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588 SUPREME COURT REPORTS ANNOTATED

Enjay, Inc. vs. National Labor Relations Commission

*
G.R. No. 110240. July 4, 1995.

ENJAY, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, HON. VALENTIN C.
GUANIO, RODOLFO CASTAÑEDA, RENATO
CONQUISTA, VICENTE DELGRA, SILVESTRE GARCIA,
HONORATO GONZALES, ELISEO JARCE, MARIO
DAGONOY, ROBERTO LOPEZ, JOSE MAGSOMBOL,
HERMINIGILDO MARQUEZ, JR., MUECA GREGORIO,
ALFREDO PABON, ABELARDO PALMIS, GREGORIO
PERALTA, MARIO QUIAMBAO, EDUARDO SALAMAT,
ERNESTO TARALA, MARIANO VILLACRUSIS,
REUBEN LOMOCSO, EDWIN FERRER, RODRIGO
PAROCHA, OBILAN ANAPI, LEIDO ARANDELA,
SAMUEL BAJORA, LUIS BUEN, NATHANIEL
LAURETA, ROSALIO NARVADEZ and SHIRLEY ISIP,
respondents.

Labor Law; Wages; Court finds that petitioner failed to raise

any substantial argument to warrant a reversal of the ruling that
petitioner was not able to overcome the burden of proving payment
of the minimum wage.—In its motion for reconsideration,
petitioner reiterates its argument that private respondents were
paid the minimum wage. We find that petitioner failed to raise
any substantial argument to warrant a reversal of our ruling that
petitioner was not able to overcome the burden of proving
payment of the minimum wage.
Same; Same; Construing Section 9 of Wage Order No. 6 the
Court ruled that the liability of the principal and the contractor
was solidary.—The Court construed said provision in conjunction
with the

_______________

* FIRST DIVISION.

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Enjay, Inc. vs. National Labor Relations Commission

Labor Code of the Philippines in Eagle Security Agency, Inc. v.

National Labor Relations Commission, 173 SCRA 479 (1989),
ruling that the liability of the principal and the contractor was
solidary.
Same; Same; Under R.A. 6727, liability of the principal and
the contractor for the payment of wages is joint and several.—After
R.A. No. 6640 came R.A. No. 6727 enacted on June 9, 1989.
Liability of the principal and the contractor for the payment of
wages under R.A. No. 6727 is joint and several.
Same; Same; R.A. 6640 categorically provides for the
subsidiary liability of the principal.—While Wage Order No. 6 in
relation to the Labor Code as well as Section 6 of R.A. No. 6727
provided for the principal’s solidary liability for unpaid wages,
R.A. No. 6640 categorically provides for the subsidiary liability of
the principal.
Same; Same; Same; The term “subsidiary liable” as used in
RA 6640 means “secondarily liable.”—The term “subsidiarily
liable” as used in R.A. No. 6640 means “secondarily liable.”
Secondary liability is a personal liability which attaches when the
remedy against one primarily liable has been exhausted, and
which may be satisfied from all assets of one secondarily liable.

SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.

The facts are stated in the resolution of the Court.

          Castillo, Laman, Tan & Pantaleon Law Offices for
petitioner.
          Guerrero and Oraa Law Firm for private
respondents.
          Jose Oscar M. Salazar for respondent Paladin
Protective and Security Services, Inc.

RESOLUTION

QUIASON, J.:

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In their complaint filed with the Labor Arbiter, private

respondents, who are security guards previously employed
by the Paladin Protective and Security Services, Inc.
(Paladin), claimed from petitioner and Paladin wage
differentials resulting from increases mandated under
Wage Order No. 6, which took effect on November 1, 1984
and under R.A. No. 6640, which took effect

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Enjay, Inc. vs. National Labor Relations Commission

on December 14, 1987.

