CASE DIGEST: Mirant Phils v. Caro

G.R. No. 181490 : April 23, 2014




Petitioner corporation is organized and operating under and by virtue of the laws of the Republic of the Philippines. It is a holding company that owns shares in project companies such as Mirant Sual Corporation and Mirant Pagbilao Corporation (Mirant Pagbilao) which operate and maintain power stations located in Sual, Pangasinan and Pagbilao, Quezon, respectively. Petitioner corporation and its related companies maintain around 2,000 employees detailed in its main office and other sites. Petitioner corporation had changed its name to CEPA Operations in 1996 and to Southern Company in 2001. In 2002, Southern Company was sold to petitioner Mirant whose corporate parent is an Atlanta-based power producer in the United States of America. Petitioner corporation is now known as Team Energy Corporation.

Petitioner Edgardo A. Bautista (Bautista) was the President of petitioner corporation when respondent was terminated from employment.

Respondent was hired by Mirant Pagbilao on January 3, 1994 as its Logistics Officer. In 2002, when Southern Company was sold to Mirant, respondent was already a Supervisor of the Logistics and Purchasing Department of petitioner. At the time of the severance of his employment, respondent was the Procurement Supervisor of Mirant Pagbilao assigned at petitioner corporations corporate office. As Procurement Supervisor, his main task was to serve as the link between the Materials Management Department of petitioner corporation and its staff, and the suppliers and service contractors in order to ensure that procurement is carried out in conformity with set policies, procedures and practices. In addition, respondent was put in charge of ensuring the timely, economical, safe and expeditious delivery of materials at the right quality and quantity to petitioner corporations plant. Respondent was also responsible for guiding and overseeing the welfare and training needs of the staff of the Materials Management Department. Due to the nature of respondents functions, petitioner corporation considers his position as confidential.

Respondent filed a complaint for illegal dismissal and money claims for 13th and 14th month pay, bonuses and other benefits, as well as the payment of moral and exemplary damages and attorneys fees. It is the contention of respondent that he was illegally dismissed by petitioner corporation due to the latters non-compliance with the twin requirements of notice and hearing. He asserts that while there was a notice charging him of unjustified refusal to submit to random drug testing, there was no notice of hearing and petitioner corporations investigation was not the equivalent of the hearing required under the law which should have accorded respondent the opportunity to be heard.

In a decision dated August 31, 2005, Labor Arbiter Aliman D. Mangandog found respondent to have been illegally dismissed. The Labor Arbiter also found that the quitclaim purportedly executed by respondent was not a bona fide quitclaim which effectively discharged petitioners of all the claims of respondent in the case at bar. If at all, the Labor Arbiter considered the execution of the quitclaim as a clear attempt on the part of petitioners to mislead its office into thinking that respondent no longer had any cause of action against petitioner corporation.

On appeal to the NLRC, petitioners alleged that the decision of the Labor Arbiter was rendered with grave abuse of discretion for being contrary to law, rules and established jurisprudence, and contained serious errors in the findings of facts which, if not corrected, would cause grave and irreparable damage or injury to petitioners. The NLRC, giving weight and emphasis to the inconsistencies in respondents explanations, considered his omission as unjustified refusal in violation of petitioner corporations drug policy. Respondent filed a motion for reconsideration, while petitioners filed a motion for partial reconsideration of the NLRC decision. In a Resolution dated June 30, 2006, the NLRC denied both motions.


1) Whether the petition for certiorari filed by respondent with the CA should have been summarily dismissed as it lacked the requisite verification and certification against forum shopping under Sections 4 and 5, Rule 7 of the Rules; 

2) Whether respondent was illegally dismissed



This jurisdiction has adopted in the field of labor protection a liberal stance towards the construction of the rules of procedure in order to serve the ends of substantial justice. This liberal construction in labor law emanates from the mandate that the workingmans welfare should be the primordial and paramount consideration. Thus, if the rules of procedure will stunt courts from fulfilling this mandate, the rules of procedure shall be relaxed if the circumstances of a case warrant the exercise of such liberality.

