In Magro Placement and General Services v. Hernandez, the Supreme Court reiterated the importance of procedural due process in employment termination. The Court held that while an employer may have just cause to dismiss an employee, failure to comply with the mandatory two-notice requirement renders the dismissal ineffectual. This means employers must provide a written notice stating the grounds for termination and give the employee an opportunity to be heard. If this procedure is not followed, the employer may be liable for damages, even if the dismissal itself was justified.

The Auto Electrician’s Dismissal: Did Due Process Drive Off-Course?

Cresenciano Hernandez, an auto electrician, was hired by Al Yamama Est. in Saudi Arabia through Magro Placement. After arriving, he struggled with American cars as he only had experience with Japanese vehicles. He was soon sent back to the Philippines. Hernandez then filed a complaint for illegal dismissal, arguing he was not given proper notice or opportunity to defend himself. The Labor Arbiter initially dismissed the complaint, but the Court of Appeals (CA) partially granted his petition, finding that while there was just cause for dismissal, the employer failed to comply with due process requirements. The Supreme Court then reviewed the CA’s decision to determine if Hernandez was indeed accorded procedural due process.

The core of the legal matter rests on the employer’s adherence to procedural due process when terminating an employee. The Labor Code of the Philippines and its implementing rules outline specific requirements that employers must follow to ensure fairness and protect employees’ rights. Article 277 of the Labor Code explicitly states:

ART. 277. Miscellaneous provisions.

x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for 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 Department of Labor and Employment. x x x

Furthermore, Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code details the standards of due process, emphasizing the requirements of notice in termination cases. These provisions mandate a two-notice rule:

1. The first notice informs the employee of the specific acts or omissions that could lead to dismissal.
2. The second notice informs the employee of the employer’s decision to terminate employment.

The Supreme Court has consistently held that both notices are mandatory. The first notice must clearly state that the employer is considering dismissal based on the stated acts or omissions. As the Court emphasized in Maquiling v. Philippine Tuberculosis Society, Inc.:

This notice will afford the employee an opportunity to avail all defenses and exhaust all remedies to refute the allegations hurled against him for what is at stake is his very life and limb his employment. Otherwise, the employee may just disregard the notice as a warning without any disastrous consequence to be anticipated. Absent such statement, the first notice falls short of the requirement of due process. One’s work is everything, thus, it is not too exacting to impose this strict requirement on the part of the employer before the dismissal process be validly effected. This is in consonance with the rule that all doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor.

In Magro Placement, the petitioner argued that the statements issued by Hernandez, where he acknowledged his difficulties with the job, satisfied the notice requirement. However, the Court disagreed. The Court noted that Al Yamama, Hernandez’s employer, failed to provide the required prior notice or explanation before taking his passport and informing Orbit (petitioner’s foreign principal) that Hernandez was not qualified for the job. This action effectively terminated Hernandez’s employment without affording him the opportunity to be heard and defend himself.

The Supreme Court clarified the consequences of failing to comply with procedural due process in light of the evolving jurisprudence. Initially, the Serrano doctrine mandated the payment of full backwages in cases of ineffectual dismissal. However, the Court abandoned this doctrine in Agabon v. National Labor Relations Commission, holding that the lack of statutory due process does not nullify a dismissal for just cause. Instead, it warrants the payment of nominal damages to the employee.

The Court in Agabon explained that:

After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well.

In the case at hand, the Supreme Court, applying the principles established in Agabon, found that Hernandez’s employer violated his right to procedural due process. Consequently, the Court awarded Hernandez P30,000.00 as nominal damages, in addition to his unpaid salary for the period he worked, acknowledging the violation of his rights even though the dismissal was for a valid reason.

FAQs

What was the key issue in this case?	The key issue was whether the employee was accorded procedural due process before his separation from work, specifically if the employer complied with the two-notice requirement.
What is the two-notice rule in employment termination?	The two-notice rule requires the employer to (1) inform the employee of the specific acts or omissions for which dismissal is sought and (2) inform the employee of the decision to terminate employment.
What happens if an employer fails to comply with the two-notice rule?	Even if there is just cause for dismissal, failure to comply with the two-notice rule makes the employer liable for nominal damages to the employee.
What is the significance of the Agabon ruling?	The Agabon ruling abandoned the Serrano doctrine of full backwages and instead mandates the payment of nominal damages when an employee is dismissed for just cause but without due process.
What constitutes sufficient notice to an employee facing dismissal?	Sufficient notice must clearly state the grounds for termination and provide the employee a reasonable opportunity to explain their side.
Can an employee’s statements serve as a substitute for the formal notice requirement?	No, the employer cannot rely solely on an employee’s statements as a substitute for the formal written notice explicitly informing the employee of the charges against them.
What is the purpose of awarding nominal damages in illegal dismissal cases?	Nominal damages serve to vindicate or recognize the employee’s right to procedural due process, which was violated by the employer.
What factors does the court consider when determining the amount of nominal damages?	The amount of nominal damages is addressed to the sound discretion of the Court, taking into account the relevant circumstances of each case.

The Magro Placement case underscores the critical importance of adhering to procedural due process in employment termination. While employers retain the right to dismiss employees for just cause, they must fulfill their legal obligation to provide proper notice and a fair opportunity to be heard. By doing so, they uphold the principles of fairness and protect the rights of their employees, mitigating legal risks and fostering a more equitable work environment.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: MAGRO PLACEMENT AND GENERAL SERVICES vs. CRESENCIANO E. HERNANDEZ, G.R. No. 156964, July 04, 2007