GR No. 175501
Oct. 4, 2010
Facts
Respondents were employed as security guards by DNL Security Agency (DNL Security). Pursuant to a service contract entered into by DNL Security and petitioner GSIS, respondents were assigned to the Tacloban Office of petitioner. Thereafter, DNL Security informed the respondents that their service contract with petitioner was terminated. This notwithstanding, DNL Security instructed respondents to continue reporting for work to petitioner. Respondents worked as instructed until April 20, 1993, but without receiving their wages; after which, they were terminated from employment.
Issue
Whether or not petitioner GSIS is jointly and severally liable with DNL Security Agency for payment of the unsubstantiated amounts of Salary Differentials and the 13th Month Pay to the private respondent security guards?
Held
Yes. Even if there is no actual and direct employer-employee relationship between petitioner and respondents, it does not absolve the former from liability for the latter’s monetary claims. When petitioner contracted DNL Security’s services, petitioner became an indirect employer of respondents, pursuant to Article 107 of the Labor Code.
Under Article 106 and 109 of the Labor Code, a principal became jointly and severally liable to the employees if the contractor failed to pay the employees their correct wages and other monetary benefits. According to Rosewood Processing, Inc. v. NLRC, 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.
In this case, petitioner is solidarily liable with DNL Security for the respondents’ salary differential and 13th month pay during the time they worked for petitioner. Accordingly, petitioner is bound by the provisions of the Labor Code on indirect employment. The principal is made liable to its indirect employees because, after all, it can protect itself from irresponsible contractors by withholding payment of such sums that are due the employees and by paying the employees directly, or by requiring a bond from the contractor or subcontractor for this purpose.
Hence, petitioner GSIS is jointly and severally liable with DNL Security Agency for payment of the unsubstantiated amounts of Salary Differentials and the 13th Month Pay to the private respondent security guards.