Joint error

If there is no employer-employee relationship between the parties and no issue which may be resolved by reference to the Labor Code or other labor statutes is involved, it is the Regional Trial Court which has jurisdiction. This is illustrated in this case of a security agency (CSA) and the SSS.

CSA entered into an agreement to provide security services to SSS. During the effectivity of said agreement, CSA requested SSS for the upward adjustment of their contract rate in view of Wage Order No. NCR-03 increasing the minimum wage and providing that the prescribed amount of the increase in wages of the security guards shall be borne by the principal or the client (SSS) of the service contractor (CSA), and the contract shall be deemed amended accordingly; and if the principal/client fails to pay the prescribed increase, the service contractor shall be jointly and severally liable with the principal or client.

CSA’s repeated requests were not heeded by SSS. Thus CSA could not pay the salary differentials of its guards prompting the latter to file a complaint in the NLRC for underpayment of wages. On the other hand, CSA pulled out its security guards and filed a complaint against SSS with the Department of Labor and Employment (DOLE), National Capital Region (NCR). SSS prayed for the dismissal of the complaint on the ground that CSA was not the real party in interest and has no legal capacity to file the same. It argued that if it had any obligation, it was to the security guards. CSA however countered that the security guards assigned to SSS do not have any legal basis to file a complaint for lack of contractual privity.

The NCR Director ruled in favor of CSA and ordered SSS to pay CSA P1,600,858.46 representing the wage differentials of its 168 security guards. On appeal to the DOLE Secretary, the latter set aside the NCR Director’s order, required it to recompute the wage differentials and held the CSA jointly and severally liable for the wage differentials which should be paid directly to the security guards concerned.

CSA questioned this order of the DOLE contending that it has no jurisdiction to review appeals from decisions of the Regional Director regarding recovery of wages, simple money claims and other benefits. Under Article 129 of the Labor Code, it is the NLRC which has jurisdiction to resolve the appeal. SSS on the other hand contended that it is Article 128 which is applicable to this case. Under the said article an order issued by the duly authorized representative of the DOLE Secretary may be appealed to the latter.

Which of them is correct?

None of them is correct.

Where no employer-employee relationship exists between the parties it is the Regional Trial Court that has jurisdiction. In this case, even if CSA filed the complaint on its behalf and also on behalf of the security guards, the relief sought has to do with the enforcement of the contract between it and the SSS which was deemed amended by virtue of Wage Order N. NCR-03. The controversy subject of the case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil courts.

But even assuming arguendo that CSA’s complaint was filed with the proper forum, it must still be dismissed for lack of cause of action. It is only when the service contractor (CSA) pays the increases mandated by the Wage Order that it can claim an adjustment from the principal (SSS) to cover the increase payable to the security guards. The conclusion that the contractor (CSA) has the right to recover from the principal (SSS) arises only if the contractor has paid the amounts for which both of them are jointly and severally liable in line with Article 1217 of the Civil Code. In this case, CSA has not paid the mandated increases to the security guards. The security guards have in fact filed a complaint with the NLRC against CSA relative to among other things, underpayment of wages (Urbanes Jr. vs. Secretary of Labor and Employment G.R. 122791, February 19, 2003. 397 SCRA 665).