Redundancy Scheme is Ineffective if there is no Power to Terminate Services

Redundancy Scheme is Ineffective if there is no Power to Terminate Services

Redundancy is one of the grounds to terminate services under authorized cause in Article 298 of the Labor Code, as amended. Termination letter is usually signed by the individual holding the authority to execute the act.

However, in the case of Alfredo American Power Conversion Corporation, et al. vs. Lim, G.R. No. 214291, January 11, 2018, the Supreme Court held, in part, that the termination is ineffective where there is no authority to effect redundancy.

In this case, the employee, Lim was hired as Country Manager by APC. He was tasked to liase with APCC. His payroll was with APCPI (registered entity)

APCP BV acquired APCPI.

Lim was subsequently promoted as RM for APC North Asean. His position was declared redundant by APC BV. He filed a labor case against APCC, et al.

APCC, et al argued that Lim should have impleaded only APCP BV (where he had EE contract). They said that the complaint against other APCC should be dismissed.

The SC held that APCC conducted business in the Philippines as an unregistered and unregulated enterprise. Consequently, it did not pay taxes despite doing business here and earning income as a result. APCP BV was not engaged in sales, as it is licensed to engage only in the manufacture of computer-related products -yet, it holds Lim in its payroll.

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The SC concluded that APCC, et al. are, for all practical purposes, Lim’s employers. He was selected and engaged by APCC. His salaries and benefits were paid by APCP BV and he is under the supervision and control of APCS and APC Japan. The SC observed that there is no such thing in legitimate employment arrangements.

For the SC, such bizarre labor relation was made possible and necessary only by APCC, et al.’s common objective: to enable APCC to skirt the law. For all legal purposes, APCC is Lim’s employer.

The subject redundancy scheme a sham, the same being an integral part of APCC, et al.’s illegitimate scheme to defraud the public -including Lim -and the State. It is null and void for being contrary to law and public policy as it is in furtherance of an illegal scheme perpetrated by APCC with the aid of its co-APCC, et al.

Quae ab initio non valent, ex post facto convalescere non possunt. Things that are invalid from the beginning are not made valid by a subsequent act.

The redundancy program in issue that was used to justify Lim’s dismissal from work was nonetheless implemented by Plumer and Kong -who are employees of APC Japan and APCS, as well as by Hendy and del Ponso -employees of APCP BV. As admitted by APCC, et al., Plumer and Kong conceived and implemented the redundancy program, and Hendy and del Ponso prepared the documents which consummated Lim’s supposed dismissal.

As APCP BV Human Resource Director and Manager, respectively, Hendy and del Ponso furnished the DOLE with documents relative to the redundancy scheme, including a notice of termination/redundancy.

Since APCC is Lim’s true employer, APC Japan, APCS, APCP BV, Plumer, Kong, Hendy, and del Ponso had no business coming into the picture. They are not connected with APCC whatsoever. They had no authority to devise a redundancy scheme and represent APCC in their dealings with the DOLE. Therefore, their supposed redundancy scheme, as against Lim, is ineffective. They had no power to terminate the services. The prerogative belonged to APCC.

However, this does not prevent Lim from recovering from all APCC, et al. Since they all benefited from his services -APCC was able to grow its business and conceal its sales operations and, by its misrepresentations and assurances that it would register its operations, it successfully convinced Lim to do its bidding.

Finally, the SC held that for the gross violation of the fundamental policy of the Labor Code, APCC, et al. were liable to pay backwages, damages, and attorney’s fees.

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

Read more on procedural due process discussion by Atty. Elvin:

Read more on procedural due process by Atty. Villanueva:

Twin Requirements of Notice and Hearing

Procedural Due Process for Other Types of Employment

Notice to Explain: Contents and Requirements

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