SPARTAN SECURITY & DETECTIVE AGENCY, INC., PETITIONER, VS. HON. NATIONAL LABOR RELATIONS COMMISSION, AQUILINO BARONA, JR., RESPONDENTS.

The main issue for resolution is who shall be responsible for the
payment to security guards of the salary differentials resulting from the
increases in minimum wages mandated by Wage Orders Nos. 5 and 6. The security agency and the principal-client
point to each other, but the security guards point to both of them.

Private respondents Aquilino Barona, Jr. and Noe Semillano were
employed as security guards by Spartan Security & Detective Agency,
Inc. They were detailed to Home Savings
Bank & Trust Company,* with Barona posted at its
Balintawak branch and Semillano at its Sta. Cruz branch.

Barona and Semillano took official leaves of absence on April,
1987, and August 13, 1987, respectively. Upon reporting back for work, they were not returned to their original
posts or given any assignment. They
then filed separate complaints against Spartan and the Bank for illegal
dismissal with claims for illegal deductions, underpayment, overtime pay, legal
and holiday pay and rest day pay.

On July 29, 1988, Labor Arbiter Felipe T. Garduque II disposed of
Barona’s complaint thus:

ACCORDINGLY, Respondent Spartan Security Detective Agency is hereby
ordered to reinstate herein complainant Aquilino Barona, Jr. within ten (10)
days from receipt hereof to his former position or any substantially equivalent
assignment without loss of seniority right and privileges with three (3) months
back wages.

Further, both Respondents agency and Home Savings Bank (Balintawak
Branch, Q.C.) are hereby held solidarily liable to pay herein complainant
within the same period the sum of P30,749.00 with ten percent (10%) attorney’s
fees representing under-payment of salary/living allowance and other benefits,
as computed by the latter and based on the adjusted Padpao rates for security
guards under Wage Order No. 6, primer No. 2, Workers’ Rights Series, Institute
of Manpower Studies, 1985.

As regards the cash bond, the same should remain with the
respondent agency until complainant resigns or is separated from the service.

All other claims are hereby denied for lack of merit and by reason
of prescription.

Both Spartan and the Bank appealed to the NLRC, which on December
29, 1988, affirmed the aforesaid decision.^[1]
However, it ordered Spartan to assign Barona to other available posts because
reinstatement to his former position was no longer feasible owing to the
termination of the contract of service between Spartan and the Bank.

Upon denial of its motion for reconsideration, Spartan came to
this Court on November 9, 1989, in a petition for review on certiorari. This was docketed as G.R. No. 90693.

The Bank, on the other hand, settled half of the award by paying
P20,000.00 to Barona on February 6, 1990.

Meanwhile, Labor Arbiter Benigno C. Villarente, Jr. had rendered
a decision dated August 22, 1988, disposing of Semillano’s case as follows:

WHEREFORE, all the foregoing premises considered, judgment is
hereby rendered declaring that complainant Noe Semillano was illegally
dismissed and ordering respondent Spartan Security and Detective Agency, Inc.
to:

(a) Reinstate complainant
as security guard without loss of seniority rights at the adjusted rate under
the law;

(b) Refund to him the amount of P880.00 as shown
by the evidence as having been illegally deducted P820 only as admitted by
respondent; and

jointly and severally with co-respondent Home Savings Bank and
Trust Co., to:

(c) Pay complainant his full back wages and
other benefits under existing laws effective his dismissal on September 1, 1987
until actual reinstatement, or the tentative amount of P26,217.91 as of August
20, 1988 and determined by the Computation and Examination Unit of this Office;

(d) Pay him the salary differential and overtime
pay for the four-hour excess of eight hours daily duties as security guard from
August 1985 (four days – Exhs. “C” and “D”) until April 30,
1987 (Exh. “C”) in the amount P11,433.18 and for the two hour excess from May
1, 1987 to August 15, 1987 (Exh. “C”) in the amount of P4,467.84 or a
total differential of P15,901; and

(e) Pay the attorney’s fees equivalent to 10% of
all the above monetary awards.

The claim for moral damages is hereby dismissed for lack of merit.

On appeal, this decision was affirmed by the respondent
Commission on September 29, 1989.^[2] However, it required payment of Semillano’s
back wages from the date of his license renewal up to his actual reinstatement
and held Spartan solely liable therefor inasmuch as the Bank had no
participation in Semillano’s dismissal.

On February 6, 1990, the Bank paid P7,950.50 or half of the
awarded claim of P15,901.00, to Semillano. He in turn signed a Waiver, Quitclaim and Release in its favor without
prejudice to his right to pursue the balance against Spartan. This waiver was approved by the NLRC in its
resolution of May 29, 1990, denying Spartan’s motion for reconsideration.

On July 6, 1990, Spartan filed a petition for review on certiorari,
docketed as G.R. No. 93961. Upon its
motion, this petition was consolidated with G.R. No. 90693.

On August 27, 1990, Labor Arbiter Villarente ordered the
execution of the judgment subject of case G.R. No. 93961. Upon Spartan’s motion, we issued a temporary
restraining order on October 1, 1990, enjoining the enforcement of the writ of
execution.

