8 Smart Comm. vs. Astroga

8/13/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 542
434 SUPREME COURT REPORTS ANNOTATED

Smart Communications, Inc. vs. Astorga
*
G.R. No. 148132. January 28, 2008.
SMART COMMUNICATIONS, INC., petitioner, vs. REGINA M.

ASTORGA, respondent.
*
G.R. No. 151079. January 28, 2008.
SMART COMMUNICATIONS, INC., petitioner, vs. REGINA M.

ASTORGA, respondent.
*
G.R. No. 151372. January 28, 2008.
REGINA M. ASTORGA, petitioner, vs. SMART

COMMUNICATIONS, INC. and ANN MARGARET V.
SANTIAGO, respondents.
Actions; Provisional Remedies; Replevin; Words and Phrases;

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; The term may refer either to the action itself, for the recovery of
personality, 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.—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. 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.
Same; Same; Same; Jurisdictions; Labor Law; An employer’s 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; A
_______________
* THIRD DIVISION.
435
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VOL. 542, JANUARY 28, 2008 435
dispute which involves the relationship of debtor and creditor rather than
employee-employer relations falls within the jurisdiction of the regular
courts.—Contrary to the CA’s ratiocination, the RTC rightfully assumed
jurisdiction over the suit and acted well within its discretion in denying
Astorga’s motion to dismiss. SMART’s 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 employeeemployer relations. As such, the dispute falls within the
jurisdiction of the regular courts.
Labor Law; Termination of Employment; Redundancy; Management

Prerogatives; Words and Phrases; Redundancy in an employer’s personnel
force necessarily or even ordinarily refers to duplication of work; 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 employee’s 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.—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,
193 SCRA 665 (1991), viz.: x x x redundancy in an employer’s 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 overhir-
436
ing 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 employee’s 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.
Same; Same; Same; Due Process; The validity of termination can exist
independently of the procedural infirmity of the dismissal.—SMART’s
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. Astorga’s 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 Astorga’s 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 Astorga’s employment illegal.
The validity of termination can exist independently of the procedural
infirmity of the dismissal. In DAP Corporation v. CA, 477 SCRA 792
(2005), 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 noncompliance with the
procedural requirements.
PETITIONS for review on certiorari of the decisions and resolutions

of the Court of Appeals.
The facts are stated in the opinion of the Court.

Picazo, Buyco, Tan, Fider & Santos for Smart
Communications, Inc. and Ann Margaret V. Santiago.
437
VOL. 542, JANUARY 28, 2008 437

Federico C. Leynes & Partners for Regina Astorga.
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.
1
148132 assails
2
the February 28, 2000 Decision and the May 7, 2001
Resolution of the Court of Appeals (CA) in CA-G.R. SP. No.
53831. G.R. Nos. 151079 and 151372 question the June 11, 2001
3 4
Decision and the December 18, 2001 Resolution 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
5
insurance coverage, and a car plan in the amount of P455,000.00.
In February 1998, SMART launched an organizational
realignment to achieve more efficient operations. This 6
was made
known to the employees on February 27, 1998. 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 SMART-NTT Multime-
_______________
1 Penned by Associate Justice Elvi John S. Asuncion (dismissed), with Associate

Justices Corona Ibay-Somera (retired) and Portia Aliño-Hormachuelos, concurring;
Rollo (G.R. No. 148132), pp. 146-152.
2 Rollo, pp. 164-165.
3 Penned by Associate Justice Romeo Brawner (retired), with Associate Justices
Remedios Salazar-Fernando and Josefina Guevara-Salonga, concurring; Rollo (G.R.
No. 151079), pp. 24-36.
4 Id., at pp. 42-45.
5 Rollo (G.R. No. 151372), pp. 58-59.
6 Rollo (G.R. No. 151079), p. 46.
438

dia, Incorporated (SNMI). Since SNMI was formed to do the sales

and marketing work, SMART abolished the CSMG/FSD, Astorga’s
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.
7
Astorga received it on March 16, 1998.
The termination of her employment prompted Astorga to file a
8
Complaint 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
9
contractor is an in-house agency.
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 re-
_______________
7 Rollo (G.R. No. 151372), p. 62.

