We point out at the outset that this Petition for Review, which was filed before the promulgation of St. Martin Funeral Home v. National Labor Relations Commission,1 [G.R. No. 130866, 16 September 1998, 295 SCRA 494.] is not the proper means by which NLRC decisions are appealed to this Court. Before St. Martin Funeral Home, it was only through a Petition for Certiorari under Rule 65 that NLRC decisions could be reviewed and nullified by us on the ground of lack of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. After St. Martin Funeral Home, petitions like the one at bar are initially filed in the Court of Appeals for proper adjudication.

In the interest of justice, however, and in order to write finis to the instant case which has already dragged on for so long, we shall treat the petition pro hac vice as one for certiorari under Rule 65 although it is captioned Petition for Review on Certiorari; after all, it was filed within the reglementary period for the filing of a petition for certiorari under Rule 65.

Briefly, on 4 April 1985 private respondent Isetann Department Store, Inc. (ISETANN), employed petitioner Ruben Serrano as Security Checker until his appointment as Security Section Head. On 11 October 1991 ISETANN through its Human Resource Division Manager Teresita A. Villanueva sent Serrano a memorandum terminating his employment effective immediately "in view of the retrenchment program of the company," and directing him to secure clearance from their office.2 [Exh. "B," Records, p. 21.]

Petitioner Serrano filed with the NLRC Adjudication Office a complaint for illegal dismissal and underpayment of wages against ISETANN. Efforts at amicable settlement proved futile. Ms. Cristina Ramos, Personnel Administration Manager of ISETANN, testified that the security checkers and their section head were retrenched due to the installation of a labor saving device, i.e., the hiring of an independent security agency.

Finding the dismissal to be illegal, the Labor Arbiter ordered the immediate reinstatement of Serrano to his former or to an equivalent position plus payment of back wages, unpaid wages, 13th month pay and attorney’s fees.

On appeal the NLRC reversed the Labor Arbiter and ruled that ISETANN acted within its prerogative when it phased out its Security Section and retained the services of an independent security agency in order to cut costs and economize. Upon denial of his motion for reconsideration3 [Rollo, p. 63.] Serrano filed the instant petition imputing grave abuse of discretion on the part of the NLRC.

Article 282 of the Labor Code enumerates the just causes for the termination of employment by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter's representative in connection with the employee's 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 his 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.

On the other hand, Arts. 283 and 284 of the same Code enumerate the so-called authorized causes: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment to prevent losses; (d) closure or cessation of the establishment or undertaking unless the closure or cessation is for the purpose of circumventing the provisions of the law; and, (e) disease.

The just causes enumerated under Art. 282 of the Labor Code are provided by the employee who causes the infraction. The authorized causes are provided by the employer either because of outside factors such as the general decline in the economy or merely part of its long range plan for business profitability. Corollarily, in termination for a just cause, the employee is not entitled to separation pay unlike in termination for an authorized cause. In addition, the basis in computing the amount of separation pay varies depending on whether the termination is due to the installation of a labor saving device, or redundancy, in which case, the employee is entitled to receive separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service. In case the termination is due to retrenchment in order to prevent losses or in case of closure or cessation of operation of the establishment or undertaking not due to serious business losses or financial reverses, the separation pay is lower, i.e., equivalent to one (1) month pay or at least one-half month pay for every year of service, whichever is higher. As may be gleaned from the foregoing, where the cause of termination is for the financial advantage or benefit of the employer, the basis in computing for separation pay is higher compared to termination dictated by necessity with no appreciable financial advantage to the employer.

In the instant case, we agree with the NLRC that the dismissal of petitioner Serrano was for an authorized cause, i.e., redundancy, which exists where the services of an employee are in excess of what are reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and the superfluity may be the outcome of other factors such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.4 [Sebuguero v. National Labor Relations Commission, G.R. No. 115395, 27 September 1995, 248 SCRA 536; Almodiel v. National Labor Relations Commission, G.R. No. 100641, 14 June 1993, 223 SCRA 341.]

