Development Bank of the Philippines v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondents Godofredo Morillo, Jr., Sunday Bacea, Alfredo Cos, and Rogelio Villanueva were hired as security guards by Confidential Investigation and Security Corporation ("CISCOR"). They were assigned to secure the premises of CISCOR's clients, including petitioner Development Bank of the Philippines ("DBP"), specifically at Riverside Mills Corporation. Private respondents resigned from CISCOR in August 1987 and claimed their cash bond, 13th month pay, and service incentive leave pay. Upon CISCOR's failure to grant their claims, they filed labor cases against CISCOR and its President/Manager, Ernesto Medina, for non-payment of benefits and other statutory dues. CISCOR and Medina alleged that DBP formed its own security agency and pirated the private respondents. They further claimed that DBP stated that private respondents incurred losses while guarding Riverside Mills Corporation, and thus, they needed to secure an individual/agency clearance from DBP before their claims could be paid. Private respondents instead secured clearance from CISCOR's detachment commander, leading CISCOR to withhold their cash bond, proportionate 13th month pay, and service incentive leave pay to answer for alleged liabilities. Procedural History: CISCOR filed a motion to implead DBP, asserting joint and several liability under the Labor Code. Labor Arbiter Crescencio Iniego granted the motion. DBP filed its position paper, arguing it was not the employer and not liable, and that CISCOR and Medina were willing to pay upon presentation of proper clearance. The Labor Arbiter rendered a decision ordering CISCOR, Ernesto Medina, and DBP to jointly and severally pay the complainants salary differential and ordering CISCOR to return cash bonds. CISCOR and Medina appealed to the NLRC. DBP also filed a Motion for Reconsideration/Appeal, praying to be held solely liable and for the salary differential award to be voided. The NLRC modified the decision, adjudging DBP, CISCOR, and Medina jointly and severally liable for 13th month pay, incentive leave, and refund of cash bond, and directed immediate execution. The award for wage differential, rest day, and legal holiday pay was remanded for further hearing. The Petition: DBP filed a petition for review on certiorari, questioning its joint and several liability, the application of Article 106 of the Labor Code, and the adjudication of wage differential, rest day, and legal holiday pay.
Issue(s)
Whether or not DBP is liable for any of the claims of private respondents, including the proper impleading of DBP. Whether or not the NLRC correctly applied Article 106 of the Labor Code. Whether or not wage differential, rest day, and legal holiday pay could and should be adjudicated in this case.
Ruling
The Supreme Court affirmed the Resolution of the NLRC with modification. DBP, CISCOR, and Medina are jointly and severally liable for the claims of private respondents. The additional hearing ordered by the NLRC shall be confined to legal holiday and rest day pay, excluding wage differentials. Execution shall proceed as to the NLRC awards of 13th month pay, service incentive leave pay, and return of private respondents' cash bond.
Ratio Decidendi
On the liability of DBP and its proper impleading: The Court held that DBP's interpretation of Article 106 of the Labor Code was misplaced and that the NLRC correctly held that DBP was properly impleaded. The article does not require insolvency or unwillingness to pay by the contractor as a prerequisite for the joint and several liability of the principal or indirect employer. The statutory basis for this liability is found in Articles 107 and 109 in relation to Article 106 of the Labor Code, which are designed to protect labor. The Court cited Eagle Security Agency, Inc. vs. NLRC to emphasize that this joint and several liability is mandated to assure compliance with labor laws and provide ample protection to workers. Therefore, DBP, as the principal, is liable to pay the benefits due to the private respondents. The impleading of DBP by CISCOR for indemnity and subrogation, considering that the complainants worked for DBP's premises, was considered a proper "Third-Party Complaint" under Section 12, Rule 6 of the Rules of Court, which are suppletorily adopted by the NLRC Rules. DBP's argument that it was not properly impleaded was thus untenable, especially since it did not dispute liability on the admitted claims but only its degree of liability. On the application of Article 106 of the Labor Code: The Court sustained the NLRC's application of Article 106 of the Labor Code, emphasizing that it serves to protect labor rights and ensure compliance with labor laws. On the adjudication of wage differential, rest day, and legal holiday pay: The Court noted that there was no claim for wage differentials in the complaints or position paper filed by private respondents. Therefore, no relief could be granted on that matter. However, the Court agreed with the NLRC that private respondents were entitled to rest day and holiday pay, as these issues were properly raised in their position paper and included in their prayer for relief. The computation of these amounts could be made during the additional hearings ordered by the Commission. Accordingly, the additional hearing was ordered to be confined to legal holiday and rest day pay.
Main Doctrine
The principal is jointly and severally liable with the contractor for the payment of employees' wages and statutory benefits, as mandated by Articles 106, 107, and 109 of the Labor Code, for the protection of labor. The interpretation of "fails" in Article 106 does not require insolvency or unwillingness of the contractor to pay as a prerequisite for the principal's liability.