8 Id., at pp. 40-42.
9 Id., at pp. 43-54.
439
VOL. 542, JANUARY 28, 2008 439

quirements of the Labor Code. The redundancy of Astorga’s position

was the result of the abolition of CSMG and the creation of a
specialized and more technically equipped SNMI, which is a valid
10
and legitimate exercise of management prerogative.
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 company’s car
plan program, or to surrender the same to the company for proper
11
disposition. 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
12
as Civil Case No. 981936 and was raffled to Branch 57.
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
13
regular courts.
Pending resolution of Astorga’s motion to dismiss the replevin
14
case, the Labor Arbiter rendered a Decision dated August 20, 1998,
declaring Astorga’s dismissal from employment illegal. While
recognizing SMART’s 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 Astorga’s employment. The
Arbiter also
_______________
10 Id., at pp. 68-78.

11 Rollo (G.R. No. 148132), p. 47.
12 Id., at pp. 30-34.
13 Id., at pp. 51-59.
14 Rollo (G.R. No. 151372), pp. 79-92.
440

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) Astorga
BACKWAGES; (P33,650.00 x 4 months) = P134,600.00
UNPAID SALARIES (February 15, 1998-
April 3, 1998
February 15-28, 1998 = P 16,823.00
March 1-31, [1998] = P 33,650.00
April 1-3, 1998 = P 3,882.69
CAR MAINTENANCE ALLOWANCE = P 8,000.00
(P2,000.00 x 4)
FUEL ALLOWANCE (300 liters/mo. x = P 14,457.83
4 mos. at P12.04/liter)
TOTAL = 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
xx
4. Jointly and severally pay 10% of the amount due as attorney’s fees.
15
SO ORDERED.”
_______________
15 Id., at pp. 90-92.
441
VOL. 542, JANUARY 28, 2008 441

16
Subsequently, on March 29, 1999, the RTC issued an Order
denying Astorga’s 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 plaintiff’s 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.
17
SO ORDERED.”
Astorga filed a motion for reconsideration, but the RTC denied it on

18
June 18, 1999.
Astorga elevated the denial of her motion via certiorari to the
19
CA, which, in its February 28, 2000 Decision, reversed the RTC
ruling. Granting the petition and, consequently, dismissing the
replevin case, the CA held that the case is intertwined with Astorga’s
complaint for illegal dismissal; thus, it is the labor tribunal that has
rightful jurisdiction over the complaint. SMART’s motion for
reconsideration having
_______________
16 Rollo (G.R. No. 148132), pp. 79-80.

17 Id.
18 Id., at p. 110.
19 Id., at pp. 146-152.
442

20
been denied, 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 its September 27, 1999
21
Decision, the NLRC sustained Astorga’s 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 Arbiter’s 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 Arbiter’s
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 and Santiago] are hereby ordered to pay the
final wages of [Astorga] after [she] had submitted the required supporting
papers therefor.
22
SO ORDERED.”
Astorga filed a motion for reconsideration, but the NLRC denied it

23
on December 21, 1999.
Astorga then went to the CA via certiorari. On June 11, 2001, the
24
CA rendered a Decision affirming with modification the resolutions
of the NLRC. In gist, the CA agreed with
_______________
20 Id., at pp. 164-165.

21 Rollo (G.R. No. 151079), pp. 102-120.
22 Id., at p. 120.
23 Id., at p. 122.
24 Id., at pp. 24-36.
443
VOL. 542, JANUARY 28, 2008 443

the NLRC that the reorganization undertaken by SMART resulting

in the abolition of CSMG was a legitimate exercise of management
prerogative. It rejected Astorga’s posturing that her non-absorption
into SNMI was tainted with bad faith. However, the CA found that
SMART failed to comply with the mandatory one-month notice
prior to the intended termination. Accordingly, the CA imposed a
penalty equivalent to Astorga’s one-month salary for this non-
compliance. The CA also set aside the NLRC’s 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, [Astorga’s] motion for reconsideration is hereby

PARTIALLY GRANTED. [Smart] is hereby ordered to pay [Astorga] her
backwages from 15 February 1998 to 06 November 1998. [Smart’s] motion
for reconsideration is outrightly DENIED.
25
SO ORDERED.”
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
26
of these petitions with G.R. No. 148132.
In her Memorandum, Astorga argues:
I
THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY

OF ASTORGA’S DISMISSAL DESPITE THE FACT THAT HER
DISMISSAL WAS EFFECTED IN CLEAR VIOLATION
_______________
25 Id., at p. 45.
26 Rollo (G.R. No. 151372), p. 175.
444

OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE,

CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR
HER DISMISSAL.
II
SMART’S 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
27
ACQUIRED AS PART OF HER EMPLOYEE (sic) BENEFIT.
On the other hand, Smart in its Memoranda raises the following

issues:
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.
_______________
27 Rollo (G.R. No. 151079), p. 250.
445
VOL. 542, JANUARY 28, 2008 445

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
28
WAS ABSOLUTELY NO NOTICE AT ALL.
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.
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
29
CODE.
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.
_______________
28 Id., at p. 273.
29 Rollo (G.R. No. 148132), p. 266.
446

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
30
one who has wrongfully taken or detained the property. 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
31
retained during the pendency of the action.
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
32
exclusive jurisdiction of the labor arbiters and the NLRC.”
We do not agree. Contrary to the CA’s ratiocination, the RTC

rightfully assumed jurisdiction over the suit and acted well within its
discretion in denying Astorga’s motion to dismiss. SMART’s
demand for payment of the market value of the car or, in the
alternative, the surrender of the car, is not a
_______________
30 Black’s Law Dictionary, Fifth Edition, p. 1168.

31 Tillson v. Court of Appeals, G.R. No. 89870, May 28, 1991, 197 SCRA 587,
598.
32 Id., at p. 148.
447
VOL. 542, JANUARY 28, 2008 447

labor, but a civil, dispute. It involves the relationship of debtor and

33
creditor rather than employee-employer relations. As such, the
dispute falls within the jurisdiction of the regular courts.
34
In Basaya, Jr. v. Militante, 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.”
_______________
33 See Nestlé Philippines Inc. v. National Labor Relations Commission, G.R. No.
85197, March 18, 1991, 195 SCRA 340, 343.
34 G.R. L-75837, December 11, 1987, 156 SCRA 299, 303-304.
448

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
Astorga’s 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
35
Commission, viz.:
“x x x redundancy in an employer’s 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 employee’s 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
36
arbitrary or malicious action is not shown.
_______________
35 G.R. No. 82249, February 7, 1991, 193 SCRA 665, 672.

36 Dole Philippines, Inc. v. National Labor Relations Commission, 417 Phil. 428,
440; 365 SCRA 124, 134 (2001).
449
VOL. 542, JANUARY 28, 2008 449

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
37
employee on the ground of redundancy.
We agree with the CA that the organizational realignment
introduced by SMART, which culminated in the abolition of
CSMG/FSD and termination of Astorga’s employment was an
honest effort to make SMART’s 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 SMART’s decision to outsource
the corporate sales market to SNMI
_______________
37 Id.
450

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 SMART’s
telecommunications services to the corporate market. SMART, to ensure it
can respond quickly, efficiently and flexibly to its customer’s 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
38
reasonable returns for his investment. 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
_______________
38 Asian Alcohol Corporation v. National Labor Relations Commission, 364 Phil.

912, 924-925; 305 SCRA 416, 427-428 (1999).
451
VOL. 542, JANUARY 28, 2008 451

39
termination only on March 16, 1998 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
40
March 6, 1998.
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.”
SMART’s 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. Astorga’s
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 Astorga’s 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 Astorga’s employment illegal. The validity of
termination can exist independently of the proce-
_______________
39 Rollo (G.R. No. 151372), p. 62.

40 Id., at p. 56.
452

41 42
dural infirmity of the dismissal. In DAP Corporation v. CA, 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
Astorga’s 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
43
Corporation v. Pacot, 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 tempered because 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 employer’s 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) month’s pay for every year of
service, whichever is higher. The records show that Astorga’s length
of service is less than a year. She is, there-
_______________
41 DAP Corporation v. Court of Appeals, G.R. No. 165811, December 14, 2005,
477 SCRA 792, 798.
42 Id.
43 G.R. No. 151378, March 28, 2005, 454 SCRA 119, 125-126.
453
VOL. 542, JANUARY 28, 2008 453

fore, 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
44
on the employer. SMART failed to discharge the onus probandi.
Accordingly, it must be held liable for Astorga’s salary from
February 15, 1998 until the effective date of her termination, on
April 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
45
work. The Labor Arbiter ruled that Astorga was illegally
dismissed. But on appeal, the NLRC reversed the Labor Arbiter’s
ruling and categorically declared Astorga’s dismissal valid. This
ruling was affirmed by the CA in its assailed Decision. Since
Astorga’s dismissal is for an authorized cause, she is not entitled to
backwages. The CA’s 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.
_______________
44 G & M (Phil.), Inc. v. Batomalaque, G.R. No. 151849, June 23, 2005, 461
SCRA 111, 118.
45 Filflex Industrial & Manufacturing Corporation v. National Labor Relations
Commission, G.R. No. 115395, February 12, 1998, 286 SCRA 245, 253.
454

