Case Summary (G.R. No. 183623)
Procedural Posture and Relief Ordered by the Court
The Supreme Court affirmed with modification the Court of Appeals’ September 29, 2000 decision. It directed Philippine Airlines (PAL) to recognize the named respondents (except where later modified) as PAL’s regular employees in their same or substantially equivalent positions and to pay wages, benefits, and salary differentials corresponding to the difference between what respondents received and what PAL’s regular employees of the same rank received. The Court additionally ordered monetary relief for Benedicto Auxtero in the nature of salary differential, backwages until finality of the decision, and separation pay in lieu of reinstatement. Because the Court lacked sufficient data to determine monetary liabilities, the case was remanded to the Labor Arbiter solely for computation of monetary claims.
Basis for Declaring Respondents as Regular Employees
The Court’s declaration that respondents are PAL’s regular employees was premised on the finding that Synergy Services Corporation operated as a labor-only contractor. Under applicable labor doctrine, when the contractor is labor-only, the personnel are effectively employees of the principal employer. Consequently, respondents were held entitled to salaries, allowances, and other employment benefits provided under PAL’s Collective Bargaining Agreement.
Petitioner’s Arguments in Motion for Reconsideration
PAL filed a motion for reconsideration reiterating that respondents were Synergy employees and arguing that an order to “accept” respondents as regular employees would be iniquitous because it would force PAL to maintain a workforce in excess of operational needs. PAL also urged that reinstatement is no longer an appropriate remedy due to the long lapse of time and asserted financial impossibility to comply with the acceptance order, citing alleged economic losses and retrenchment measures taken on June 30, 1998. PAL further disclosed that 13 of the respondents had separately filed illegal dismissal cases pending before the CA (CA-G.R. SP No. 00922).
Respondents’ Clarification and Additional Requests
Respondents sought clarification that the Court’s directive to “accept” them should be construed as an instruction to “reinstate” those terminated during the pendency of the case, with full backwages and other benefits from termination until actual reinstatement. They also sought attorney’s fees, though they acknowledged that they had not raised that claim previously before the appellate court. Respondents disclosed that several among them had been terminated purportedly via retrenchment and that some had either died or previously settled.
Developments Concerning Roque Pilapil and Benedicto Auxtero
PAL presented supervening developments for two respondents. Roque Pilapil had been recognized as a PAL regular employee but was later dismissed for submitting falsified academic credentials. Pilapil’s illegal dismissal complaint was dismissed by the Labor Arbiter; the appellate court’s disposition was reinstated with modification, and Pilapil later failed to prosecute an intended petition to the Supreme Court, resulting in termination of that proceeding. PAL asserts it paid the separation pay awarded to Pilapil on September 23, 2003; respondents do not dispute this. Benedicto Auxtero obtained a favorable judgment in a separate Supreme Court case (G.R. No. 158710) affirming the CA’s earlier decision; PAL reports having satisfied that judgment by a Joint Declaration of Satisfaction and a Release and Quitclaim dated November 29, 2007, with Auxtero having waived reinstatement. Respondents’ counsel states Auxtero’s separate case was not coordinated with the counsel representing respondents in the present matter.
Modification of the Decision with Respect to Pilapil and Auxtero
In light of the foregoing supervening developments, the Court modified its prior decision to deem the claims of Pilapil and Auxtero extinguished before promulgation of the Supreme Court’s decision. The Court reasoned that Pilapil’s earlier recognition as regular employee yielded to a valid dismissal for misconduct established in his own separate proceeding, and that Auxtero’s pursuit of separate remedies amounted to forum-shopping that could not be countenanced. Accordingly, claims fully satisfied or finally disposed of were excluded from the operative relief granted in the modified dispositive portion.
Clarification on the Effect of the Regularization Finding on Illegal Dismissal Issues
The Court clarified that its declaration of respondents as regular employees was without prejudice to the determination of whether specific dismissals were lawful in the proper proceedings. The Supreme Court’s ruling addressed only regularization and under-/non-payment of benefits; it did not adjudicate or preclude separate determinations on just or authorized causes for termination. The decision explicitly acknowledged that security of tenure attaches once respondents are declared regular employees, meaning they can be dismissed only for just or authorized causes with observance of procedural due process. However, the validity of dismissals (including claims of retrenchment) must be decided in the appropriate illegal dismissal proceedings.
Treatment of the Economic Impossibility and Retrenchment Defense
The Court rejected PAL’s claim of inability to comply with the acceptance order based on alleged financial losses because PAL presented no sufficient evidence substantiating economic impossibility. The Court noted that PAL raised the economic-impossibility argument belatedly—only in its motion for reconsideration before the CA—and that the issue is fundamentally factual and thus better resolved in the proper case. The Court also observed respondents’ willingness to accept substantially equivalent positions. If a subsequent determination in the illegal dismissal proceedings establishes an authorized cause (such as valid retrenchment), PAL would still be required to pay respondents their corres
...continue readingCase Syllabus (G.R. No. 183623)
Procedural Posture and Post-Decision Motions
- The Supreme Court issued a Decision on February 29, 2008, affirming with modification the Court of Appeals' September 29, 2000 Decision.
