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MERALCO INDUSTRIAL ENGINEERING SERVICES CORPORATION v. NLRC

FACTS:

Meralco Industrial Engineering Services Corporation (MIESCOR) entered into a contract with Ofelia P. Landrito General Services (OPLGS) and Ofelia P. Landrito for janitorial services. The employees filed a complaint against OPLGS for labor violations, and later included MIESCOR as a party respondent. The Labor Arbiter dismissed the complaint against MIESCOR but ordered OPLGS to pay the employees' claims. Both parties appealed the decision.

MIESCOR filed a Motion for Reconsideration, which was denied by the NLRC. The private respondents filed a Petition for Certiorari, which was dismissed by the Supreme Court. The proceedings before the Labor Arbiter resumed to determine liability for the monetary awards. The Labor Arbiter held MIESCOR solidarily liable with OPLGS for underpayment and non-payment of overtime pay. However, MIESCOR can seek reimbursement from OPLGS. The NLRC affirmed the Labor Arbiter's order.

The private respondents filed a petition for certiorari before the Court, challenging the NLRC's decision. The Court referred the case to the Court of Appeals. The private respondents' sole assignment of error was the NLRC's finding that they should bear the ultimate liability without reimbursement from MIESCOR. The Court of Appeals modified the NLRC's decision and held MIESCOR solidarily liable with the private respondents for the satisfaction of separation pay.

ISSUES:

  1. Whether the petitioner should be held solidarily liable with the private respondents for the satisfaction of the laborers' separation pay.

  2. Whether or not the petitioner is solidarily liable with the private respondents for the payment of separation pay.

  3. Whether or not the Court of Appeals erred in ruling that the petitioner is jointly and solidarily liable with the private respondents.

  4. Whether there was an employer-employee relationship between the petitioner and the complainants.

  5. Whether the petitioner can be held liable for the dismissal of the complainants.

  6. Whether the petitioner can be held liable for the separation pay of the complainants.

  7. Whether the Decision and Resolution of the Court of Appeals should be reversed and set aside.

  8. Whether the Decision of the National Labor Relations Commission should be reinstated.

RULING:

  1. The Court of Appeals held that the petitioner should be held solidarily liable with the private respondents for the satisfaction of the laborers' separation pay. It ruled that the provisions of the Labor Code impose joint and several liability on every employer or indirect employer for any violation of any provision of the Code, regardless of the existence of an employer-employee relationship or whether the violation is a labor standards benefit. The Court emphasized that the law does not make any distinction in imposing liability, and thus, the Court should refrain from making any distinction as well. The Court also stated that the petitioner's liability is without prejudice to a claim for reimbursement from the private respondents.

  2. The petitioner is not solidarily liable with the private respondents for the payment of separation pay. The law of the case principle does not apply to this issue, as it was not settled in a previous decision. The NLRC's order directed the Labor Arbiter to determine the party responsible for the monetary awards, and this was only resolved after the dismissal of the previous case. The Labor Arbiter subsequently ruled that the petitioner's liability was limited to wage underpayment and non-payment of overtime, and that separation pay was solely the responsibility of the private respondents.

  3. The Court of Appeals erred in ruling that the petitioner is jointly and solidarily liable with the private respondents. Article 109 of the Labor Code, which holds an indirect employer responsible for violations committed by a contractor or subcontractor, should be read in conjunction with Articles 106 and 107. An indirect employer can only be held solidarily liable with the contractor or subcontractor if the latter fails to pay its employees' wages. In this case, the petitioner may be considered an indirect employer only for the purpose of unpaid wages, as defined by Article 106. Therefore, the petitioner cannot be held liable in the same way as the employer for all aspects and can only be held responsible for unpaid wages.

  4. The Court ruled that there was no employer-employee relationship between the petitioner and the complainants. The petitioner was not their employer, and therefore could not have dismissed them from employment.

  5. The Court held that only the private respondents, as the complainants' employer, can terminate their services and be held liable for illegal dismissal.

  6. The Court ruled that the liability for the separation pay of the complainants cannot be extended to the petitioner based on the contract between the petitioner and the private respondents. The contract did not provide for separation pay in the event of termination.

  7. The Decision and Resolution of the Court of Appeals are reversed and set aside.

  8. The Decision of the National Labor Relations Commission is reinstated.

PRINCIPLES:

  • Article 109 of the Labor Code imposes joint and several liability on every employer or indirect employer for any violation of any provision of the Labor Code, regardless of the existence of an employer-employee relationship or whether the violation is a labor standards benefit.

  • The law of the case refers to the established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question settled becomes the controlling legal rule or decision upon subsequent appeal.

  • The law of the case principle states that once a controlling legal rule or decision is established between the same parties in the same case, it continues to be the law of the case as long as the facts remain the same (whether correct on general principles or not).

  • Courts must adhere to the law of the case principle to maintain stability and finality in court judgments.

  • An indirect employer can be held solidarily liable with a contractor or subcontractor for unpaid wages, but their liability is limited to this aspect only.

  • Article 109 of the Labor Code, which holds an indirect employer responsible, should be read in conjunction with Articles 106 and 107 to determine the extent of their liability.

  • The principal can only be held liable for the backwages and separation pay of the employees of an independent contractor if there is proof of conspiracy between the principal and the contractor in the illegal dismissal of the employees.

  • The liability arising from an illegal dismissal is different from the liability to pay the statutory minimum wage. The liability for backwages and separation pay in an illegal dismissal case is not automatically imposed on the principal. There must be proof of conspiracy.

  • Contracts are binding on the parties, and if a contract does not provide for a particular liability, it cannot be read into the contract without violating the intention of the parties.

  • Factual findings of quasi-judicial agencies, when affirmed by the Court of Appeals, are conclusive upon the parties and not subject to review by the Supreme Court unless they are completely devoid of support from the evidence or based on a gross misapprehension of facts.

  • The purpose of the solidary liability of the principal with the contractor or subcontractor is to ensure compliance with the provisions of the Labor Code and the protection of workers, particularly in relation to the payment of the statutory minimum wage.

  • Decisions of judicial agencies like the NLRC, when affirmed by the Court of Appeals, are conclusive upon the parties and binding on the Supreme Court.

  • The party who received the correct amount of wages and benefits but failed to turn them over to the complainants is solely liable for the underpayment of wages and non-payment of overtime pay.