G.R. No.

140689, February 17, 2004

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS,
PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND
BANKARD, INC., RESPONDENTS.

DECISION

CARPIO MORALES, J.:

The present Petition for Review on Certiorari under Rule 45 of the Rules of Court raises
the issue of whether the unilateral adoption by an employer of an upgraded salary scale
that increased the hiring rates of new employees without increasing the salary rates of old
employees resulted in wage distortion within the contemplation of Article 124 of the
Labor Code.

Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level
III, Level IV, and Level V. On May 28, 1993, its Board of Directors approved a New
Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate
competitive in the industrys labor market. The New Salary Scale increased the hiring
rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and
Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of
employees who fell below the new minimum rates were also adjusted to reach such rates
under their levels.

Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly
certified exclusive bargaining agent of the regular rank and file employees of Bankard, to
press for the increase in the salary of its old, regular employees.

Bankard took the position, however, that there was no obligation on the part of the
management to grant to all its employees the same increase in an across-the-board
manner.

As the continued request of petitioner for increase in the wages and salaries of Bankards
regular employees remained unheeded, it filed a Notice of Strike on August 26, 1993 on
the ground of discrimination and other acts of Unfair Labor Practice (ULP).

A director of the National Conciliation and Mediation Board treated the Notice of Strike
as a Preventive Mediation Case based on a finding that the issues therein were not
strikeable.

Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to
bargain, discrimination, and other acts of ULP -union busting. The strike was averted,
however, when the dispute was certified by the Secretary of Labor and Employment for
compulsory arbitration.

The Second Division of the NLRC, by Order of May 31, 1995, finding no wage
distortion, dismissed the case for lack of merit.

Petitioners motion for reconsideration of the dismissal of the case was, by Resolution of
July 28, 1995, denied.

Petitioner thereupon filed a petition for certiorari before this Court, docketed as G.R.
121970. In accordance with its ruling in St. Martin Funeral Homes v. NLRC,[1] the petition
was referred to the Court of Appeals which, by October 28, 1999, denied the same for
lack of merit.

Hence, the present petition which faults the appellate court as follows:
(1) It misapprehended the basic issues when it concluded that under Bankards new
wage structure, the old salary gaps between the different classification or level of
employees were still reflected by the adjusted salary rates[2]; and

(2) It erred in concluding that wage distortion does not appear to exist, which
conclusion is manifestly contrary to law and jurisprudence.[3]
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending,
among others, Article 124 of the Labor Code) on June 9, 1989, the term wage
distortion was explicitly defined as:
... a situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other
logical bases of differentiation.[4]
Prubankers Association v. Prudential Bank and Trust Company[5] laid down the four elements of
wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary
rates; (2) A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one; (3) The elimination of the distinction between
the two levels; and (4) The existence of the distortion in the same region of the country.

Normally, a company has a wage structure or method of determining the wages of its
employees. In a problem dealing with wage distortion, the basic assumption is that
there exists a grouping or classification of employees that establishes distinctions among
them on some relevant or legitimate bases.[6]

Involved in the classification of employees are various factors such as the degrees of
responsibility, the skills and knowledge required, the complexity of the job, or other
logical basis of differentiation. The differing wage rate for each of the existing classes of
employees reflects this classification.

Petitioner maintains that for purposes of wage distortion, the classification is not one
based on levels or ranks but on two groups of employees, the newly hired and the
old, in each and every level, and not between and among the different levels or ranks in
the salary structure.
Public respondent National Labor Relations Commission (NLRC) refutes petitioners
position, however. It, through the Office of the Solicitor General, essays in its Comment
of April 12, 2000 as follows:
To determine the existence of wage distortion, the historical classification of the
employees prior to the wage increase must be established. Likewise, it must be shown that
as between the different classification of employees, there exists a historical gap or
difference.
xxx

The classification preferred by petitioner is belied by the wage structure of private

respondent as shown in the new salary scale it adopted on May 28, 1993, retroactive to
April 1, 1993, which provides, thus:
Hiring Minimum Maximum
Level From To From To From To