In a Decision dated April 23, 1990, the Labor Arbiter
granted wage differentials under Wage Order No. 6 from
November 18, 1985 until December 13, 1987, and under
R.A. No. 6640 from December 14, 1987 until April 30, 1988.
The Labor Arbiter thus disposed as follows:

“xxx      xxx      xxx

1. Respondent Enjay, Inc. shall pay each of the complainants

the sums due them under Wage Order No. 6;
2. Respondent Paladin Protective and Security Services, Inc.
shall pay the complainants the amount due each of them
under R.A. No. 6640 with the proviso that respondent
Enjay, Inc. shall be subsidiarily liable therefor.”

xxx      xxx      xxx

(Rollo, p. 26; Italics supplied).

In a Resolution dated January 6, 1992, the National Labor

Relations Commission (NLRC) modified the Arbiter’s
award by granting wage differentials under Wage Order
No. 6 from October 31, 1985 until December 13, 1987 and
under R.A. No. 6640 from December 14, 1987 until April
30, 1988. The NLRC also modified the Labor Arbiter’s
decision by disposing thus:

“WHEREFORE, in view of the foregoing, the appealed decision is

hereby set aside, and a new judgment rendered declaring
respondents Paladin Protective and Security Services, Inc., and
Enjay Incorporated to be solidarily liable for complainants’
monetary award x x x” (Rollo, p. 34; Italics supplied).

The motion for reconsideration filed by petitioner and

Paladin was denied by NLRC in a Resolution dated
February 26, 1993. Petitioner went to us on certiorari
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asserting that NLRC acted with grave abuse of discretion

when it ruled that:

(1) petitioner was liable for Paladin’s failure to pay the

minimum wage under Wage Order No. 6 and R.A.
No. 6640 despite the absence of an employer-
employee relationship between petitioner and
private respondents;
(2) petitioner was solidarily liable with Paladin despite
the latter’s express assumption under their service
contract of the liability for wages, as well as the
provisions of R.A. No. 6640; and

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Enjay, Inc. vs. National Labor Relations Commission

(3) petitioner was liable for the unpaid wages despite

the private respondents’ sworn admission that they
received the minimum wage (Rollo, pp. 8-9).

In our Resolution of June 21, 1993, we dismissed the

petition considering petitioner’s failure to show grave
abuse of discretion on the part of NLRC.
In its motion for reconsideration, petitioner reiterates its
argument that private respondents were paid the
minimum wage. We find that petitioner failed to raise any
substantial argument to warrant a reversal of our ruling
that petitioner was not able to overcome the burden of
proving payment of the minimum wage.
Petitioner also argues that, granting it is liable for the
payment of wage differentials, it is only subsidiarily liable
for the amounts due under R.A. No. 6440, within the period
of December 14, 1987 to April 30, 1988. Section 6 of R.A.
No. 6640 provides as follows:

“In the case of contracts for construction projects and for security,
janitorial and similar services, the increase in the minimum wage
of the workers shall be borne by the employers of the construction
workers, security guards, janitors, and others similarly situated:
Provided, however, That the principal or client of the construction
and service contractor shall be subsidiarily liable: Provided
further, That the subsidiary liability shall not apply to
construction of family homes worth not more than two hundred
thousand pesos (P200,000.00)” (Italics supplied).

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The law on minimum wage immediately preceding R.A. No.

6640 was Wage Order No. 6. Section 9 of said Wage Order
provided:

“In the case of contracts for construction projects and for security,
janitorial and similar services, the increases in the minimum
wage and allowance rates of the workers shall be borne by the
principal or client of the construction/service contractor and the
contracts shall be deemed amended accordingly, subject to the
provisions of Section 3 (c) of this Order.”

The Court construed said provision in conjunction with the

Labor Code of the Philippines in Eagle Security Agency,
Inc. v.
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Enjay, Inc. vs. National Labor Relations Commission

National Labor Relations Commission, 173 SCRA 479

(1989), ruling that the liability of the principal and the
contractor was solidary, thus:

“Petitioner’s solidary liability for the amounts due the security

guards finds support in Articles 106, 107 and 109 of the Labor
Code which state that:
x x x      x x x      x x x
“This joint and several liability of the contractor and the
principal is mandated by the Labor Code to assure compliance of
the provisions therein including the statutory minimum wage
[Article 99, Labor Code]. The contractor is made liable by virtue of
his status as direct employer. The principal, on the other hand, is
made the indirect employer of the contractor’s employees for
purposes of paying the employees their wages should the
contractor be unable to pay them. This joint and several liability
facilitates, if not guarantees, payment of the workers’
performance of any work, task, job or project, thus giving the
workers ample protection as mandated by the 1987 Constitution
[See Article II Sec. 18 and Article XIII Sec. 3]; (at p. 485).

