G.R. Nos. 230609-10, August 27, 2020
Monsanto Philippines, Inc., Petitioner, vs. National Labor Relations Commission, Martin B. Generoso Jr., Orville P. Pagonzaga, Roel M. Morano, Roel T. Malinao, Felmer Y. Estano, Sherwin T. Tabanag, Ponciano O. Laranio, Ariel F. Balili, Jerih M. Juntado, Jr., and Antonio S. Siso, Respondents.

FACTS

Petitioner Monsanto Philippines, Inc. (Monsanto), an agricultural business corporation, entered into a service agreement on April 25, 2005, with East Star Agricultural Development Corporation (East Star), a DOLE-accredited job contractor. Private respondents were agricultural crop technicians tasked to promote Monsanto’s products. In April 2007, they were informed their positions were redundant, and East Star formally terminated their employment on May 16, 2007. Private respondents filed a complaint for illegal dismissal against Monsanto, East Star, and its officers. The Labor Arbiter (LA) ruled East Star was a labor-only contractor and that private respondents were regular employees of Monsanto, dismissed for an authorized cause but without due process, awarding separation pay, nominal damages, and other benefits. The NLRC initially affirmed the LA but later modified the award, deleting certain benefits. The Court of Appeals (CA), in a consolidated Decision, ruled that East Star was a legitimate job contractor and the employer of private respondents (except Generoso), but held Monsanto solidarily liable with East Star for violations of the Labor Code under their service agreement. The CA found the dismissal illegal for lack of just or authorized cause and awarded backwages, separation pay, moral and exemplary damages, and attorney’s fees. Monsanto filed a petition for partial review.

ISSUE

1. Whether the CA erred in ruling East Star is a legitimate job contractor and the employer of private respondents.
2. Whether Monsanto is solidarily liable with East Star.
3. Whether the CA erred in ruling private respondents were illegally dismissed.
4. Whether the CA erred in awarding backwages, separation pay, damages, and attorney’s fees.
5. Whether the CA erred in ruling that Generoso is an employee of Monsanto.

RULING

1. The Supreme Court reversed the CA on this point, ruling that East Star was NOT a legitimate job contractor and was NOT the employer of private respondents. The Court found that Monsanto did not dispute private respondents’ allegation that Monsanto hired them through its officers before the service agreement’s execution, constituting an admission by silence. The service agreement was executed only after Monsanto had already hired and deployed them. Thus, an employer-employee relationship existed between Monsanto and private respondents from the start, and East Star acted merely as a labor-only contractor.
2. The Supreme Court affirmed that Monsanto is solidarily liable, but as the direct employer. Since East Star was a labor-only contractor, Monsanto, as the principal, is deemed the employer of private respondents under Article 106 of the Labor Code and is solely responsible for all rightful claims of the workers.
3. The Supreme Court affirmed that the dismissal was illegal. The cause cited was redundancy, but Monsanto failed to substantiate this claim with clear and convincing evidence. No documents were presented to prove a superfluous position or a bona fide reorganization. The dismissal was not for a just or authorized cause under the Labor Code.
4. The Supreme Court modified the awards. As illegally dismissed regular employees, private respondents are entitled to:
a. Full backwages from the time compensation was withheld until finality of the decision.
b. Separation pay in lieu of reinstatement, equivalent to one month’s pay for every year of service.
c. Moral damages of P15,000.00 each, as the dismissal was effected in a manner contrary to public policy.
d. Exemplary damages of P15,000.00 each to deter similar acts.
e. Attorney’s fees of 10% of the total monetary award.
The awards are subject to legal interest. The LA is ordered to recompute the amounts.
5. The Supreme Court affirmed the CA’s ruling that Generoso is an employee of Monsanto, as he presented evidence (letters dated December 3, 2004) proving Monsanto directly engaged his services before the service agreement.