THIRD DIVISION

SMART COMMUNICATIONS, INC.,

Petitioner,

G.R. No. 148132

- versus REGINA M. ASTORGA,

Respondent.
x---------------------------------------------------x
SMART COMMUNICATIONS, INC.,
Petitioner,

G.R. No. 151079

- versus REGINA M. ASTORGA,

Respondent.
x---------------------------------------------------x
REGINA M. ASTORGA,
Petitioner,

G.R. No. 151372

- versus -

Present:

SMART COMMUNICATIONS, INC. and ANN

MARGARET V. SANTIAGO,
Respondents.

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CORONA,*
NACHURA, and
REYES, JJ.
Promulgated:
____________________

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

For the resolution of the Court are three consolidated petitions for review
on certiorari under Rule 45 of the Rules of Court. G.R. No. 148132 assails the February
28, 2000Decision[1] and the May 7, 2001 Resolution[2] of the Court of Appeals (CA) in
CA-G.R. SP. No. 53831. G.R. Nos. 151079 and 151372 question the June 11, 2001
Decision[3]and the December 18, 2001 Resolution[4] in CA-G.R. SP. No. 57065.
Regina M. Astorga (Astorga) was employed by respondent Smart
Communications, Incorporated (SMART) on May 8, 1997 as District Sales Manager of
the Corporate Sales Marketing Group/ Fixed Services Division (CSMG/FSD). She was
receiving a monthly salary of P33,650.00. As District Sales Manager, Astorga enjoyed
additional benefits, namely, annual performance incentive equivalent to 30% of her
annual gross salary, a group life and hospitalization insurance coverage, and a car plan in
the amount ofP455,000.00.[5]
In February 1998, SMART launched an organizational realignment to achieve
more efficient operations. This was made known to the employees on February 27, 1998.
[6]
Part of the reorganization was the outsourcing of the marketing and sales force. Thus,
SMART entered into a joint venture agreement with NTT of Japan, and formed SMARTNTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and
marketing work, SMART abolished the CSMG/FSD, Astorgas division.
To soften the blow of the realignment, SNMI agreed to absorb the CSMG
personnel who would be recommended by SMART. SMART then conducted a
performance evaluation of CSMG personnel and those who garnered the highest ratings
were favorably recommended to SNMI. Astorga landed last in the performance
evaluation, thus, she was not recommended by SMART. SMART, nonetheless, offered
her a supervisory position in the Customer Care Department, but she refused the offer
because the position carried lower salary rank and rate.
Despite the abolition of the CSMG/FSD, Astorga continued reporting for work.
But on March 3, 1998, SMART issued a memorandum advising Astorga of the
termination of her employment on ground of redundancy, effective April 3,
1998. Astorga received it on March 16, 1998.[7]

The termination of her employment prompted Astorga to file a Complaint [8] for
illegal dismissal, non-payment of salaries and other benefits with prayer for moral and
exemplary damages against SMART and Ann Margaret V. Santiago (Santiago). She
claimed that abolishing CSMG and, consequently, terminating her employment was
illegal for it violated her right to security of tenure. She also posited that it was illegal for
an employer, like SMART, to contract out services which will displace the employees,
especially if the contractor is an in-house agency.[9]
SMART responded that there was valid termination. It argued that Astorga was
dismissed by reason of redundancy, which is an authorized cause for termination of
employment, and the dismissal was effected in accordance with the requirements of the
Labor Code. The redundancy of Astorgas position was the result of the abolition of
CSMG and the creation of a specialized and more technically equipped SNMI, which is a
valid and legitimate exercise of management prerogative.[10]
In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding
that she pay the current market value of the Honda Civic Sedan which was given to her
under the companys car plan program, or to surrender the same to the company for
proper disposition.[11] Astorga, however, failed and refused to do either, thus prompting
SMART to file a suit for replevin with the Regional Trial Court of Makati (RTC)
on August 10, 1998. The case was docketed as Civil Case No. 98-1936 and was raffled
to Branch 57.[12]
Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii)
failure to state a cause of action; (iii) litis pendentia; and (iv) forum-shopping. Astorga
posited that the regular courts have no jurisdiction over the complaint because the subject
thereof pertains to a benefit arising from an employment contract; hence, jurisdiction over
the same is vested in the labor tribunal and not in regular courts.[13]
Pending resolution of Astorgas motion to dismiss the replevin case, the Labor
Arbiter rendered a Decision[14] dated August 20, 1998, declaring Astorgas dismissal from
employment illegal. While recognizing SMARTs right to abolish any of its departments,
the Labor Arbiter held that such right should be exercised in good faith and for causes
beyond its control. The Arbiter found the abolition of CSMG done neither in good faith

