LRTA v Bienvenido, Carlos, etc.

G.R. No. 188047 (2016)

Jardeleza, J.

SUBJECT MATTER: Solidary Liability of Indirect Employer/Direct Employer

SUMMARY: LRTA entered into an agreement with Meralco Transit Organization, Inc (METRO) for the
Management of Operation of the Light Rail Transit System (AMO-LRTS). COA nulled and voided the said
agreement. As its resolution, LRTA acquired METRO. LRTA approved the Employee Retirement Plan of
METRO and took the responsibility of the updating of the Metro, Inc., Employee Retirement Fund with the
Bureau of Treasury to ensure that the fund fully covers all retirement benefits payable to the employees of
Metro, Inc. However, only 50% of what is due was paid to the employees, given that the approved
severance pay is 1.5months salaries for every year of service. PRs sued LRTA and METRO for the
remaining 50%. LA ruled in favor of PRs. LRTA appealed, asserting that (1) LA has no jurisdiction over it
and (2) LRTA should not be held solidarily liable with METRO because LRTA has no employer-employee
relationship with METRO’s employees. NLRC, CA, SC affirmed LA’s ruling. LA has jurisdiction because
METRO remains a private corporation. LRTA is jointly liable because it manifestly agreed in doing so as
shown in a Memorandum and Board Resolution No. 00-44. Moreover, LRTA is solidarily liable as an indirect
employer as contemplated in Article 109 of LC. Finally, the ruling in LRTA v Mendoza is applicable by virtue
of the doctrine of stare decisis. The Mendoza case held that LRTA is solidarily liable with METRO for the
remaining 50%.

DOCTRINES:

By engaging in a particular business thru the instrumentality of a corporation (METRO), the government
(LRTA) divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the
rules of law governing private corporations (Labor Code).

The rule of stare decisis is a bar to any attempt to relitigate the same issue where the same questions
relating to the same event have been put forward by parties similarly situated as in a previous case litigated
and decided by a competent court.

PARTIES:

Petitioner Light Rail Transit Authority (LRTA)

Respondent Bienvenido R. Alvarez,
Carlos S. Velasco,
Ascencion A. Gargalicano,
Marlon E. Aguinaldo,
Petronilo T. Legaspi,
Bonifacio A. Estopia,
Andre A. Dela Merced,
Jose Novier D. Bayot,
Rolando Amazona and
Marlino Herrera

FACTS:

1. Agreement for the Management of Operation of the Light Rail Transit System (AMO-LRTS) was
entered into between LRTA and Meralco Transit Organization, Inc. (METRO) in 1984. LRTA shouldered
and provided for all the operating expenses of METRO.
2. Collective Bargaining Agreement (CBA) with METRO’s employees - provisions on wage increases
and benefits were approved by LRTA’s Board of Directors
3. Commission on Audit (COA) nullified and voided the AMO-LRTS – the case didn’t mention why.
4. LRTA acquired all of the shares of stocks of METRO – to resolve COA’s finding.
 LRTA hired new set of officers (Board, Top Management)
 Continued implementation of AMO-LRTS
 Continued establishment of Employees Retirement Plan of METRO
 CBA remained in force; LRTA sanctioned the unions of both rank-and-file and supervisory
employees
5. Memorandum approving severance/resignation benefit of METRO employees at one and a half (1
1/2) months salaries for every year of service.
6. STRIKE of union of rank-and-file employees over a retirement fund dispute.
 LRTA updated the retirement fund of METRO employees with Bureau of Treasury.
7. LRTA stopped the operation of METRO – Metro’s Board approved the release of 50% of the
severance pay.
8. COA Advisory Opinion – LRTA is liable to pay the severance pay of METRO’s employees.
9. PRs asked LRTA for the balance of their severance pay but to no avail. PRs filed before the NLRC
praying for payment of 13th month pay, separation pay, and refund of salary deductions against LRTA
and METRO.
10. Labor Arbiter ruled in favor of PRs - LRTA and METRO are jointly and severally liable.
11. Separate Appeals before NLRC
 METRO – denied for failure to file appeal bond
 LRTA – denied for lack of merit. MR denied.
o LRT argues that there being no employer-employee relationship, it is legally
inconceivable how LRTA can be held solidarily liable with METRO for the payment
of private respondents’ separation differentials.
12. CA on certiorari – denied for failure to comply with mandatory appeal bond. Denial become final and
executory.
 On merits – in light of the CBA, LRTA has financial obligations to PRs
 On jurisdiction – METRO remains a private corporation, hence LA has original and
exclusive jurisdiction.
 Stare decisis – the ruling in Malanao is applicable. MR denied.

