DEVELOPMENT BANK OF THE PHILIPPINES, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, GODOFREDO MORILLO, JR., SUNDAY BACEA, ALFREDO COS AND ROGELIO VILLANUEVA, RESPONDENTS.

This petition for review on certiorari (here treated as a
petition for certiorari under Rule
65, Rules of Court) seeks to reverse and set aside the Resolution dated
11 June 1991 of respondent National Labor Relations Commission
(“NLRC”) in NLRC NCR Case Nos. 00-09­-03383-87 and 00-10-03562-87,
denying petitioner’s motion for reconsideration, the dispositive part of which
reads:

“Accordingly, the Bank’s motion for reconsideration is hereby
denied. The responsible officers of the
Bank and its counsel are hereby warned, under pain of contempt, that we shall
not tolerate their further delaying the execution of the subject award.”^[1]

Private respondents Godofredo Morillo, Sunday Bacea, Alfredo Cos
and Rogelio Villanueva were hired as security guards by Confidential
Investigation and Security Corporation (“CISCOR”) on 19 May 1981, 21
August 1984, 22 January 1985, and 27 November 1985, respectively. In the course of their employment, private
respondents were assigned to secure the premises of CISCOR’s clients, among
them, the herein petitioner, Development Bank of the Philippines
(“DBP”) which, in turn, assigned private respondents to secure one of
its properties or assets, the Riverside Mills Corporation.

On 11 August 1987, private respondent Villanueva resigned from
CISCOR. On 15 August 1987, private
respondents Morillo, Bacea and Cos followed suit in resigning from CISCOR. Thereafter, private respondents claimed from CISCOR the return of
their cash bond and payment of their 13th month pay and service incentive leave
pay. For failure of CISCOR to grant
their claims, private respondents Villanueva and Cos filed against CISCOR and
its President/Manager Ernesto Medina NLRC NCR Case No. 00-10-3562-87 on 13
October 1987, while private respondents Morillo and Bacea filed NLRC NCR Case
No. 00-09-3383-87 on 29 September 1987. In said two (2) cases, private respondents sought recovery of their cash
bond, payment of 13th month pay, and their five-day service incentive leave
pay. The two (2) cases were
consolidated and assigned to Labor Arbiter Crescencio Iniego.

In their position paper filed on 23 November 1987, private respondents
(as complainants) alleged that they tendered their resignations in August 1987
upon the assurance of CISCOR that they would be paid the cash benefits due
them. For failure of CISCOR to comply,
private respondents claimed violations committed by CISCOR and Medina,
specifically, the non-payment of their 13th month pay, five (5) day service
incentive leave pay from the date of employment to the time of their
separation, non-refund of their cash bond, non-payment of legal holiday pay and
rest day pay. On the other hand, CISCOR
and Medina in their position paper filed on 3 March 1988 admitted that private
respondents were former security guards of CISCOR. They added, however, that sometime in 1987, petitioner allegedly
formed its own security agency and pirated private respondents who tendered
their voluntary resignations from CISCOR. Thereafter, when private respondents sought from CISCOR the return of
their cash bond deposit, payment of 13th month pay and service incentive leave
pay, CISCOR explained to private respondents that in view of the claim of
petitioner that it incurred losses when private respondents and their other
co-security guards secured the premises of Riverside Mills Corporation, private
respondents, prior to the payment of their claims, were asked to first secure
an individual/agency clearance from petitioner to show that no losses were
incurred while they were guarding Riverside Mills Corporation.

Instead of getting such clearance from the petitioner, private
respondents secured their clearance from CISCOR’s detachment commander. Hence, for failure to secure the required
clearance, private respondents’ cash bond deposit, their proportionate 13th
month pay and service incentive leave pay were withheld to answer for
liabilities incurred while private respondents were guarding Riverside Mills
Corporation.

On 10 March 1988, CISCOR filed a motion with leave to implead
petitioner bank and averred therein that in view of its contract with the
petitioner whereby, for a certain service fee, CISCOR undertook to guard
petitioner’s premises, both CISCOR and petitioner, under the Labor Code, are
jointly and severally liable to pay the salaries and other statutory benefits
due the private respondents, petitioner being an indispensable party to the case. On 11 March 1988, Labor Arbiter Iniego
issued an order granting the aforesaid motion and including petitioner as one
of the respondents therein. To this,
private respondents filed their opposition and alleged, among others, that
petitioner, not being an employer of the private respondents, was not a proper,
necessary or indispensable party to the case.

