Meralco Indl Engineering Services vs. NLRC, G.R. No.145402
Meralco Indl Engineering Services vs. NLRC, G.R. No.145402
Meralco Indl Engineering Services vs. NLRC, G.R. No.145402
DECISION
CHICO-NAZARIO, J.:
3[3]
Id. at 46.
4[4]
Id. at 60-63.
non-payment of overtime pay, legal holiday pay, premium pay for holiday
and rest day and night differentials 5[5] against the private respondents before
the Labor Arbiter. The case was docketed as NLRC NCR Case No. 00-09-
04432-89.
In view of the enactment of Republic Act No. 6727, 6[6] the contract
between the petitioner and the private respondents was amended 7[7] for the
10th time on 3 November 1989 to increase the minimum daily wage per
employee from P63.55 to P89.00 or P2,670.00 per month. Two months
thereafter, or on 2 January 1990,8[8] petitioner sent a letter to private
respondents informing them that effective at the close of business hours on
31 January 1990, petitioner was terminating Contract Order No. 166-84.
Accordingly, at the end of the business hours on 31 January 1990, the
complainants were pulled out from their work at the petitioner’s Rockwell
Thermal Plant. Thus, on 27 February 1990, complainants amended their
Complaint to include the charge of illegal dismissal and to implead the
petitioner as a party respondent therein.
Since the parties failed to settle amicably before the Labor Arbiter,
they submitted their respective position papers and other pleadings together
with their documentary evidence. Thereafter, a Decision was rendered by
the Labor Arbiter on 26 March 1991, dismissing the Complaint against the
5[5]
Records, pp. 1-6.
6 [6]
Its complete title is “An Act to Rationalize Wage Policy Determination by Establishing
the Mechanism and Proper Standards Therefor, Amending for the Purpose Article 99 of, and
Incorporating Articles 120, 121, 122, 123, 124, 126 and 127 into, Presidential Decree No. 442, as
Amended, Otherwise Known as the Labor Code of the Philippines, Fixing New Wage Rates,
Providing Wage Incentives for Industrial Dispersal to the Countryside, and for Other Purposes.”
It is also known as the “Wage Rationalization Act.” It took effect on 1 July 1989,
7[7]
Rollo, p. 65.
8[8]
Id. at 64.
petitioner for lack of merit, but ordering the private respondents to pay the
complainants the total amount of P487,287.07 representing unpaid wages,
separation pay and overtime pay; as well as attorney’s fees in an amount
equivalent to 10% of the award or P48,728.70. All other claims of the
9[9]
complainants against the private respondents were dismissed.
9[9]
Id. at 83-84.
10[10]
Id. at 86-87.
11[11]
Penned by Commissioner Vicente S.E. Veloso with Commissioner Alberto R. Quimpo,
concurring; id. at 86-97.
We, however, disagree with the dismissal of the case against
[herein petitioner]. Under Art. 10712[12] of the Labor Code of the
Philippines, [herein petitioner] is considered an indirect employer and
can be held solidarily liable with [private respondents] as an
independent contractor. Under Art. 109,13[13] for purposes of
determining the extent of its liability, [herein petitioner] is considered
a direct employer, hence, it is solidarily liable for complainant’s (sic)
wage differentials and unpaid overtime. We find this situation
obtaining in this case in view of the failure of [private respondents] to pay
in full the labor standard benefits of complainants, in which case liability
is limited thereto and does not extend to the establishment of employer-
employee relations.14[14] [Emphasis supplied].
12[12]
ART. 107. INDIRECT EMPLOYER. The provisions of the immediately preceding
Article shall likewise apply to any person, partnership, association or corporation which, not being
an employer, contracts with an independent contractor for the performance of any work, task, job
or project.
13[13]
ART. 109. SOLIDARY LIABILITY. The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible with his contractor
or subcontractor for any violation of any provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be considered as direct employers.
14[14]
Rollo, pp. 88-89.
15[15]
Penned by Commissioner Vicente S.E. Veloso with Presiding Commissioner Bartolome S. Carale
and Commissioner Alberto R. Quimpo, concurring; id. at 98-101.
P487,287.07 was secured by a surety bond posted by the private
respondents;16[16] hence, there was no longer any impediment to the
satisfaction of the complainants’ claims. Resultantly, the NLRC denied the
private respondents’ Motion for Reconsideration. The NLRC likewise
directed the Labor Arbiter to enforce the monetary award against the private
respondents’ surety bond and to determine who should finally shoulder the
liability therefor.17[17]
16[16]
Records, pp. 250-251.
