Meralco Industrial of the NLRC and held Meralco to be

solidarily liable with the private respondents

Engineering for the satisfaction of the 

laborer’s separation pay. 

Services, Co., vs. Issue: 

NLRC  Should Meralco be liable for the payment of

the dismissed laborer’s separation pay? 

Facts: 
Meralco and the private respondent executed Held: 
a contract where the latter would supply the No.
petitioner janitorial services, which include
labor, materials, tools and equipment, as SC ruled that Art.109 should be read in
well as supervision of its assigned relation to Art. 106 and 107 of the
employees, at Meralco’s Rockwell Thermal LC.  Thus, an indirect employer can only be 
Plant in Makati City.  held liable with the independent contractor o
r subcontractor in the event that the latter
The 49 employees lodged a Complaint for ill fails to pay the wages of its employees.
egal deduction, underpayment, non-payment While it is true that the petitioner was the
of overtime pay, legalholiday pay, premium  indirect employer of the complainants, it
pay for holiday and rest day and night  cannot be held liable in the same way
differentials against the private respondent as the employer in every respect. Meralco
before the LA.  may be considered an indirect employer
only for purposes of unpaid
By virtue of RA 6727, the contract between wages.  The only instance when the princi
Meralco and the private respondent was pal can also be held liable with the indepe
amended to increase the minimum daily ndent contractor or subcontractor for the
wage per employee. 2 months after the back wages and separation pay of
amendment of the contract, Meralco sent the latter’s employees is when there is
a letter to private respondent informing them proof that the principal conspired with the
that at the end of business hours of Jan. 31, independent contractor or subcontractor in
1990, it would be terminating the contract the illegal dismissal of
entered into with the private respondents. On the employees. In the present case, there is n
the said date, the complainants were pulled o allegation, much less proof presented, that 
out from their work. The complainants the petitioner conspired with private respond
amended their complaint to include the ents in the illegal dismissal of the  latter’s
charge of illegal dismissal and to implead employees; hence, it cannot be held liable
Meralco as a party respondent. The LA for the same.
dismissed the complaint.

On appeal, the NLRC affirmed

the decision of the LA with the PAL v. Ligan (G.R.
modification that Meralco was solidarily
liable with the private respondents. The No. 146408)
CA on the other hand, modified the Decision Facts:
Petitioner Philippine Airlines and Synergy
Services Corporation as Contractor, entered
into an Agreement whereby Synergy
undertook to provide loading and delivery
services by furnishing all the necessary
capital, workers, materials, supplies and
equipment for the performance and
execution of said work. Herein respondents
who appear to have been assigned to work
for petitioner filed complaints before the
NLRC for the payment of their labor
standard benefits and regularization of
employment status claiming that they are
performing duties directly connected with
petitioner’s business. The Labor Arbiter’s
decision found Synergy an independent
contractor but was vacated on appeal. The
NLRC tribunal declared Synergy to be a
labor-only contractor and was affirmed
by the CA. Petitioner moved for
reconsideration but was denied.
Issue:
Whether or not there is labor-only
contracting.
Ruling: YES.
For labor-only contracting to exist,
Section 5 of D.O. No. 18-02 which
requires any  of two elements to be present
is, for convenience, re-quoted:
(i) The contractor or subcontractor does not
have substantial capital or
investment which relates to the job, work
or service to be performed and the
employees recruited, supplied or placed by
such contractor or subcontractor are
performing activities which are directly
related to the main business of the
principal, OR
(ii) The contractor does not exercise
the right to control over the performance of
the work of the contractual employee.
Even if only one of the two elements is
present then, there is labor-only contracting.
From the records of the case, it is gathered
that the work performed by almost all of the
respondents – loading and unloading of
baggage and cargo of passengers – is
directly related to the main business of
petitioner. And the equipment used by
respondents as station loaders, such as
trailers and conveyors, are owned by
petitioner.
Petitioner PAL, and not Synergy,
exercises control and supervisionover the
respondent workers’ methods of doing the
work, as reflected in their
Agreement: (1) Contractor (Synergy) shall
require all its workers, employees, suppliers
and visitors to comply with OWNER’S
(PAL) rules, regulations, procedures and
directives relative to the safety and security
of OWNER’S premises, properties and
operations (2) xxx shall furnish its
employees and workers identification
cards to be countersigned by OWNER and
uniforms to be approved by
OWNER. (3)OWNER may require
CONTRACTOR to dismiss immediately
and prohibit entry into OWNER’S
premises of any person employed therein by
CONTRACTOR who in OWNER’S opinion
is incompetent or misconducts himself or
does not comply with OWNER’S reasonable
instructions xxx
Petitioner in fact admitted that it fixes the
work schedule of respondents as their work
was dependent on the frequency of plane
arrivals. And as the NLRC found,
petitioner’s managers and supervisors
approved respondents’ weekly work
assignments and respondents and other
regular PAL employees were all referred to
as “station attendants” of the cargo operation
and airfreight services of petitioner.
Respondents having performed tasks which
are usually necessary and desirable in the air
transportation business of petitioner, they
should be deemed its regular employees and
Synergy as a labor-only contractor.
Almeda v. Asahi
Glass Philippines
(G.R. No. 177785)
Facts:
Respondent Asahi Glass Philippines entered
into a service contract with San Sebastian
Allied Services whereby the latter
undertook to provide the former with the
necessary manpower for its glass
manufacturing business. Pursuant to the
contract, SSASI hired herein petitioners as
glass cutters and quality controllers all
assigned to work for respondent. Sometime
after, respondent terminated its service
contract with SSASI which in turn
terminated the employment of petitioners.
Petitioners then filed complaints before
the Labor Arbiter asserting they should
be considered regular employees of the
respondent as they are performing
functions which are directly related to its
business. Respondent contends that
petitioners were employees of SSASI a
legitimate job contractor. The Labor Arbiter
dismissed the complaint but on appeal was
reversed by the NLRC tribunal declaring
SSASI a labor-only contractor. CA reversed
said decision and denied reconsideration.
Issues:
Whether or not SSASI is a labor-only
contractor.
Ruling: YES.
An important element of legitimate job
contracting is that the contractor has
substantial capital or investment, which
respondent failed to prove. The Court did
not find a single financial statement or
record to attest to the economic status and
financial capacity of SSASI to venture into
and sustain its own business independent
from petitioner.
Furthermore, the Court is unconvinced by
respondent’s argument that petitioners were
performing jobs that were not directly
related to respondent’s main line of
business. Respondent is engaged in glass
manufacturing. One of the petitioners served
as a quality controller, while the rest were
glass cutters. Petitioners supplemented the
regular workforce when the latter could not
comply with the market’s demand;
necessarily, therefore, petitioners performed
the same functions as the regular workforce.
The indispensability of petitioners’ services
was fortified by the length and continuity of
their performance, lasting for periods
ranging from three to 11 years.
More importantly, the Court finds that the
crucial element of control over petitioners
rested in respondent. In the instant case,
petitioners worked at the respondent’s
premises, and nowhere else. Petitioners
followed the work schedule prepared by
respondent. They were required to observe
all rules and regulations of the respondent
pertaining to, among other things, the
quality of job performance, regularity of job
output, and the manner and method of
accomplishing the jobs.

SSASI is a labor-only contractor; hence, it is

considered as the agent of respondent.
Respondent is deemed by law as the
employer of petitioners.