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Meralco Industrial Engineering Services v. NLRC

1) Meralco contracted a private company to provide janitorial services at its plant. The janitors alleged illegal deductions, unpaid overtime, and other violations by the private company. 2) After a wage increase, Meralco terminated its contract with the private company and the janitors were dismissed. The janitors alleged illegal dismissal against both companies. 3) The court ruled that Meralco could not be held liable for separation pay unless it conspired in the illegal dismissal, which was not proven. Meralco remained liable for unpaid wages during its contract but was not continuously liable given the private company's surety bond for damages.

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278 views5 pages

Meralco Industrial Engineering Services v. NLRC

1) Meralco contracted a private company to provide janitorial services at its plant. The janitors alleged illegal deductions, unpaid overtime, and other violations by the private company. 2) After a wage increase, Meralco terminated its contract with the private company and the janitors were dismissed. The janitors alleged illegal dismissal against both companies. 3) The court ruled that Meralco could not be held liable for separation pay unless it conspired in the illegal dismissal, which was not proven. Meralco remained liable for unpaid wages during its contract but was not continuously liable given the private company's surety bond for damages.

Uploaded by

Joe Real
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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2. 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 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 respondent for the

satisfaction of the laborer’s separation pay.

Issue:

Whether Meralco should be liable for the payment of

the dismissed laborer’s separation pay.

Decision:

Petition GRANTED, Judgment and Resolution

Reversed and SET ASIDE.

The CA used Art. 109 of the Labor Code to hold

Meralco solidarily liable with the private respondent as regard to

the payment of separation pay. However, the 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

backwages 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.

Neither can the liability for the separation pay of the

complainants be extended to the petitioner based on contract.

Contract Order No. 166-84 executed between the petitioner and

the private respondents contains no provision for separation pay

in the event that the petitioner terminates the same. It is basic

that a contract is the law between the parties and the stipulations

therein, provided that they are not contrary to law, morals, good

customs, public order or public policy, shall be binding as

between the parties. Hence, if the contract does not provide for

such a liability, this Court cannot just read the same into the

contract without possibly violating the intention of the parties.

Although petitioner is not liable for complainants’

separation pay, the Court conforms to the consistent findings in


the proceedings below that the petitioner is solidarily liable with

the private respondents for the judgment awards for

underpayment of wages and non-payment of overtime pay.

In this case, however, private respondents had already

posted a surety bond in an amount sufficient to cover all the

judgment awards due the complainants, including those for

underpayment of wages and non-payment of overtime pay.

The

joint and several liability of the principal with the contractor and

subcontractor were enacted to ensure compliance with the

provisions of the Labor Code, principally those on statutory

minimum wage. This liability facilitates, if not guarantees,

payment of the workers’ compensation, thus, giving the workers

ample protection as mandated by the 1987 Constitution. With

private respondents’ surety bond, it can therefore be said that

the purpose of the Labor Code provision on the solidary liability

of the indirect employer is already accomplished since the

interest of the complainants are already adequately protected.

Consequently, it will be futile to continuously hold the petitioner

jointly and solidarily liable with the private respondents for the

judgment awards for underpayment of wages and non-payment

of overtime pay.

But while this Court had previously ruled that the


indirect employer can recover whatever amount it had paid to the

employees in accordance with the terms of the service contract

between itself and the contractor, the said ruling cannot be

applied in reverse to this case as to allow the private

respondents (the independent contractor), who paid for the

judgment awards in full, to recover from the petitioner (the

indirect employer).

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