G.R. No. L-64204 May 31, 1985
DEL ROSARIO & SONS LOGGING ENTERPRISES, INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, PAULINO MABUTI, NAPOLEO BORATA, SILVINO TUDIO and CALMAR SECURITY AGENCY, respondents.

FACTS

Petitioner Del Rosario & Sons Logging Enterprises, Inc. entered into a Contract of Services with respondent Calmar Security Agency on February 1, 1978, whereby the agency would supply security guards. In October 1979, guards Paulino Mabuti, Napoleo Borata, and Silvino Tudio filed a complaint against both the Security Agency and the logging company for underpayment of wages, non-payment of living allowance, and 13th-month pay. The Security Agency, in its defense, argued it could not comply with labor standard payments due to the inadequacy of the contract rates paid by the petitioner.
The Labor Arbiter dismissed the complaint against the logging company, finding no direct employer-employee relationship, but ordered the Security Agency to pay the monetary claims. The Security Agency appealed this decision to the NLRC. The petitioner contended the appeal was defective for lack of verification and non-payment of the appeal fee on time.

ISSUE

The primary issues were: (1) whether the NLRC correctly gave due course to the Security Agency’s appeal despite procedural defects; and (2) whether the petitioner, as principal, can be held jointly and severally liable with the Security Agency for the guards’ monetary claims.

RULING

The Supreme Court affirmed the NLRC’s resolution. On the procedural issue, the Court ruled that the formal defects in the appeal were not fatal. The lack of verification was curable, and the appeal fee, although paid late, was ultimately settled. Citing Article 221 of the Labor Code, the Court emphasized that technicalities should not hinder the resolution of cases on their merits, and the NLRC has the discretion to allow late payment in the interest of substantial justice.
On the substantive issue, the Court upheld the finding of joint and several liability. Applying Articles 106 and 107 of the Labor Code, the petitioner, as the principal who contracted the services of an independent contractor (the Security Agency), is deemed an indirect employer. The law expressly provides that the principal is jointly and severally liable with the contractor for the unpaid wages of the latter’s employees for work performed under the contract. The Security Agency’s defense of inadequate compensation from the principal is unavailing, as it is charged with knowledge of labor laws and bears the responsibility to ensure its contract rates are sufficient to cover statutory benefits. The Court clarified that this liability is without prejudice to the petitioner’s right to seek reimbursement from the Security Agency for any amounts it pays to the complainants.