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Norkis case on lack of control of contractor

2. Eparwa vs Liceo de Cagayan University- solidarily
3. Rosewood Processing Inc. vs NLRC-direct liability
4. Subcontracting vs Labor only Contracting

1.) “Lack of control by the contractor is justification for declaring the contractor as a labor-only
G.R. No. 182018 October 10, 2012

Lack of control was cited as additional justification for declaring the contractor as a labor-only
contractor in this case. Thus, together with the DOLE Regional Director’s finding that Panaghiusa sa
Kauswagan (PASAKA) Multipurpose Cooperative, a duly registered cooperative, evidently lacked
substantial capital or investment required of legitimate job contractors, the cooperative failed to dispute
the respondents’ allegation that officers of Norkis Trading supervised the work and paid the salaries of
its employees.

2.) “The contractor’s employees may collect from either or both the principal or legitimate contractor”
G.R. No. 150402 November 28, 2006

As far as the security guards are concerned, the actual source of the payment of their wage differentials
and premium for holiday and rest day work does not matter as long as they are paid. This is the import
of Eparwa and LDCUs solidary liability. Creditors, such as the security guards, may collect from anyone of
the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors
are liable for only half of the payment.

3.) “Solidary Liability of principal is only to the extent of the work performed under the employment
G.R. Nos. 116476-84. May 21, 1998

In this case, the security guards farmed out by the security agency to petitioner were assigned to its
other clients. Withal, fairness dictates that the petitioner should not be assigned to its other clients.
Under Articles 106, 107 and 109 of the Labor Code, should the contractor pay the wages of its
employees in accordance contractor, but such responsibility should be understood to be limited to the
extent of the work performed under the contract, in the same manner and extent that he is liable to the
employees directly employed by him. This liability of petitioner covers the payment of the workers’
performance of any work, task, job, or project. So long as the work, task, job or project has been
performed for petitioner’s benefit or on its behalf, the liability accrues for such period even if, later on,
the employees are eventually transferred or reassigned elsewhere. To reiterate, the principal’s (indirect
employer) liability to the contractor’s employees extends only to the period during which they were
working for the petitioner, and the fact that they were reassigned to another principal necessarily
ends such responsibility. The principal is made liable to his indirect employees because it can protect
itself from irresponsible contractors by withholding such sums and paying them directly to the
employees or by requiring a bond from the contractor for this purpose.


The principal distinctions between legitimate, permissible job contracting, on the one hand, and the
prohibited labor-only contracting, on the other.

a. In the former, no employer-employee relationship exists between the employees of the job
contractor and the principal employer (indirect employer); while in the latter, an employer-
employee relationship is created by law between the principal employer and the employees of
the labor-only contractor.

b. In the former, the principal employer is considered only an “indirect employer”, as this term is
understood under Article 107 of the Labor Code; while in the latter, the principal employer is
considered the “direct employer” of the employees in accordance with the last paragraph of
Article 106 of the Labor Code.

c. In the former, the joint and several obligation of the principal employer and the legitimate job
contractor is only for a limited purpose, that is, to ensure that the employees are paid their
wages. Other than this obligation of paying the wages, the principal employer is not responsible
for any claim made by the employees; while in the latter, the principal employer becomes
solidarily liable with the labor-only contractor for all the rightful claims of the employees.

d. In the former, the legitimate job contractor provides specific services; while in the latter, the
labor-only contractor provides only manpower.

e. In the former, the legitimate job contractor undertakes to perform a specific job for the principal
employer; while in the latter, the labor-only contractor merely provides the personnel to work
for the principal employer.