Celdran v. Forza Integrated Services

FIRST DIVISION

[G.R. No. 189460. June 5, 2013.]

LEO MARIO C. CELDRAN, petitioner, vs. FORZA INTEGRATED SERVICES, CITY SERVICE CORPORATION, PEERLESS INTEGRATED SERVICES, INC., VALENTIN B. PRIETO, JR., CHIEF EXECUTIVE OFFICER, PERCIVAL R. SANTIAGO, CHIEF OPERATION OFFICER, ROLLY O. HERNANDEZ, SENIOR INFORMATION OFFICER, VICTOR B. PRIETO, VIRGIL B. PRIETO, AND VERNON B. PRIETO, ALL DIRECTORS OF FORZA INTEGRATED CORP., CITY SERVICE CORPORATION, AND PEERLESS INTEGRATED SERVICES, INC., respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated June 5, 2013 which reads as follows:

"G.R. No. 189460 (Leo Mario C. Celdran v. Forza Integrated Services, City Service Corporation, Peerless Integrated Services, Inc., Valentin B. Prieto, Jr., Chief Executive Officer, Percival R. Santiago, Chief Operation Officer, Rolly O. Hernandez, Senior Information Officer, Victor B. Prieto, Virgil B. Prieto, and Vernon B. Prieto, all directors of Forza Integrated Corp., City Service Corporation, and Peerless Integrated Services, Inc.). — We resolve the Petition for Review on Certiorari filed by petitioner Leo Mario C. Celdran (Celdran) from the judgments of the Court of Appeals (CA) in CA-G.R. SP. No. 03537. 1

The Facts

We quote the narration of facts by the CA as follows: cTIESa

Petitioner Leo Mario C. Celdran was working for Philamlife Insurance Company [(Philamlife)] before he was hired by private respondent City Service Corporation [(City Service)] on July 1, 2005, as Vice-President for the Visayas Regional Office in Cebu City. Parenthetically, private respondents City Service Corporation and Peerless Integrated Services, Incorporated [(Peerless Integrated)] are affiliate companies of respondent FORZA Integrated Corporation [(Forza Integrated)]. Celdran was paid a monthly salary of P150,000.00, P35,000.00 basic salary and P115,000.00 discretionary amount to be determined by the president and deposited in his bank account on a monthly basis. [According to petitioner, his] compensation package included a car benefit which to him, was a car plan wherein private respondent City Service Corporation would assume the remaining balance of his car plan with his former employer [in the amount of P518,787.88], with 50% participation by the company and the other 50% by Celdran himself; but, to private respondents, it was a car lease arrangement whereby an agreed percentage of the [amount paid to Philamlife] was to be set as residual value and the remaining amount was to be spread over a certain period as monthly car rental with an option to buy the vehicle at its residual value after the end of the lease period. Deductions were then made from Celdran's salary starting September 2005 but he gave instructions for the deductions to be made retroactive to his start of employment in July 2005. With the monthly deductions in place and the vehicle being already in the possession and use of Celdran, he was required to sign a motor vehicle lease contract in order to formalize the arrangement. Celdran consistently refused to sign the said lease contract as it was contrary to what he allegedly agreed with private respondent Valentin B. Prieto, Jr. [(V. Prieto)] during his employment interview way back in May 2005.

On November 10, 2005, private respondent Percival R. Santiago [(Santiago)], Chief Operating Officer, accused Celdran of dishonesty for allegedly charging a personal lunch to the company. Private respondent Santiago then demanded Celdran's resignation. Eight days after, Celdran received a termination notice signed by private respondent Santiago which led the former to file a complaint for illegal dismissal on November 22, 2005, before the Regional Arbitration Branch of the [National Labor Relations Commission (NLRC)]. However, the said case was settled as he was reinstated to his position on December 27, 2005.

Upon his return, Celdran was told to occupy the last open cubicle at the ground floor and not to his former office. He was given a new copy of the motor vehicle lease contract for his signature which he refused to sign. On January 12, 2006, he was relieved as Mancom Chairman for no reason at all. He was subjected to check and inspection by the security guard and his transportation and cellular phone allowances were subjected to new guidelines. Private respondent City Service Corporation gave Celdran the option to buy the Honda CRV at its residual value until February 9, 2006, otherwise, the former would recover the vehicle from the latter. CIHTac

On February 14, 2006, Celdran filed a complaint with the Regional Arbitration Branch of the NLRC charging private respondents with violation of the terms of the car plan. On February 15, 2006, Celdran filed an injunction case with a prayer for the issuance of a temporary restraining order with the NLRC, Fourth Division, to prevent private respondents from taking the car. Public respondent NLRC granted the prayed-for temporary restraining order as well as the writ of preliminary injunction. However, public respondent refused to make the injunction permanent in deference to the proceedings in this arbitration branch before which, the parties' conflicting positions on the nature of Celdran's car benefit had been submitted for determination.

