supreme Court ruled the Resolution No. 97 is

not unconstitutional. As provided a treaty engagementis not a mere obligation but creates a legally bindingobligation on the parties. A state which has contractedvalid international obligations is bound to make itslegislations such modifications as may be necessary toensure the fulfillment of the obligations undertaken.While the constitution mandates a bias in favor ofFilipino goods, services, labor and enterprises, at thesame time, it recognizes the need for businessexchange with the rest of the world on the bases ofequality and reciprocity and limits protection of Filipinointerests only against foreign competition and tradepractices that are unfair.

SERRANO VS NLRC

1) A written notice on the worker and on theDepartment of Labor and Employment at least onemonth before the intended date of termination. Thisrequirement is mandatory. The purpose of suchprevious notice is to give the worker some time toprepare for the eventual loss of his job, and the DOLEthe opportunity to ascertain the verity of the allegedauthorized cause of termination. The employer cannotsubstitute the required prior written notice withpayment of 30 days" salary, for this is a right to whicha worker is legally entitled. (Serrano vs. NLRC et al May

4, 2000)

FACTS

Petitioner was hired by private respondent IsetannDepartment Store as a security checker to apprehendshoplifters and prevent pilferage of mer chandi se.Initially hired on October 4, 1984 oncontr actua l basis , petitioner eventually became aregular employee on April 4, 1985. In1988, hebecame head of the Security Checkers Sectionof private respondent. Sometime in 1991, as acos t-cut ting measure , priva te respondentd e c i d e d t o p h a s e o u t i t s e n t i r e s e c u r i t y

s ec t i on a nd e ng ag e t he services of anindependent security agency. For this reason,the pet it ioner was terminated as Secur itySection Head effective October 11, 1991. Thepet it io ner f il ed a comp lai nt be fo re theLabor Arbiter against the private respondentfor unfai r labor pract ice/ il lega l dismissal.Ther ea fte r, th e ca se wa s hea rd. On Apr il 30 ,1993, the Labor Arb ite r rendered a decision findingpetitioner to have been illegally dismissed. On thefollowing basis:1 . P r i v a t e r e s p o n d e n t f a i l e d t o e s t a b l i s ht h a t i t h a d r e t r e n ch e d i t s s e cu r i t y s e c t i o n

t o p re ven t o r m in im i ze l os s es t o i tsbusiness;2 . P r i v a t e r e s p o n d e n t f a i l e d t oa c c o r d d u e p r o c e s s t o p e t i t i o n e r ;3 . P r i v a t e r e s p o n d e n t f a i l e d t o u s er e a s o n a b l e s t a n d a r d s i n s e l e c t i n ge m p l o y e e s w h o s e e m p l o y m e n t w o u l db e terminated;4 . P r i v a t e r e s p o n d e nt h a d n o t s h o w n t h ape ti ti on er an d ot he r employees in the securitysection were so inefficient so as to justify theireplacement by a security agency, or that "cost-savi ngdevices [such as] secret v ideo cameras ( tomonitor a n d p r e v e n t s h o p l i f t i n g ) a n ds e c r e t c o d e t a g s o n t h e merchandise"could not have been employed; instead, the dayafter petitioner's dismissal, private respondenemployed a safety and security supervisor withdut ies and funct ions similar to those of petitionerPrivate respondent appea led to the NLRCwhich, in i ts reso lut ion of March 30, 1994reversed the decision of the Labor. Petitioner filed amotion for reconsideration, but his motion was deniedThe NLRC he ld that the pha se -ou t of pri va terespondent's security section and the hiring of

an independent security agency constituted anexercise by private respondent of [a] legitimatebusiness decision or of a management prerogativeHence the petitioner raised the case to the SupremeCourt contending that the abolition of privaterespondent's Security Checkers Section and theemployment of an independent security agencydo not fal l under any of the authorized causes fodismissal under Art. 283 of the Labor Code.

ISSUES

Whether or not the dismissal of the petitioner was legaand valid.

Whether or not the r ight of the pet it ioner todue process was violated when the employerdid not observed the twin notice requirement interminating him as a Security Section Head.

RULING

Petitioner Laid Off for Cause. Petitioner's contentionhas no merit. Art. 283 provides:

x xx T he e mp lo ye r m ay a ls o t er mi na teth e emp lo ym en t of any employee due to theinstallation of labor-saving devices, redundancyr et re nc hm en t t o p re ve nt l os se s o r t he

c lo s in g o r cessa t i on o f operations of theestablishment xxx.

