LANTIN, JOHN LESTER C.

ARTICLE 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.

DISCUSSIONS

The article speaks of the solidary liability of employer with the contractor for payment of unpaid
wage of the employees. The insolvency of the contractor is not a prerequisite of the solidary
liability of the employer. Thus, the employer who paid the employee any unpaid wages due to
the solidary liability of the employer with the contractor may claim for reimbursement.

CASE

POLYFOAM-RGC INTERNATIONAL, CORPORATION and PRECILLA A. GRAMAJE, Petitioners, vs.

EDGARDO CONCEPCION, Respondent. (G.R. No. 172349 - June 13, 2012)

FACTS: On February 8, 2000, respondent filed a Complaint for illegal dismissal, non-payment of
wages, premium pay for rest day, separation pay, service incentive leave pay, 13th month pay,
damages, and attorney’s fees against Polyfoam and Ms. Natividad Cheng (Cheng). Respondent
alleged that he was hired by Polyfoam as an "all-around" factory worker and served as such for
almost six years. On January 14, 2000, he allegedly discovered that his time card was not in the
rack and was later informed by the security guard that he could no longer punch his time card.
When he protested to his supervisor, the latter allegedly told him that the management decided
to dismiss him due to an infraction of a company rule. Respondent’s counsel later wrote a letter
to Polyfoam’s manager requesting that respondent be re-admitted to work, but the request
remained unheeded prompting the latter to file the complaint for illegal dismissal.

On April 28, 2000, Gramaje filed a Motion for Intervention claiming to be the real employer of
respondent. On the other hand, Polyfoam and Cheng filed a Motion to Dismiss on the grounds
that the NLRC has no jurisdiction over the case, because of the absence of employer-employee
relationship between Polyfoam and respondent and that the money claims had already
prescribed.

On May 24, 2000, Labor Arbiter Adolfo Babiano issued an Order granting Gramaje’s motion for
intervention, it appearing that she is an indispensable party and denying Polyfoam and Cheng’s
motion to dismiss as the lack of employer-employee relationship is only a matter of defense. On
December 14, 2001, Labor Arbiter (LA) Marita V. Padolina rendered a Decision finding respondent
to have been illegally dismissed from employment and holding Polyfoam and Gramaje/PAGES
solidarily liable for respondent’s money claims.
On appeal by petitioners, the NLRC modified the LA decision by exonerating Polyfoam from
liability for respondent’s claim for separation pay and deleting the awards of backwages, 13th
month pay, damages, and attorney’s fees.

Aggrieved, respondent elevated the case to the CA in a special civil action for certiorari under
Rule 65 of the Rules of Court. The CA agreed with the LA’s conclusion that Gramaje is not a
legitimate job contractor but only a "labor-only" contractor because of the following: (1) Gramaje
failed to present its Audited Financial Statement that would have shown its financial standing
and ownership of equipment, machineries, and tools necessary to run her own business; (2)
Gramaje failed to present a single copy of the purported contract with Polyfoam as to the
packaging aspect of the latter’s business; (3) Gramaje’s licenses supposedly issued by the DOLE
appeared to be spurious. (4) Gramaje was not registered with DOLE as a private recruitment
agency; and (5) Gramaje presented only one (1) SSS Quarterly Collection List whose authenticity
is doubtful.

ISSUE: Whether Polyfoam-RGC International Corporation is solidarily liable with Gramaje.

RULING: YES. Gramaje is a Labor-Only Contractor.

The test of independent contractorship is "whether one claiming to be an independent

contractor has contracted to do the work according to his own methods and without being
subject to the control of the employer, except only as to the results of the work."

Applying the foregoing tests, we agree with the CA’s conclusion that Gramaje is not an
independent job contractor, but a "labor-only" contractor. First, Gramaje has no substantial
capital or investment. Second, Gramaje did not carry on an independent business or undertake
the performance of its service contract according to its own manner and method, free from the
control and supervision of its principal, Polyfoam, its apparent role having been merely to recruit
persons to work for Polyfoam.