nor for causes beyond the control of SMART, but a ploy to terminate Astorgas
employment. The Arbiter also ruled that contracting out the functions performed by
Astorga to an in-house agency like SNMI was illegal, citing Section 7(e), Rule VIII-A of
the Rules Implementing the Labor Code.
Accordingly, the Labor Arbiter ordered:
WHEREFORE, judgment is hereby rendered declaring the
dismissal of [Astorga] to be illegal and unjust. [SMART and Santiago] are
hereby ordered to:
1. Reinstate [Astorga] to [her] former position or to a substantially
equivalent position, without loss of seniority rights and other privileges,
with full backwages, inclusive of allowances and other benefits from the
time of [her] dismissal to the date of reinstatement, which computed as of
this date, are as follows:
(a)

1998
1998

Astorga

BACKWAGES;
(P33,650.00
months)
= P134,600.00
UNPAID SALARIES (February 15, 1998April 3, 1998
February
= P 16,823.00
March 1-31, [1998]
April
= P 3,882.69

CAR MAINTENANCE ALLOWANCE

(P2,000.00
4)
= P 8,000.00
FUEL ALLOWANCE (300 liters/mo. x
4
at P12.04/liter)
= P 14,457.83
TOTAL

15-28,
= P 33,650.00
1-3,

x
mos.
= P211,415.52

xxxx
3. Jointly and severally pay moral damages in the amount
of P500,000.00 x x x and exemplary damages in the amount
of P300,000.00. x x x

4. Jointly and severally pay 10% of the amount due as attorneys

fees.
SO ORDERED.[15]

Subsequently, on March 29, 1999, the RTC issued an Order[16] denying Astorgas
motion to dismiss the replevin case. In so ruling, the RTC ratiocinated that:
Assessing the [submission] of the parties, the Court finds no merit
in the motion to dismiss.
As correctly pointed out, this case is to enforce a right of
possession over a company car assigned to the defendant under a car plan
privilege arrangement. The car is registered in the name of the
plaintiff. Recovery thereof via replevin suit is allowed by Rule 60 of the
1997 Rules of Civil Procedure, which is undoubtedly within the
jurisdiction of the Regional Trial Court.
In the Complaint, plaintiff claims to be the owner of the company
car and despite demand, defendant refused to return said car. This is
clearly sufficient statement of plaintiffs cause of action.
Neither is there forum shopping. The element of litis penden[t]ia
does not appear to exist because the judgment in the labor dispute will not
constitute res judicata to bar the filing of this case.
WHEREFORE, the Motion to Dismiss is hereby denied for lack of
merit.
SO ORDERED.[17]

Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999.
[18]

Astorga elevated the denial of her motion via certiorari to the CA, which, in its
February 28, 2000 Decision,[19] reversed the RTC ruling. Granting the petition and,
consequently, dismissing the replevin case, the CA held that the case is intertwined with
Astorgas complaint for illegal dismissal; thus, it is the labor tribunal that has rightful
jurisdiction over the complaint. SMARTs motion for reconsideration having been
denied,[20] it elevated the case to this Court, now docketed as G.R. No. 148132.

Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in
the illegal dismissal case to the National Labor Relations Commission (NLRC). In
itsSeptember 27, 1999 Decision,[21] the NLRC sustained Astorgas dismissal. Reversing
the Labor Arbiter, the NLRC declared the abolition of CSMG and the creation of SNMI
to do the sales and marketing services for SMART a valid organizational action. It
overruled the Labor Arbiters ruling that SNMI is an in-house agency, holding that it
lacked legal basis. It also declared that contracting, subcontracting and streamlining of
operations for the purpose of increasing efficiency are allowed under the law. The NLRC
further found erroneous the Labor Arbiters disquisition that redundancy to be valid must
be impelled by economic reasons, and upheld the redundancy measures undertaken by
SMART.
The NLRC disposed, thus:
WHEREFORE, the Decision of the Labor Arbiter is hereby
reversed and set aside. [Astorga] is further ordered to immediately return
the company vehicle assigned to her. [Smart andSantiago] are hereby
ordered to pay the final wages of [Astorga] after [she] had submitted the
required supporting papers therefor.
SO ORDERED.[22]

Astorga filed a motion for reconsideration, but the NLRC denied it on December
21, 1999.[23]
Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a
Decision[24] affirming with modification the resolutions of the NLRC. In gist, the CA
agreed with the NLRC that the reorganization undertaken by SMART resulting in the
abolition of CSMG was a legitimate exercise of management prerogative. It rejected
Astorgas posturing that her non-absorption into SNMI was tainted with bad
faith. However, the CA found that SMART failed to comply with the mandatory onemonth notice prior to the intended termination. Accordingly, the CA imposed a penalty
equivalent to Astorgas one-month salary for this non-compliance. The CA also set aside
the NLRCs order for the return of the company vehicle holding that this issue is not
essentially a labor concern, but is civil in nature, and thus, within the competence of the

regular court to decide. It added that the matter had not been fully ventilated before the
NLRC, but in the regular court.
Astorga filed a motion for reconsideration, while SMART sought partial
reconsideration, of the Decision. On December 18, 2001, the CA resolved the
motions, viz.:
WHEREFORE, [Astorgas] motion for reconsideration is hereby
PARTIALLY GRANTED. [Smart] is hereby ordered to pay [Astorga] her
backwages from 15 February 1998 to 06 November 1998. [Smarts]
motion for reconsideration is outrightly DENIED.
SO ORDERED.[25]

Astorga and SMART came to us with their respective petitions for review
assailing the CA ruling, docketed as G.R Nos. 151079 and 151372. On February 27,
2002, this Court ordered the consolidation of these petitions with G.R. No. 148132.[26]
In her Memorandum, Astorga argues:
I
THE COURT OF APPEALS ERRED IN UPHOLDING THE
VALIDITY OF ASTORGAS DISMISSAL DESPITE THE FACT THAT
HER DISMISSAL WAS EFFECTED IN CLEAR VIOLATION OF THE
CONSTITUTIONAL RIGHT TO SECURITY OF TENURE,
CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR
HER DISMISSAL.
II
SMARTS REFUSAL TO REINSTATE ASTORGA DURING
THE PENDENCY OF THE APPEAL AS REQUIRED BY ARTICLE 223
OF THE LABOR CODE, ENTITLES ASTORGA TO HER SALARIES
DURING THE PENDENCY OF THE APPEAL.
III
THE COURT OF APPEALS WAS CORRECT IN HOLDING
THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION
OVER THE COMPLAINT FOR RECOVERY OF A CAR WHICH
ASTORGA ACQUIRED AS PART OF HER EMPLOYEE (sic)
BENEFIT.[27]

On the other hand, Smart in its Memoranda raises the following issues:
I
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED
A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN
ACCORD WITH LAW OR WITH APPLICABLE DECISION OF THE
HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER
OF SUPERVISION WHEN IT RULED THAT SMART DID NOT
COMPLY WITH THE NOTICE REQUIREMENTS PRIOR TO
TERMINATING ASTORGA ON THE GROUND OF REDUNDANCY.
II
WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND
THE DEPARTMENT OF LABOR AND EMPLOYMENT ARE
SUBSTANTIAL
COMPLIANCE
WITH
THE
NOTICE
REQUIREMENTS BEFORE TERMINATION.
III
WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL
LABOR RELATIONS COMMISSION FINDS APPLICATION IN THE
CASE AT BAR CONSIDERING THAT IN THE SERRANO CASE
THERE WAS ABSOLUTELY NO NOTICE AT ALL.[28]
IV
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED
A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN
ACCORD WITH LAW OR WITH APPLICABLE DECISION[S] OF THE
HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER
OF SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL
COURT DOES NOT HAVE JURISDICTION OVER THE COMPLAINT
FOR REPLEVIN FILED BY SMART TO RECOVER ITS OWN
COMPANY VEHICLE FROM A FORMER EMPLOYEE WHO WAS
LEGALLY DISMISSED.
V