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 Astorga
P50,000.00 as indemnity for its noncompliance 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.
Ynares-Santiago (Chairperson), Austria-Martinez, Corona**

and Reyes, JJ., concur.
Petition granted in G.R. No. 148132, judgment and resolution

dated February 28, 2000 set aside.
Notes.—Replevin may refer either to the action itself, i.e., to

regain the possession of personal chattels being wrongfully detained
from the plaintiff by another, or to the provisional remedy that
would allow the plaintiff to retain the thing during the pendency of
the action and hold it pendente lite. (BA Finance Corporation vs.
Court of Appeals, 258 SCRA 102 [1996])
Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements
of the enterprise—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.
(DOLE Philippines, Inc. vs. National Labor Relations Commission,
365 SCRA 124 [2001]
_______________
** In lieu of Associate Justice Minita Chico-Nazario per Special Order No. 484
dated January 11, 2008.
455
VOL. 542, JANUARY 28, 2008 455

Tokio Marine Malayan Insurance Company Incorporated vs. Valdez
Basic is the rule that property already placed under legal custody
may not be a proper subject of replevin. (Vda. De Danao vs. Ginete,
395 SCRA 542 [2003])
——o0o——
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8/13/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 542

434 SUPREME COURT REPORTS ANNOTATED

SMART COMMUNICATIONS, INC., petitioner, vs. REGINA M.

SMART COMMUNICATIONS, INC., petitioner, vs. REGINA M.

REGINA M. ASTORGA, petitioner, vs. SMART

Actions; Provisional Remedies; Replevin; Words and Phrases;

Same; Same; Same; Jurisdictions; Labor Law; An employer’s demand

VOL. 542, JANUARY 28, 2008 435

Smart Communications, Inc. vs. Astorga

Labor Law; Termination of Employment; Redundancy; Management

436 SUPREME COURT REPORTS ANNOTATED

Smart Communications, Inc. vs. Astorga

ing of workers, decreased volume of business, or dropping of a particular

PETITIONS for review on certiorari of the decisions and resolutions

The facts are stated in the opinion of the Court.

VOL. 542, JANUARY 28, 2008 437

Federico C. Leynes & Partners for Regina Astorga.

1 Penned by Associate Justice Elvi John S. Asuncion (dismissed), with Associate

438 SUPREME COURT REPORTS ANNOTATED

dia, Incorporated (SNMI). Since SNMI was formed to do the sales

7 Rollo (G.R. No. 151372), p. 62.

VOL. 542, JANUARY 28, 2008 439

quirements of the Labor Code. The redundancy of Astorga’s position

10 Id., at pp. 68-78.

440 SUPREME COURT REPORTS ANNOTATED

ruled that contracting out the functions performed by Astorga to an

“WHEREFORE, judgment is hereby rendered declaring the dismissal of

15 Id., at pp. 90-92.

VOL. 542, JANUARY 28, 2008 441

Astorga ﬁled a motion for reconsideration, but the RTC denied it on

16 Rollo (G.R. No. 148132), pp. 79-80.

442 SUPREME COURT REPORTS ANNOTATED

“WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and

Astorga ﬁled a motion for reconsideration, but the NLRC denied it

20 Id., at pp. 164-165.

VOL. 542, JANUARY 28, 2008 443

the NLRC that the reorganization undertaken by SMART resulting

“WHEREFORE, [Astorga’s] motion for reconsideration is hereby

Astorga and SMART came to us with their respective petitions for

THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY

444 SUPREME COURT REPORTS ANNOTATED

OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE,

SMART’S REFUSAL TO REINSTATE ASTORGA DURING THE

THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT

On the other hand, Smart in its Memoranda raises the following

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED

WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND

VOL. 542, JANUARY 28, 2008 445

WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL

WHETHER THE HONORABLE COURT OF APPEALS HAS

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED

446 SUPREME COURT REPORTS ANNOTATED

We do not agree. Contrary to the CA’s ratiocination, the RTC

30 Black’s Law Dictionary, Fifth Edition, p. 1168.

VOL. 542, JANUARY 28, 2008 447

labor, but a civil, dispute. It involves the relationship of debtor and

“Replevin is a possessory action, the gist of which is the right of possession

448 SUPREME COURT REPORTS ANNOTATED

The CA, therefore, committed reversible error when it overturned