Rosewood Processing, Inc.

vs National Labor Relations Commission

A Summary of a Decision of the Supreme Court of the Philippines

G.R. Nos. 116476-84 May 21, 1998

ROSEWOOD PROCESSING, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NAPOLEON C. MAMON, ARSENIO
GAZZINGAN, ROMEO C. VELASCO, ARMANDO L. BALLON, VICTOR E. ALDEZA, JOSE L.
CABRERA, VETERANS PHILIPPINE SCOUT SECURITY AGENCY, and/or ENGR. SERGIO
JAMILA IV, respondents.

Facts:

Private respondents were security guards of Veterans Philippine Scout Security Agency. Some
were assigned to other companies and detailed to Rosewood, while others are re-assigned to
other companies from Rosewood, and still others were put on “floating” status without
assignment. Most were underpaid or their wages were never paid. All these circumstances led
to the filing of a complaint for illegal dismissal, underpayment of wages, and for nonpayment of
overtime pay, legal holiday pay, premium pay for holiday and rest day, thirteenth month pay,
cash bond deposit, unpaid wages and damages was filed against Veterans Philippine Scout
Security Agency and/or Sergio Jamila IV (collectively referred to as the "security agency," for
brevity). Thereafter, petitioner Rosewood Processing, Inc. was impleaded as a third-party
respondent by the security agency. In due course, Labor Arbiter Ricardo C. Nora rendered a
consolidated Decision dated March 26, 1993 finding the security agency and Rosewood as
solidarily liable to pay the monetary benefits due the security guards.

Issue:

Whether or not petitioner Rosewood was solidarily liable with the security agency for the
non-payment of wages, as provided in Articles 106, 107 and 109 of the Labor Code.

Held:

The Supreme Court held that while it is undisputable that by operation of the provisions of
Articles 106, 107 and 109, the Employer which is Rosewood has solidary liability for payment of
wage differentials, such liability however should only be to the extent of the period when the
respondent guards were under its employment. For the periods where said guards were
assigned somewhere else, the Supreme Court held that Rosewood cannot be liable. The
Supreme Court further held that since there was no evidence presented pointing to the fact that
Rosewood conspired with the security agency in illegally dismissing the guards, it cannot be
made liable to pay back wages as provided in Article 109. Finally, since an order to pay back
wages and separation pay is invested with a punitive character, such that an indirect employer
should not be made liable without a finding that it had committed or conspired in the illegal
dismissal, then Rosewood, which was no longer the employer of the guards when they were
dismissed, should not be compelled to pay since it was clear that it took no part in the illegal
dismissal.