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED

TO APPRECIATE THAT THE SUBJECT OF THE REPLEVIN CASE IS
NOT THE ENFORCEMENT OF A CAR PLAN PRIVILEGE BUT
SIMPLY THE RECOVERY OF A COMPANY CAR.
VI
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED
TO APPRECIATE THAT ASTORGA CAN NO LONGER BE
CONSIDERED AS AN EMPLOYEE OF SMART UNDER THE LABOR
CODE.[29]

The Court shall first deal with the propriety of dismissing the replevin case filed
with the RTC of Makati City allegedly for lack of jurisdiction, which is the issue raised in
G.R. No. 148132.
Replevin is an action whereby the owner or person entitled to repossession of
goods or chattels may recover those goods or chattels from one who has wrongfully
distrained or taken, or who wrongfully detains such goods or chattels. It is designed to
permit one having right to possession to recover property in specie from one who has
wrongfully taken or detained the property.[30] The term may refer either to the action
itself, for the recovery of personalty, or to the provisional remedy traditionally associated
with it, by which possession of the property may be obtained by the plaintiff and retained
during the pendency of the action.[31]
That the action commenced by SMART against Astorga in the RTC of Makati
City was one for replevin hardly admits of doubt.
In reversing the RTC ruling and consequently dismissing the case for lack of
jurisdiction, the CA made the following disquisition, viz.:
[I]t is plain to see that the vehicle was issued to [Astorga] by
[Smart] as part of the employment package. We doubt that [SMART]
would extend [to Astorga] the same car plan privilege were it not for her
employment as district sales manager of the company. Furthermore, there
is no civil contract for a loan between [Astorga] and
[Smart]. Consequently, We find that the car plan privilege is a benefit
arising out of employer-employee relationship. Thus, the claim for such
falls squarely within the original and exclusive jurisdiction of the labor
arbiters and the NLRC.[32]

We do not agree. Contrary to the CAs ratiocination, the RTC rightfully assumed
jurisdiction over the suit and acted well within its discretion in denying Astorgas motion
to dismiss. SMARTs demand for payment of the market value of the car or, in the
alternative, the surrender of the car, is not a labor, but a civil, dispute. It involves the
relationship of debtor and creditor rather than employee-employer relations. [33] As such,
the dispute falls within the jurisdiction of the regular courts.
In Basaya, Jr. v. Militante,[34] this Court, in upholding the jurisdiction of the RTC
over the replevin suit, explained:
Replevin is a possessory action, the gist of which is the right of possession
in the plaintiff. The primary relief sought therein is the return of the
property in specie wrongfully detained by another person. It is an ordinary
statutory proceeding to adjudicate rights to the title or possession of
personal property. The question of whether or not a party has the right of
possession over the property involved and if so, whether or not the adverse
party has wrongfully taken and detained said property as to require its
return to plaintiff, is outside the pale of competence of a labor tribunal and
beyond the field of specialization of Labor Arbiters.
xxxx
The labor dispute involved is not intertwined with the issue in the
Replevin Case. The respective issues raised in each forum can be resolved
independently on the other. In fact in 18 November 1986, the NLRC in the
case before it had issued an Injunctive Writ enjoining the petitioners from
blocking the free ingress and egress to the Vessel and ordering the
petitioners to disembark and vacate. That aspect of the controversy is
properly settled under the Labor Code. So also with petitioners right to
picket. But the determination of the question of who has the better right to
take possession of the Vessel and whether petitioners can deprive the
Charterer, as the legal possessor of the Vessel, of that right to possess in
addressed to the competence of Civil Courts.
In thus ruling, this Court is not sanctioning split jurisdiction but
defining avenues of jurisdiction as laid down by pertinent laws.

The CA, therefore, committed reversible error when it overturned the RTC ruling and
ordered the dismissal of the replevin case for lack of jurisdiction.