The hiring of an independent security agency is a business decision properly within the exercise of management prerogative. As such, this Court is denied the authority to delve into its wisdom although it is equipped with the power to determine whether the exercise of such prerogative is in accordance with law. Consequently, the wisdom or soundness of the management decision is not subject to the discretionary review of the Labor Arbiter nor of the NLRC unless there is a violation of law or arbitrariness in the exercise thereof, in which case, this Court will step in.5 [De Ocampo v. National Labor Relations Commission, G.R. No. 101539, 4 September 1992, 213 SCRA 652, 662.] Specifically, we held in International Harvester Macleod, Inc. v. Intermediate Appellate Court6 [G.R. No. 73287, 18 May 1987, 149 SCRA 641.] that the determination of whether to maintain or phase out an entire department or section or to reduce personnel lies with management. The determination of the need for the phasing out of a department as a labor and cost saving device because it is no longer economical to retain its services is a management prerogative.

After having established that the termination of petitioner Ruben Serrano was for an authorized cause, we now address the issue of whether proper procedures were observed in his dismissal.

Since the State affords protection to labor under the Constitution,7 [Art. XIII, Sec. 3, 1987 Constitution, reiterated in Art. 3, Labor Code.] workers enjoy security of tenure and may only be removed or terminated upon valid reason and through strict observance of proper procedure.8 [Art. 3, Labor Code.] Article 279 of the Labor Code specifically provides -

Security of tenure however does not guarantee perpetual employment. If there exists a just or an authorized cause, the employer may terminate the services of an employee but subject always to procedural requirements. The employer cannot be legally compelled to have in its employ a person whose continued employment is patently inimical to its interest. The law, while affording protection to the employee, does not authorize the oppression or destruction of his employer.9 [Alcantara, Samson S., Reviewer in Labor and Social Legislation, 1993 Ed., p. 347.]

Subject then to the constitutional right of workers to security of tenure and to be protected against dismissal except for a just or authorized cause, and without prejudice to the requirement of notice under Art. 283 of the Labor Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the cause of termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires, in accordance with company rules and regulations promulgated pursuant to guidelines set by the DOLE.10 [Art. 277, Labor Code.]

As specifically provided in Art. 283 of the Labor Code, the employer may terminate the employment of any employee due to redundancy by serving a written notice on the worker and the DOLE at least one (1) month before the intended date thereof. In the instant case, ISETANN clearly violated the provisions of Art. 283 on notice.11 [Art. 283. 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 operation of the establishment or undertaking x x x by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof x x x x.] It did not send a written notice to DOLE which is essential because the right to terminate an employee is not an absolute prerogative. The lack of written notice denied DOLE the opportunity to determine the validity of the termination.

The written notice ISETANN sent to Serrano was dated 11 October 1991 or on the same day the intended termination was to take effect. This obviously did not comply with the 30-day mandatory requirement. Although the cause for discharge may be just or authorized, it is still necessary and obligatory to afford the employee concerned his basic and more important right to notice. Serrano was not given the chance to make the needed adjustments brought about by his termination. Significantly, the notice is intended to enable the employee not only to prepare himself for the legal battle to protect his tenure of employment, which can be long, arduous, expensive and complicated by his own standards, but also to find other means of employment and ease the impact of the loss of his job and, necessarily, his income.

We are of the view that failure to send notice of termination to Serrano is not tantamount to violation of his constitutional right to due process but merely constitutes non-compliance with the provision on notice under Art. 283 of the Labor Code.

The legitimacy of a government is established and its functions delineated in the Constitution. From the Constitution flows all the powers of government in the same manner that it sets the limits for their proper exercise. In particular, the Bill of Rights functions primarily as a deterrent to any display of arbitrariness on the part of the government or any of its instrumentalities. It serves as the general safeguard, as is apparent in its first section which states, "No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws."12 [Sec. 1, Art. III, 1987 Constitution.] Specifically, due process is a requirement for the validity of any governmental action amounting to deprivation of liberty or property.13 [Fernando, Enrique M., The Bill of Rights, 1972 ed., p. 71.] It is a restraint on state action not only in terms of what it amounts to but how it is accomplished. Its range thus covers both the ends sought to be achieved by officialdom as well as the means for their realization.14 [Id., p. 78.]

