FACTS: Petitioner is a government-owned and controlled corporation which entered into a

contract with the Odin Security Agency for security services of its Iloilo Fishing Port
Complex. During the effectivity of the said security agreement, the private respondent
requested the petitioner to adjust the contract rate in view of the implementation of Wage
Order No. 6. Several requests for the adjustment have been made but all were ignored by
the petitioner. Thus, private respondent filed a complaint for unpaid amount of readjustment rate under Wage Order No. 6 together with salary differentials. Petitioner filed a
motion to dismiss on the following grounds: the Commission has no jurisdiction over the
case; the security guards have no legal personality to sue or be sued; and the action
involves interpretation of contract which it has no authority. The Labor Arbiter dismissed the
complaint stating that the petitioner is a government-owned and controlled corporation
which would be placed under the jurisdiction of the Civil Service Commission and not under
the NLRC. The NLRC, on appeal, set aside the order and entered a decision granting reliefs
to the private respondent.
ISSUE: Whether an indirect employer is bound by the rulings of NLRC. WON the DOLE have
a role over civil service members.
HELD: The guards are not employees of the petitioner as the contract of services explicitly
states such. Being no employer-employee relationship between the petitioner and the
security guards, the jurisdiction of the Civil Service Commission may not be invoked in this
case. When a government entity that is under the Civil Service enters into a contract, it
becomes an indirect employer. The liabilities of the petitioner, notwithstanding that it is a
government agency, is joint and solidary with that of the contractor which the Labor Code
specifically provides that the term employer includes any person acting directly and
indirectly in the interest of an employer in relation to an employee and shall include the
Government and all its branches, subdivisions, and instrumentalities. Settled is the rule that
in job contracting, the petitioner as principal is jointly and severally liable with the
contractor on the payment of unpaid wages.