The Supreme Court affirmed the Secretary of Labor’s authority to enforce labor standards and award monetary claims to employees, even when individual claims exceed P5,000. The Court emphasized that Republic Act No. 7730 (RA 7730) strengthened the Secretary of Labor’s visitorial and enforcement powers, allowing them to resolve wage disputes and ensure compliance with labor laws. This decision reinforces the protection of workers’ rights to fair wages and benefits, ensuring that employers cannot evade their obligations by contesting the Secretary’s jurisdiction.

Ex-Bataan Veterans Security Agency: Did the Labor Secretary Overstep Authority in Wage Dispute?

Ex-Bataan Veterans Security Agency, Inc. (EBVSAI), a security services provider, faced a complaint from its employees assigned to the National Power Corporation (NPC) at Ambuklao Hydro Electric Plant in Benguet. The employees, led by Alexander Pocding, alleged underpayment of wages, prompting an inspection by the Department of Labor and Employment (DOLE). The inspection revealed multiple labor violations, including non-payment of holiday pay, rest day premium, night shift differential pay, service incentive leave, and 13th-month pay, among others. Consequently, the Regional Director of DOLE issued an order directing EBVSAI to pay the computed deficiencies amounting to P763,997.85 to the affected employees. EBVSAI contested the order, arguing that the Regional Director lacked jurisdiction because the individual monetary claim of each employee exceeded P5,000, which, according to EBVSAI, fell under the exclusive jurisdiction of the Labor Arbiter.

The central legal question revolved around the extent of the Secretary of Labor’s visitorial and enforcement powers under Article 128 of the Labor Code, as amended by RA 7730. EBVSAI contended that Articles 129 and 217(6) of the Labor Code, which grant Labor Arbiters jurisdiction over cases where individual monetary claims exceed P5,000, should take precedence. The company argued that the Regional Director should have certified the case to the Arbitration Branch of the National Labor Relations Commission (NLRC) for a full-blown hearing. The Secretary of Labor, however, affirmed the Regional Director’s order, relying on RA 7730, which strengthens the Secretary’s authority to issue compliance orders based on labor standards violations found during inspections. This divergence of views set the stage for a legal battle that ultimately reached the Supreme Court.

The Supreme Court, in resolving the jurisdictional issue, highlighted the effect of RA 7730 on Article 128 of the Labor Code. The Court cited its previous ruling in Allied Investigation Bureau, Inc. v. Sec. of Labor, emphasizing that the amendment explicitly excludes Articles 129 and 217 from the coverage of Article 128. The relevant portion of Article 128, as amended, states:

Art. 128 Visitorial and enforcement power. — x x x
(b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to [the labor standards provisions of this Code and other] labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

Building on this principle, the Court affirmed that RA 7730 intended to retain and further strengthen the power of the Secretary of Labor to issue compliance orders to enforce labor standards. The Court also cited Cirineo Bowling Plaza, Inc. v. Sensing, where it sustained the jurisdiction of the DOLE Regional Director, holding that “the visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000.”

However, the Court also acknowledged an exception to this rule. If the labor standards case falls under the exception clause in Article 128(b) of the Labor Code, the Regional Director must endorse the case to the appropriate Arbitration Branch of the NLRC. For this exception to apply, the following elements must be present: (a) the employer contests the findings of the labor regulations officer and raises issues thereon; (b) resolving such issues requires examining evidentiary matters; and (c) such matters are not verifiable in the normal course of inspection. Furthermore, the employer must raise these objections during the hearing or after receiving the notice of inspection results.

In the EBVSAI case, the Court found that the Regional Director validly assumed jurisdiction over the money claims, even though they exceeded P5,000. This was because the jurisdiction was exercised in accordance with Article 128(b) of the Labor Code, and the case did not fall under the exception clause. The Court noted that EBVSAI did not contest the findings of the labor regulations officer during the hearing or immediately after receiving the notice of inspection results. It was only in its supplemental motion for reconsideration that EBVSAI questioned the findings and presented documentary evidence. The Regional Director and the Secretary of Labor considered EBVSAI’s evidence but found it insufficient to warrant a reversal of the order.

Moreover, the Court emphasized that the evidence presented by EBVSAI was verifiable in the normal course of inspection. The Court reasoned that employment records should be kept and maintained at the workplace, which in this case was the Ambuklao Plant, where the employees were regularly assigned. Consequently, EBVSAI’s failure to present these records during the initial stages of the inspection weakened its case. The Supreme Court, therefore, denied EBVSAI’s petition and affirmed the Court of Appeals’ decision, which upheld the Secretary of Labor’s order.

FAQs

What was the key issue in this case?	The central issue was whether the Secretary of Labor or their representatives have jurisdiction over money claims exceeding P5,000, given the provisions of the Labor Code. The court clarified the scope of the Secretary’s visitorial and enforcement powers.
What is the significance of Republic Act No. 7730?	RA 7730 strengthens the Secretary of Labor’s visitorial and enforcement powers, allowing them to issue compliance orders based on labor standards violations found during inspections. This law clarifies that the Secretary’s authority is not limited by the monetary claim thresholds typically applicable to Labor Arbiters.
Under what circumstances can the Regional Director’s jurisdiction be divested?	The Regional Director’s jurisdiction is divested if the employer contests the findings of the labor regulations officer, raises issues requiring examination of evidentiary matters, and such matters are not verifiable in the normal course of inspection. These objections must be raised promptly.
What should employers do if they disagree with the findings of a labor inspection?	Employers should contest the findings of the labor regulations officer during the hearing or soon after receiving the notice of inspection results. They should also present documentary evidence to support their claims.
Where should employment records be kept?	Employment records should be kept and maintained in or about the premises of the workplace. This ensures they are readily accessible for inspection and verification.
What types of violations were found during the DOLE inspection of EBVSAI?	The inspection revealed non-presentation of records, non-payment of holiday pay, rest day premium, night shift differential pay, service incentive leave, and 13th-month pay, as well as other violations related to registration, medical reports, and safety measures.
What was the final ruling of the Supreme Court in this case?	The Supreme Court denied EBVSAI’s petition and affirmed the Court of Appeals’ decision, which upheld the Secretary of Labor’s order. This confirmed the Secretary’s jurisdiction and the validity of the monetary awards to the employees.
Does this ruling affect all industries in the Philippines?	Yes, this ruling applies to all industries in the Philippines where employer-employee relationships exist and labor standards are applicable. It reinforces the DOLE’s authority to enforce these standards.

This case underscores the importance of adhering to labor standards and the broad powers vested in the Secretary of Labor to ensure compliance. Employers must maintain accurate records and promptly address any violations to avoid potential penalties and legal challenges. Employees, on the other hand, are empowered to seek redress for labor violations through the DOLE’s visitorial and enforcement mechanisms.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Ex-Bataan Veterans Security Agency, Inc. vs. The Secretary of Labor Bienvenido E. Laguesma, G.R. NO. 152396, November 20, 2007