On March 2, 2006, Celdran was placed under preventive suspension for 30 days due to his belligerent attitude and required to explain why he should not be terminated. He was not asked to return to work after his suspension for which reason he amended his complaint on April 11, 2006, to include charges of illegal suspension, constructive dismissal and unpaid money claims.

In a letter dated April 11, 2006, private respondent City Service Corporation informed all its employees, including Celdran, that by virtue of a board resolution dated March 17, 2006, the company decided to replace the Visayas Regional Office with a small Liaison Office. Consequently, Celdran made a second amendment of his complaint on April 18, 2006 to include charges of illegal lay-off/downsizing.

The Executive Labor Arbiter Ruling

On 10 April 2007, the Office of the Executive Labor Arbiter (ELA) rendered a Decision on the various claims of petitioner. On the issue of the arrangement involving the car, it found that the long-standing policy of City Service was to offer its senior officials a car lease program and not a car plan, as claimed by petitioner. Since he failed to prove that what was given to him was a car plan benefit, the ELA ruled that the agreement was on a car lease with an option to buy the car at its residual value at the end of the lease period, similar to the option given to other, more senior officials of the company.

The ELA then discussed the claim of petitioner that there were three instances of illegal dismissal committed against him: (a) the constructive dismissal when respondent rendered his employment impossible and unreasonable; (b) the extension of the preventive suspension imposed on him beyond 30 days; and (c) the termination of his employment due to an alleged downsizing of the regional office to a mere liaison office. On the first allegation, the ELA ruled that his subsequent claim of illegal dismissal due to retrenchment had the effect of conceding the allegation of constructive dismissal, since employment can only be terminated once. IAETSC

With respect to petitioner's allegation of illegal dismissal by virtue of the preventive suspension, the ELA found that there was nothing illegal in the action, because City Service had reinstated him in the payroll following the extension of the suspension. Nevertheless, it ruled that the preventive suspension was illegal, as it was not one of the valid grounds under the Labor Code. Consequently, respondents were ordered to pay him his salary corresponding to the time in which he was preventively suspended.

Anent the claim of the illegality of the downsizing, purportedly done only as a pretense for petitioner's ultimate dismissal, the ELA pronounced that City Service merely exercised its management prerogative and was not done for the purpose of circumventing the provisions of the Labor Code. Respondents submitted a report showing that the retrenchment in the Visayas regional office was done to prevent business losses, which the company had been experiencing for the past three years. The ELA noted that other employees similarly lost their jobs. Respondents were also able to notify the workers and the DOLE at least one month before the retrenchment, pursuant to law. Consequently, it ruled that the termination was based on an authorized cause.

The ELA also denied petitioner's application for the issuance of a subpoena against Manila Bulletin, as the application was only meant to look into anonymous advertisements, based on an unfounded allegation and hope that the company had been anonymously announcing vacancies for his position.

Finally, as regards the issue of liability, the ELA ruled that respondent corporations City Service, Forza Integrated, and Peerless Integrated were jointly and severally liable, since both petitioner and respondents apparently referred to the entities interchangeably, as if they were one and the same. However, as to the liability of the officers and directors of City Service, the ELA pronounced that the individual respondents could not be held personally accountable due to the separate juridical personality of City Service.

The NLRC Ruling

On 6 December 2007, the NLRC issued its Decision affirming the ELA's judgment, with a modification. The NLRC laid credence to the claim of petitioner that he had been extended a car plan benefit, and not a car lease arrangement. It pointed out that petitioner had already paid his former employer the amount of P408,212.12, or 44% of the total purchase price of the CR-V (P927,000), before he transferred to City Service. Because of his resignation from Philamlife, he had to immediately pay the remaining balance of P518,787.88, or 56% of the purchase price, so that he could keep the vehicle. In order to prevent the forfeiture of the payments made, he persuaded City Service to pay Philamlife the remaining balance. Thereafter, he and City Service entered into an arrangement, whereby the latter would share 50% of the amount paid to Philamlife as a car plan benefit.

The CA Ruling

On 5 March 2009, the CA issued its assailed Decision finding no grave abuse of discretion in the NLRC's ruling. According to the appellate court, the findings on the validity and the legality of the termination of the employment of petitioner were supported by substantial evidence. Consequently, the CA affirmed the following findings:

(a) Petitioner was extended a car plan benefit, and not a car lease plan; thus, City Service should bear 50% of the total amount paid to Philamlife. Since petitioner had already consigned and posted cash bonds equivalent to the value of the car (P518,787.88), the amount of P291,740.36 was released to City Service as petitioner's share in the amount paid to Philamlife, with interest. The remaining P227,047.52 was to be released to complainant.

(b) Petitioner was not illegally dismissed.

(c) Petitioner's preventive suspension was illegal.

