G.R. No. 117040 May 4, 2000
RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE, respondents.

FACTS

Petitioner Ruben Serrano was a security checker whose employment was terminated by respondent Isetann Department Store on October 11, 1991, on the ground of retrenchment due to the adoption of cost-saving devices. Isetann claimed it informed its security section employees in a September 1991 meeting that a security agency would take over their work. The company offered affected personnel their last salaries, separation pay, and proportionate 13th-month pay. All accepted except Serrano, who later filed a complaint for illegal dismissal. The Labor Arbiter ruled in Serrano’s favor, finding the dismissal illegal due to lack of proof of legitimate retrenchment and failure to observe due process. The NLRC reversed, but the Supreme Court reinstated the Labor Arbiter’s decision, ordering payment of full backwages due to Isetann’s failure to provide the 30-day written notice required under Article 283 of the Labor Code.
Isetann filed a motion for reconsideration, arguing that its offer of 30 days’ pay in lieu of notice was valid and accepted by other employees, that such payment was more advantageous, and that the new ruling should apply only prospectively. It contended the notice issue was not properly raised. Serrano opposed, maintaining his dismissal was illegal and procedural requirements were violated.

ISSUE

Whether the respondent employer’s payment of thirty days’ salary in lieu of the thirty-day written notice required under Article 283 of the Labor Code constitutes valid compliance with the statutory notice requirement for termination due to authorized causes.

RULING

The Supreme Court denied the motion for reconsideration. The Court held that the issue of the validity of the notice was squarely raised in the parties’ pleadings before the Labor Arbiter, as Isetann itself detailed its separation offer and Serrano challenged the legality of his termination process. On the substantive argument, the Court ruled that the payment of thirty days’ salary cannot substitute for the mandatory written notice required by law. Article 283 explicitly demands a written notice to the employee and the Department of Labor and Employment at least one month before the intended termination. The purpose of this notice is to give the employee time to prepare for the eventual loss of employment and to seek other means of income. Payment of salary in lieu of notice deprives the employee of this crucial period and effectively amounts to a “buy-out” of a statutory right. The Court further rejected the plea for prospective application, as Isetann did not claim good-faith reliance on the old doctrine (from Wenphil Corp. v. NLRC) that allowed such payment in lieu of notice in dismissal for just causes, which is distinct from termination for authorized causes under Article 283. The new standard announced in this case, emphasizing strict compliance with the written notice requirement, was thus applied to the instant case.