Mirant Phils Vs Caro

MIRANT (PHILIPPINES) CORPORATION, ET. AL. v. JOSELITO A.
CARO,
VILLARAMA, JR., J. GR No. 181490 April 23, 2014
Facts:
Petitioner company (Mirant) organized and operating under and by virtue of the laws of the RP,
is a holding company that owns shares in project companies Mirant Sual Corp and Mirant
Pagbilao which both operate and maintain power stations.
Petitioner Edgardo Bautista was the president of Mirant when Caro, the respondent, was
terminated from employment. Caro was hired by Mirant Pagbilao on January 3, 1994 as its
Logistics Officer. At the time of his dismissal, Caro was the Procurement Supervisor of Mirant
Pagbilao assigned at Mirants corporate office.
Caro filed a complaint for illegal dismissal and money claims for 13th and 14th month pay,
bonuses and other benefits, as well as payment of moral and exemplary damages and attorneys
fees before the Labor Arbiter against Mirant and its president. Mirant allegedly failed to comply
with the twin requirements of notice and hearing and while there was a notice charging him of
unjustified refusal to submit to random drug testing, there was no notice of hearing and Mirants
investigation was not the equivalent of the hearing required under the law. Caro argued that he
did not refuse the random drug test, instead, he was attending to an emergency regarding a
bombing in Tel-Aviv near his wifes work place. He also suggested that he take the test the next
day at his expense.
LA found Caro to have been illegally dismissed in a decision dated August 31, 2005. Caros
omission merely resulted to a failure to submit to the drug test and not an unjustified refusal
to submit to a random drug test which is penalized by termination.
On appeal to NLRC, it found that Caro was validly dismissed for cause and was also properly
accorded his constitutional right to due process as proven by the show-cause notice he had
received, his submission of his explanation, a notice of investigation and finally, he was served a
letter of termination with clear reasons for the same.
Caro filed a MR while Mirant filed for partial reconsideration. Both were denied by NLRC.
In a petition for certiorari before the CA, the CA disagreed with the NLRC and ruled that it was
immaterial whether respondent failed, refused, or avoided being tested. Caro did not get himself
tested in clear disobedience of company instructions and policy. However, such disobedience did
not warrant a penalty of dismissal. LAs decision was reinstated and modified by omitting the
award for moral and exemplary damages and attorneys fees.
CA denied Mirants petition for reconsideration
Issues:
1. Whether the CA erred in ruling that Caro was illegally dismissed. (Labor Law)
2. Whether the CA erred when it held petitioner Bautista (Mirants President)
personally liable for Caros dismissal. (Commercial Law)
Ruling:
1. The SC agreed with the CA that there was illegal dismissal. While the adoption and
enforcement by Mirant 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.
Mirants subject Anti-Drugs Policy fell short of being fair and reasonable. The policy was not
clear on what constitutes unjustified refusal when the 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 Mirants own Investigating Panel recognized
this ambiguity.
2. The SC agreed with the petitioners that Bautista should not be held personally liable for
Caros dismissal as he acted in good faith and within the scope of his official functions as then
president of the corporation. 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.
Petition denied. CA decision affirmed with modification that only Mirant is found guilty of the
illegal dismissal of Joselito Caro.

Mirant Phils Vs Caro

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MIRANT (PHILIPPINES) CORPORATION, ET. AL. v. JOSELITO A.

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