GR 151378; (March, 2005) (Digest)
G.R. No. 151378 . March 28, 2005
JAKA FOOD PROCESSING CORPORATION, Petitioner, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, Respondents.
FACTS
Respondents were employees of JAKA Food Processing Corporation until their termination on August 29, 1997, due to the company’s alleged dire financial straits, a ground for retrenchment constituting an authorized cause for dismissal under Article 283 of the Labor Code. It was undisputed that petitioner JAKA failed to comply with the statutory due process requirement of serving written notices to both the employees and the Department of Labor and Employment at least one month prior to termination. The Labor Arbiter and initially the NLRC declared the dismissal illegal, ordering reinstatement with full backwages or separation pay. Upon JAKA’s motion for reconsideration, the NLRC modified its decision, upholding the dismissal for an authorized cause but deleting the award of backwages, granting only separation pay and a nominal indemnity of P2,000 for the procedural lapse.
ISSUE
What are the legal consequences when an employee is dismissed for an authorized cause, but the employer fails to comply with the statutory notice requirement?
RULING
The Supreme Court, applying its then-recent ruling in Agabon v. NLRC, held that the dismissal based on an authorized cause (retrenchment) remains valid despite the procedural defect. The failure to serve the required one-month written notice does not render the termination illegal or ineffectual. The legal implication is solely the employer’s liability for nominal damages as indemnity for violating the employees’ statutory right to due process. Consequently, the Court of Appeals’ award of full backwages from termination until finality of judgment, based on the overturned Serrano doctrine, was erroneous. The proper remedy is to uphold the dismissal but order the employer to pay separation pay, as the cause was authorized, and to pay nominal damages for the procedural violation. The Court set the amount of nominal damages at P30,000.00 per employee, aligning with Agabon to provide a more meaningful deterrent against the “dismiss now, pay later” scheme, instead of the P2,000 awarded by the NLRC. The award of proportionate 13th-month pay was sustained.