Republic of the
Supreme Court
THIRD DIVISION
GOVERNMENT
SERVICE G.R. NO. 157647
INSURANCE
SYSTEM (GSIS),
Petitioner,
Present:
YNARES-SANTIAGO,
J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA,
and
REYES,
JJ.
NATIONAL
LABOR RELATIONS
COMMISSION,
LANTING SECURITY
and
WATCHMAN AGENCY, TOMAS
LANTING,
DANIEL FANILA,* HECTOR
WILFREDO,
JESUS DELIMA, JR.,
MARIA
LEGASPI,
JR.,
and VIRGILIO SORIANO, Promulgated:
Respondents. October 15, 2007
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D E C I S I O N
AUSTRIA-MARTINEZ,
J.:
Before the Court is a Petition for
Review on Certiorari of the Decision[1]
dated
The facts:
Tomas Lanting,
doing business under the name and style of Lanting
Security and Watchman Agency (LSWA) entered into a Security Service Contract to
provide security guards to the properties of the Government Service Insurance
System (GSIS) at the contract rate of P3,000.00 per guard per month.[3]
During the effectivity
of the contract, LSWA requested the GSIS for an upward adjustment of the
contract rate in view of Section 7 of Wage Order No. 1 and Section 3 of Wage
Order No. 2, which were issued by the Regional Tripartite Wages and
Productivity Board-NCR pursuant to Republic Act No. 6727, otherwise known as
the Wage Rationalization Act.
Acting on the request of LSWA, the
GSIS, through its Board of Trustees and under Board Resolution No. 207, dated P3,000.00 to P3,716.07
per guard, per month effective P4,200.00
effective
LSWA assigned security guards Daniel Fanila, Hector Moreno, Isauro Ferrer, Rubin Wilfredo, Jesus Delima, Jr., Maria Legaspi,
Santiago Noto, Jr., and Virgilio
Soriano (hereafter complainants) to guard one of GSIS's properties. The complainants have the following
dates of employment and compensation package with LSWA:
1.
Daniel Fanila 3/28/91-3/15/93
P3,100/month
2. Virgilio Soriano 10/0/91-3/15/93 P3,100/month
3.
Hector Moreno 1/04/89-3/15/93 P3,100/month
4. Isauro Torres 11/ /88-3/15/93 P3,100/month
5.
Rubin Wilfredo 3/08/91-3/15/93 P3,100/month
6.
Jesus Delima, Jr. 3/28/91-3/15/93 P3,100/month
7.
Maria Legaspi 3/13/91-3/15/93 P3,100/month
On
On
In its Position Paper, LSWA alleged
that complainants were estopped from claiming that
they were underpaid because they were informed that the pay and benefits given
to them were based on the contract rate of P103.00 per eight hours of
work or about P3,100.00 per month.
On
In its Position Paper,[6]
GSIS alleged that the Third-Party Complaint states no cause of action against
it; that LSWA obligated itself in the Security Service Contract to be solely
liable for the enforcement of and compliance with all existing labor laws,
rules and regulations; that the GSIS Board of Trustees approved the upward
adjustment on a month-to-month basis, at P4,200 per guard per month,
effective January 8, 1991 to May 31, 1991, under Board Resolution No. 207 dated
May 24, 1991, which was incorporated in the Security Service Contract; that
GSIS fully paid the services of the security guards as agreed upon in the Security
Service Contract.
On
WHEREFORE, premises considered judgment is hereby rendered:
1. Ordering respondents Lanting Security and Watchman Agency and Tomas Lanting to reinstate complainant Virgilio Soriano without loss of seniority rights and benefits and to pay his backwages amounting to P161,400.47, computed up to the promulgation of this decision. Failure to reinstate complainant to his former position as hereby ordered, his backwages shall continue to run but in no case shall exceed three (3) years;
2. Ordering, respondents Lanting Security and Watchman Agency and/or Thomas Lanting and the Government Service Insurance System, jointly and severally liable to pay the complainants, their salary differentials; cash equivalent of their service incentive leaves and proportionate 13th month pay covering the period from June 1, 1991 to March 15, 1993, hereto indicated as follows:
1.Daniel Fanila,Jr. – P18, 439.50
2. Hector
3. Isauro Torres - P18, 439.50
4. Rubin Wilfredo - P18, 439.50
5. Jesus Delima, Jr. - P18, 439.50
6. Maria Legaspi - P18, 439.50
7. Virgilio Soriano - P18, 439.50
3. All other claims are hereby dismissed for lack of merit.
SO ORDERED.[8]
The Labor Arbiter held LSWA and GSIS
jointly and severally liable for the payment of complainants' money claims,
pursuant to Articles 106 and 107 of the Labor Code.
LSWA appealed to the NLRC. On
WHEREFORE, premises considered, the Appeal is hereby GRANTED. Accordingly, the Decision appealed from is SUSTAINED subject to the modification that Complainant-Appellee Soriano was not illegally dismissed and hence, is not entitled to reinstatement to his former position and to payment of any backwages; that from the other Complainants-Appellees' awarded salary differentials from 7 March 1991 to 1 June 1991 in the amount of (sic) each should be deducted from their awarded total salary differentials in the sum of P10,917.00 each; and that the Third-Party Respondent GSIS is alone liable for payment of their salary differentials.
SO ORDERED.[10]
The NLRC held the GSIS solely liable
for payment of complainants' money claims.
