Case Summary (G.R. No. 74193-94)

Background of the Case

A complaint was filed on February 8, 1983, by Luisito de Ocampo and 133 co-employees against Reliable Contractor and San Miguel Corporation. The complaint alleged underpayment of wages and nonpayment of 13th month pay for the years 1980 to 1982. The respondents claimed to be regular and permanent employees of Reliable, which had a contract with San Miguel Corporation for loading, unloading, and repairing materials on a task basis until December 1982. They asserted that they received only a daily wage of P17.00 and did not receive their 13th month pay during this period.

• Complaint filed by 134 employees against Reliable Contractor and San Miguel Corporation.
• Allegations of underpayment of wages and nonpayment of 13th month pay for 1980-1982.
• Employees claimed regular and permanent status under Reliable.
• Work performed on a task basis until December 1982.
• Daily wage received was P17.00, with no 13th month pay.

Positions of the Parties

San Miguel Corporation contended that it was not jointly and severally liable for the payment of the 13th month pay under P.D. No. 851 and its implementing rules. It argued that it had paid Reliable the agreed contractor's fees, which included the basic wage, emergency allowance, and 13th month pay for Reliable's employees. Conversely, Reliable claimed exemption from P.D. No. 851's coverage, asserting that it hired the complainants on a task basis.

• San Miguel Corporation denied joint liability for 13th month pay under P.D. No. 851.
• Claimed compliance with payment of contractor's fees to Reliable.
• Reliable asserted exemption from P.D. No. 851, hiring employees on a task basis.

Labor Arbiter's Decision

On October 30, 1984, Labor Arbiter Pelagio A. Carpio dismissed the complaint regarding underpayment of wages but ordered both San Miguel Corporation and Reliable to pay the 13th month pay for the years 1980 to 1982. Following this decision, both parties filed appeals.

• Labor Arbiter dismissed the underpayment complaint.
• Ordered payment of 13th month pay by both San Miguel and Reliable.
• Both parties appealed the decision on December 13, 1984.

NLRC Ruling

On January 29, 1986, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's decision. The NLRC found that San Miguel Corporation was solidarily liable with Reliable for the payment of the workers' 13th month pay. The NLRC emphasized the constitutional mandate to protect labor and referenced provisions of the Labor Code that establish joint and several liabilities for employers and contractors.

• NLRC affirmed Labor Arbiter's decision on January 29, 1986.
• Found San Miguel solidarily liable with Reliable for 13th month pay.
• Cited constitutional protection for labor and relevant Labor Code provisions.

Legal Basis for Solidary Liability

The NLRC's ruling was based on Articles 106 and 107 of the Labor Code, which stipulate that an employer is jointly and severally liable with a contractor for unpaid wages. The provisions indicate that the liability extends to indirect employers, such as San Miguel Corporation, when the contractor fails to fulfill its obligations. T...continue reading