I 3,100 4,100 3,200 4,200 7,200 9,250

II 3,200 4,100 3,300 4,200 7,500 9,500
III 3,300 4,200 3,400 4,300 8,000 10,000
IV 3,500 4,400 3,600 4,500 8,500 10,500
V 3,700 4,700 3,800 4,800 9,000 11,000
Thus the employees of private respondent have been historically classified into levels,
i.e. I to V, and not on the basis of their length of service. Put differently, the entry of
new employees to the company ipso facto place[s] them under any of the levels
mentioned in the new salary scale which private respondent adopted retroactive [to] April
1, 1993. Petitioner cannot make a contrary classification of private respondents
employees without encroaching upon recognized management prerogative of formulating
a wage structure, in this case, one based on level.[7] (Emphasis and underscoring
supplied)
The issue of whether wage distortion exists being a question of fact that is within the
jurisdiction of quasi-judicial tribunals,[8] and it being a basic rule that findings of facts of
quasi-judicial agencies, like the NLRC, are generally accorded not only respect but at
times even finality if they are supported by substantial evidence, as are the findings in the
case at bar, they must be respected. For these agencies have acquired expertise, their
jurisdiction being confined to specific matters.[9]

It is thus clear that there is no hierarchy of positions between the newly hired and regular
employees of Bankard, hence, the first element of wage distortion provided in Prubankers
is wanting.

While seniority may be a factor in determining the wages of employees, it cannot be made
the sole basis in cases where the nature of their work differs.

Moreover, for purposes of determining the existence of wage distortion, employees

cannot create their own independent classification and use it as a basis to demand an
across-the-board increase in salary.

As National Federation of Labor v. NLRC, et al.[10] teaches, the formulation of a wage

structure through the classification of employees is a matter of management judgment
and discretion.
[W]hether or not a new additional scheme of classification of employees for
compensation purposes should be established by the Company (and the legitimacy or
viability of the bases of distinction there embodied) is properly a matter of management
judgment and discretion, and ultimately, perhaps, a subject matter for bargaining
negotiations between employer and employees. It is assuredly something that falls
outside the concept of wage distortion.[11] (Emphasis and underscoring supplied)
As did the Court of Appeals, this Court finds that the third element provided in
Prubankers is also wanting. For, as the appellate court explained:
In trying to prove wage distortion, petitioner union presented a list of five (5) employees
allegedly affected by the said increase:no
Pay of Newly Hired
Pay of Old/Regular Employees Difference
Employees

A. Prior to April 1, 1993

Level I P4,518.75 (Sammy Guce) P3,100 P1,418.75

Level II P6,242.00 (Nazario Abello) P3,200 P3,042.00
Level IIIP4,850.00 (Arthur Chavez) P3,300 P1,550.00
Level IVP5,339.00 (Melissa Cordero) P3,500 P1,839.00
Level VP7,090.69 (Ma. Lourdes Dee) P3,700 P3,390.69

B. Effective April 1, 1993

Level I P4,518.75 (Sammy Guce) P4,100 P418.75
Level II P6,242.00 (Nazario Abello) P4,100 P2,142.00
Level IIIP4,850.00 (Arthur Chavez) P4,200 P650.00
Level IVP5,330.00 (Melissa Cordero) P4,400 P939.00
Level VP7,090.69 (Ma. Lourdes Dee) P4,700 P2,390.69
Even assuming that there is a decrease in the wage gap between the pay of the old
employees and the newly hired employees, to Our mind said gap is not significant as to
obliterate or result in severe contraction of the intentional quantitative differences in the
salary rates between the employee group. As already stated, the classification under the
wage structure is based on the rank of an employee, not on seniority. For this reason,
,wage distortion does not appear to exist.[12] (Emphasis and underscoring supplied)

Apart from the findings of fact of the NLRC and the Court of Appeals that some of the
elements of wage distortion are absent, petitioner cannot legally obligate Bankard to
correct the alleged wage distortion as the increase in the wages and salaries of the
newly-hired was not due to a prescribed law or wage order.