Dissatisfied, the GSIS filed on
On
On
WHEREFORE, the petition is GRANTED for being
meritorious. The questioned resolution
dated
SO ORDERED.[15]
While finding that the GSIS complied
with its obligations under Wage Order Nos. 1 and 2 by incorporating the
mandated increase in the Security Service Contract, the CA held the GSIS
jointly and severally liable with LSWA for complainants' money claims pursuant
to Articles 106 and 107 of the Labor Code.
On
Hence, the present petition anchored
on the following assigned error:
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER GSIS IS SOLIDARILY LIABLE FOR PAYMENT OF COMPLAINANTS-RESPONDNENTS' SALARY DIFFERENTIALS.[18]
The GSIS avers that it cannot twice be held liable for complainants'
salary differentials since it fully paid complainants' salaries by
incorporating in the Security Service Contract the salary rate increases
mandated by Wage Order Nos. 1 and 2; otherwise, it would be unjust enrichment
on the part of complainants and/or LSWA at its expense. It submits that Articles 106 and 107 of the
Labor Code were not contemplated by its framers to cover principals or clients
of service contractors who had already paid for the wages of the contractor or
subcontractor.
In
its Comment,[19] LSWA
maintains that the GSIS is jointly and severally liable with LSWA because Articles 106 and 107
of the Labor Code provide so and these provisions were intended to ensure that
employees are paid the wages due them in case of violation of the Labor Code of
either the contractor or the principal; that the GSIS cannot claim that holding
it jointly and severally liable with LSWA would result in grave injustice since
the law did not leave it without recourse as the GSIS has the right of
reimbursement from its co-debtor under Article 1217[20]
of the Civil Code.
In
their Comment,[21]
complainants argue that the GSIS is jointly and severally liable with LSWA for
complainants' money claims since LSWA actually paid only the sum of P3,100.00
a month, even though the GSIS incorporated in the Security Service Contract the
mandated wage increases in Wage Order Nos. 1 and 2; that although the Security
Service Contract provided that there shall be employer-employer relationship
between LSWA and/or its security guards and the GSIS, Article 106 of the Labor
Code establishes an employer-employee relationship between the employer and the
job contractor's employees for a limited purpose, that is, in order to ensure
that the latter get paid the wages due them.
The
Court gave due course to the petition and required the parties to submit their respective
memoranda.[22] Only the GSIS complied.[23] In the interest of justice and speedy
disposition of cases, the Court resolved to dispense with the filing of the
respective memoranda of LSWA and the complainants and to decide the case based
on the pleadings filed.[24]
The
petition is bereft of merit.
Articles
106 and 107 of the Labor Code provide:
ART. 106. Contractor or subcontractor.– Whenever an employer enters into contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wage of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
x x x
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. (Emphasis supplied.)
In this case, the GSIS cannot evade liability by claiming
that it had fully paid complainants' salaries by incorporating in the Security
Service Contract the salary rate increases mandated by Wage Order Nos. 1 and 2
by increasing the contract price from P3,000.00 to P3,176.07 per
guard per month effective November 1, 1990 to January 7, 1991, and P4,200.00
effective January 8, 1991 to May 31, 1991.
In Rosewood
Processing, Inc. v. National Labor Relations Commission,[25]
the Court explained the rationale for the joint and several liability of the
employer, thus:
The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractor’s employees. This liability facilitates, if not guarantees, payment of the workers’ compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution. This is not unduly burdensome to the employer. Should the indirect employer be constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor.(Emphasis supplied)[26]
Thus, the Court does not agree with the GSIS's
claim that a double burden would be imposed upon the latter because it would be
paying twice for complainants' services. Such fears are unfounded. Under Article 1217 of the Civil Code, if the GSIS
should pay the money claims of complainants, it has the right to recover from LSWA
whatever amount it has paid in accordance with the terms of the service
contract between the LSWA and the GSIS.
Joint
and solidary liability is simply meant to assure aggrieved workers of
immediate and sufficient payment of what is due them. This is in line with the policy of the State
to protect and alleviate the plight of the working class.
WHEREFORE,
the petition is DENIED. The
Decision dated July 25, 2002 and the Resolution dated March 19, 2003 of the
Court of Appeals (CA) in CA-G.R. SP No. 61570 are AFFIRMED with the MODIFICATION
that the joint and solidary liability of LSWA and the
GSIS to pay complainants' salary differentials shall be without prejudice to the
GSIS's right of reimbursement from LSWA.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate
Justice
WE CONCUR:
CONSUELO
YNARES-SANTIAGO
Associate Justice
Chairperson
MINITA V.
Associate Justice Associate Justice
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
CONSUELO
YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
C
E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s attestation, it is hereby
certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
* Known as “Daniel Fanila, Jr.” in other parts of the rollo.
* * Known
as “Isauro Torres” in other parts of the rollo.
[1] Penned by Associate Justice Eloy R. Bello, Jr. (retired) and concurred in by Associate Justices Godardo A. Jacinto (retired) and Rebecca de Guia-Salvador, CA rollo, p. 101.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14] Supra note 1.
[15]
[16]
[17] Supra note 2.
[18] Rollo, p. 33.
[19]
[20] ART. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.
[21]
[22]
[23]
[24]
[25] 352 Phil. 1013 (1998).
[26]