#6 American Power Conversion Corporation vs. Lim

American Power Conversion Corporation vs.
Lim
G.R. No. 214291 | January 11, 2018
FACTS:
On July 1, 1998, respondent Jason Yu Lim was hired to serve as the
Country Manager of American Power Conversion Philippine Sales Office,
which was not registered with the Securities and Exchange Commission
(SEC) but whose function then was to act as a liaison office for American
Power Conversion Corporation (APCC) - an American corporation - and
provide sales, marketing, and service support to the local distributor and
consumers of APCC in the Philippines. APCC is engaged in designing,
developing, manufacturing and marketing of power protection and
management solutions for computer, communication, and electronic
applications.
The only SEC-registered corporation then v.ras American Power

Conversion (Phils.), Inc. (APCPI) with manufacturing and production
facilities in Cavite and Laguna.
Since American Power Conversion Philippine Sales Office was unregistered

but doing business in the country, respondent was included in the list of
employees and payroll of APCPI. He was also instructed to create a petty
cash fund using his own personal bank account to answer for the day-to-
day operations of American Power Conversion Philippine Sales Office.
In 2002, American Power Conversion (Phils.) B. V. (APCP BV) was

established in the country and it acquired APCPI and continued the latter's
business here.
In November, 2004, respondent was promoted as Regional Manager for

APC North A.SEAN, a division of APC ASEAN. As Regional Manager for
APC North A.SEAN, he handled sales and marketing operations for
Thailand, the Philippines, Vietnam, Myanmar, Cambodia, Laos, and Guam,
and reported directly to Larry Truong (Truong), Country General Manager
for the entire A.PC ASEAN and officer of APCC. Truong was not connected
in any way with APCP BV - which, per its SEC registration, is licensed to
engage only in the manufacture of computer-related products.
In an electronic mail (e-mail) message, Truong announced respondent's

appointment together with the appointment of David Shao (Shao) as
Regional Manager for South ASEAN; which covered Singapore, Malaysia,
Indonesia, and Brunei. Truong noted respondent's "steady and principled
leadership" since he "joined APC Philippines in 1998" that "doubled x x x
revenue x x x despite the Fact that the country economy has improved little
since the Financial Crisis."
In 2005, Truong was replaced by petitioner George Kong (Kong).

During their stint with Kong, respondent and Shao supposedly discovered
irregularities committed by Kong, which sometime in late August, 2005
they reported to. Leanne Cunnold (Cunnold), General Manager for APC-
South and Kong's immediate superior. Cum10Jd took up the matter with
petitioner Alicia Hendy (Hendy), Human Resource Director for APCP BV.
Respondent and Shao also took the matter directly to David Plumer
(Plumer), Vice President for Asia Pacific of APC Japan, who advised them
to discuss the matter directly with Kong.
Upon being apprised of the issues against him, Kong on September 8, 2005
sent three e-mail messages to respondent and the other six members of the
sales and marketing team indicating his displeasure and that he took the
matter quite personally. In the last of his e-mail messages, he remarked -
"'and finally, thank you for the 7 knives in my back."
On September 30, 2005, Kong and Hendy met with Shao, where the latter
was asked to resign; when he refused, he was right then and there
terminated from employment with immediate effect. The Letter of
Termination handed to him did not specify any reason why he was being
fired from work and was written on the official stationery of American
Power Conversion Singapore Pte, Ltd. (APCS) and signed by its Human
Resource Manager, Samantha Phang (Phang).
Thereafter, Kong arrived in the country and met with respondent on

October 17, 2005, where he informed the latter of a supposed company
restructuring which rendered his position as Regional Manager for North
ASEAN redundant. Respondent was furnished by the Human Resource
Manager of APCP BV Maximo del Ponso, Jr. (del Ponso) with a
Termination Letter.
On December 8, 2005, respondent's counsel proceeded to the Department

of Labor and Employment (DOLE) to verify if petitioners gave the requisite
notice of termination due to redundancy. In a Certification, 17 the DOLE
through National Capital Region Assistant Regional Director Ma. Celeste
M. Valderrama confirmed that there was no record on file - from
September l, 2005 up to November 30, 2005 - of a notice of termination
filed by any of the petitioners.
Respondent was paid severance pay, but in a written demand, he sought

reinstatement, the payment of backwages and allowances/benefits, and
damages for his claimed malicious and illegal termination.
Likewise, in a December 9, 2005 letter to respondent, APCP BV through

Hendy acknowledged to respondent that should he be questioned about the
use by APCC of his private bank account, petitioners will "offer the fullest
possible accounting of its [APCC] past actions."
ISSUE:
Whether the prerogative to declare position redundant can be held by
related companies
RULING:
According to the SC, when Lim was hired directly by APCC, an American
entity that was not registered to conduct business here, to sell its products
and services here, he was tossed over to another APC Corporation, APCPI
(now APCP BV), a Philippine-registered manufacturing corporation, where
he was ostensibly included in the list of employees and the payroll. Thus,
APCC conducted business in the Philippines as an unregistered and
unregulated enterprise. Consequently, it did not pay taxes despite doing
business here and earning income as a result. APCP BV was not engaged in
sales, as it is licensed to engage only in the manufacture of computer-
related productions – yet, it holds Lim in its payroll. Meanwhile, Lim took
orders from and came under the supervision and control of APCS and Kong
from Singapore. This arrangement and manner of conducting business by
APCC, et al. with their illegitimate business arrangement. The SC found the
situation unique in that Lim was hired directly by APCC of the USA, but
was being paid his remuneration by a separate entity – APCPP BV of the
Philippines, and is supervised and controlled by APCS from Singapore and
APC Japan – all in furtherance of APCC’s objective of doing business here
unfettered by government regulation. For the SC, such bizarre labor
relation was made possible and necessary only by APCC, et al’s common
objective: to enable APCC to skirt the law. For all legal purposes, APCC is
Lim’s employer. Therefore, the SC declared the subject redundancy scheme
a sham, the same being an integral part of APCC, et al’s illegitimate scheme
to defraud the public – including Lim – and the State. It is null and void for
being contrary to law and public policy as it is in furtherance of an illegal
scheme perpetrated by APCC with the aid of its co-APCC, et al. Quae ab
initio non valent, ex post facto convalescere nonpossunt. Things that
invalid from the beginning are not made valid by a subsequent act.

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American Power Conversion Corporation vs.

The only SEC-registered corporation then v.ras American Power

Since American Power Conversion Philippine Sales Office was unregistered

In 2002, American Power Conversion (Phils.) B. V. (APCP BV) was

In November, 2004, respondent was promoted as Regional Manager for

In an electronic mail (e-mail) message, Truong announced respondent's

In 2005, Truong was replaced by petitioner George Kong (Kong).

Thereafter, Kong arrived in the country and met with respondent on

On December 8, 2005, respondent's counsel proceeded to the Department

Respondent was paid severance pay, but in a written demand, he sought

Likewise, in a December 9, 2005 letter to respondent, APCP BV through

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