LAPANDAY AGRICULTURAL DEVELOPMENTCORPORATION V CA (and COMMANDO SECURITYSERVICE

AGENCY, INC.)
GONZAGA-REYES; January 31, 2000
NATURE
Petition for Review on
Certiorari
of the decision of the CA
whichaffirmed the decision of the RTC.
FACTS
In June 1986 private respondent and plaintiff entered into a Guard Service Contract. Respondent
provided security guards ind e f e n d a n t ' s b a n a n a p l a n t a t i o n . T h e c o n t r a c t c a l l e d f o r
t h e payment to a guard of P754.28 on a daily 8-hour basis and anadditional P565.72 for a
four hour overtime while the shift-in- c h a r g e w a s t o b e p a i d P 8 1 1. 4 0 o n a d a i l y 8 - h o u r
b a s i s a n d P808.60 for the 4-hour overtime.- W a g e O r d e r s i n c r e a s i n g t h e m i n i m u m w a g e i n
1 9 8 3 w e r e complied with by the defendant. On June 16, 1984, Wage OrderNo. 5 was promulgated
directing an increase of P3.00 per day onthe minimum wage of workers in the private sector and a
P5.00increase on the ECOLA. This was followed on November 1, 1984by Wage Order No. 6 which
further increased said minimumwage by P3.00 on the ECOLA. Both Wage Orders contain
thefollowing provision:" I n t h e c a s e o f c o n t r a c t f o r c o n s t r u c t i o n p r o j e c t s a n d f o r security,
janitorial and similar services, the increase in the minimum wage and allowances rates of the
workers shall beborne by the principal or client of the construction/service c o n t r a c t o r a n d
t h e c o n t r a c t s s h a l l b e d e e m e d a m e n d e d a c c o r d i n g l y, s u b j e c t t o t h e p r o v i s i o n s o f
Sec. 3 (b) of this o r d e r " ( S e c . 6 a n d S e c . 9 , W a g e O r d e r s N o . 5 a n d
6 , respectively).- Respondent demanded that its Guard Service Contract with defendant be
upgraded in compliance with Wage Order Nos. 5and 6. Plaintiff refused. Their Contract expired on June
6, 1986without the rate adjustment called for Wage Order Nos. 5 and 6being implemented. By the
time of the filing of respondent's Complaint, the rate adjustment payable by defendant amountedto
P462,346.25. Plaintiff opposed the Complaint.- The trial court decided in favor of the respondent.
PlaintiffsMOR was denied, hence this petition.
ISSUES
1.
WON RTC has jurisdiction over the case2.
W ON petitioner is liable to the private respondent for the wage adjustments provided under
Wage Order Nos. 5 and 6 andfor attorney's fees
HELD
1. YES- The enforcement of the written contract does not fall under the jurisdiction of the NLRC
because the money claims involved therein did not arise from employer-employee relations
betweenthe parties and is intrinsically a civil dispute. Thus, jurisdictionlies with the regular courts.
The RTC has jurisdiction over the subject matter of the present case. It is well settled in law
and jurisprudence that where no employer-employee relationship exists between the parties and
no issue is involved which maybe resolved by reference to the Labor Code, other labor statutesor any
collective bargaining agreement, it is the Regional TrialCourt that has jurisdiction. In its complaint, private
respondent isnot seeking any relief under the Labor Code but seeks paymento f a s u m o f m o n e y
and damages on account of petitioner'salleged breach of its obligation under
their Guard ServiceContract. The action is within the realm of civil law
h e n c e jurisdiction over the case belongs to the regular courts. W hile the resolution of the issue
involves the application of labor laws,reference to the labor code was only for the determination of
thesolidary liability of the petitioner to the respondent where no employer-employee relation
exists. Article 217 of the Labor Codeas amended vests upon the labor arbiters exclusive
original jurisdiction
only
over
the
following:1 . U n f a i r
l a b o r
p r a c t i c e s ; 2 . T e r m i n a t i o n
d i s p u t e s ; 3.If
accompanied

w i t h a c l a i m f o r r e i n s t a t e m e n t , t h o s e cases that workers may file involving wages,

rates of pay,h o u r s
of
work
and
other
terms
and
conditions
o f employment;4 . C l a i m s f o r a c t u a l , m o r a l e x e m p l a r y a n d o t h e r f o r m
o f damages arising from employer-employee relations;5 . C a s e s a r i s i n g f r o m a n y
v i o l a t i o n o f A r t i c l e 2 6 4 o f t h i s Code, including questions involving legality of strikes
andlockouts;
and6 . E x c e p t
claims
for
Employees
Compensation,
S o c i a l S e c u r i t y, M e d i c a r e a n d m a t e r n i t y b e n e f i t s , a l l o t h e r c l a i m s , a r i s i n g f r o m
employer-employee relations,including those of persons in domestic or
h o u s e h o l d service, involving an amount exceeding five thousandpesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.- In all these cases, an
employer-employee relationship is an indispensable jurisdictional requisite; and there is none in
thiscase.2 . P r i v a t e r e s p o n d e n t a d m i t s t h a t t h e r e i s n o e m p l o y e r - employee relationship
between it and the petitioner. The privaterespondent is an independent/job contractor
1
who assignedsecurity guards at the petitioner's premises for a stipulated amount per guard per
month. The Contract of Security Servicesexpressly stipulated that the security guards are employees
of the Agency and not of the petitioner. Articles 106 and 107 of theLabor Code provides the rule governing
the payment of wages of employees in the event that the contractor fails to pay such wages
1
.- It will be seen from the above provisions that the principal(petitioner) and the contractor
(respondent) are jointly andseverally liable to the employees for their wages. This Court heldin
Eagle Security, Inc
.
vs
.
NLRC
and
Spartan Security and Detective Agency, Inc
.
vs
.
NLRC
t h a t t h e j o i n t a n d s e v e r a l liability of the contractor and the principal is mandated by
theLabor Code to assure compliance with the provisions therein including the minimum wage.
The contractor is made liable byvirtue of his status as direct employer. The principal, on
theother hand, is made the indirect employer of the contractor's e m p l o y e e s t o s e c u r e
p a y m e n t o f t h e i r w a g e s s h o u l d t h e contractor be unable to pay them. Even in the
absence of anemployer-employee relationship, the law itself establishes onebetween the principal
and the employees of the agency for a limited purpose
i
.
e
. in order to ensure that the employees arepaid the wages due them. In the abovementioned cases, thesolidary liability of the principal and contractor was held to applyto the
aforementioned Wage Order Nos. 5 and 6. In ruling thatu n d e r t h e W a g e O r d e r s , e x i s t i n g
s e c u r i t y g u a r d s e r v i c e s contracts are amended to allow adjustment of the considerationin order to
cover payment of mandated increases, and that theprincipal is ultimately liable for the said increases.- It
is clear that it is only when contractor pays the increases mandated that it can claim an
adjustment from the principal toc o v e r t h e i n c r e a s e s p a y a b l e t o t h e s e c u r i t y g u a r d s .
T h e conclusion that the right of the contractor (as principal debtor) torecover from the principal as
solidary co-debtor) arises only if