The wordings of Article 124 are clear. If it was the intention of the legislators to cover all
kinds of wage adjustments, then the language of the law should have been broad, not
restrictive as it is currently phrased:
Article 124. Standards/Criteria for Minimum Wage Fixing.
xxx

Where the application of any prescribed wage increase by virtue of a law or Wage Order
issued by any Regional Board results in distortions of the wage structure within an establishment,
the employer and the union shall negotiate to correct the distortions. Any dispute arising from the
wage distortions shall be resolved through the grievance procedure under their collective
bargaining agreement and, if it remains unresolved, through voluntary arbitration.

x x x (Italics and emphasis supplied)

Article 124 is entitled Standards/Criteria for Minimum Wage Fixing. It is found in
CHAPTER V on WAGE STUDIES, WAGE AGREEMENTS AND WAGE
DETERMINATION which principally deals with the fixing of minimum wage. Article
124 should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the
distinctions embodied in the wage structure based on skills, length of service, or other
logical bases of differentiation will be preserved.

If the compulsory mandate under Article 124 to correct wage distortion is applied to
voluntary and unilateral increases by the employer in fixing hiring rates which is inherently
a business judgment prerogative, then the hands of the employer would be completely
tied even in cases where an increase in wages of a particular group is justified due to a re-
evaluation of the high productivity of a particular group, or as in the present case, the
need to increase the competitiveness of Bankards hiring rate. An employer would be
discouraged from adjusting the salary rates of a particular group of employees for fear
that it would result to a demand by all employees for a similar increase, especially if the
financial conditions of the business cannot address an across-the-board increase.

Petitioner cites Metro Transit Organization, Inc. v. NLRC[13] to support its claim that the
obligation to rectify wage distortion is not confined to wage distortion resulting from
government decreed law or wage order.

Reliance on Metro Transit is however misplaced, as the obligation therein to rectify the
wage distortion was not by virtue of Article 124 of the Labor Code, but on account of a
then existing company practice that whenever rank-and-file employees were paid a
statutorily mandated salary increase, supervisory employees were, as a matter of practice,
also paid the same amount plus an added premium. Thus this Court held in said case:
We conclude that the supervisory employees, who then (i.e., on April 17, 1989) had,
unlike the rank-and-file employees, no CBA governing the terms and conditions of their
employment, had the right to rely on the company practice of unilaterally correcting the
wage distortion effects of a salary increase given to the rank-and-file employees, by giving
the supervisory employees a corresponding salary increase plus a premium. . . .[14]
(Emphasis supplied)
Wage distortion is a factual and economic condition that may be brought about by
different causes. In Metro Transit, the reduction or elimination of the normal differential
between the wage rates of rank-and-file and those of supervisory employees was due to
the granting to the former of wage increase which was, however, denied to the latter
group of employees.

The mere factual existence of wage distortion does not, however, ipso facto result to an
obligation to rectify it, absent a law or other source of obligation which requires its
rectification.

Unlike in Metro Transit then where there existed a company practice, no such
management practice is herein alleged to obligate Bankard to provide an across-the-board
increase to all its regular employees.

Bankards right to increase its hiring rate, to establish minimum salaries for specific jobs,
and to adjust the rates of employees affected thereby is embodied under Section 2, Article
V (Salary and Cost of Living Allowance) of the parties Collective Bargaining Agreement
(CBA), to wit:
Section 2. Any salary increase granted under this Article shall be without prejudice to the
right of the Company to establish such minimum salaries as it may hereafter find appropriate for
specific jobs, and to adjust the rates of the employees thereby affected to such minimum salaries
thus established.[15] (Italics and underscoring supplied)
This CBA provision, which is based on legitimate business-judgment prerogatives of the
employer, is a valid and legally enforceable source of rights between the parties.

In fine, absent any indication that the voluntary increase of salary rates by an employer
was done arbitrarily and illegally for the purpose of circumventing the laws or was devoid
of any legitimate purpose other than to discriminate against the regular employees, this
Court will not step in to interfere with this management prerogative. Employees are of
course not precluded from negotiating with its employer and lobby for wage increases
through appropriate channels, such as through a CBA.

This Court, time and again, has shown concern and compassion to the plight of workers
in adherence to the Constitutional provisions on social justice and has always upheld the
right of workers to press for better terms and conditions of employment. It does not
mean, however, that every dispute should be decided in favor of labor, for employers
correspondingly have rights under the law which need to be respected.
WHEREFORE, the present petition is hereby DENIED.
SO ORDERED.
Vitug, (Chairman), Sandoval-Gutierrez, and Corona, JJ., concur.

