Cash equivalent of ‘belated due process’: Is it P30,000 or P50,000?

A couple of weeks ago, my former mentor and now fellow partner in the firm, Mr. Rio Manibog came out with an article in this column entitled "Dismiss now, pay later." His satirical observation was opportune in view of the abandonment by the Supreme Court en banc of the much earlier en banc ruling in the case of Serrano (323 SCRA 445 [2000]). In the 2004 landmark labor case of Agabon et al. (G.R.No. 158693, Nov. 17, 2004). In this case, the Supreme Court revisited Serrano and re-examined the lack of statutory basis in the Labor Code for declaring as "ineffectual or defective" a dismissal of an employee for a valid or authorized cause but without complying with the employee’s statutory right to due process. Following the 1989 vintage case of Wenphil (170 SCRA 69 [1989]), the present rule now as laid down in Agabon et al, is to hold the dismissal as valid (no longer defective or ineffectual) but with the qualification, that the employer will have to pay the "validly" dismissed employee the sum of P30,000 as nominal damages for non-observance by the employer of the employee’s right to due process. In the mind of the High Court, P30,000 was considered as a "stiffer" sanction than the P1,000 which it originally awarded in Wenphil. Being a landmark decision by the Supreme Court en banc, Agabon et al., is now the leading authority used by many human resource practitioners and management lawyers, citing it with distinction to overturn previous decisions of the High Court based on Serrano (Caingat vs. NLRC, G.R. No. 154308, March 10, 2005; Chua vs. NLRC, G.R. No. 146780, March 11, 2005; Glaxo Wellcome Phils., vs. Nagkaisang Empleyado ng Wellcome, G.R. No. 149349, March 11, 2005).

Notably however, as what the Supreme Court said in reversing Serrano, social justice is not based on rigid formulas set in stone. A few months ago after enunciating Agabon et al., the cash equivalent, so to speak, of the "belated due process" rule was further clarified by the Supreme Court in the more recent en banc of Jaka Food Processing vs. Pacot et al. (GH.R. No. 151378, March 28, 2005). Here, the Court found the need to make a material distinction as regards the gravity of the sanction which an employer should be meted in case it violates the employee’s right to due process. Thus in this recent case, the cash equivalent may be "tempered" or made "stiffer," depending on the cause for termination. In other words, the P30,000 indemnity in Agabon, et. al., is not a uniform amount of indemnity to be applied in all cases of termination for cause when there is non-compliance with due process. Clearly then, the Court laid down the following parameters: (1) if the dismissal is based on just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal was, in effect initiated by an act imputable to the employee; and (2) if the dismissal is based on authorized cause under Article 293 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative. In Jaka Food Processing Corp., a P50,000 award was considered by the Supreme Court as a "stiffer" sanction.

"Tempered" and "stiffer" sanction will now be the crux of the employer’s extent of liability the cash equivalent of which will depend on the gravity of the due process violation of the employer. Once again, I believe there will be judicial stability in the more recent pronouncement of the Supreme Court. However, I will not be surprised if rules are changed later. After all as it has been said – "Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances."

(The author is the Resident Partner of the Cebu Branch of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). He is also a professor of Labor Law at the University of San Carlos College of Law, Cebu City. He may be contacted at tel. no. (032) 2311-449; fax no. (032) 231-3614).