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NATIONAL POWER CORPORATION v. CA

FACTS:

On July 22, 1979, a convoy of four dump trucks owned by the National Power Corporation (NPC) left Marawi city bound for Iligan city. One of the trucks, driven by Gavino Ilumba, figured in a head-on collision with a Toyota Tamaraw, resulting in the death of three persons and injuries to seventeen others. The heirs of the victims filed a complaint for damages against NPC and PHESCO Incorporated. PHESCO argued that it was not the owner of the truck involved in the accident and that it was merely a contractor of NPC. NPC, on the other hand, denied any liability and asserted that the driver of the truck was the employee of PHESCO. The trial court absolved NPC of any liability but held PHESCO and Ilumba jointly and severally liable for damages. The Court of Appeals reversed the trial court's decision, holding that NPC, as the employer of Ilumba, should be held liable. Dissatisfied, NPC filed a motion for reconsideration, which was denied. Hence, this petition to the Supreme Court. The principal issue to be resolved is who is the employer of Ilumba - NPC or PHESCO, and who should be liable for damages to the victims.

ISSUES:

  1. Whether NPC or PHESCO is the employer of Gavino Ilumba, the driver of the dump truck involved in the collision.

  2. Whether NPC, assuming an employer-employee relationship with Gavino Ilumba, is liable for damages to third parties caused by Ilumba's tortious acts.

RULING:

  1. NPC is the employer of Gavino Ilumba. PHESCO is considered a "labor-only" contractor, thus creating an employer-employee relationship between NPC and the employees supplied by PHESCO, including Ilumba.

  2. NPC is liable for the damages caused by Ilumba's tortious acts under Article 2180 of the Civil Code. The liability of NPC is direct, primary, and solidary with PHESCO and Ilumba.

PRINCIPLES:

  1. Labor-Only Contracting: A "labor-only" contractor is merely an agent of the principal employer, thus creating an employer-employee relationship between the principal employer and the employees of the "labor-only" contractor.

  2. Employer's Liability for Employee Acts: Under Article 2180 of the Civil Code, employers are liable for damages caused by their employees acting within the scope of their assigned tasks.

  3. Due Diligence Defense: Employers may disclaim liability for the tortious acts of their employees by proving due diligence in the selection and supervision of employees; however, failure to raise this defense precludes its consideration on appeal.