Having resolved that issue, we proceed to rule on the validity of Astorgas

dismissal.
Astorga was terminated due to redundancy, which is one of the authorized causes
for the dismissal of an employee. The nature of redundancy as an authorized cause for
dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor
Relations Commission,[35] viz:
x x x redundancy in an employers personnel force necessarily or even
ordinarily refers to duplication of work. That no other person was holding
the same position that private respondent held prior to termination of his
services does not show that his position had not become
redundant. Indeed, in any well organized business enterprise, it would be
surprising to find duplication of work and two (2) or more people doing
the work of one person. We believe that redundancy, for purposes of the
Labor Code, exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous,
and superfluity of a position or positions may be the outcome of a number
of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise.

The characterization of an employees services as superfluous or no longer necessary and,

therefore, properly terminable, is an exercise of business judgment on the part of the
employer. The wisdom and soundness of such characterization or decision is not subject
to discretionary review provided, of course, that a violation of law or arbitrary or
malicious action is not shown.[36]
Astorga claims that the termination of her employment was illegal and tainted
with bad faith. She asserts that the reorganization was done in order to get rid of her. But
except for her barefaced allegation, no convincing evidence was offered to prove it. This
Court finds it extremely difficult to believe that SMART would enter into a joint venture
agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of
easing out a particular employee, such as Astorga. Moreover, Astorga never denied that
SMART offered her a supervisory position in the Customer Care Department, but she
refused the offer because the position carried a lower salary rank and rate. If indeed

SMART simply wanted to get rid of her, it would not have offered her a position in any
department in the enterprise.
Astorga also states that the justification advanced by SMART is not true because
there was no compelling economic reason for redundancy. But contrary to her claim, an
employer is not precluded from adopting a new policy conducive to a more economical
and effective management even if it is not experiencing economic reverses. Neither does
the law require that the employer should suffer financial losses before he can terminate
the services of the employee on the ground of redundancy. [37]
We agree with the CA that the organizational realignment introduced by SMART,
which culminated in the abolition of CSMG/FSD and termination of Astorgas
employment was an honest effort to make SMARTs sales and marketing departments
more efficient and competitive. As the CA had taken pains to elucidate:
x x x a careful and assiduous review of the records will yield no other
conclusion than that the reorganization undertaken by SMART is for no
purpose other than its declared objective as a labor and cost savings
device. Indeed, this Court finds no fault in SMARTs decision to
outsource the corporate sales market to SNMI in order to attain greater
productivity. [Astorga] belonged to the Sales Marketing Group under the
Fixed Services Division (CSMG/FSD), a distinct sales force of SMART in
charge of selling SMARTs telecommunications services to the corporate
market. SMART, to ensure it can respond quickly, efficiently and flexibly
to its customers requirement, abolished CSMG/FSD and shortly thereafter
assigned its functions to newly-created SNMI Multimedia Incorporated, a
joint venture company of SMART and NTT of Japan, for the reason that
CSMG/FSD does not have the necessary technical expertise required for
the value added services. By transferring the duties of CSMG/FSD to
SNMI, SMART has created a more competent and specialized
organization to perform the work required for corporate accounts. It is
also relieved SMART of all administrative costs management, time and
money-needed in maintaining the CSMG/FSD. The determination to
outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a
sound business judgment based on relevant criteria and is therefore a
legitimate exercise of management prerogative.

Indeed, out of our concern for those lesser circumstanced in life, this Court has
inclined towards the worker and upheld his cause in most of his conflicts with his
employer. This favored treatment is consonant with the social justice policy of the

Constitution. But while tilting the scales of justice in favor of workers, the fundamental
law also guarantees the right of the employer to reasonable returns for his investment.
[38]
In this light, we must acknowledge the prerogative of the employer to adopt such
measures as will promote greater efficiency, reduce overhead costs and enhance prospects
of economic gains, albeit always within the framework of existing laws. Accordingly, we
sustain the reorganization and redundancy program undertaken by SMART.
However, as aptly found by the CA, SMART failed to comply with the mandated
one (1) month notice prior to termination. The record is clear that Astorga received the
notice of termination only on March 16, 1998[39] or less than a month prior to its
effectivity on April 3, 1998. Likewise, the Department of Labor and Employment was
notified of the redundancy program only on March 6, 1998.[40]
Article 283 of the Labor Code clearly provides:
Art. 283.
Closure of establishment and reduction of personnel.
The employer may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof x x x.

