G.R. No. 203932 . June 08, 2016
PHILIPPINE AIRLINES, INC., PETITIONER, VS. ENRIQUE LIGAN, ET AL., RESPONDENTS.

FACTS

Philippine Airlines (PAL) entered into service agreements with Synergy Services Corporation, whereby Synergy provided janitors and station attendants at Mactan airport. The respondents were personnel supplied by Synergy. They initially filed a complaint for regularization, which culminated in a final Supreme Court Decision dated April 30, 2009, declaring Synergy a labor-only contractor and ordering PAL to recognize the respondents as its regular employees, with monetary awards computed up to June 30, 1998. This prior ruling became final and executory.
While that regularization case was pending, PAL terminated its contract with Synergy effective June 30, 1998, citing serious business losses. Synergy, in turn, terminated the respondents. The respondents then filed separate complaints for illegal dismissal against PAL. The Labor Arbiter initially ruled Synergy was an independent contractor and solely liable. On appeal, the National Labor Relations Commission (NLRC) reversed, finding the respondents were regular employees of PAL based on the nature of their duties, exclusive service to PAL, workplace within PAL’s premises, and PAL’s shared supervision and control—factors consistent with the Supreme Court’s prior final ruling on the labor-only contracting arrangement.

ISSUE

The core issue is whether the Court of Appeals correctly affirmed the NLRC’s finding that the respondents were illegally dismissed by PAL, thereby making PAL liable for their dismissal.

RULING

The Supreme Court denied PAL’s motion for reconsideration and affirmed the lower courts’ rulings. The legal logic rests on the conclusive application of the doctrine of conclusiveness of judgment, also known as preclusion of issues or collateral estoppel. The Court’s final and executory 2009 Decision in the prior regularization case had already definitively settled that Synergy was a labor-only contractor and the respondents were regular employees of PAL. This finding on the nature of the employment relationship is binding and cannot be relitigated in the subsequent illegal dismissal case. PAL’s attempt to re-argue that Synergy was a legitimate independent contractor was a barred collateral attack on a settled issue.
Consequently, as the true employer, PAL bore the burden of proving that the dismissal was for a just or authorized cause. PAL failed to discharge this burden. Its mere allegation of business losses was insufficient without substantiating the claimed losses and demonstrating that the dismissal was done in good faith and without discrimination. The termination of the service contract did not absolve PAL of its direct employer liability towards the respondents, its regular employees. Therefore, their dismissal, absent valid cause, was illegal. The remand to the Labor Arbiter was proper for the computation of full backwages and other monetary benefits consequent to the illegal dismissal.