Dismiss now, pay later

In the dismissal of an employee, the requirements of substantive and procedural due process have to be complied with. The first means that there should be a cause for the dismissal; while the second pertains to affording the employee the opportunity to be heard. It is well settled that in the absence of both requirements, or if the dismissal is bereft of any cause, there is illegal dismissal. With respect, however, to a situation where there is cause but the employer did not afford the employee the right to be heard, the Supreme Court has continuously modified its stand in its effort to balance the rights and interests of the employer and the employee.

Prior to 1989, the rule was that, if the employer did not comply with procedural due process, as for, instance, it did not give the employee a show-cause notice apprising him of the charges against him, the dismissal is illegal, whether or not there was just cause. The reliefs granted to the employee are reinstatement without loss of seniority rights and payment of backwages.

In February 1989, the Supreme Court came up with a doctrine which was euphemistically called and assailed, mostly by workers, as the "dismiss now, pay later" doctrine. In Wenphil Corporation vs. NLRC, it was ruled that where there is a cause for the dismissal of an employee, the same is valid even if he was not afforded the right to due process. In this case, the employee was not given a show-cause notice, and he was not even given the opportunity to explain his side. Since the dismissal was valid, the employee was held not to be entitled to reinstatement and backwages. However, the employer was made liable to pay indemnity in the form of a penalty or fine in the measly amount of P1,000. Subsequent cases followed this ruling but the amount of penal indemnity varied from P1,000 to 10,000 depending on the circumstances of each case.

More than a decade after, the Supreme Court developed another doctrine, which modified, not really reversed, the Wenphil doctrine. This is the case of Serrano vs. NLRC which involved a security guard in one department store. There was authorized cause for the separation of the guard but the employer did not comply with procedural due process. The High Court labeled the dismissal as ineffectual. This was just toying with semantics because like the preceding case, the employee was not entitled to reinstatement considering that there was a cause for his separation. Similarly, the employer had to pay the employee for infringing on his right to due process. However, instead of the usual penalty imposed against the employer, under the Wenphil and other similar cases, which ranges from P1,000 to P10,000, the amount was increased to "full backwages" computed from the time the employee was dismissed without due process until the decision finding the termination to be for cause had become final.

In November 2004, the Supreme Court made another modification to the prevailing doctrine. In Agabon & Agabon vs. NLRC, et al., there was a just cause for the dismissal of the employees but there was no due process. The High Court said that the dismissal was valid, for which reason the employees were not entitled to reinstatement, but for not complying with due process, the employer had to pay the employees nominal damages in the amount of P30,000.

In the three cases mentioned above, the Supreme Court recognized the right of the employer to dismiss an employee for a cause. As long as there is just or authorized cause, the dismissal is always valid, regardless of the absence or presence of due process. This is a clear recognition of the right of the employer to discipline its erring employees as a measure of self-protection.

It should be noted, however, that while the dismissal is valid, the employer has to pay the dismissed employee, in varying amounts, for violating his right to due process. The prevailing rule now is that, the only relief available to the employee who is dismissed for a cause but without due process is the payment to him of nominal damages, as opposed to penal indemnity in Wenphil and compensatory damages in Serrano. The amount varies depending on the circumstances of each case. To the workers, regardless of how our Court terms and justifies the amount that has to be paid, it will not matter. For them, this is again the era of "dismiss now, pay later."

(The author is a Senior Partner of Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). He may be contacted at tel. #:830-8000; fax #:894-4697 or email at: [email protected])