G.R. No.

146408 February 29, 2008

PHILIPPINE AIRLINES, INC., petitioner,
vs.
ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON
PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M.
CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, ROQUE PILAPIL,
ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE
ALEGRES, BENEDICTO AUXTERO, EDUARDO MAGDADARAUG, NELSON M. DULCE, and ALLAN
BENTUZAL, respondents.

Facts: Petitioner Philippine Airlines and Synergy Services Corporation as Contractor, entered into an
Agreement whereby Synergy undertook to provide loading and delivery services by furnishing all the
necessary capital, workers, materials, supplies and equipment for the performance and execution of
said work. Herein respondents who appear to have been assigned to work for petitioner filed complaints
before the NLRC for the payment of their labor standard benefits and regularization of employment
status claiming that they are performing duties directly connected with petitioner’s business. The Labor
Arbiter’s decision found Synergy an independent contractor but was vacated on appeal. The NLRC
tribunal declared Synergy to be a labor-only contractor and was affirmed by the CA. Petitioner moved
for reconsideration but was denied.

Issue: Whether or not there is labor-only contracting.

Ruling: YES. For labor-only contracting to exist, Section 5 of D.O. No. 18-02 which requires any of two
elements to be present is, for convenience, re-quoted:
(i) The contractor or subcontractor does not have substantial capital or investment which relates
to the job, work or service to be performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly related to the main business of
the principal, OR
(ii) The contractor does not exercise the right to control over the performance of the work of the
contractual employee.

Even if only one of the two elements is present then, there is labor-only contracting.

From the records of the case, it is gathered that the work performed by almost all of the respondents –
loading and unloading of baggage and cargo of passengers – is directly related to the main business of
petitioner. And the equipment used by respondents as station loaders, such as trailers and conveyors,
are owned by petitioner.

Petitioner PAL, and not Synergy, exercises control and supervision over the respondent workers’
methods of doing the work, as reflected in their Agreement: (1) Contractor (Synergy) shall require all its
workers, employees, suppliers and visitors to comply with OWNER’S (PAL) rules, regulations, procedures
and directives relative to the safety and security of OWNER’S premises, properties and
operations (2) xxx shall furnish its employees and workers identification cards to be countersigned by
OWNER and uniforms to be approved by OWNER. (3)OWNER may require CONTRACTOR to dismiss
immediately and prohibit entry into OWNER’S premises of any person employed therein by
CONTRACTOR who in OWNER’S opinion is incompetent or misconducts himself or does not comply with
OWNER’S reasonable instructions xxx
Petitioner in fact admitted that it fixes the work schedule of respondents as their work was dependent
on the frequency of plane arrivals. And as the NLRC found, petitioner’s managers and supervisors
approved respondents’ weekly work assignments and respondents and other regular PAL employees
were all referred to as “station attendants” of the cargo operation and airfreight services of petitioner.
Respondents having performed tasks which are usually necessary and desirable in the air transportation
business of petitioner, they should be deemed its regular employees and Synergy as a labor-only
contractor.