G.R. No. L-30587 October 28, 1977
NORTHERN MOTORS, INC., petitioner, vs. WORKMEN’S COMPENSATION COMMISSION and TERESITA VILLAPANIA, respondents.

FACTS

Teresita Villapania, on behalf of her minor children, filed a claim for compensation under the Workmen’s Compensation Act for the death of her husband, Emilio S. Bautista. Bautista was employed by the Detective and Protective Bureau, Inc. (DPBI) but was assigned as a security guard at the premises of Northern Motors, Inc. (NMI). The DPBI submitted an employer’s report admitting Bautista was its employee and signified its intention to controvert the claim but failed to state any grounds. NMI did not controvert the claim. The Acting Referee of the Workmen’s Compensation Commission rendered an award holding NMI and DPBI jointly and severally liable.
NMI appealed, arguing it was not the employer. The Workmen’s Compensation Commission modified the award, holding NMI solely liable as the statutory employer. NMI filed a petition for reconsideration, which was denied by the Commission en banc. NMI then elevated the case to the Supreme Court, contending that DPBI was an independent contractor and the sole employer, and that it was deprived of a hearing.

ISSUE

The primary issue is whether Northern Motors, Inc., as the principal where the security guard was assigned, can be held liable as the statutory employer for death compensation benefits under the Workmen’s Compensation Act, notwithstanding a contractual agreement with the security agency assuming such liability.

RULING

The Supreme Court affirmed the decision of the Workmen’s Compensation Commission with modification. The Court held that NMI is indeed the statutory employer under Section 39(a) of the Workmen’s Compensation Act, which defines an employer to include the owner or manager of the place of work where the labor is performed, even if the laborers are furnished by an independent contractor. The law imposes liability on the principal or business establishment to ensure that workmen’s compensation benefits are paid to employees working within its premises, regardless of the direct employment relationship.
The Court cited the doctrine established in Universal Corn Products, Inc. vs. Workmen’s Compensation Commission and reiterated in Aboitiz Co., Inc. vs. Workmen’s Compensation Commission, which consistently ruled that a company furnished with security guards by an agency is the statutory employer for compensation purposes. However, the Court also recognized the validity of the contractual indemnity clause between NMI and DPBI. The contract expressly stipulated that DPBI would hold NMI free from any liability under labor laws, including the Workmen’s Compensation Act, and would assume all responsibilities for claims filed by the guards.
Consequently, while NMI is primarily and statutorily liable to the claimant to fulfill the public policy of the Workmen’s Compensation Act, it possesses a right of reimbursement from DPBI based on their contract. The award was modified in the amounts payable, and it was ordered that DPBI shall reimburse NMI for whatever amount NMI pays to the claimants. This ruling balances the statutory obligation to the employee with the contractual rights between the principal and the contractor.