Case Summary (G.R. No. 148132)
Organizational Realignment and Termination
In February 1998 SMART outsourced its marketing and sales to SNMI, abolishing the CSMG/FSD. A performance evaluation determined which personnel SNMI would absorb; Astorga ranked last and was not recommended. SMART offered her a lower-rank supervisory post, which she declined. On March 3, 1998, SMART served written notice of termination due to redundancy, effective April 3, 1998.
Illegal Dismissal Complaint
Astorga filed before the Labor Arbiter a complaint for illegal dismissal, non-payment of salaries and benefits, and for moral and exemplary damages against SMART and Santiago. She maintained that the abolition of her division and contracting out to an in-house agency violated her security of tenure. SMART defended the dismissal as a bona fide redundancy exercise of management prerogative under the Labor Code.
Replevin Suit and Jurisdictional Challenge
After Astorga refused to return or pay for the company car, SMART filed a replevin suit (RTC Makati, Branch 57). Astorga moved to dismiss for lack of jurisdiction, arguing that the dispute arose from an employment benefit and belonged before the labor tribunal. The RTC denied the motion; the CA reversed, dismissing the replevin case for lack of jurisdiction.
Labor Arbiter and NLRC Decisions
The Labor Arbiter (August 20, 1998) declared Astorga’s dismissal illegal, ordering reinstatement with backwages, allowances, moral and exemplary damages, and attorney’s fees. The NLRC (September 27, 1999) reversed, upholding SMART’s redundancy program, overruling the “in-house agency” finding, and ordering Astorga to return the vehicle and to receive only final wages.
Court of Appeals Ruling on Dismissal
On certiorari from the NLRC ruling, the CA (June 11, 2001) affirmed that SMART validly abolished CSMG/FSD as an exercise of management prerogative but failed to give the one-month notice required by Article 283. It imposed one-month salary indemnity for procedural non-compliance and held that the replevin claim was civil, within RTC jurisdiction.
Supreme Court’s Jurisdictional Analysis on Replevin
The Supreme Court held that a replevin action to recover a company vehicle is a civil possessory remedy under Rule 60, 1997 Rules of Civil Procedure, governed by regular courts. The CA erred in stripping the RTC of jurisdiction; the dispute involved debtor-creditor relations, not an intertwined labor issue.
Supreme Court’s Validation of Redundancy
Citing Wiltshire File Co. v. NLRC, the Court recognized redundancy as an authorized cause for dismissal whenever an employee’s services exceed the enterprise’s needs. SMART’s joint-venture realignment to enhance efficiency constituted a legitimate exercise of business judgment and management prerogative. There was no evidence of bad faith or circumvention of security of tenure.
Procedural Infirmity and Remedies
Although the dismissal was substantively valid, SMART violated Article 283 by giving Astorga less than one month’s written notice (received March 16 for an April 3 effectivity) and notifying DOLE on March 6. Under
...continue readingCase Syllabus (G.R. No. 148132)
Parties and Petitions
- Smart Communications, Inc. (“SMART”) filed three consolidated petitions (G.R. Nos. 148132, 151079, 151372) under Rule 45 of the Rules of Court.
- Regina M. Astorga (“Astorga”) is the respondent in two petitions and petitioner in one.
- The consolidated issues involve: (a) jurisdiction of the Regional Trial Court over SMART’s replevin suit for recovery of a company car; and (b) the validity and consequences of Astorga’s dismissal for redundancy.
Employment and Benefits
- Astorga was hired by SMART on May 8, 1997 as District Sales Manager of the Corporate Sales Marketing Group/Fixed Services Division (CSMG/FSD).
- Her compensation package included a monthly salary of ₱33,650, an annual performance incentive (30% of annual gross salary), group life and hospitalization insurance, and a car plan valued at ₱455,000.
Organizational Realignment and Abolition of CSMG/FSD
- In February 1998, SMART announced an organizational realignment to improve efficiency and outsourced its marketing and sales force.
- A joint venture, SMART-NTT Multimedia, Inc. (SNMI), was formed to perform the sales and marketing functions previously handled by CSMG/FSD.
- CSMG/FSD was abolished; SMART conducted performance evaluations and recommended only top‐rated personnel for absorption by SNMI.
- Astorga ranked last in the evaluation and was not recommended; SMART offered her a lower‐rank supervisory role in Customer Care, which she declined.
Termination Notice and Effective Date
- On March 3, 1998, SMART issued a memorandum notifying Astorga of her redundancy‐based termination, effective April 3, 1998.
- Astorga received the notice on March 16, 1998, less than the one-month notice required under Article 283 of the Labor Code.
Illegal Dismissal Complaint
- Astorga filed a complaint before the Labor Arbiter for illegal dismissal, non-payment of salaries and benefits, and prayed for moral and exemplary damages against SMART and Ann Margaret V. Santiago.
- She alleged violation of her security of tenure and the illegality of contracting out functions to an in-house agency.
SMART’s Defense on Dismissal
- SMART justified the termination as a valid redundancy resulting from genuine management prerogative and reorganizational needs.
- It argued compliance with authorized causes under the Labor Code and lawful exercise of business judgment.
Replevin Suit for the Company Car
- On May 18, 1998, SMART demanded Astorga to return or pay the market value of the Honda Civic Sedan provided under the car plan.
- Astorga’s refusal led SMART to file a replevin action (Civil Case No. 98-1936) with the Regional Trial Court (RTC) of Makati, Branch 57.
- Astorga moved to dismiss the replevin suit for lack of jurisdiction (labor tribunal jurisdiction), failure to state a cause of action, litis pendentia, and forum-shopping.
Labor Arbiter Decision
- On August