Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 117040 January 27, 2000

RUBEN SERRANO, petitioner,

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

MENDOZA, J.:

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 Serrano's 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. Seranno,

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 petitioner's dismissal,
private respondent employed a safety and security supervisor with duties and functions similar to
those of petitioner.1âwphi1.nêt

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% attorney's 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 respondent's 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 one's 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 respondent's part was of no moment because the position had long been in existence and
was separate from petitioner's 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 respondent's 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

Petitioner's 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 company's 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 employer's 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 respondent's real purpose was to avoid payment to the security checkers of the
wage increases provided in the collective bargaining agreement approved in 1990.13 Such an
assertion is not sufficient basis for concluding that the termination of petitioner's 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 petitioner's 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 petitioner's
right.

To be sure, this is not the first time this question has arisen. In Subuguero 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 NLRC's 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.

xxx xxx xxx

 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 P1,000.0022 to
P2,000.0023 to P5,000.0024 to P10,000.00.25

Need for Reexamining the Wenphil Doctrine

Today, we once again consider the question of appropriate sanctions for violations of the notice
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, suggest 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 cause for such dismissal or layoff. Consequently, in
their view, the employee concerned should be reinstated and paid backwages.

Validity of Petitioner's 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 employer's 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 latter's family, or when the employer is precisely retrenching in order to prevent
losses.

The need is for a rule which, while recognizing the employee's right to notice before he is
dismissed or laid off, at the same time acknowledges the right of the employer to dismiss for any
of the just causes enumerated in Art. 282 or to terminate employment for any of the authorized
causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an employer who is
found to have dismissed an employee for cause without prior notice is deemed ineffective in
deterring employer violations of the notice requirement, the remedy is not to declare the
dismissal void if there are just or valid grounds for such dismissal or if the termination is for an
authorized cause. That would be to uphold the right of the employee but deny the right of the
employer to dismiss for cause. Rather, the remedy is to 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 employer's failure to comply with the notice requirement constitutes
a denial of the employee's right to due process. Prescinding from this premise, he quotes the
statement of Chief Justice Concepcion Vda. de Cuaycong v. Vda. de Sengbengco26 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
cause exist, the employee should be reinstated with full back pay. On the other hand, Justice
Panganiban quotes from the statement in People v. Bocar27 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 employee's dismissal or layoff.

The first is that the Due Process Clause of the Constitution is a limitation on governmental
powers. It does not apply to the exercise of private power, such as the termination of
employment under the Labor Code. This is plain from the text of Art. III, §1 of the Constitution,
viz.: "No person shall be deprived of life, liberty, or property without due process of law. . . ."
The reason is simple: Only the State has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is
consistent with what are considered civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before
the power of organized society are brought to bear upon the individual. This is obviously not the
case of termination of employment under Art. 283. Here the employee is not faced with an aspect
of the adversary system. The purpose for requiring a 30-day written notice before an employee is
laid off is not to afford him an opportunity to be heard on any charge against him, for there is
none. The purpose rather is to give him time to prepare for the eventual loss of his job and the
DOLE an opportunity to determine whether economic causes do exist justifying the termination
of his employment.

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 latter's 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 one's 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 employer's failure to
comply with the notice requirement does not constitute a denial of due process but a mere failure
to observe a procedure for the termination of employment which makes the termination of
employment merely ineffectual. It is similar to the failure to observe the provisions of Art. 1592,
in relation to Art. 1191, of the Civil Code34 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 resident Ramon Magsaysay's
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 right's 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 employee's 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.