(d) City Service must pay the following to petitioner: AHDacC

1.	Separation Pay	P150,000.00
2.	Unpaid Salary for Feb. 2006	115,000.00
3.	Unpaid Salary for April 2006	150,000.00
4.	Salary due to the illegal
	preventive suspension
	on March 2006	150,000.00
5.	Proportionate 13th month
	pay for 2006	56,250.00
6.	Refund of Expenses	12,400.00
		——————
		P633,650.00
		========

(e) Petitioner was not entitled to all of his other claims, monetary or otherwise.

(f) Individual respondents were not solidarily liable.

(g) The denial of the issuance of a subpoena duces tecum against Manila Bulletin was proper.

The Issue

Whether the CA committed reversible error when it ruled that the NLRC did not commit grave abuse of discretion in making the following findings:

I. Petitioner was not illegally dismissed.

II. Individual respondents may not be held solidarily liable with respondent corporations.

Our Ruling

We deny the appeal.

There is constructive dismissal when employees resort to involuntary resignation, because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility, or disdain by the employer becomes unbearable to them. 2 That is, they find themselves in a situation in which there is a belief that personal reasons cannot be sacrificed in favor of the exigency of the service, and that they have no other choice but to disassociate themselves from their employment. 3

We rule that there was no constructive dismissal in the case at bar. According to petitioner, he had been experiencing a kind of treatment that rendered "employment impossible and unreasonable" as early as in the last quarter of 2005. However, he never resigned. In fact, when he filed a complaint in March 2006 regarding his car plan benefit, he did not make any allegation concerning his inability to continue working for respondents due to an alleged ill working environment. We thus find that he was still willing and able to continue his employment despite any alleged ill treatment. To repeat, for there to be constructive dismissal, the employer must be shown to have committed an act of clear discrimination, insensibility, or disdain, which had become so unbearable on the part of the employee that it foreclosed any choice other than for the latter to forego continued employment. 4 cHESAD

We also find that petitioner was not illegally dismissed when respondent company implemented a downsizing program for their Visayas regional office. Pursuant to Article 283 of the Labor Code, an employer may reduce the number of its employees based on economic grounds in order to protect and preserve the employer's viability and ensure its survival. 5 Consequently, employers are given the management prerogative to implement a retrenchment program for the purpose of preventing losses or cessation of business operations due to business recession, industrial depression, seasonal fluctuations, lack of work, or considerable reduction in the volume of their business. 6

Respondents were able to prove that their retrenchment program was justified and not implemented in bad faith. As found by the ELA and the NLRC, respondents had been experiencing a downtrend in their Visayas operations since three years before they decided to downsize. In fact, City Service was suffering from continuous defeats in numerous biddings it had participated in. Furthermore, they showed that they had complied with the requirement of written notice to the employees and to the DOLE at least one month prior to the intended date of downsizing or retrenchment. We no longer see any reason to depart from these findings, especially since findings of fact of quasi-judicial bodies like the NLRC, when passed upon and upheld by the CA, are binding and conclusive upon this Court and will not be normally disturbed. 7

Finally, we also affirm the CA ruling that individual respondents may not be held personally liable. As a general rule, corporate directors, trustees, or officers are not personally liable for their official acts, unless they have exceeded the scope of their authority. Section 31 of the Corporation Code is in point:

SEC. 31. Liability of directors, trustees or officers. — Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. (Emphases supplied)

Indeed, personal liability may attach when directors, trustees, or officers assent to a patently unlawful act of the corporation, or when they act in bad faith, resulting in damages to the corporation, its stockholders, or other persons. 8 However, as previously discussed, there was no substantial evidence on record proving bad faith in the termination of petitioner's employment due to retrenchment.

WHEREFORE, the Decision dated 5 March 2009 and Resolution dated 10 August 2009 of the Court of Appeals in CA-G.R. SP. No. 03537 are hereby AFFIRMED.

SO ORDERED."

Very truly yours,

(SGD.) EDGAR O. ARICHETADivision Clerk of Court

 

Footnotes

1.Both the Decision dated 5 March 2009 and the Resolution dated 10 August 2009 in CA-G.R. SP. No. 03537 were penned by CA Associate Justice Stephen C. Cruz, and concurred in by Associate Justices Antonio L. Villamor and Florito S. Macalino.

2.Philippine Wireless, Inc. (Pocketbell) v. NLRC, G.R. No. 112963, 20 July 1999, 310 SCRA 653.

3.Id.

4.Singa Ship Management Phils., Inc. v. NLRC, G.R. No. 119080, 11 April 1998, 288 SCRA 692.

5.Central Azucarera de la Carlota v. NLRC, G.R. No. 100092, 29 December 1995, 251 SCRA 589.

6.Bogo-Medellin Sugarcane Planters Association, Inc. v. NLRC, G.R. No. 97846, 25 September 1998, 296 SCRA 108.

7.Penafrancia Tours and Travel Transport, Inc. v. Joselito Sarmiento and Ricardo Catimbang, G.R. No. 178397, 20 October 2010, 634 SCRA 279.

8.Tramat Mercantile, Inc. v. Court of Appeals, G.R. No. 111008, 7 November 1994, 238 SCRA 14.