Case Summary (G.R. No. 148490)
Facts of the Case
In February 1997, 7K Corporation and Universal entered into a service contract obligating Universal to supply drivers for 7K Corporation at a monthly rate. Private respondents, Rene A. Corona and Alex B. Catingan, were employed as drivers starting March and April of that year. While 7K Corporation paid Universal the stipulated rate, it directly compensated the private respondents for overtime. A dispute ensued regarding the failure to duly pay for the overtime hours worked, resulting in the private respondents filing complaints for illegal dismissal, salary differentials, and other claims against Universal and 7K Corporation before the Labor Arbiter.
Labor Arbiter's Decision
On November 20, 1998, the Labor Arbiter ruled that Universal was the employer of the private respondents and that their dismissal was illegal, thereby ordering Universal to pay them backwages and separation pay, along with other monetary claims. The ruling emphasized the responsibilities arising under the Labor Code pertaining to labor standards.
NLRC's Ruling
Universal appealed the Labor Arbiter's decision to the NLRC, arguing that 7K Corporation was their true employer, and claimed there had been no illegal dismissal. On March 30, 1999, the NLRC modified the decision by eliminating the award for backwages but held both Universal and 7K Corporation jointly responsible for unpaid salary differentials, holiday pay, and proportional 13th month pay, confirming that Universal was a labor-only contractor.
Petitioner’s Further Appeals
Both parties filed motions for reconsideration, which the NLRC denied on August 23, 1999. Subsequently, 7K Corporation sought relief from the Court of Appeals (CA), claiming that the NLRC had overstepped its jurisdiction and that the Labor Arbiter's decision had become final as neither they nor the private respondents appealed it.
Court of Appeals Decision
The CA dismissed 7K Corporation's petition, affirming that Universal's appeal to the NLRC was valid and that the issue of who was responsible for payment had become a matter of joint concern for both 7K Corporation and Universal. It also clarified that the whole case went on appeal, automatically including all parties involved.
Supreme Court Ruling
Upon reaching the Supreme Court, 7K Corporation argued that the NLRC had no jurisdiction as the Labor Arbiter's decision was final and they were not parties in the appeal. However, the Court ruled against these assertions, affirming that the case appropriately included all parties once Universal filed its appeal, which was timely. It confirmed that labor-only contracting existed between Universal and 7K Corporation, making the latter jointly liable for all claims of the private respondents, regardless of the specific contractual terms stated.
Labor-Only Contracting Definition and Liability
The Supreme Court underscored that a contractor is presumed to be a
...continue readingCase Syllabus (G.R. No. 148490)
Case Background
- The case involves a Petition for Review on Certiorari filed by 7K Corporation (petitioner) against the National Labor Relations Commission (NLRC) and private respondents Rene A. Corona and Alex B. Catingan.
- The petition challenges the Decision of the Court of Appeals (CA) dated September 29, 2000, and its Resolution dated May 25, 2001.
- The events leading to the case began in February 1997 when 7K Corporation entered into a service contract with Universal Janitorial and Allied Services (Universal) for the provision of drivers.
- Private respondents, Corona and Catingan, were hired by 7K Corporation through Universal, with Corona starting on March 7, 1997, and Catingan on April 11, 1997.
Employment Relationship and Issues
- 7K Corporation paid Universal a fixed amount for each driver, but directly paid the private respondents for their overtime work.
- A dispute arose regarding the overtime payments, with the accounting department reducing the recorded overtime hours from 70 to only 20 hours.
- After their grievances were not addressed, the private respondents filed complaints for illegal dismissal, salary differentials, unpaid overtime, and reinstatement against Universal and 7K Corporation.
Labor Arbiter's Decision
- The Labor Arbiter (LA) found Universal to be the employer of the private respondents, ruling that the respondents were illegally dismissed.
- The LA's decision included the following findings:
- Universal was responsible for compliance with labor laws, including payment of wages and benefits.
- An award of six months'