- Petitioner Philippine Airlines, Inc. filed a Motion for Reconsideration of that Decision.
- Respondents filed a Motion for Clarification and/or Reconsideration in light of subsequent incidents and information not previously brought to the Court’s attention.
- The Court considered manifestations and information from both parties concerning supervening events and compliance with the prior judgments, and modified its prior Decision accordingly by resolution dated April 30, 2009 (G.R. No. 146408).
Core Facts Found and Relevant Background
- Synergy Services Corporation (Synergy) was found to be a labor-only contractor.
- As a consequence of the finding against Synergy, the Court declared respondents to be regular employees of Philippine Airlines, Inc. (PAL).
- Respondents were found entitled to the salaries, allowances, and other employment benefits under the pertinent Collective Bargaining Agreement applicable to PAL regular employees.
- The subject complaints before the Court were for regularization and under-/non-payment of benefits; the Court did not adjudicate the validity of eventual dismissals except to note implications of security of tenure.
- Petitioner pleaded financial difficulties and alleged retrenchment/terminations during pendency, asserting impossibility of compliance with an order to accept respondents as regular employees; petitioner presented little or no substantiation of those economic losses before the Court.
Issues Presented to the Court
- Whether respondents employed through Synergy are in truth regular employees of PAL due to Synergy being a labor-only contractor.
- What reliefs are appropriate after declaring respondents as regular employees, including whether reinstatement and backwages should be ordered.
- Whether the Court should modify its Decision in light of new facts concerning two respondents, Roque Pilapil and Benedicto Auxtero, and other supervening events.
- Whether respondents are entitled to attorney’s fees despite their failure to raise such an issue earlier.
- Whether the Court’s declaration that respondents are regular employees precludes or prejudices resolution of separate illegal dismissal cases pending in other tribunals.
Court’s Holding (Disposition as Modified)
- The Supreme Court AFFIRMED with MODIFICATION the Court of Appeals Decision of September 29, 2000.
- PAL is ordered to recognize the named respondents (list repeated in the dispositive) as its regular employees in their same or substantially equivalent positions.
- PAL is ordered to pay the wages and benefits due them as regular employees plus salary differential corresponding to the difference between wages and benefits given them and those granted to PAL’s other regular employees of the same or substantially equivalent rank, up to June 30, 1998.
- The Court clarified that this recognition and monetary directive are “without prejudice to the resolution of the illegal dismissal case.”
- Because there was no data before the Court from which monetary liabilities could be precisely calculated, the case was REMANDED to the Labor Arbiter solely for the computation of monetary liabilities.
- The Decision as modified explicitly limited the salary differential and monetary obligations to the period up to June 30, 1998, and left issues of reinstatement/backwages beyond that date subject to the separate illegal dismissal proceedings.
Legal Reasoning and Key Principles Articulated
- Synergy’s status as a labor-only contractor meant that its employees were, in substance, employees of PAL; therefore respondents acquired the status of regular employees with attendant security of tenure.
- Security of tenure implies that respondents, as regular employees, could be dismissed only for just or authorized causes, with observance of procedural due process; such issues of just cause were beyond the subject matter of the regularization and benefits complaints and therefore must be resolved in the proper case.
- An order of reinstatement presupposes a finding of illegal dismissal in the proper action; the Supreme Court did not itself find that dismissals were illegal in this case, and therefore did not order reinstatement as an automatic consequence of the regularization ruling.
- Claims of impossibility of compliance due to alleged financial distress are factual matters; PAL failed to substantiate such alleged economic losses before the Court and had waived the defense by not properly raising it earlier in the appellate proceedings.
- Determination of retrenchment or economic loss as an authorized cause for dismissal is a factual inquiry reserved for the tribunal hearing the illegal dismissal action; the Supreme Court’s declaration of regular employee status neither frustrates nor preempts such determination.
Treatment of Reinstatement and Backwages
- The Court declined to order reinstatement as part of its pronouncement because reinstatement presupposes a determination of illegal dismissal in the proper case.
- The Decision expressly stated that respondents’ declaration as regular employees is without prejudice to resolution of the illegal dismissal issue in the proper proceedings.
- If, in the separate illegal dismissal proceedings, an authorized cause for dismissal is found (e.g., valid retrenchment), PAL would still be liable for benefits and salary differential up to June 30, 1998.
- If illegal dismissal is later found in the proper case, reinstatement with full backwages would be a remedy consistent with respondents’ declared status as regular employees; such relief does not conflict with the Court’s regularization finding.
Remand for Computation of Monetary Liabilities
- The Supreme Court remanded the case to the Labor Arbiter solely for the purpose of determining and computing PAL’s monetary liabilities to the respondents.
- The remand was necessitated by the absence of sufficient data in the record before the Supreme Court to calculate the exact amounts due.