After R.A. No. 6640 came R.A. No. 6727 enacted on June 9,
1989. Liability of the principal and the contractor for the
payment of wages under R.A. No. 6727 is joint and several.
Section 6 provides as follows:

“In the case of contracts for construction projects and for ‘security,
janitorial and similar services, the prescribed increases in the
wage rates of the workers shall be borne by the principals or

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clients of the construction/service contractors and the contract

shall be deemed amended accordingly. In the event, however, that
the principal or client fails to pay the prescribed wage rates, the
construction/service contractor shall be jointly and severally liable
with his principal or client” (Italics supplied).

While Wage Order No. 6 in relation to the Labor Code as

well as Section 6 of R.A. No. 6727 provided for the
principal’s solidary liability for unpaid wages, R.A. No.
6640 categorically provides for the subsidiary liability of
the principal.
It is a rule of statutory construction that if a statute is
clear, plain and free from ambiguity, it must be given its
literal meaning and applied without interpretation. In
Globe-Mackay Cable and Radio Corporation v. National
Labor Relations Commis-

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Enjay, Inc. vs. National Labor Relations Commission

sion, 206 SCRA 701 (1992), we expounded on the rule, thus:

“x x x This plain-meaning rule or verba legis derived from the

maxim index animi sermo est (speech is the index of intention)
rests on the valid presumption that the words employed by the
legislature in a statute correctly express its intent or will and
preclude the court from construing it differently. The legislature
is presumed to know the meaning of the words, to have used
words advisedly, and to have expressed its intent by the use of
such words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there should be no
departure. x x x” (at p. 711).

The term “subsidiarily liable” as used in R.A. No. 6640

means “secondarily liable.” Secondary liability is a personal
liability which attaches when the remedy against one
primarily liable has been exhausted, and which may be
satisfied from all assets of one secondarily liable (38A,
Words and Phrases 76 [1967]).
The doctrine in Lopez & Sons, Inc. v. Court of Tax
Appeals, 100 Phil. 850 (1957) cannot be applied in the
instant case. In Lopez, we stated that if the literal meaning
and wording of Section 11 of R.A. No. 1125, that persons
affected by a decision of the Collector of Customs may
appeal directly to the Court of Tax Appeals, then the
supervision and control of the Commissioner of Customs
over Collectors of Customs, and his right to review their
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decisions upon appeal to him by the persons affected by

said decision, would be destroyed. Thus, we ruled that the
phrase “Collector of Customs” in Section 11 should be read
“Commissioner of Customs.”
In said case, the Court corrected what was clearly a
clerical error in the wording of the statute, in order to carry
out the evident legislative intent. We find no such clerical
error in the case at bench.
The effect then of Section 6 of R.A. No. 6640 is to provide
for the subsidiary liability of the principal, in case the
contractor, the party primarily liable as the direct
employer, fails to pay the wages of the employees. While
R.A. No. 6640 would create a lacuna, in that for the period
said law was in effect, the principal was subsidiarily liable
instead of solidarily liable, the Court has no choice but to
apply the law as it finds it.
ACCORDINGLY, the Court Resolved to GRANT in part
the motion for reconsideration. Petitioner is solidarily
liable for the
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Mercado vs. Court of Appeals

sums due to private respondents under Wage Order No. 6

and subsidiarily liable for the sums due under R.A. No.
6640.
SO ORDERED.

     Davide, Jr., Bellosillo and Kapunan, JJ., concur.

          Padilla (Chairman), J., No part. For personal
reasons.

Motion partly granted.

Note.—Claims for backwages earned from the former

employer cannot be filed against the new owners of an
enterprise nor the new operator of a business liable for
claims for retirement pay of employees. (Robledo vs.
National Labor Relations Commission, 238 SCRA 52
[1994])

———o0o———

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