Republic of the Philippines
SUPREME COURT
FIRST DIVISION
G.R. No. 166302. July 28, 2005
LOTTE PHIL. CO., INC., Petitioners,
vs.
ERLINDA DELA CRUZ, LEONOR MAMAUAG, LOURDES CAUBA, JOSEPHINE DOMANAIS,
ARLENE CAGAYAT, AMELITA YAM, VIVIAN DOMARAIS, MARILYN ANTALAN, CHRISTOPHER
RAMIREZ, ARNOLD SAN PEDRO, MARISSA SAN PEDRO, LORELI JIMENEZ, JEFFREY
BUENO, CHRISTOPHER CAGAYAT, GERARD CABILES, JOAN ENRIQUEZ, JOSEPH DE LA
CRUZ, NELLY CLERIGO, DULCE NAVARETTE, ROWENA BELLO, DANIEL RAMIREZ, AILEEN
BAUTISTA and BALTAZAR FERRERA, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari1 assails the July 9, 2004 decision2 of the Court of Appeals in CA-
G.R. SP No. 72732 and its November 26, 2004 resolution3 denying reconsideration thereof.
The established facts of this case are as follows:
Private respondent (petitioner herein) Lotte Phils., Inc. (Lotte) is a domestic corporation. Petitioners
(respondents herein) are among those who were hired and assigned to the confectionery facility
operated by private respondent.
On December 14, 1995 – and yearly thereafter until the year 2000 – 7J Maintenance and Janitorial
Services ("7J") entered into a contract with private respondent to provide manpower for needed
maintenance, utility, janitorial and other services to the latter. In compliance with the terms and
conditions of the service contract, and to accommodate the needs of private respondent for
personnel/workers to do and perform "piece works," petitioners, among others, were hired and
assigned to private respondent as repackers or sealers.
However, either in October, 1999 or on February 9, 2000, private respondent dispensed with their
services allegedly due to the expiration/termination of the service contract by respondent with 7J.
They were either told "hwag muna kayong pumasok at tatawagan na lang kung may gawa"; or were
asked to wait "pag magrereport sila sa trabaho." Unfortunately, petitioners were never called back to
work again.
Aggrieved, petitioners lodged a labor complaint against both private respondent Lotte and 7J, for
illegal dismissal, regularization, payment of corresponding backwages and related employment
benefits, 13th month pay, service incentive leave, moral and exemplary damages and attorney’s
fees based on total judgment award.4
On February 28, 2001, Labor Arbiter Cresencio G. Ramos, Jr., rendered judgment5 declaring 7J as
employer of respondents.6 The arbiter also found 7J guilty of illegal dismissal7 and ordered to
reinstate respondents,8 pay P2,374,710.00 as backwages, P713,648.00 as 13th month pay and
P117,000.00 as service incentive leave pay.9
Respondents appealed to the National Labor Relations Commission (NLRC) praying that Lotte be
declared as their direct employer because 7J is merely a labor-only contractor. In its decision10 dated
April 24, 2002, the NLRC found no cogent reason to disturb the findings of the labor arbiter and
affirmed its ruling that 7J is the employer of respondents and solely liable for their claims.
Respondents’ motion for reconsideration was denied by the NLRC in a resolution dated June 18,
2002.
Undaunted, they filed a petition for certiorari in the Court of Appeals11 against the NLRC and Lotte,
insisting that their employer is Lotte and not 7J.
Lotte, however, denied that respondents were its employees. It prayed that the petition be dismissed
for failure to implead 7J who is a party interested in sustaining the proceedings in court, pursuant to
Section 3, Rule 46 of the Revised Rules of Civil Procedure.
On July 9, 2004, the Court of Appeals reversed and set aside the rulings of the Labor Arbiter and the
NLRC. In its decision, the Court of Appeals declared Lotte as the real employer of respondents and
that 7J who engaged in labor-only contracting was merely the agent of Lotte. Respondents who
performed activities directly related to Lotte’s business were its regular employees under Art. 280 of
the Labor Code. As such, they must be accorded security of tenure and their services terminated
only on "just" and "authorized" causes.
Lotte’s motion for reconsideration was denied, hence this petition, on the following issues:
8. Whether or not petitioner herein had the burden of proof to establish before the proceedings in the
Court of Appeals that 7J Maintenance and Janitorial Service was not a labor-only contractor.
8.1. Whether or not the Petition in CA-G.R. SP No. 72732 is dismissible for failure to comply with
Section 3, Rule 46 in relation to Section 5, Rule 65 of the 1997 Rules of Civil Procedure. 12
We first resolve the procedural issue raised by petitioner. Lotte asserts that 7J is an indispensable
party and should have been impleaded in respondents’ petition in the Court of Appeals. It claims that
the petition before the Court of Appeals was dismissible for failure to comply with Section 3,13 Rule
46 in relation to Section 514 of Rule 65 of the Revised Rules of Civil Procedure.
Petitioner’s contention is tenable.
An indispensable party is a party in interest without whom no final determination can be had of an
action,15 and who shall be joined either as plaintiffs or defendants.16 The joinder of indispensable
parties is mandatory.17 The presence of indispensable parties is necessary to vest the court with
jurisdiction, which is "the authority to hear and determine a cause, the right to act in a case". 18 Thus,
without the presence of indispensable parties to a suit or proceeding, judgment of a court cannot
attain real finality.19 The absence of an indispensable party renders all subsequent actions of the
court null and void for want of authority to act, not only as to the absent parties but even as to those
present.20
In the case at bar, 7J is an indispensable party. It is a party in interest because it will be affected by
the outcome of the case. The Labor Arbiter and the NLRC found 7J to be solely liable as the
employer of respondents. The Court of Appeals however rendered Lotte jointly and severally liable
with 7J who was not impleaded by holding that the former is the real employer of respondents.
Plainly, its decision directly affected 7J.
In Domingo v. Scheer,21 we held that the non-joinder of indispensable parties is not a ground for the
dismissal of an action22 and the remedy is to implead the non-party claimed to be
indispensable.23 Parties may be added by order of the court on motion of the party or on its own
initiative at any stage of the action and/or such times as are just. If the petitioner refuses to implead
an indispensable party despite the order of the court, the latter may dismiss the complaint/petition for
the petitioner/plaintiff’s failure to comply therefor.24
Although 7J was a co-party in the case before the Labor Arbiter and the NLRC, respondents failed to
include it in their petition for certiorari in the Court of Appeals. Hence, the Court of Appeals did not
acquire jurisdiction over 7J. No final ruling on this matter can be had without impleading 7J, whose
inclusion is necessary for the effective and complete resolution of the case and in order to accord all
parties with due process and fair play.
In light of the foregoing, the Court sees no need to discuss the second issue raised by petitioner.
WHEREFORE, the July 9, 2004 decision of the Court of Appeals in CA-G.R. SP No. 72732 and the
November 26, 2004 resolution, are SET ASIDE. Let the case be REMANDED to the Court of
Appeals to include 7J Maintenance and Janitorial Services as an indispensable party to the case for
further proceedings.
SO ORDERED.