The "[ma nage ment of a company] canno t bedenied the faculty of promoting efficiency andattaining economy by a study of what units areessential for its operation. To it belongs the ultimatedetermination of whether services should be performedby its personnel or contracted to outsideagencies . . . [While there] should be mutuaconsultation, eventually deference is to be paidto what management decides."Consequentlyabsent proof that management acted in a maliciousor a r bi t ra r y m a nn e r, t h e C o ur t w i l l n o

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in ter fe re wi th th e ex er ci se of judgment by anemployer.

Sanctions for Violations of the Notice Requirement.

In the case at bar, petitioner was given a noticeof termi nation on October 11, 1991. On the sameday, his services were terminated. He w a s t h u sd en ie d h is r ig ht t o b e g iv en w ri tt enn o t i ce b e f o r e th e termination of his employment,and the question is the appropriate sanction for theviolation of petitioner's right.

It is now settled that where the dismissal of oneemployee is in fact for a just and valid cause and is soproven to be but he is not accorded his right to dueprocess, i .e., he was not furnished the twinrequirements of notice and opportunity to be heard,the dismissal shall be upheld butthe employer mustbe sa nc ti on ed f or no n- co mpl ian ce wi ththe requirements of, or for failure to observe, dueprocess.

The rule reversed a long standing policy theretoforefollowed that eventhough the dismissal is based

on a just cause or the terminationof employment is for an authorized cause, thedismissal or termination isil leg al if eff ected wi thoutnotice to the employee. The shift indoct rine took place in 1989 inWenphil Corp. v. NLRC .The remedy is to order thepayment to the employee of full back wages from thetime of his dismissal unti l the court f inds thatthe dismissal was for a just cause. But, otherwise, hisdismissal must be upheld and h e s h o u l d n o t b er e i n s t a t e d . T h i s i s b e c a u s e h i sdismissal is ineffectual .Violation of Notice Requirement Not a Denial of DueProcessTh e r e a r e th r ee r e as on s w h y , o n t h e o t h e r

ha nd , vi ol at io n by th e employer of the noticerequirement cannot be considered a denial of dueprocess resulting in the nullity of theemployee's d ismissal o r layoff. The f i r s t i sth a t t h e D u e P r oce ss C lau s e o f t h eCo ns ti tu ti on is a limitation on governmentalpowers. It does not apply to the exercise of privatepower, such as the termination of employment underthe Labor Code. Only the State has authority to takethe life, liberty, or property of the individual. Thepurpose of the Due Process Clause is to ensure that theexercise of this power is consistent with what areconsidered civilized methods.

The second reason is that notice and hearing arerequired under the Due Process Clause before thepower of organized society are brought t o b e a ru p o n t h e i n d i v i d u a l . T h i s i s o b v i o u s l yn o t t h e c a s e o f t ermina tion of employmentunder Art. 283. Here the employee is not facedw i t h a n a s p e c t o f t h e a d v e r s a r y s y s t e m .Th e p u r p os e f o r requiring a 30-day written noticebefore an employee is laid off is not to afford him anopportunity to be heard on any charge againsthim, for there is none. The third reason why thenotice requirement under Art. 283 cannot bec on si de re d a r eq ui re me nt o f t he D ueProc ess C la use is tha t the employer cannot

really be expected to be entirely an impartial judgeof his own cause. .

Lack of Notice Only Makes Termination Ineffectual

Not all notice requirements are requirements of dueprocess. Some are simply part of a procedure tobe fol lowed bef ore a right granted to a party canbe exercised.Th e con s e q u en ce o f t h e f a i l u r e e i t h e r o ft h e e m p l o y e r o r t h e e m p l o y e e t o l i v e u pt o t h i s p r e c e p t i s t o m a k e h i m l i a b l e i ndamages, not to render his act (dismissal orres ign ation, as the case may be) void.T h e r e f o r e , w i t h r e s p e c t t o A r t . 2 8 3 o ft h e L a b o r C o d e , t h e employer's failure tocomply with the notice requirement does not constitutea denial of due process but a mere failure to observe aprocedure for the termination of employmentwhich makes the termination of employment merelyineffectual.Thus, only if the termination of employment is not foany of the causes prov ided by law is it ill egal andthere fore, the emplo yee shoul d be reinstated and

paid backwages The refusal to look beyond the validityof the initial action taken by the employer toterminate employment either for an authorizedor just cause can result in an injustice to theemployer. For not giving notice and hearing beforedismissing an employee, who is otherwise guilty ofsay, theft, or even of an attempt against thelife of the employer, an employer will be forcedto keep in h is employ such guil ty employeeThis is unjust. T h e P e t i t i o n i sG R A N T E D i n s o f a r a s t h em o n e t a r y damages/separation pay isconcerned.