ISSUES:

1. WON LA and NLRC have jurisdiction over LRTA – YES

2. WON LRTA is jointly and severally liable with METRO for PRs’ money claims – YES
3. WON doctrine of stare decisis is applicable. YES

RATIO:

Yes – LA and NLRC have jurisdiction.

 The respondents were hired by METRO and, were, therefore its employee.
 PNB v Pabalan - By engaging in a particular business thru the instrumentality of a corporation, the
government divests itself pro hac vice of its sovereign character, so as to render the corporation subject
to the rules of law governing private corporations.
 As applied in the case, LRTA must submit itself to the provisions governing private corporations,
including the Labor Code, for having conducted business through a private corporation, in this case,
METRO. Such private relation was not changed notwithstanding the subsequent acquisition by [LRTA]
of full ownership of [METRO] and take over of its business operations at LRT.

Yes – LRTA is solidarily liable for the remaining 50% of the PRs separation pay.

LRTA is contractually liable to pay the separation benefits.

 In a memorandum approved by LRTA, it provides that “By virtue of its ownership of Metro, Inc. LRTA
officially and formally assumed by authority of its board the obligation to update the Metro, Inc.
Employees Retirement Fund with the Bureau of Treasury, to ensure that the fund fully covers all
retirement benefits payable to Metro, Inc[.] employees x x x.
 In Light Rail Transit Authority v. Mendoza – Board Resolution No. 00-44 states that “LRTA anticipated
and prepared for the … (3) involuntary loss of jobs of the METRO employees, thus… (3) the updating
of the Metro, Inc., Employee Retirement Fund with the Bureau of Treasury to ensure that the fund fully
covers all retirement benefits payable to the employees of Metro, Inc.”

LRTA is solidarily liable as an indirect employer of PR.

 Art. 107 of LC “Indirect employer.—The provisions of the immediately preceding article shall likewise
apply to any person, partnership, association or corporation which, not being an employer, contracts
with an independent contractor for the performance of any work, task, job or project.
o LRTA qualifies as an indirect employer by contracting METRO to manage and operate the
Metro Manila light rail transit.
 Art. 109. Solidary liability.—The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining the extent of their civil liability
under this Chapter, they shall be considered as direct employers.
o Being an indirect employer, LRTA is solidarily liable with METRO.
 Mendoza - Department Order No. 18-02, S. 2002, the rules implementing Articles 106 to 109 of the
Labor Code, provides in its Section 19 that “the principal shall also be solidarily liable in case the
contract between the principal is pre-terminated for reasons not attributable to the contractor or
subcontractor.”
o The agreement was not renewed through no fault of METRO, as it was solely at the behest
of LRTA.

Yes – The doctrine of stare decisis warrants the dismissal of this petition.

 The same factual setting, and issues raised in this case also obtained Mendoza. In that case, this
Court ruled that LRTA is solidarily liable for the remaining fifty percent (50%) of the respondents’
separation pay which arises from the very same AMO-LRTS.
 The rule of stare decisis is a bar to any attempt to relitigate the same issue where the same questions
relating to the same event have been put forward by parties similarly situated as in a previous case
litigated and decided by a competent court.

DISPOSITIVE: WHEREFORE, the Petition is DENIED. The Decision dated February 20, 2009 of the Court
of Appeals in C.A.-G.R. S.P. No. 103278 is AFFIRMED.