In these two consolidated petitions, Spartan asks us to hold the
Bank solely liable for the differential pay of the two employees. It invokes Section 9 of Wage Order No. 6,
which provides:

In case of contracts for construction projects and for security,
janitorial and similar services, the increase in the minimum wage and allowance
rates of the workers shall be borne by the principal or client of the
construction/service contractor and the contract shall be deemed amended
accordingly. x x x

In point is the case of Eagle Security Agency, Inc. vs. NLRC,^[3]
where this Court held:

The Wage Orders are explicit that payment of the increases are
“to be borne” by the principal or client. “To be borne”, however, does not mean that the
principal, PTSI in this case, would directly pay the security guards the wage
and allowance increases because there is no privity of contract between
them. The security guards’ contractual
relationship is with their immediate employer, EAGLE. As an employer, EAGLE is tasked, among others, with the payment
of their wages [See Article VII Sec. 3 of the Contract for Security Services,
Supra and Bautista v. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 665].

On the other hand, there existed a contractual agreement between
PTSI and EAGLE wherein the former availed of the security services provided by
the latter. In return, the security
agency collects from its client payment for its security services. This payment covers the wages for the
security guards and also expenses for their supervision and training, the
guards’ bonds, firearms with ammunitions, uniforms and other equipments, accessories,
tools, materials and supplies necessary for the maintenance of a security
force.

Premises considered, the security guards’ immediate recourse for
the payment of the increases is with their direct employer, EAGLE. However, in order for the security agency to
comply with the new wage and allowance rates it has to pay the security guards,
the Wage Orders made specific provision to amend existing contracts for
security services by allowing the adjustment of the consideration paid by the
principal to the security agency concerned. What the Wage Orders require, therefore, is the amendment of the
contract as to the consideration to cover the service contractor’s payment of
the increases mandated. In the end,
therefore, ultimate liability for the payment of the increases rests with the
principal.

The above ruling was affirmed in the case of Rabago v. NLRC,^[4]
decided only last year.

In the instant cases, it is not disputed that Barona and
Semillano were employees of Spartan. As
such, they were entitled to the wage increases required under Wage Orders Nos.
5 and 6 from their employer, Spartan. In turn, Spartan could ask the Bank, where they were posted, to make the
necessary adjustment in their security contract to cover the said increases.

The two employees were not privy to the contract of service
between Spartan and the Bank. Nevertheless, they could go after Spartan and/or the Bank for their wage
differentials under the rule on solidary liability established by Articles 106,
107 and 109 of the Labor Code providing as follows:

ART. 106. Contractor or
subcontractor. – Whenever an employer
enters into a 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
wages 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.

x x x

ART. 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.

As we explained in Eagle, this joint and several liability of the
contractor and the principal is mandated by the Labor Code to ensure observance
of its provisions, including Article 99 on the minimum wage. The contractor is made liable by virtue of
his status as direct employer. The
principal, on the other hand, is made the indirect employer of the contractor’s
employees to secure payment of their wages should the contractor be unable to
pay them. This arrangement in conformity
with the constitutional mandate for the protection of the working class
pursuant to the social justice policy.

It is worth stressing that while Spartan and the Bank are jointly
and severally answerable for the underpayment, Spartan has the right of
reimbursement from the Bank under Article 1217 of the Civil Code, reading as
follows:

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. x x x.

As already stated, the Bank had already paid half of the
differential wages of Barona and Semillano. Under the above-discussed law and jurisprudence, it is still liable to
them for the other half.

We come now to the counter-petition of private respondent Barona.

Barona prays that the award of three months back wages be
modified and increased to three years because he was dismissed on April 25,
1987, and payment of his claims has been unduly delayed by Spartan. He is also asking for moral and exemplary
damages and other available relief.

The finding of illegal dismissal warrants not only reinstatement
of the dismissed employee but also the payment to him of three years back
wages, conformably to existing policy. The award in his favor must therefore be accordingly adjusted.

Barona’s claim for moral and exemplary damages must be
rejected. Moral damages are recoverable
only where the dismissal of the employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to
morals, good customs or public policy.^[5]
Exemplary damages may be awarded only if the dismissal was effected in a
wanton, oppressive or malevolent manner.^[6]
Those circumstances have not been established in this case.

WHEREFORE, the petitions are DISMISSED and the challenged
resolutions of the NLRC are AFFIRMED as above modified. The temporary restraining order issued on
October 1, 1990 is hereby LIFTED. Costs
against the petitioner.

SO ORDERED.

Griño-Aquino, Medialdea, and
Bellosillo, JJ., concur.

*
Now known as Home Bankers Savings &
Trust Company.

^[1] Penned by Commissioner Roberto P. Tolentino,
with Commissioners Dulay and Corleto, concurring.

^[2]
Penned by Commissioner Daniel M. Lucas,
Jr., with Commissioners Zapanta and Abella, concurring.

^[3]
173 SCRA 479.

^[4]
200 SCRA 158.

^[5]
Article 1701 of the Civil Code of the
Philippines and Article 2219 (10) in relation to Article 21 of the same Code;
Primero v. IAC, 156 SCRA 435; Maglutac v. NLRC; 189 SCRA 767.

^[6]
Article 2232 of the Civil Code of the
Philippines; National Service Corp., et al. v. NLRC, 168 SCRA 122,
Maglutac v. NLRC, Supra.