G.R. No. 150326, March 12, 2014

THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) AND THE
REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)- NCR,
PETITIONERS, VS. THE ALLIANCE OF PROGRESSIVE LABOR (APL) AND THE
TUNAY NA NAGKAKAISANG MANGGAGAWA SA ROYAL (TNMR-APL)
RESPONDENTS.

DECISION

BERSAMIN, J.:
This case concerns the authority of the National Wages and Productivity Commission
(NWPC) and the Regional Tripartite Wages and Productivity Board (RTWPB) created
under Republic Act No. 6727,[1] otherwise known as the Wage Rationalization Act, to issue
wage orders, and to receive, process and act on applications for exemption from the
prescribed wage rates.
The Case

Petitioners NWPC and RTWPB of the National Capital Region (NCR) appeal the
decision promulgated on June 15, 2001,[2] whereby the Court of Appeals (CA) reversed
the decisions rendered by the NWPC on February 28, 2000[3] and July 17, 2000[4], and
declared as null and void Section 2(A) and Section 9(2) of Wage Order No. NCR-07.
Antecedents

On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize
wages throughout the Philippines, Republic Act No. 6727 created the NWPC and the
RTWPBs of the different regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727,
empowered the NWPC to formulate policies and guidelines on wages, incomes and
productivity improvement at the enterprise, industry and national levels; to prescribe rules
and guidelines for the determination of appropriate minimum wage and productivity
measures at the regional, provincial or industry levels; and to review regional wage levels
set by the RTWPBs to determine whether the levels were in accordance with the
prescribed guidelines and national development plans, among others. On the other hand,
Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act No. 6727,
tasked the RTWPBs to determine and fix minimum wage rates applicable in their region,
provinces or industries therein; and to issue the corresponding wage orders, subject to the
guidelines issued by the NWPC. The RTWPBs were also mandated to receive, process
and act on applications for exemption from the prescribed wage rates as may be provided
by law or any wage order.[5]

Consequently, the RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999
imposing an increase of P25.50/day on the wages of all private sector workers and
employees in the NCR and pegging the minimum wage rate in the NCR at P223.50/day.[6]
However, Section 2 and Section 9 of Wage Order No. NCR-07 exempted certain sectors
and industries from its coverage, to wit:
Section 2. The adjustment in this Order does not cover the following:

A. [W]orkers in the following sectors which were granted corresponding wage increases
on January 1, 1999 as prescribed by Wage Order No. NCR-06:
a.1. Agriculture workers
-Plantation P12.00
-Non-plantation P18.50

a.2. Cottage/handicraft industry P16.00

a.3. Private hospitals with bed capacity of

P12.00
100 or less

a.4. Retail/Service establishments

-Employing 11-15 workers P12.00
-Employing not more than 10 workers P19.00
B. Workers in small establishments employing less that ten (10) workers.

xxxx

Section 9. Upon application with and as determined by the Board, based on

documentation and other requirements in accordance with applicable rules and
regulations issued by the Commission, the following may be exempt from the applicability
of this Order:

1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;

2. Exporters including indirect exporters with at least 50% export sales and with forward
contracts with their foreign buyers/principals entered into on or twelve (12) months
before the date of publication of this Order may be exempt during the lifetime of said
contract but not to exceed twelve (12) months from the effectivity of this Order.
Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of
Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR)
filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order
No. NCR-07. They contended that neither the NWPC nor the RTWPB-NCR had the
authority to expand the non-coverage and exemptible categories under the wage order;
hence, the assailed sections of the wage order should be voided. The appeal was docketed
as NWPC Case No. W.O.- 99-001.
Ruling of the NWPC

In its decision dated February 28, 2000,[7] the NWPC upheld the validity of Section 2(A)
and Section 9(2) of Wage Order No. NCR-07. It observed that the RTWPBs power to
determine exemptible categories was adjunct to its wage fixing function conferred by
Article 122(e) of the Labor Code, as amended by Republic Act No. 6727; that such
authority of the RTWPB was also recognized in NWPC Guidelines No. 01, Series of
1996; that APL and TNMR did not adduce evidence to show any arbitrariness on the part
of the RTWPB-NCR when it included in Wage Order No. NCR-07 the disputed
exclusionary provisions; and that the RTWPB-NCR was able to submit strong and
justifiable reasons for the inclusion of the exemptible categories in Wage Order No.
NCR-07.

