PSBA v. NLRC (G.R. No. 114143; August 28, 1996)
RULING: Job-contracting is permissible if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and, (b) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. In the absence of these requisites, what exists is a "labor-only" contract under which the person acting as contractor is considered merely an agent or intermediary who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. This is what obtains in the present case.
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