GR 112139; (January, 2000) (Digest)
G.R. No. 112139 ; January 31, 2000
LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS and COMMANDO SECURITY SERVICE AGENCY, INC., respondents.
FACTS
Petitioner Lapanday Agricultural Development Corporation entered into a Guard Service Contract with respondent Commando Security Service Agency, Inc. in June 1983. The contract obligated Commando to provide security guards for Lapanday’s banana plantation. During the contract’s effectivity, Wage Order Nos. 5 and 6 were promulgated, mandating increases in minimum wage and emergency cost of living allowances (ECOLA). These Wage Orders specifically provided that for security service contracts, the principal or client must bear the cost of these increases, and the contracts were deemed amended accordingly. Commando demanded that Lapanday adjust the contract price to cover these mandated increases, but Lapanday refused. The contract expired in June 1986 without the adjustments being implemented. Commando filed a complaint in the Regional Trial Court to recover the amount of P462,346.25, representing the accrued wage adjustments.
ISSUE
The primary issues were: (1) Whether the principal, Lapanday, is obligated to pay the wage adjustments directly to the security agency despite the contract’s expiration; (2) Whether the security agency, which allegedly had not paid the increases to its already-terminated guards, had the legal standing to sue for recovery; and (3) Whether the civil courts had jurisdiction over the case.
RULING
The Supreme Court affirmed the decisions of the lower courts, ruling in favor of the security agency. On the substantive obligation, the Court held that Wage Order Nos. 5 and 6 clearly and expressly mandated that the principal or client must bear the cost of the wage and allowance increases for workers of service contractors. This statutory obligation amended the service contract by operation of law, creating a direct liability on the part of Lapanday to pay the increased amounts to Commando. This liability accrued during the contract’s effectivity and survived its expiration. The Court rejected Lapanday’s argument that Commando lacked standing because it had not yet paid the guards. The cause of action arose from the contract deemed amended by law, and the agency’s claim was for the contract price adjustment necessary to fulfill its own statutory duty to pay the increased wages. On jurisdiction, the Court ruled that the case, being a collection of a sum of money based on a contract, was within the jurisdiction of regular civil courts, not the National Labor Relations Commission. The claim was between the principal and the contractor, not a direct labor claim by the employees.