GR 111722; (May, 1997) (Digest)
G.R. No. 111722 May 27, 1997
Alpha Investigation and Security Agency, Inc. (AISA), petitioner, vs. National Labor Relations Commission, Third Division, and William Galimba, et al., respondents.
FACTS
Petitioner Alpha Investigation and Agency, Inc. (AISA) is a private corporation engaged in providing security services. Private respondents were hired as security guards by AISA on February 16, 1990, and were assigned to client Don Mariano Marcos State University (DMMSU) pursuant to a security service agreement. The agreement provided a monthly pay of P1,200.00 for each guard, but private respondents only received P900.00. Nineteen security guards filed complaints for non-compliance with the minimum wage order. AISA made representations with DMMSU for an increase in contract rates to pay the mandated minimum wage, but DMMSU, being a government corporation, cited budgetary constraints. The Labor Arbiter rendered a decision ordering AISA and DMMSU to pay each complainant salary differentials. Both AISA and DMMSU appealed. The NLRC affirmed the solidary liability of AISA and DMMSU. The judgment against DMMSU became final and executory after it failed to file a petition for certiorari within a reasonable time. Only AISA filed a motion for reconsideration, which was denied, prompting this petition.
ISSUE
May the principal (DMMSU) of a security service agreement be held jointly and severally liable with the contractor (AISA) for non-payment of the minimum wage?
RULING
Yes. The Supreme Court dismissed the petition and affirmed the NLRC resolution. The joint and several liability of the contractor and the principal is mandated by Articles 106, 107, and 109 of the Labor Code to ensure compliance with its provisions, including the statutory minimum wage. The contractor (AISA) is liable as the direct employer, while the principal (DMMSU) becomes the indirect employer for the purpose of paying wages in the event of the contractor’s failure. This interpretation is consistent with Section 6 of Republic Act 6727 (The Wage Rationalization Act), which provides that prescribed wage increases for security services shall be borne by the principal or client, and in the event of failure to pay, the contractor shall be jointly and severally liable. The Court found that the NLRC correctly held petitioner jointly and severally liable with DMMSU for the payment of the wage increases to private respondents, and no grave abuse of discretion was committed.