With regard to the excluded sectors provided for in Section 2(A) of Wage Order No.
NCR-07, the NWPC took cognizance of the precarious situation in the Philippines in
1997 because of the Asian economic turmoil that had prompted the RTWPB-NCR to
issue Wage Order No. NCR-06 to prescribe a staggered amount of wage increases for the
agricultural workers, cottage/handicraft industry, private hospitals with bed capacity of
100 or less, and retail/service establishments employing 15 or less workers. It noted that
the effects of that economic turmoil were still felt in the NCR when Wage Order No.
NCR-07 was issued considering that the unemployment rate was 15.4% in July 1999; that
the RTWPB-NCR thought it wise to defer the implementation of the new wage increase
until a future date; and that the non-inclusion of some sectors from the coverage of the
Wage Order No. NCR-07 was only temporary in character.

As regards the exemption granted to the exporting firms, the NWPC considered the
nature of the business wherein the exporters would normally enter into forwarding
contracts with their principals. It held that the recent adjustment imposed by Wage Order
No. NCR-07 could not have been anticipated by the parties at the time they agreed on the
price of their forward contract; that the implementation of the wage adjustment would
surely result, therefore, into either financial loss or at the very least a marked reduction of
profits on the part of the exporters; and that the exemption given to exporting firms was
not automatic because the RTWPB-NCR had

the discretion to ascertain if the exporter had complied with the requirements, and the
exemption given was only for a period of one year.[8]

Accordingly, the NWPC denied the appeal of APL and TNMR for its lack of merit. It
also denied TNMRs motion for reconsideration through its resolution of July 17, 2000.[9]
Ruling of the CA

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA (C.A.-
G.R. SP No. 60833), attributing grave abuse of discretion to the NWPC in upholding
Section 2(A) and Section 9(2) of Wage Order No. NCR-07, and contending that the
power of the RTWPB-NCR to determine exemptible categories was not an adjunct to its
wage fixing function.

On June 15, 2001, the CA granted the petition for certiorari,[10] holding that the powers and
functions of the NWPC and RTWPB-NCR as set forth in Republic Act No. 6727 did not
include the power to grant additional exemptions from the adjusted minimum wage; that
an administrative rule or regulation must be in harmony with the enabling law; and that
the statutory grant of power could not be extended by implication beyond what was
necessary for their just and reasonable execution. It disposed as follows:
WHEREFORE, the petition is GRANTED and the Decisions of the respondent
Commission dated February 28, 2000 and July 17, 2000 are hereby SET ASIDE.

Sections 2A and 9(2) of the Wage Order No. NCR-07 are hereby declared NULL and
VOID.

SO ORDERED.[11]
The NWPC and RTWPB-NCR moved to reconsider the decision, but the CA denied
their motion in the resolution promulgated on September 11, 2001,[12] ruling that
notwithstanding the pronouncement in Nasipit Lumber Company, Inc. v. National Wages and
Productivity Commission[13] to the effect that the NWPC had the power not only to prescribe
guidelines to govern wage orders but also to issue exemptions therefrom, Section 2(A)
and Section 9(2) of Wage Order No. NCR-07 were invalid due to lack of approval by the
NWPC.

Hence, this appeal by petition for review on certiorari by the NWPC and RTWPB-NCR.
Issues

The NWPC and RTWPB-NCR submit for resolution that:

I

SECTION 3 OF REPUBLIC ACT NO. 6727 MAY BE CONSTRUED TO

AUTHORIZE THE NWPC AND RTWPB TO PROVIDE FOR ADDITIONAL
EXEMPTIONS IN THE MINIMUM WAGE ADJUSTMENTS SUCH AS IN WAGE
ORDER NO. NCR-07.
II

THE APPROVAL GIVEN BY THE NWPC WHICH WAS CONTAINED IN ITS

DECISIONS DATED FEBRUARY 28, 2000 AND JULY 17, 2000 COMPLIES WITH
THE REQUIREMENT OF REVIEW/APPROVAL REQUIRED UNDER SECTION
2 OF THE REVISED GUIDELINES ON EXEMPTIONS FROM WAGE ORDER.[14]
Restated, the issues are: (a) whether or not the RTWPB-NCR had the authority to
provide additional exemptions from the minimum wage adjustments embodied in Wage
Order No. NCR-07; and (b) whether or not Wage Order No. NCR-07 complied with the
requirements set by NWPC Guidelines No. 01, Series of 1996.
Ruling

The petition for review on certiorari is meritorious.

