Smart Communications v Astorga

Summary: Astorga was dismissed due to redundancy. One of her benefits was a car plan, which Smart demanded she
pay the balance of (or return the car). Due to her refusal, Smart filed replevin, but she claimed the labor arbiter had
jurisdiction, and not the RTC.

Doctrine: For civil cases involving a creditor-debtor relationship where the creditor institutes an action for replevin, the
jurisdiction is properly with the regular courts.

- Regine Astorga was a District Sales Manager of Smart. One of her benefits is a P455k car plan. In Feb 1998,
Smart outsourced some of the marketing and sales force to NTT, forming “SNMI”, abolishing Astorga’s division.
- To soften the blow, Smart agreed to absorb recommended personnel. Astorga placed last in the performance
evaluation, but Smart nevertheless offered her a supervisory position in Customer Care, which she refused due
to lower salary/rank.
- After Smart issued a memo notifying Astorga of her termination due to redundancy, she filed a complaint for
illegal dismissal, arguing it was illegal for an employer to contract services which displace employees.
- While the case was ongoing, Smart sent a letter demanding Astorga pay the balance of her car plan or surrender
the car to the company. Due to her refusal, Smart filed a petition for replevin with the RTC. Astorga moved to
dismiss claiming the regular courts have no jurisdiction over a benefit arising from an employment contract.
- Pending resolution of the replevin case, the Labor Arbiter found Astorga illegally dismissed.
- The RTC denied Astorga’s motion to dismiss the replevin case, ruling that a right to possess a company car under
a car plan agreement falls within the replevin suit allowed by Rule 60, which is within the jurisdiction of the RTC.
- Astorga filed an MFR (denied), and elevated via certiorari to the CA, who reversed the RTC, ruling that the case
is intertwined with the illegal dismissal case, meaning the labor tribunal properly has jurisdiction.
- Meanwhile, Smart appealed to the NLRC, who reversed the LA, which ruled that contracting & streamlining
operations are allowed by law. Astorga appealed to the CA, who affirmed with modification (since Smart failed
to give her the required 1-month notification prior to termination) and imposed a 1-month salary penalty, and
ruled that the Car was not a labor concern, but a civil issue.
- Now, both parties come to the SC via certiorari.

Issues:

1. Did the RTC properly have jurisdiction over the replevin case? YES.
a. Replevin is an action where the owner or person entitled to goods may recover them from one who
wrongfully takes or detains such. In demanding for the value or surrender of the car, Smart instituted a
civil, not labor, dispute, as it involves a creditor-debtor relationship. Hence, the RTC has jurisdiction.
b. As in [Basaya v Militante], the issues in each case can be resolved independently of each other.
Regardless of whether she was dismissed, the car plan was a privilege which can and was revoked.
2. Was Astorga validly dismissed? YES.
a. Redundancy is an authorized cause for dismissal. Unless shown to be arbitrary or malicious, the
determination of an employee’s services as superfluous is not subject to review by the Courts.
b. In this case, no bad faith or illegality was shown. Not only was she offered a supervisory position, it is
also very hard to believe Smart would enter into a joint venture merely to ease out an employee.
c. A lack of compelling economic necessity is not a requirement for redundancy. Neither does the law
require the employer to suffer financial losses prior to the same.
3. Should Smart be penalized for not observing the 1-month notification? YES.
a. Astorga received notice on Mar 16 ’98 for her termination on Apr 3 ’98. Even DOLE was informed on
Mar 6, less than a month. This is clearly in violation of the procedural requirements.
b. However, procedural infirmity will not render termination illegal, as the validity of the same can exist
independently from the lapse.

Held: CA affirmed, but modified, deleting the part awarding backwages for lack of basis.