Held
Yes, Pharmacare may be held liable for the retirement benefits of the workers, under Article 109 of the Labor Code and Rule VIII, Section 7 of the Issuances of the Department of Labor and Employment and its Attached Agencies.
Explanation
Article 109 of the Labor Code establishes that both the direct employer and the indirect employer (the principal) are solidarily liable for violations of the Labor Code, including failure to pay monetary claims such as retirement benefits. The indirect employer is defined as a person or entity that contracts with an independent contractor for the performance of work. Rule VIII, Section 7 clarifies that while the contractor is considered the employer of the contractual employee, the principal is solidarily liable with the contractor for any violation of labor laws, including nonpayment of wages and benefits. This means that even if the contracting arrangement is legitimate and the contractor is registered, the principal cannot evade liability if the contractor fails to fulfill its obligations. The Supreme Court in Light Rail Transit Authority v. Alvarez affirmed this principle, holding that the principal is solidarily liable with the contractor for monetary claims of the contractor’s employees, regardless of the absence of a direct employer-employee relationship between the principal and the workers.
Application to the facts
In this case, Uno Service Providers, Inc. is the contractor providing workers to Pharmacare, the principal. Although Uno is a registered service provider and the contracting arrangement is legitimate, Uno failed to pay the retirement benefits of five retiring workers. Under Article 109 and Rule VIII, Section 7, Pharmacare, as the principal, is solidarily liable with Uno for the workers’ unpaid retirement benefits. The legitimacy of the contracting arrangement and registration of Uno do not exempt Pharmacare from liability. The principle established in the Light Rail Transit Authority case applies here: Pharmacare, as the indirect employer, shares responsibility with Uno for the workers’ money claims, including retirement benefits.
"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."
"The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages."
[[CASE HOLDING — Light Rail Transit Authority v. Alvarez, G.R. No. 188047 (2016-11-28)]] "Articles 107 and 109 of the Labor Code provide: 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. x x x 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."
"Based on the foregoing provisions, LRTA qualifies as an indirect employer by contracting METRO to manage and operate the Metro Manila light rail transit. Being an indirect employer, LRTA is solidarily liable with METRO in accordance with Article 109 of the Labor Code. The fact that there is no actual and direct employer-employee relationship between LRTA and private respondents does not absolve the former from liability for the latter's monetary claims."
Laws retrieved
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- Article 109, Labor Standards
- Section 7, Issuances of the Department of Labor and Employment and its Attached Agencies
- Section 2, Issuances of the Department of Labor and Employment and its Attached Agencies
- Article 302, Labor Relations
- Section 5, Issuances of the Department of Labor and Employment and its Attached Agencies
- Section 14, Issuances of the Department of Labor and Employment and its Attached Agencies
- Section 4, Issuances of the Department of Labor and Employment and its Attached Agencies
- Section 6, Issuances of the Department of Labor and Employment and its Attached Agencies
"Articles 107 and 109 of the Labor Code provide: 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. x x x 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…
Cases retrieved
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