Professional Documents
Culture Documents
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G.R. No. 148490. November 22, 2006.
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* FIRST DIVISION.
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prove the negative fact that the contractor does not have
substantial capital, investment and tools to engage in job-
contracting. Since neither petitioner nor Universal was able to
adduce evidence that Universal had any substantial capital,
investment or assets to perform the work contracted for, the
presumption that Universal is a labor-only contractor stands.
Same; Same; Same; Same; Petitioner cannot escape liability
because even without a direct employer-employee relationship
between the principal employer and the employees, the former is
still jointly and severally liable with the job contractor for the
employees monetary claims.Even granting en arguendo that
Universal is a legitimate job contractor and not a labor-only
contractor, still petitioner cannot escape liability because even
without a direct employeremployee relationship between the
principal employer and the employees, the former is still jointly
and severally liable with the job contractor for the employees
monetary claims following Arts. 106, 107 and 109 of the Labor
Code.
Same; Same; Same; Same; In legitimate job contracting, the
law creates an employer-employee relationship for a limited
purpose, to ensure that the employees are paid their wages.In
legitimate job contracting, the law creates an employer-employee
relationship for a limited purpose, to ensure that the employees
are paid their wages. In such an arrangement, the principal
employer becomes jointly and severally liable with the job
contractor for the payment of the employees wages whenever the
contractor fails to pay the same. As the claim of private
respondents in this case involve only monetary claims that fall
within the purview of wages, petitioner, even if found as the
principal employer in a legitimate job contracting, is still liable to
them for the payment of such claims.
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AUSTRIA-MARTINEZ, J.:
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3
dated and tried jointly. Only petitioner4
and the private
respondents filed their position papers.
On November 20, 1998, LA Antonio M. Villanueva
rendered a Decision declaring Universal as the employer of
the private respondents. He also held that the respondents
were illegally dismissed, thus entitled to backwages and
separation pay. He gave weight to the service contract
between petitioner and Universal which provided that:
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The cases cited by 7K Corporation to buttress its argument
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The cases cited by 7K Corporation to buttress its argument that
the NLRC cannot modify the award granted to the employee who
did not interpose an appeal from the Labor Arbiters decision is to
say the least specious. Significantly, in this (sic) cases, the NLRC
erroneously modified the Labor Arbiters decision for giving
additional awards to the employee who did not appeal, more than
what the Labor Arbiter awarded. Such is not the case here. The
Labor Arbiters decision was modified because of the
Commissions conclusion that complainants were not illegally
dismissed. Hence, the deletion of the Labor Arbiters award for
separation pay and backwages as only illegally separated
employees are entitled to such awards. The other awards granted
by the Labor Arbiter were maintained. However, in view of the
Commissions finding that Universal was a labor only
contractor, the provision of Article 206 of the Labor Code finds
application in the relationship between the principal and the
employees. There is, therefore, no cogent reason to disturb our
resolution.
PREMISES considered, the motion for reconsideration is
hereby DENIED for12 want of merit.
SO ORDERED.
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II
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III
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of the parties. Petitioner and Universal cannot dictate, by
the mere expedient of a declaration in a contract, the
character of Universals business, i.e., whether as labor-
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26 San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005,
461 SCRA 392, 422.
27 De Los Santos v. National Labor Relations Commission, supra.
523
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28 Coca-Cola Bottlers, Phils. Inc. v. Hingpit, 356 Phil. 90, 103; 294
SCRA 594, 605-606 (1998); Guarin v. National Labor Relations
Commission, G.R. No. 86010, October 3, 1989, 178 SCRA 267, 273.
29 Guarin v. National Labor Relations Commission, supra.
30 See Acevedo v. Advanstar Co. Inc., supra; San Miguel Corp. v. Aballa,
supra.
31 San Miguel Corporation v. Aballa, supra; De Los Santos v. National
Labor Relations Commission, supra; Philippine Airlines Inc. v. National
Labor Relations Commission, 357 Phil. 217, 237; 296 SCRA 214, 235
(1998); National Power Corporation v. Court of Appeals, 355 Phil. 643,
651; 294 SCRA 209, 214 (1998); Tiu v. National Labor Relations
Commission, 324 Phil. 202, 211; 254 SCRA 1, 9 (1996).
524
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ensure that the employees are paid their wages. The principal
employer becomes jointly and severally liable with the job
contractor only for the payment of the employees wages whenever
the contractor fails to pay the same. Other than that, the
principal employer is not responsible for any claim made by the
employees.
On the other hand, in labor-only contracting, the statute
creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of
labor laws. The contractor is considered merely an agent
of the principal employer and the latter is responsible to
the employees of the labor-only contractor as if such
employees had been directly employed by the principal
employer. The principal employer therefore becomes
solidarily liable with the labor-only 34
contractor for all the
rightful claims of the employees.
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Petition denied.
o0o
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