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AMERICAN POWER CONVERSION CORPORATION; et. al. v. LIM, G.R. No. 214291 | 2018

Case Digest: G.R. No. 214291 | January 11, 2018

American Power Conversion Corporation, et al. vs. Jason Yu Lim

Ponente: Justice Del Castillo

Nature of the Petition

This Petition for Review on Certiorari challenges the April 23, 2014 Decision of the Court of Appeals (CA) in CA-G.R. SP No. 110142, which set aside the NLRC’s ruling and reinstated the July 27, 2007 Decision of the Labor Arbiter. The petitioners later sought reconsideration, which was denied by the CA's September 11, 2014 Resolution.

Court Ruling

The Supreme Court DENIED the petition and AFFIRMED the CA Decision with modifications. Specifically, the directive to reinstate Lim was deleted, as were monetary awards related to vehicle insurance and registration. The Court also directed the Bureau of Internal Revenue to review the case for potential tax implications.

Key Doctrines

✔️ Four-Fold Test of Employment Relationship: To determine whether an employer-employee relationship exists, courts consider:

  • Selection & engagement of the employee

  • Payment of wages

  • Power of dismissal

  • Control over the employee's conduct

✔️ Sham Redundancy Schemes: The Court ruled that the redundancy scheme used to justify Lim's dismissal was a fraudulent maneuver intended to circumvent labor laws. Since APCC was Lim’s true employer, decisions made by affiliated entities lacked legal authority.

✔️ Fraud & Misrepresentation: The Court declared that the petitioners engaged in concerted fraud by structuring an artificial employment hierarchy to avoid compliance with labor protections.

✔️ Invalid Contracts Cannot Be Made Valid Later: Following the legal principle Quae ab initio non valent, ex post facto convalescere non possunt—acts that are invalid from the beginning remain invalid, even if subsequent steps attempt to legitimize them.

Case Background

Jason Yu Lim was hired as Country Manager for American Power Conversion Philippine Sales Office (APCPSO), a liaison office not registered with the Securities and Exchange Commission (SEC).

Company Acquisition & Employment Transfers

  • APCPSO was later acquired by American Power Conversion (Phils.), Inc. (APCPI), transferring Lim to APCPI’s payroll.

  • Lim was later promoted to Regional Manager for APC North ASEAN, reporting to petitioner George Kong.

  • While working with Kong, Lim discovered irregularities and reported them to David Plumer, Vice President for Asia Pacific of APC Japan.

  • Kong, upon learning of this, expressed his displeasure via email to Lim and the team.

Alleged Restructuring & Termination

  • Lim was later informed of a corporate restructuring that rendered his position redundant.

  • He was then handed a Termination Letter, which he contested in court, alleging that his dismissal was invalid.

Court Findings

  • The Court ruled that for all practical purposes, the various petitioning corporations were Lim's employers.

  • This artificial employment structure was created solely to bypass legal obligations.

  • The supposed redundancy program was declared a sham, as it was developed by entities lacking the legal authority to impose such changes.

  • Consequently, Lim's termination was declared invalid, and petitioners were held liable for backwages, damages, and attorney’s fees.

Conclusion

The Supreme Court ruled that Jason Yu Lim was unlawfully dismissed, concluding that his employer fraudulently devised an illegal redundancy scheme. While reinstatement was deemed impractical, Lim was awarded compensation for wrongful dismissal and legal violations.

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