17[17]
Rollo, p. 100.
18[18]
Records, p. 563.
19[19]
As shown in the Entry of Judgment bearing date 13 September 1994; id. at 573.
liability for the monetary awards granted to the complainants, in accordance
with the NLRC Order dated 30 July 1993.
As can be gleaned from the Resolution dated [28 May 1993], there
is that necessity of clarifying the respective liabilities of [herein petitioner]
and [herein private respondents] insofar as the judgment award in the total
sum of P487,287.07 is concerned.
20[20]
Penned by Labor Arbiter Donato G. Quinto, Jr.; rollo, pp. 103-105.
21[21]
Art. 99. Regional Minimum Wages. The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards. [As amended by Republic
Act No. 6727 (Wage Rationalization Act)]. By virtue of Republic Act No. 6727 the Regional
Tripartite Wage and Productivity Boards or RTWPBs have issued orders fixing the minimum
wages for their respective regions.
In sum, the complainants may enforce the judgment award on
underpayment and the non-payment of overtime pay against either [private
respondents] and/or [petitioner].
Again, both the private respondents and the petitioner appealed the
afore-quoted Order of the Labor Arbiter to the NLRC. On 25 April 1995,
the NLRC issued a Resolution22[22] affirming the Order dated 5 October 1994
of the Labor Arbiter and dismissing both appeals for non-posting of the
appeal or surety bond and/or for utter lack of merit. 23[23] When the private
respondents and the petitioner moved for reconsideration, however, it was
22[22]
Penned by Commissioner Vicente S.E. Veloso with Presiding Commissioner Bartolome S. Carale
and Commissioner Alberto R. Quimpo, concurring; rollo, pp. 106-114.
23[23]
Id. at 113.
granted by the NLRC in its Order24[24] dated 27 July 1995. The NLRC thus
set aside its Resolution dated 25 April 1995, and directed the private
respondents and the petitioner to each post an appeal bond in the amount of
P487,287.62 to perfect their respective appeals.25[25] Both parties complied.26
[26]
decision of the NLRC becomes final and executory after ten (10) calendar days from receipt of the
same. xxx. Nonetheless, the Court ruled in St. Martin Funeral Home v. NLRC that, although the
10-day period for finality of the NLRC decision may have elapsed as contemplated in the last
paragraph of Section 223 of the Labor Code, the CA may still take cognizance of and resolve a
petition for certiorari for the nullification of the decision of the NLRC on jurisdictional and due
process considerations.”
30[30]
CA rollo, pp. 186-187.
31[31]
G.R. No. 130866, 16 September 1998, 295 SCRA 494.
32[32]
CA rollo, p. 194.
Again, We quote Article 109 of the Labor Code, as amended, viz:
Petitioner now comes before this Court via a Petition for Review on
Certiorari, docketed as G.R. No. 145402, raising the sole issue of “whether
or not the Honorable Court of Appeals palpably erred when it went beyond
the issues of the case as it modified the factual findings of the Labor Arbiter
which attained finality after it was affirmed by Public Respondent NLRC
33[33]
Rollo, pp. 42-44.
and by the Supreme Court which can no longer be disturbed as it became
the law of the case.”34[34]
Petitioner argues that in the assailed Decision dated 24 April 2000, the
Court of Appeals found that the sole issue for its resolution was whether the
ultimate liability to pay the monetary awards in favor of the 49 employees
falls on the private respondents without reimbursement from the petitioner.
Hence, the appellate court should have limited itself to determining the right
of private respondents to still seek reimbursement from petitioner for the
monetary awards on the unpaid wages and overtime pay of the
complainants.
Assuming for the sake of argument that the Court of Appeals can still
take cognizance of the issue of petitioner’s liability for complainants’
34[34]
Id. at 173.
separation pay, petitioner asserts that the appellate court seriously erred in
concluding that it is jointly and solidarily liable with private respondents for
the payment thereof. The payment of separation pay should be the sole
responsibility of the private respondents because there was no employer-
employee relationship between the petitioner and the complainants, and the
payment of separation pay is not a labor standards benefit.
