Liana's Supermarket v. NLRC

G.R. No. 111014 (May 31, 1996)

Facts:

Liana's Supermarket, a self-service retail market operating in Parañaque and Pasig City, employed various workers, including sales ladies, cooks, and cashiers, from 1980 to 1982. These employees were allegedly underpaid, required to work beyond the standard eight hours without overtime compensation, and denied legal holiday pay and emergency allowances. In late 1982 and early 1983, the employees raised their grievances with the management, specifically with Peter Sy, the General Manager, and Rosa Sy, a consultant, but were met with threats of dismissal.

In response to the management's actions, the employees formed a labor union and affiliated with the National Labor Union, demanding recognition and compliance with labor laws. On April 30, 1983, Liana's Supermarket contracted BAVSPIA International Services to supply laborers. However, in late 1984, Rosa Sy pressured employees to resign from the union, threatening them with suspension or dismissal if they did not comply. Many employees were subsequently dismissed without just cause or were given fabricated charges.

The National Labor Union filed multiple complaints against Liana's Supermarket and its management for underpayment of wages, nonpayment of overtime, holiday pay, and other benefits. These complaints were consolidated, and the union submitted lists of complainants, which fluctuated in number due to withdrawals and new submissions.

The Labor Arbiter ruled that Liana's Supermarket was the true employer of the complainants, finding that BAVSPIA was engaged in labor-only contracting. The Arbiter determined that the complainants were illegally dismissed and ordered their reinstatement along with back wages. The National Labor Relations Commission (NLRC) affirmed this ruling.

Legal Issues:

1. How many individual complainants were involved in the case?
2. Were the complainants illegally dismissed?
3. Is a compromise agreement with a motion to dismiss filed by a local chapter of the union legally binding?

Arguments:

• Petitioner (Liana's Supermarket):

  • Argued that there were only seven individual complainants, as per the Labor Arbiter's decision, and that the cases did not constitute a class suit.
  • Contended that BAVSPIA was the true employer and that any resignations were voluntary, thus negating claims of illegal dismissal.
  • Claimed that the compromise agreement signed by union officers should be binding on all complainants.

• Respondents (National Labor Union and Complainants):

  • Asserted that the case was a representative suit, allowing the union to file on behalf of its members.
  • Maintained that the complainants were illegally dismissed and that Liana's Supermarket was the true employer.
  • Argued that the compromise agreement lacked individual consent from the complainants and was therefore not binding.

Court's Decision and Legal Reasoning:

The Supreme Court affirmed the NLRC's decision, clarifying that the case was a representative suit rather than a class suit. It emphasized that the union had the right to file on behalf of its members, as allowed under the Labor Code. The Court found that Liana's Supermarket was indeed the employer, as BAVSPIA was engaged in labor-only contracting, which is prohibited under the Labor Code.

The Court ruled that the complainants were illegally dismissed, as Liana's Supermarket failed to demonstrate just cause or due process in the dismissals. The Court also held that the alleged voluntary resignations were invalid due to the nature of the labor-only contracting arrangement.

Regarding the compromise agreement, the Court ruled that it could not bind the complainants as there was no evidence of individual consent from them. The Court modified the Labor Arbiter's award of separation pay, stating it should be equivalent to one month’s salary for every year of service instead of one-half month.

Significant Legal Principles Established:

1. Representative Suit vs. Class Suit: The distinction between a representative suit and a class suit was clarified, allowing unions to file on behalf of their members without needing to join each member individually.
2. Labor-Only Contracting: The ruling reinforced the prohibition against labor-only contracting, establishing that the principal employer is responsible for the workers supplied by a labor contractor.
3. Consent for Compromise Agreements: The decision underscored the necessity of individual consent from employees for any compromise agreements regarding money claims, emphasizing the protection of laborers' rights.