AGABON vs. NLRCNovember 17, 2004

Facts: Virgilio and Jenny Agabon were cornice installersof Riviera Home Improvements, a company engaged inthe business of selling ornamental constructionmaterials. They were employed from January 2, 1992until February 23, 1999, when they were dismissed forabandonment of work. The Agabons filed a complaintfor illegal dismissal before the LA, who ruled in theirfavor. The NLRC reversed on appeal. The CA sustainedthe NLRCs decision. The Agabons furtheappealed to the SC, disputing the finding oabandonment, and claiming that the company did notcomply with the twin requirements of notice andhearing.

Issue: WON the Agabons were illegally dismissed.

Held: NO. Substantive due process (EEs must bedismissed for just or authorized cause): SC upheld thefinding of abandonment, because the act of theAgabons in seeking employment elsewhere clearlyshowed a deliberate intent to sever the ER-EErelationship. Procedural due process (for just causethere must be a written notice informing him ogrounds for termination, a hearing or opportunity to be

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heard, and a final notice of termination stating thegrounds therefor): There was no due process becauseER did not send the requisite notices to the last knownaddress of the EEs. ER only gave a flimsy excuse thatthe notice would be useless because the EEs no longerlived there. This is not a valid excuse, they should havestill sent a notice as mandated by law. For not sendingthe requisite notices, the ER should be held liable fornon-compliance with the procedural requirements ofdue process.

WENPHIL CORPORATION VS NLRC GANCAYCO, J.:

FACTS:

Private respondent Mallare had an altercation with aco-employee. The following day, the OperationsManager served them memorandum of suspension andin the afternoon of that same day, Mallare wasdismissed from work. Labor Arbiter dismissed Mallarespetition for unfair labor practice for lack of merit. NLRCreversed the decision and ordered the reinstatement ofMallare with full backwages of one year withoutqualification and deduction.

ISSUE:

Whether or not an employee dismissed for just causebut without due process be reinstated to work.

RULING:

The basic requirement of due proves is that whichhears before it condemns, proceeds upon inquiry andrenders judgment only after trial. The dismissal of anemployee must be for a just cause and after dueprocess. Petitioner committed an infraction of the

second requirement thus it must be imposed asanction for its failure to give a formal notice andconduct an investigation as required by law beforedismissing Mallare from employment. Petitioner mustindemnify the dismissed employee which depends onthe facts of each case and the gravity of the omissioncommitted by the employer.

Where the private respondent appears to be of violenttemper, caused trouble during office hours and evendefied his supervisors as they tried to pacify him, heshould not be rewarded with re-employment andbackwages. The dismissal of the respondent should bemaintained.

GRN 117040 JANUARY 27, 2000 SERRANO VSNLRC / ISETANN MENDOZA, J.:

FACTS:

Serrano was a regular employee of Isetann DepartmentStore as the head of Security Checker. In 1991, as acost-cutting measure, Isetann phased out its entiresecurity section and engaged the services of anindependent security agency. Petitioner filed acomplaint for illegal dismissal among others. Laborarbiter ruled in his favor as Isetann failed to establish

that it had retrenched its security section to prevent orminimize losses to its business; that privaterespondent failed to accord due process to petitionerthat private respondent failed to use reasonablestandards in selecting employees whose employmentwould be terminated. NLRC reversed the decision andordered petitioner to be given separation pay.

ISSUE:

Whether or not the hiring of an independent securityagency by the private respondent to replace its currentsecurity section a valid ground for the dismissal of theemployees classed under the latter.

RULING:

An employers good faith in implementing aredundancy program is not necessarily put in doubt bythe availment of the services of an independentcontractor to replace the services of the terminatedemployees to promote economy and efficiency. Absentproof that management acted in a malicious oarbitrary manner, the Court will not interfere with the

exercise of judgment by an employer.

If termination of employment is not for any of thecause provided by law, it is illegal and the employeeshould be reinstated and paid backwages. To contendthat even if the termination is for a just cause, theemployee concerned should be reinstated and paidbackwages would be to amend Art 279 by addinganother ground for considering dismissal illegal.