Indisputably, the NWPC had the authority to prescribe the rules and guidelines for the
determination of the minimum wage and productivity measures, and the RTWPB-NCR
had the power to issue wage orders.
Pursuant to its statutorily defined functions, the NWPC promulgated NWPC Guidelines
No. 001-95 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in
the NWPC and the RTWPBs in the fixing of minimum wage rates by region, province
and industry. Section 1 of Rule VIII of NWPC Guidelines No. 001-95 recognized the
power of the RTWPBs to issue exemptions from the application of the wage orders
subject to the guidelines issued by the NWPC, viz:
SECTION 1. APPLICATION FOR EXEMPTION.

Whenever a wage order provides for exemption, applications for exemption shall be filed
with the appropriate Board which shall process these applications, subject to the
guidelines issued by the Commission.
The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the
exemption from compliance with the wage increases prescribed by the RTWPBs. Section
2 of the Guidelines No. 01 reads:
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

Exemption of establishments from compliance with the wage increases and cost of living
allowances prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of their
businesses and continued employment of their workers; (2) encourage the establishment
of new businesses and the creation of more jobs, particularly in areas outside the National
Capital Region and Export Processing Zones, in line with the policy on industry dispersal;
and (3) ease the burden of micro establishments, particularly in the retail and service
sector, that have a limited capacity to pay.

Pursuant to the above, the following categories of establishments may be exempted upon
application with and as determined by the Board, in accordance with applicable criteria on
exemption as provided in this Guidelines; provided further that such categories are
expressly specified in the Order.
1. Distressed establishments

2. New business enterprises (NBEs)

3. Retail/Service establishments employing not more than ten (10) workers

4. Establishments adversely affected by natural calamities

Exemptible categories outside of the abovementioned list may be allowed only if

they are in accord with the rationale for exemption reflected in the first paragraph
of this section. The concerned Regional Board shall submit strong and justifiable
reason/s for the inclusion of such categories which shall be subject to
review/approval by the Commission.
Under the guidelines, the RTWPBs could issue exemptions from the application of the
wage orders as long as the exemptions complied with the rules of the NWPC. In its rules,
the NWPC enumerated four exemptible establishments, but the list was not exclusive.
The RTWPBs had the authority to include in the wage orders establishments that
belonged to, or to exclude from the four enumerated exemptible categories. If the
exempted category was one of the listed ones, the RTWPB issuing the wage order must
see to it that the requisites stated in Section 3 and Section 4 of the NWPC Guidelines No.
01, Series of 1996 were complied with before granting fully or partially the application of
an establishment seeking to avail of the exemption, to wit:
SECTION 3. CRITERIA FOR EXEMPTION

The following criteria shall be used to determine whether the applicant-establishment is

qualified for exemption:

A. Distressed Establishments

1. For Stock Corporations/Cooperatives

a. When deficit as of the last full accounting period or interim period, if

any, immediately preceding the effectivity of the Order amounts to
20% or more of the paid-up capital for the same period; or
b. When an establishment registers capital deficiency i.e., negative
stockholders' equity as of the last full accounting period or interim
period, if any, immediately preceding the effectivity of the Order.
2. For Single Proprietorships/Partnerships

a. Single proprietorships/partnerships operating for at least two (2) years

may be granted exemption:
a.1. When the net accumulated losses for the last two (2) full accounting periods and
interim period, if any, preceding the effectivity of the Order amounts to 20% or more
of the total invested capital at the beginning of the period under review; or

a.2. When an establishment registers capital deficiency i.e., negative net worth as of the
last full accounting period or interim period, if any, immediately preceding the
effectivity of the Order.