Substantive due process is a weapon that may be utilized to challenge acts of the legislative body, whether national or local, and presumably executive orders of the President and administrative orders and regulations of a rule-making character. Procedural due process, on the other hand, is available for the purpose of assailing arbitrariness or unreasonableness in the administration of the law by the executive department or the judicial branch. Procedural due process likewise may aid those appearing before Congressional committees if the proceedings are arbitrary or otherwise unfair.15 [Id., pp. 80-81.]

Procedural due process demands that governmental acts, more specifically so in the case of the judiciary, be not infected with arbitrariness.16 [Id., p. 94.] The same disinterestedness required of men on the bench must characterize the actuations of public officials, not excluding the President, to satisfy the requirements of procedural due process.17 [Id., p. 96.]

In his dissent Mr. Justice Puno states that "the new majority opinion limiting violations of due process to government action alone is a throwback to a regime of law long discarded by more progressive countries." He opines that "today, private due process is a settled norm in administrative law," citing Schwartz, an authority in administrative law.

We beg to disagree. A careful reading of Schwartz would reveal that requirements of procedural due process extended from governmental to private action only in instances where there is "sufficient governmental involvement" or "the private action was so saturated with governmental incidents."

The cardinal primary requirements of due process in administrative proceedings were highlighted in Ang Tibay v. Court of Industrial Relations:18 [69 Phil. 635 (1940)] (a) the right to a hearing, which includes the right to present one's case and submit evidence in support thereof; (b) the tribunal must consider the evidence presented; (c) the decision must have something to support itself; (d) the evidence must be substantial; (e) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (f) the tribunal or body or any of its judges must act on its own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate; (g) the board or body should, in all controversial questions, render its decision in such manner that the parties to the proceeding may know the various issues involved, and the reason for the decision rendered.

Also in Lumiqued v. Exevea19 [G.R. No. 117565, 18 November 1997, 282 SCRA 146-147.] it was held -

From the foregoing, it is clear that the observance of due process is demanded in governmental acts. Particularly in administrative proceedings, due process starts with the tribunal or hearing officer and not with the employer. In the instant case, what is mandated of the employer to observe is the 30-day notice requirement. Hence, non-observance of the notice requirement is not denial of due process but merely a failure to comply with a legal obligation for which, we strongly recommend, we impose a disturbance compensation as discussed hereunder.

In the instant case, we categorically declare that Serrano was not denied his right to due process. Instead, his employer did not comply with the 30-day notice requirement. However, while Serrano was not given the required 30-day notice, he was nevertheless given and, in fact, took advantage of every opportunity to be heard, first, by the Labor Arbiter, second, by the NLRC, and third, by no less than this Court. Before the Labor Arbiter and the NLRC, petitioner had the opportunity to present his side not only orally but likewise through proper pleadings and position papers. It is not correct therefore to say that petitioner was deprived of his right to due process.

We have consistently upheld in the past as valid although irregular the dismissal of an employee for a just or authorized cause but without notice and have imposed a sanction on the erring employers in the form of damages for their failure to comply with the notice requirement. We discussed the rationale behind this ruling in Wenphil Corporation v. NLRC20 [G.R. No. 80587, 8 February 1989, 170 SCRA 69.] thus -

In Sebuguero v. National Labor Relations Commission21 [G.R. No. 115394, 27 September 1995, 248 SCRA 535.] Mr. Justice Davide Jr., now Chief Justice, made this clear pronouncement -

This ruling was later ably amplified by Mr. Justice Puno in Nath v. National Labor Relations Commission22 [G.R. No. 122666, 19 June 1997, 274 SCRA 379.] where he wrote -