SMARTs assertion that Astorga cannot complain of lack of notice because the
organizational realignment was made known to all the employees as early as February
1998 fails to persuade. Astorgas actual knowledge of the reorganization cannot replace
the formal and written notice required by the law. In the written notice, the employees are
informed of the specific date of the termination, at least a month prior to the effectivity of
such termination, to give them sufficient time to find other suitable employment or to
make whatever arrangements are needed to cushion the impact of termination. In this
case, notwithstanding Astorgas knowledge of the reorganization, she remained uncertain
about the status of her employment until SMART gave her formal notice of
termination. But such notice was received by Astorga barely two (2) weeks before the
effective date of termination, a period very much shorter than that required by law.

Be that as it may, this procedural infirmity would not render the termination of
Astorgas employment illegal. The validity of termination can exist independently of the
procedural infirmity of the dismissal.[41] In DAP Corporation v. CA,[42] we found the
dismissal of the employees therein valid and for authorized cause even if the employer
failed to comply with the notice requirement under Article 283 of the Labor Code. This
Court upheld the dismissal, but held the employer liable for non-compliance with the
procedural requirements.
The CA, therefore, committed no reversible error in sustaining Astorgas
dismissal and at the same time, awarding indemnity for violation of Astorga's statutory
rights.
However, we find the need to modify, by increasing, the indemnity awarded by
the CA to Astorga, as a sanction on SMART for non-compliance with the one-month
mandatory notice requirement, in light of our ruling in Jaka Food Processing
Corporation v. Pacot,[43] viz.:
[I]f the dismissal is based on a just cause under Article 282 but the
employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be temperedbecause the dismissal process was,
in effect, initiated by an act imputable to the employee, and (2) if the
dismissal is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the
employers exercise of his management prerogative.

We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to
separation pay equivalent to at least one (1) month salary or to at least one (1) months
pay for every year of service, whichever is higher. The records show that Astorgas length
of service is less than a year. She is, therefore, also entitled to separation pay equivalent
to one (1) month pay.
Finally, we note that Astorga claimed non-payment of wages from February 15,
1998. This assertion was never rebutted by SMART in the proceedings a quo. No proof
of payment was presented by SMART to disprove the allegation. It is settled that in labor

cases, the burden of proving payment of monetary claims rests on the employer.
[44]
SMART failed to discharge the onus probandi. Accordingly, it must be held liable for
Astorgas salary from February 15, 1998 until the effective date of her termination,
onApril 3, 1998.
However, the award of backwages to Astorga by the CA should be deleted for lack
of basis. Backwages is a relief given to an illegally dismissed employee. Thus, before
backwages may be granted, there must be a finding of unjust or illegal dismissal from
work.[45] The Labor Arbiter ruled that Astorga was illegally dismissed. But on appeal, the
NLRC reversed the Labor Arbiters ruling and categorically declared Astorgas dismissal
valid. This ruling was affirmed by the CA in its assailed Decision. Since Astorgas
dismissal is for an authorized cause, she is not entitled to backwages. The CAs award of
backwages is totally inconsistent with its finding of valid dismissal.
WHEREFORE, the petition of SMART docketed as G.R. No. 148132
is GRANTED. The February 28, 2000 Decision and the May 7, 2001 Resolution of the
Court
of
Appeals
in
CA-G.R.
SP.
No.
53831
are SET
ASIDE. The Regional Trial Court of Makati City, Branch 57 is DIRECTED to proceed
with the trial of Civil Case No. 98-1936 and render its Decision with reasonable
dispatch.
On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos.
151079 and 151372 are DENIED. The June 11, 2001 Decision and the December 18,
2001 Resolution in CA-G.R. SP. No. 57065, are AFFIRMED with MODIFICATION.
Astorga is declared validly dismissed. However, SMART is ordered to pay
AstorgaP50,000.00 as indemnity for its non-compliance with procedural due process, her
separation pay equivalent to one (1) month pay, and her salary from February 15,
1998 until the effective date of her termination on April 3, 1998. The award of backwages
is DELETED for lack of basis.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice