Meralco Industrial Engineering Services, Co., vs.

NLRC

Facts:

Meralco and the private respondent executed a contract where the latter would supply the
petitioner janitorial services, which include labor, materials, tools and equipment, as well as
supervision of its assigned employees, at

Meralco’s Rockwell Thermal Plant in Makati City. The 49 employees lodged a Complaint for
illegal deduction, underpayment, non-payment of overtime pay, legal holiday pay, premium pay
for holiday and rest day and night differentials against the private respondent before the LA. By
virtue of RA 6727, the contract between Meralco and the private respondent was amended to
increase the minimum daily wage per employee. 2 months after the amendment of the
contract, Meralco sent a letter to private respondent informing them that at the end of
business hours of Jan. 31, 1990, it would be terminating the contract entered into with the
private respondents. On the said date, the complainants were pulled out from their work. The
complainants amended their complaint to include the charge of illegal dismissal and to implead
Meralco as a party respondent. The LA dismissed the complaint. On appeal, the NLRC affirmed
the decision of the LA with the modification that Meralco was solidarily liable with the private
respondents. The CA on the other hand, modified the Decision of the NLRC and held Meralco to
be solidarily liable with the private respondents for the satisfaction of the

laborer’s

separation pay.

Issue:

Should Meralco be liable for the payment of the dismissed

laborer’s

separation pay?

Held: No.

SC ruled that Art.109 should be read in relation to Art. 106 and 107 of the LC. Thus, an indirect
employer can only be held liable with the independent contractor or subcontractor in the event
that the latter fails to pay the wages of its employees. While it is true that the petitioner was
the indirect employer of the complainants, it cannot be held liable in the same way as the
employer in every respect. Meralco may be considered an indirect employer only for purposes
of unpaid wages. The only instance when the principal can also be held liable with the
independent contractor or subcontractor for the back wages and separation pay of the
latter’s

employees is when there is proof that the principal conspired with the independent contractor
or subcontractor in the illegal dismissal of the employees. In the present case, there is no
allegation, much less proof presented, that the petitioner conspired with private respondents in
the illegal dismissal of the

latter’s

employees; hence, it cannot be held liable for the same.