Also, in Camua v. National Labor Relations Commission23 [G.R. No. 116473, 12 September 1997, 279 SCRA 45.] this Court through Mr. Justice Mendoza decreed -

Non-observance of this procedural requirement before would cause the employer to be penalized by way of paying damages to the employee the amounts of which fluctuated through the years. Thus, for just cause the indemnity ranged from P1,000.00 to P10,000.00.24 [Shoemart, Inc. v. NLRC, G.R. No. 74229, 11 August 1989, 176 SCRA 385 -The employee was found to have abandoned his job but for failure to observe the notice requirement, the employer was fined P1,000.00; Pacific Mills, Inc. v. Alonzo, G.R. No. 78090, 26 July 1991, 199 SCRA 617 - The employee violated company rules and regulations but because of procedural lapse the company was fined P1,000.00; Aurelio v. NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432 - The managerial employee breached the trust and confidence of his employer but for failure to observe the notice requirement the company was fined P1,000.00; Worldwide Papermills Inc. v. NLRC, G.R. No. 113081, 12 May 1995, 244 SCRA 125 - The employee was found guilty of gross and habitual neglect of his duties and of excessive absences. For failure to comply with the notice requirement the company was fined P5,000.00; Reta v. NLRC, G.R. No. 112100, 27 May 1994, 232 SCRA 613 - The employee was guilty of inefficiency, negligence and insubordination but the company was fined P10,000.00 for failure to observe the notice requirement.] For authorized cause, as distinguished from just cause, the award ranged from P2,000.00 to P5,000.00.25 [Sebuguero v. NLRC, G.R. No. 115394, 27 September 1995, 248 SCRA 532 - The employees were retrenched in order to prevent further losses but the company failed to observe the notice requirement, hence was fined P2,000.00 for each employee; Balbalec et al. v. NLRC, G.R. No. 107756, 19 December 1995, 251 SCRA 398 - The employees were retrenched to prevent business losses but the company was fined P5,000.00 for each employee for failure to observe the notice requirement.]

This Court has also sanctioned the ruling that a dismissal for a just or authorized cause but without observance of the mandatory 30-day notice requirement was valid although considered irregular. The Court ratiocinated that employers should not be compelled to keep in their employ undesirable and undeserving laborers. For the irregularity, i.e., the failure to observe the 30-day notice of termination, the employer was made to pay a measly sum ranging from P1,000.00 to P10,000.00.

With regard to the indemnity or penalty, which we prefer seriously to be referred to as "disturbance compensation," the Court has awarded varying amounts depending on the circumstances of each case and the gravity of the commission. We now propose that the amount of the award be uniform and rational and not arbitrary. The reason for the proposal or modification is that in their non-compliance with the 30-day notice requirement the erring employers, regardless of the peculiar circumstances of each case, commit the infraction only by the single act of not giving any notice to their workers. It cannot be gainfully said that the infraction in one case is heavier than in the other as the non-observance constitutes one single act. Thus, if the dismissal is illegal, i.e. there is no just or authorized cause, a disturbance compensation in the amount of P10,000.00 may be considered reasonable. If the dismissal is for a just cause but without notice, a disturbance compensation in the amount P5,000.00 may be given. In termination for an authorized cause and the notice requirement was not complied with, we distinguish further: If it is to save the employer from imminent bankruptcy or business losses, the disturbance compensation to be given is P5,000.00. If the authorized cause was intended for the employer to earn more profits, the amount of disturbance compensation is P10,000.00. This disturbance compensation, again we strongly recommend, should be given to the dismissed employee at the first instance, the moment it is shown that his employer has committed the infraction - of not complying with the 30-day written notice requirement - to tide him over during his economic dislocation.

The right of the laborers to be informed of their impending termination cannot be taken lightly, and the award of any amount below P5,000.00 may be too anemic to satisfy the fundamental protection especially accorded to labor and the workingman. In fact, it is hardly enough to sustain a family of three; more so if the employee has five or more children, which seems to be the average size of a Filipino family.