In answer, petitioner filed its position paper alleging therein
that it was not made a respondent by the herein private respondents in their
complaint, and that none of the original parties to the case (private
respondents and CISCOR/Medina) interposed any claim against the
petitioner. It further stated that it
cannot be held liable to the claim of private respondents because there was no
failure on the part of CISCOR and Medina to pay said claims. If CISCOR had apparently failed to pay
private respondents’ claims, it was only due to the failure of private
respondents to secure their individual clearance of accountability or agency
clearance that there were no losses incurred while they were guarding Riverside
Mills Corporation.

On 12 July 1988, the Labor Arbiter rendered a decision, the
dispositive part of which reads:

“WHEREFORE, judgment is hereby rendered ordering the
respondents Confidential Investigation and Security Corporation, Mr. Ernesto
Medina and Development Bank of the Philippines to pay the complainants the
corresponding salary differential due them to be computed for the last three
(3) years from the time they stopped working with the respondents sometime in
August 1987. Confidential Investigation
and Security Corporation is further ordered to return to the complainants their
respective cash bond cited in this decision within a period of ten (10) days
from receipt hereof.“^[2]

From the above decision, CISCOR and Medina appealed to the
NLRC. Petitioner likewise filed its
Motion for Reconsideration/Appeal and prayed for the Labor Arbiter to modify
his decision and make CISCOR and Medina solely liable
for the claims of private respondents, and to declare the award for salary
differentials as null and void.

In its Resolution of 24 January 1991, the NLRC held the
petitioner DBP, CISCOR and Medina, as jointly and severally liable, the
pertinent part of which reads:

“WHEREFORE, the decision appealed from is hereby
modified. All the respondents
(Confidential Investigation and Security Corporation, Ernesto Medina and the
Development Bank of the Philippines) are hereby adjudged jointly and severally
liable to the admitted claims for 13th month pay, 5 days incentive leave, and
refund of cash bond, and accordingly, immediate execution is hereby directed
against any of the aforesaid respondents without prejudice to their having
lawful recourse against each other.

Anent the award of wage differential and the claim for rest day and
legal holiday pay, the same are hereby remanded to the Arbitration Branch of
origin for further hearing with the directive that it be completed in 20 days
from the Arbitration Branch’s receipt of this Order.”^[3]

Hence, this petition for review on certiorari, with
petitioner DBP raising the following issues:

1. Whether or not the DBP is really liable for any of the claims of private respondents;

2. Whether or not the NLRC (or the Labor Arbiter) correctly applied Article
106 of the Labor Code; and

3. Whether or not the wage differential, rest day and legal holiday pay
could and should be adjudicated in this case.

The threshold and, in the ultimate analysis, the decisive issue
raised by the present petition is whether petitioner was correctly held jointly
and severally liable, alongside CISCOR and Medina, for the payment of the
private respondents’ salary differentials, 13th month pay, service incentive
leave pay, rest day pay, legal holiday pay, and the refund of their cash
deposit.

Petitioner posits that it is not the employer of private
respondents and should thus not be held liable for the latter’s claims. In addition, it avers that it was not
properly impleaded as it was CISCOR and Medina who filed the motion to implead
petitioner, and not the private respondents, as complainants therein. Petitioner even goes further by countering
that, assuming arguendo, it was the indirect employer of private respondents,
Article 106 of the Labor Code^[4]
cannot be applied to the present case as there was no failure on the part of
CISCOR and Medina, as direct employer, to pay the claims of private
respondents, but only a failure on the part of the latter to present the proper
clearance to pave the way for the payment of the claims. It emphasizes that the term
“fails” in Article 106 of the Labor Code implies insolvency or
unwillingness of the direct employer to pay, which cannot be said of CISCOR and
Medina as they have manifested their willingness to pay private respondents’
claims after they have presented proper clearance from accountability.

We are not persuaded by petitioner’s arguments.

Petitioner’s interpretation of Article 106 of the Labor Code is
quite misplaced. Nothing in said
Article 106 indicates that insolvency or unwillingness to pay by the contractor
or direct employer is a prerequisite for the joint and several liability of the
principal or indirect employer. In
fact, the rule is that in job contracting, the principal is jointly and
severally liable with the contractor. The statutory basis for this joint and several liability is set forth in
Articles 107^[5]
and 109^[6]
in relation to Article 106 of the Labor Code.^[7] There
is no doubt that private respondents are entitled to the cash benefits due
them. The petitioner is also, no doubt,
liable to pay such benefits because the law mandates the joint and several
liability of the principal and the contractor for the protection of labor. In Eagle Security Agency,
Inc. vs. NLRC, this Court, explaining the aforesaid
liability, held:

“This joint and several liability of the contractor and the
principal is mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage [Article 99, Labor Code]. 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 for purposes of paying the employees their wages should the
contractor be unable to pay them. This
joint and several liability facilitates, if not guarantees, payment of the
workers’ performance of any work, task, job or project; thus giving the workers
ample protection as mandated by the 1987 Constitution [See Article II Sec. 18
and Article XIII Sec. 3].”^[8]

Neither may petitioner argue that it was not properly impleaded
and hence, should not be made liable to the claims of private respondents. On this matter, petitioner cannot be
absolved from responsibility. We
sustain respondent Commission’s holding that:

“Anent the Bank’s first issue, what we actually have here is a
“Third-Party Complaint”, defined by Section 12, Rule 6 of the Rules
of Court as “a claim that a defending party may, with leave of court, file
against a person not a party to the action, called the the third-party defendant,
for contribution, indemnity, subrogation or any other relief, in respect of
his opponent’s claim” (emphasis ours). Since Rule I, Section 3 of our 1986 Revised NLRC Rules adopts
suppletorily the Rules of Court “in the interest of expeditious labor justice
and whenever practicable and convenient” with the Security Agency’s
impleading the Bank for indemnity and subrogation considering that the
complainants worked with the Bank “to safeguard their premises, properties
and their person” (Record, p. 76), such a third-party complaint would
therefore be proper. That the bank has
not disputed liability on the admitted claims, but professes merely subsidiary,
instead of solidary liability, we find its position here all the more,
untenable.”^[9]

Finally, petitioner submits that wage differential, rest day and
legal holiday pay should not be adjudicated in this case. The respondent Commission, however,
observed:

“Regarding the question of wage differential, we note that the
complaint (Record, p. 1), as well as the complainants’ Position Paper (Record,
pp. 5-10) do not mention about any wage differential claim. We do not therefore see any basis with which
we may, on sight, affirm the said award. We note though that complainants’ position paper save technical arguments
(that after all are not binding to us in this jurisdiction), sufficiently
claims rest day and legal holiday pay, claims that were not strongly refuted by
respondents. Impressed, although not
convincingly, that the award on wage differential could have referred to the
complainants’ claim for rest day and legal holiday pay, we therefore see the
need to have the said claims subjected to further hearing but for a limited
period of 20 days.”^[10]

We note that in the present case, there is no claim for wage
differentials either in the complaints or in the position paper filed by
private respondents before the labor arbiter. Accordingly, no relief may be granted on such matter. We, however, agree with the respondent
Commission in its stand that private respondents are entitled to rest day and
holiday pay (aside from the refund of their cash bond and the payment of their
13th month pay and service incentive leave pay for 1989). Private respondents’ position paper
submitted before the labor arbiter properly raised the two (2) issues (rest and
holiday pay) and included the same in their prayer for relief. The computation of the amount due each
individual security guard can be made during the additional hearings ordered by
the Commission.

WHEREFORE, premises considered, the
questioned resolution of the respondent NLRC is hereby AFFIRMED with the modification that the additional hearing
ordered by the NLRC shall not include wage differentials but shall be confined
to legal holiday and rest day pay. Execution shall forthwith proceed as to the NLRC awards of 13th month
pay, service incentive leave pay and return of private respondents’ cash
bond. Petitioner and CISCOR/Medina are ORDERED to pay jointly and severally
the claims of private respondents, as finally awarded by the NLRC, without
prejudice to the right of reimbursement which petitioner or CISCOR/Medina may
have against each other.

SO ORDERED.

Narvasa, C.J., (Chairman), Regalado, Puno, and Mendoza, JJ.,
concur.

^[1]
Rollo, p. 61

^[2]
Rollo, p. 30.

^[3]
Rollo, p. 44.

^[4]
Article 106 reads in part: “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 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.”

^[5]
Art. 107. Indirect employer. – The
provisions of the immediate 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.

^[6]
Art. 109. Solidary lialbility. – 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 this
Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be considered as
direct employer.

^[7]
Philippine Fisheries Development Authority vs. National Labor Relations
Commission, 213 SCRA 621, 627 (1992) citing Del Rosario and Sons Logging
Enterprises, Inc. vs. NLRC, 136 SCRA 669 (1985); Baguio vs. NLRC,
202 SCRA 465 (1991); ECAL vs. NLRC, 195 SCRA 224 (1991).

^[8]
173 SCRA, 479, 485 (1989).

^[9]
Rollo, p. 48.

^[10]
Id. p. 47.