A finding that a contractor is a "labor-only" contractor, as opposed to permissible job contracting,

is equivalent to declaring that there is an employer-employee relationship between the principal
and the employees of the supposed contractor, and the "labor-only" contractor is considered as
a mere agent of the principal, the real employer. In this case, Polyfoam is the principal employer
and Gramaje is the labor-only contractor. Polyfoam and Gramaje are, therefore, solidarily liable
for the rightful claims of respondent.
LANTIN, JOHN LESTER C.

ARTICLE 190.

Rehabilitation services. The System shall, as soon as practicable, establish a continuing program,
for the rehabilitation of injured and handicapped employees who shall be entitled to
rehabilitation services, which shall consist of medical, surgical or hospital treatment, including
appliances if they have been handicapped by the injury, to help them become physically
independent.

As soon as practicable, the System shall establish centers equipped and staffed to provide a
balanced program of remedial treatment, vocational assessment and preparation designed to
meet the individual needs of each handicapped employee to restore him to suitable employment,
including assistance as may be within its resources, to help each rehabilitee to develop his
mental, vocational or social potential.

DISCUSSIONS

This article speaks of rehabilitation as the process by which there is provided a balanced program
of remedial treatment, vocational assessment and preparation designed to meet the individual
needs of each handicapped employee to restore him to suitable employment. The SSS and GSIS
shall establish a continuing program for the rehabilitation of injured and handicapped
employees. Such coverage from such program is voluntary only.

To be entitled for rehabilitation services, the employee must:

1. Have been reported to the System;
2. Have sustained permanent disability as result of a compensable injury or sickness; and
3. Have not been placed in a suitable employment.

The rehabilitation services shall be during the period of disability unless suspended on the
following grounds:
1. Upon suitable employment;
2. By self-termination; or
3. Upon suspension or termination of such services by the rehabilitation center.

The liability of the System does not cover:

1. Intoxication;
2. Willful intention to injure or kill himself or another; or
3. Notorious negligence.

Lastly, the System may enter into agreement with the employer to participate in payment of
wages of the employed rehabilitee through:
1. 50% of wages for first 2 weeks after start of on-the-job training;
2. 25% of wages for 3rd and 4th weeks of on-the-job training;
 3. 10% of wages for 5th and 6th weeks of on-the-job training; and
4. 0% of wages for the rest of the period.

CASE

VICTORIANO F. CORALES, Petitioner, vs. EMPLOYEES' COMPENSATION COMMISSION and THE

GOVERNMENT SERVICE INSURANCE SYSTEM, Respondents. (G.R. No. L-44063 - August 25,
1978)

FACTS: Petitioner worked as a classroom teacher from 1932 until 1946 when he was transferred
to the Bureau of Lands as Computer, and later on as land investigator until his compulsory
retirement in 1975, at the age of sixty-five. As land investigator he had to hike a lot to distant
places, exposing himself to dust, heat and cold, not to mention hunger, and inevitably to people
who must have been suffering from tuberculosis. Sometimes, he had to forego his meals and
physical rest. The GSIS Medicare Employee's Compensation Department denied petitioner's
claim and the Employee's Compensation Commission dismissed his appeal on the ground that
tuberculosis is not an occupational disease insofar as petitioner's employment is concerned.

ISSUE: Whether tuberculosis is an occupational disease compensable to the petitioner.

RULING: The presumption of compensability in favor of petitioner remains unrebutted by the

respondent employer. Moreover, petitioner has shown by clear and convincing evidence that he
contracted tuberculosis or at least the risk of contracting said disease had been increased by the
conditions under which he was then working. From the nature of petitioner's duties, there can
be no dispute that indeed petitioner had traveled a lot thereby exposing himself to dust, heat
and cold, not to mention hunger and inevitably to people who must have been suffering from
tuberculosis.

The fact that petitioner-claimant was never absent from work nor went on leave of absence for
at least four days and instead continued to report for work until his compulsory retirement at the
age of 65, militates against his right to disability compensation because the very term implies
that the compensation must be for loss or diminution of salary by reason of illness incurred or
aggravated due to his employment.

However, he is entitled to reimbursement for his medical expenses with proper receipts as well
as to medical services and appliances as the nature of his sickness and progress of his recovery
may require and to such rehabilitation services as may be made available to help him become
physically independent and to develop his mental, vocational and social potential.