G.R. No. 174809; June 27, 2012
DUTY FREE PHILIPPINES SERVICES, INC., Petitioner, vs. MANOLITO Q. TRIA, Respondent.

FACTS

Petitioner Duty Free Philippines Services, Inc. (DFPSI), a manpower agency, employed respondent Manolito Q. Tria and seconded him to Duty Free Philippines (DFP) as a Warehouse Supervisor. An audit in 1998 revealed a fake condemnation proceeding involving 1,020 packs of Marlboro cigarettes, which were illegally removed from the warehouse. Ed Garcia, a stockkeeper implicated in the audit, claimed he acted under orders from his superiors, including Tria. The DFP Discipline Committee (DFPDC) investigated and found Tria guilty of dishonesty for direct participation in the fake condemnation and pilferage, recommending his dismissal. DFPSI subsequently terminated Tria’s employment on September 18, 1998, based on this finding.
Tria filed a complaint for illegal dismissal against DFPSI. The Labor Arbiter ruled in his favor, ordering reinstatement and payment of backwages. The National Labor Relations Commission (NLRC) affirmed the decision. When DFPSI appealed to the Court of Appeals (CA), it raised for the first time the defense that it was not Tria’s employer, pointing to DFP as the real employer. The CA rejected this, noting the defense was barred by estoppel for not being raised earlier, and upheld the finding of illegal dismissal.

ISSUE

Whether the Court of Appeals erred in: (1) holding DFPSI liable as the employer and barring its new defense; (2) not ruling on the liability of DFP as an indispensable party; and (3) affirming the finding of illegal dismissal.

RULING

The Supreme Court denied the petition and affirmed the CA. On the first issue, the defense of non-existence of an employer-employee relationship is a question of fact that cannot be raised for the first time on appeal. DFPSI actively participated in the proceedings before the LA and NLRC, consistently arguing the validity of the dismissal based on just cause, thereby conceding the relationship. It is estopped from asserting a contrary position later. On the second issue, DFP is not an indispensable party. The cause of action is based on Tria’s dismissal by DFPSI, his direct employer under the law. The Labor Code holds the manpower agency primarily liable to the employee, and DFPSI can seek reimbursement from DFP if warranted. On the third issue, the Court found no reason to disturb the factual findings of the LA, NLRC, and CA. DFPSI failed to substantiate the charge of dishonesty with clear and convincing evidence. The sole uncorroborated allegation of Ed Garcia, a co-respondent in the audit, was insufficient to establish Tria’s participation. The burden of proving a valid dismissal rests on the employer, and DFPSI did not discharge this burden. Therefore, the dismissal was illegal.