Henceforth, if the dismissal is for a just cause but without observance of the 30-day notice requirement, the dismissal is deemed improper and irregular. If later the dismissal is ascertained to be without just cause, the dismissed employee is entitled to reinstatement, if this be feasible, otherwise to separation pay and back wages plus disturbance compensation of P10,000.00 and moral damages, if warranted. On the other hand, if the dismissal is ascertained to be with just cause, the dismissed employee is entitled nevertheless to a disturbance compensation of P5,000.00 if the legal requirement of the 30-day notice to both employee and DOLE has not been complied with.

In instances where there is obviously a ground for dismissal, as when the employee has become violent and his presence would cause more harm to his co-workers and the security and serenity of the workplace, the employee may be suspended in the meantime until he is heard with proper observance of the 30-day notice requirement. Likewise, if the dismissal is for an authorized cause but without the required notice, the dismissal is improper and irregular and the employee should be paid separation pay, back wages and disturbance compensation of P5,000.00 or P10,000.00 depending on the cause. As already intimated, if the authorized cause is for the purpose of saving the employer from imminent bankruptcy or business losses, the disturbance compensation should be P5,000.00; otherwise, if the authorized cause is for the employer, in the exercise of management prerogative, to save and earn more profits, the disturbance compensation should be P10,000.00.

In the instant case, Serrano was given his walking papers only on the very same day his termination was to take effect. DOLE was not served any written notice. In other words, there was non-observance of the 30-day notice requirement to both Serrano and the DOLE. Serrano was thus terminated for an authorized cause but was not accorded his right to 30-day notice. Thus, his dismissal being improper and irregular, he is entitled to separation pay and back wages the amounts of which to be determined by the Labor Arbiter, plus P10,000.00 as disturbance compensation which, from its very nature, must be paid immediately to cushion the impact of his economic dislocation.

One last note. This Separate Opinion is definitely not advocating a new concept in imposing the so-called "disturbance compensation." Since Wenphil Corporation v. NLRC26 [See Note 21.] this Court has already recognized the necessity of imposing a sanction in the form of indemnity or even damages, when proper, not specifically provided by any law, upon employers who failed to comply with the twin-notice requirement. At the very least, what is being proposed to be adopted here is merely a change in the terminology used, i.e., from "sanction," "indemnity," "damages" or "penalty," to "disturbance compensation" as it is believed to be the more appropriate term to accurately describe the lamentable situation of our displaced employees.

Indeed, from the time the employee is dismissed from the service without notice - in this case since 11 October 1991 - to the termination of his case, assuming it results in his reinstatement, or his being paid his back wages and separation pay, as the case may be, how long must he be made to suffer emotionally and bear his financial burden? Will reinstating him and/or paying his back wages adequately make up for the entire period that he was in distress for want of any means of livelihood? Petitioner Serrano has been deprived of his only source of income - his employment - for the past eight (8) years or so. Will his reinstatement and/or the payment of his back wages and separation pay enable him to pay off his debts incurred in abject usury - to which he must have succumbed - during his long period of financial distress? Will it be adequate? Will it be just? Will it be fair? Thus, do we really and truly render justice to the workingman by simply awarding him full back wages and separation pay without regard for the long period during which he was wallowing in financial difficulty?

FOR ALL THE FOREGOING, the Decision of respondent National Labor Relations Commission should be MODIFIED. The termination of petitioner RUBEN SERRANO being based on an authorized cause should be SUSTAINED AS VALID although DECLARED IRREGULAR for having been effected without the mandatory 30-day notice.

ISETANN DEPARTMENT STORE INC. should PAY petitioner SERRANO back wages and separation pay the amounts of which to be determined by the Labor Arbiter, plus P10,000.00 as disturbance compensation which must be paid immediately. Consequently, except as regards the disturbance compensation, the case should be REMANDED to the Labor Arbiter for the immediate computation and payment of the back wages and separation pay due petitioner.

EXCEPT as herein stated, I concur with the majority.