If it is shown that the employee was dismissed for anyof the causes mentioned in Art 282, the in accordancewith that article, he should not be reinstated but mustbe paid backwages from the time his employment was

terminated until it is determined that the terminationof employment is for a just cause because the failureto hear him before he is dismissed renders thetermination without legal effect.

GRN 158693 NOVEMBER 17, 2004 AGABON VSNLRC / RIVIERA HOME YNARES-SANTIAGO, J.:

FACTS:

Petitioners were employed by Riviera Home as gypsumboard and cornice installers from January 1992 toFebruary 23, 1999 when they were dismissed fo

abandonment of work. Petitioners filed a complaint forillegal dismissal and was decided in their favor by theLabor Arbiter. Riviera appealed to the NLRC contendingjust cause for the dismissal because of petitionersabandonment of work. NLRC ruled there was just causeand petitioners were not entitled to backwages andseparation pay. The CA in turn ruled that the dismissawas not illegal because they have abandoned theiwork but ordered the payment of money claims.

ISSUE:

Whether or not petitioners were illegally dismissed.

http://www.lawphil.net/judjuris/juri1989/feb1989/gr_80587_1989.htmlhttp://sc.judiciary.gov.ph/jurisprudence/2000/jan2000/117040_jan2000.htmhttp://sc.judiciary.gov.ph/jurisprudence/2000/jan2000/117040_jan2000.htmhttp://sc.judiciary.gov.ph/jurisprudence/2000/jan2000/117040_jan2000.htmhttp://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/158693.htmhttp://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/158693.htmhttp://sc.judiciary.gov.ph/jurisprudence/2000/jan2000/117040_jan2000.htmhttp://sc.judiciary.gov.ph/jurisprudence/2000/jan2000/117040_jan2000.htmhttp://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/158693.htmhttp://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/158693.htmhttp://www.lawphil.net/judjuris/juri1989/feb1989/gr_80587_1989.html

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RULING:

To dismiss an employee, the law required not only theexistence of a just and valid cause but also enjoins theemployer to give the employee the right to be heardand to defend himself. Abandonment is the deliberateand unjustified refusal of an employee to resume hisemployment. For a valid finding or abandonment, twofactors are considered: failure to report for workwithout a valid reason; and, a clear intention to sever

employer-employee relationship with the second as themore determinative factor which is manifested by overtacts from which it may be deduced that the employeeshas no more intention to work.

Where the employer had a valid reason to dismiss anemployee but did not follow the due processrequirement, the dismissal may be upheld but theemployer will be penalized to pay an indemnity to theemployee. This became known as the Wenphil Doctrineof the Belated Due process Rule.

Art 279 means that the termination is illegal if it is notfor any of the justifiable or authorized by law. Where

the dismissal is for a just cause, the lack of statutorydue process should not nullify the dismissal but theemployer should indemnify the employee for theviolation of his statutory rights. The indemnity shouldbe stiffer to discourage the abhorrent practice ofdismiss now, pay later which we sought to deter inSerrano ruling. The violation of employees rightswarrants the payment of nominal damages.

GRN 151378 JAKA FOOD PROCESSING VS PACOTGARCIE, J.:

FACTS:

Respondents were hired by JAKA until their terminationon August 29, 1997 because the Corporation was indire financial straits. It was not disputed that theywere terminated without complying with therequirement under Art. 283 of the Labor Coderegarding the service of notice upon the employeesand DOLE at least one month before the intended dateof termination.

ISSUE:

Whether or not full backwages and separation pay beawarded to respondents when employers effectedtermination without complying with the twin noticerule.

RULING:

The dismissal of the respondents was for an authorizedcause under Article 283. A dismissal for authorizedcause does not necessarily imply delinquency orculpability on the part of the employee. Instead, thedismissal process is initiated by the employersexercise of his management prerogative, i.e. when theemployer opts to install labor-saving devices, when hedecides to cease business operations or when heundertakes to implement a retrenchment program.

Accordingly, it is wise to hold that: 1) if the dismissal isbased on a just cause but the employer failed tocomply with the notice requirement, the sanction to beimposed upon him should be tempered because thedismissal was initiate by an act imputable to theemployee; 2) if the dismissal is based on an authorizedcause but the employer fails to comply with the noticerequirement, the sanction should be stiffer because thedismissal process was initiated by the employersexercise of his management prerogative. Thusdismissal was upheld but ordered JAKA to pay each ofthe respondents the amount of PhP 50,000.00representing nominal damages for non-compliancewith statutory due process.

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