Law of the case has been defined as the opinion delivered on a former
appeal. It is a term applied to an established rule that when an appellate
court passes on a question and remands the case to the lower court for
further proceedings, the question there settled becomes the law of the case
upon subsequent appeal. It means that whatever is once irrevocably
established as the controlling legal rule or decision between the same parties
in the same case continues to be the law of the case, whether correct on
general principles or not, so long as the facts on which such decision was
predicated continue to be the facts of the case before the court. 35[35] Indeed,
courts must adhere thereto, whether the legal principles laid down were
“correct on general principles or not” or “whether the question is right or
wrong” because public policy, judicial orderliness and economy require such
stability in the final judgments of courts or tribunals of competent
jurisdiction.36[36]
35 [35]
Pelayo v. Perez, G.R. No. 141323, 8 June 2005, 459 SCRA 475, 484, citing Cucueco v.
Court of Appeals, G.R. No. 139278, 25 October 2004, 441 SCRA 290, 300-301.
36 [36]
Bañes v. Lutheran Church in the Philippines, G.R. No. 142308, 15 November 2005, 475
SCRA 13, 31.
The only matters settled in the 23 May 1994 Resolution of this Court
in G.R. No. 111506, which can be regarded as the law of the case, were (1)
both the petitioner and the private respondents were jointly and solidarily
liable for the judgment awards due the complainants; and (2) the said
judgment awards shall be enforced against the surety bond posted by the
private respondents. However, the issue as regards the liability of the
petitioner for payment of separation pay was yet to be resolved because
precisely, the NLRC, in its Order dated 30 July 1993, still directed the Labor
Arbiter to make a determination on who should finally shoulder the
monetary awards granted to the complainants. And it was only after G.R.
No. 111506 was dismissed by this Court that the Labor Arbiter promulgated
his Decision dated 5 October 1994, wherein he clarified the respective
liabilities of the petitioner and the private respondents for the judgment
awards. In his 5 October 1994 Decision, the Labor Arbiter explained that
the solidary liability of the petitioner was limited to the monetary awards for
wage underpayment and non-payment of overtime pay due the
complainants, and it did not, in any way, extend to the payment of separation
pay as the same was the sole liability of the private respondents.
The Court of Appeals indeed erred when it ruled that the petitioner
was jointly and solidarily liable with the private respondents as regards the
payment of separation pay.
The appellate court used as basis Article 109 of the Labor Code, as
amended, in holding the petitioner solidarily liable with the private
respondents for the payment of separation pay:
Hence, 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. The petitioner may be considered an indirect employer only
for purposes of unpaid wages. As this Court succinctly explained in
Philippine Airlines, Inc. v. National Labor Relations Commission37[37]:
37 [37]
G.R. No. 120506, 28 October 1996, 263 SCRA 638, 656-657.
complainants’ employer, can terminate their services, and should it be done
illegally, be held liable therefor. 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, thus:
It is the established fact of conspiracy that will tie the principal or indirect
employer to the illegal dismissal of the contractor or subcontractor’s
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
38 [38]
Rosewood Processing, Inc. v. National Labor Relations Commission, G.R. No. 116476-
84, 21 May 1998, 290 SCRA 408, 427.
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.39[39] 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.
39[39]
Roxas v. De Zuzuarregui, Jr., G.R. No. 152072, 31 January 2006, 481 SCRA 258, 276.
40[40]
See private respondents’ Petition, CA rollo, pp. 7-15.
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.41[41] 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, 42[42]
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).
41[41]
Rosewood Processing, Inc. v. National Labor Relations Commission, supra note 38 at 425-426.
42[42]
Id.
the janitorial services it contracted with private respondents. 43[43] This is a
finding of fact made by the Labor Arbiter,44[44] untouched by the NLRC45[45]
and explicitly affirmed by the Court of Appeals, 46[46] and which should
already bind this Court.
This Court is not a trier of facts. Well-settled is the rule that the
jurisdiction of this Court in a petition for review on certiorari under Rule 45
of the Revised Rules of Court is limited to reviewing only errors of law, not
of fact, unless the factual findings complained of are completely devoid of
support from the evidence on record, or the assailed judgment is based on a
gross misapprehension of facts. Besides, factual findings of quasi-judicial
agencies like the NLRC, when affirmed by the Court of Appeals, are
conclusive upon the parties and binding on this Court.47[47]
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
REYNATO S. PUNO
Chief Justice