If we sustain the argument of petitioners in the case at bar that the petition for certiorari should have been dismissed outright by the CA, the NLRC decision would have reached finality and respondent would have lost his remedy and denied his right to be protected against illegal dismissal under the Labor Code, as amended.

It is beyond debate that petitioner corporations enforcement of its Anti-Drugs Policy is an exercise of its management prerogative. It is also a conceded fact that respondent failed to take the random drug test as scheduled, and under the said company policy, such failure metes the penalty of termination for the first offense. A plain, simple and literal application of the said policy to the omission of respondent would have warranted his outright dismissal from employment if the facts were that simple in the case at bar. Beyond debate the facts of this case are not and this disables the Court from permitting a straight application of an otherwise prima facie straightforward rule if the ends of substantial justice have to be served.

It is the crux of petitioners argument that respondents omission amounted to unjust refusal because he could not sufficiently support with convincing proof and evidence his defenses for failing to take the random drug test. For petitioners, the inconsistencies in respondents explanations likewise operated to cast doubt on his real reasons and motives for not submitting to the random drug test on schedule. In recognition of these inconsistencies and the lack of convincing proof from the point of view of petitioners, the NLRC reversed the decision of the Labor Arbiter. The CA found the ruling of the Labor Arbiter to be more in accord with the facts, law and existing jurisprudence.


We agree with the disposition of the appellate court that there was illegal dismissal in the case at bar.

While the adoption and enforcement by petitioner corporation of its Anti-Drugs Policy is recognized as a valid exercise of its management prerogative as an employer, such exercise is not absolute and unbridled. Managerial prerogatives are subject to limitations provided by law, collective bargaining agreements, and the general principles of fair play and justice. In the exercise of its management prerogative, an employer must therefore ensure that the policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. The Anti-Drugs Policy of Mirant fell short of these requirements.

Petitioner corporations subject Anti-Drugs Policy fell short of being fair and reasonable.

First. The policy was not clear on what constitutes unjustified refusal when the subject drug policy prescribed that an employees unjustified refusal to submit to a random drug test shall be punishable by the penalty of termination for the first offense. To be sure, the term unjustified refusal could not possibly cover all forms of refusal as the employees resistance, to be punishable by termination, must be unjustified. To the mind of the Court, it is on this area where petitioner corporation had fallen short of making it clear to its employees as well as to management as to what types of acts would fall under the purview of unjustified refusal. Even petitioner corporations own Investigating Panel recognized this ambiguity.


It is not a mere jurisprudential principle, but an enshrined provision of law, that all doubts shall be resolved in favor of labor. Thus, in Article 4 of the Labor Code, as amended, all doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor. In Article 1702 of the New Civil Code, a similar provision states that in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Applying these provisions of law to the circumstances in the case at bar, it is not fair for this Court to allow an ambiguous policy to prejudice the rights of an employee against illegal dismissal. To hold otherwise and sustain the stance of petitioner corporation would be to adopt an interpretation that goes against the very grain of labor protection in this jurisdiction. As correctly stated by the Labor Arbiter, when a conflicting interest of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged worker.

Second. The penalty of termination imposed by petitioner corporation upon respondent fell short of being reasonable. Company policies and regulations are generally valid and binding between the employer and the employee unless shown to be grossly oppressive or contrary to law50 as in the case at bar. Recognizing the ambiguity in the subject policy, the CA was more inclined to adopt the recommendation of petitioner corporations own Investigating Panel over that of Sliman and the NLRC.

To be sure, the unreasonableness of the penalty of termination as imposed in this case is further highlighted by a fact admitted by petitioner corporation itself: that for the ten-year period that respondent had been employed by petitioner corporation, he did not have any record of a violation of its company policies.


A corporation has a personality separate and distinct from its officers and board of directors who may only be held personally liable for damages if it is proven that they acted with malice or bad faith in the dismissal of an employee. Absent any evidence on record that petitioner Bautista acted maliciously or in bad faith in effecting the termination of respondent, plus the apparent lack of allegation in the pleadings of respondent that petitioner Bautista acted in such manner, the doctrine of corporate fiction dictates that only petitioner corporation should be held liable for the illegal dismissal of respondent.



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