b. Single proprietorships/partnerships operating for less than two (2)

years may be granted exemption when the net accumulated losses for
the period immediately preceding the effectivity of the Order amounts
to 20% or more of the total invested capital at the beginning of the
period under review.
3. For Non-stock Non-profit Organizations

a. Non-stock Non-profit organizations operating for at least two (2) years

may be granted exemption:
a.1. When the net accumulated losses for the last two (2) full accounting periods and
interim period, if any, immediately preceding the effectivity of the Order amounts to
20% or more of the fund balance/members' contribution at the beginning of the
period under review; or
 a.2. When an establishment registers capital deficiency i.e.,negative fund
balance/members' contribution as of the last full accounting period or interim
period, if any, immediately preceding the effectivity of the Order.

b. Non-stock non-profit organizations operating for less than two (2)

years may be granted exemption when the net accumulated losses for
the period immediately preceding the effectivity of the Order amounts
to 20% or more of the fund balance/members' contribution at the
beginning of the period under review.
4. For Banks and Quasi-banks

a. Under receivership/liquidation

Exemption may be granted to a bank or quasi-bank under receivership

or liquidation when there is a certification from the Bangko Sentral ng
Pilipinas that it is under receivership or liquidation as provided in
Section 30 of RA 7653, otherwise known as the New Central Bank
Act.
b. Under controllership/conservatorship

A bank or quasi-bank under controllership/conservatorship may apply

for exemption as a distressed establishment under Section 3 A of this
Guideline.
B. New Business Enterprises

Exemption may be granted to New Business Enterprises established outside the National
Capital Region (NCR) and Export Processing Zones within two (2) years from effectivity
of the Order, classified under any of the following:

1. Agricultural establishments whether plantation or non-plantation.

2. Establishments with total assets after financing of five million pesos
(P5, 000,000.00) and below.
C. Retail/Service Establishments Regularly Employing Not More Than Ten (10)
Workers

Exemption may be granted to a retail/service establishment when:

1. It is engaged in the retail sale of goods and/or services to end users for
personal or household use; and
2. It is regularly employing not more than ten (10) workers regardless of
status, except the owner/s, for at least six (6) months in any calendar
year.
D. Establishments Adversely Affected by Natural Calamities
 1. The establishment must be located in an area declared by a competent
authority as under a state of calamity.
2. The natural calamities, such as earthquakes, lahar flow, typhoons,
volcanic eruptions, fire, floods and similar occurrences, must have
occurred within 6 months prior to the effectivity of the Wage Order.
3. Losses suffered by the establishment as a result of the calamity that
exceed the insurance coverage should amount to 20% or more of the
stockholders' equity as of the last full accounting period in the case of
corporations and cooperatives, total invested capital in the case of
partnerships and single proprietorships and fund balance/members
contribution in the case of non-stock non-profit organizations.

Only losses or damage to properties directly resulting from the

calamity and not incurred as a result of normal business operations
shall be considered.
4. Where necessary, the Board or its duly-authorized representative shall
conduct an ocular inspection of the establishment or engage the
services of experts to validate the extent of damages suffered.
SECTION 4. DOCUMENTS REQUIRED

The following supporting documents shall be submitted together with the application:

For All Categories of Exemption

Proof of notice of filing of the application to the President of the union/contracting party
if one is organized in the establishment, or if there is no union, a copy of a circular giving
general notice of the filing of the application to all the workers in the establishment. The
proof of notice, which may be translated in the vernacular, shall state that the workers'
representative was furnished a copy of the application with all the supporting documents.
The notice shall be posted in a conspicuous place in the establishment.

A. For Distressed Establishments

1. For corporations, cooperatives, single proprietorships, partnerships,

non-stock non-profit organizations.
a. Audited financial statements (together with the Auditor's
opinion and the notes thereto) for the last two (2) full
accounting periods preceding the effectivity of the Order filed
with and stamped "received" by the appropriate government
agency.
b. Audited interim quarterly financial statements (together with the
Auditor's opinion and the notes thereto) for the period
immediately preceding the effectivity of the Order.
 2. For Banks and Quasi-banks

a. Certification from Bangko Sentral ng Pilipinas that it is under

receivership/liquidation.
B. For New Business Enterprises

1. Affidavit from employer regarding the following:

a. Principal economic activity

b. Date of registration with appropriate government agency
c. Amount of total assets

2. Certificate of registration from the appropriate government agency.

C. For Retail/Service Establishments Employing not more than Ten (10) Workers:

1. Affidavit from employer stating the following:

a. It is a retail/service establishment.
b. It is regularly employing not more than ten (10) workers for at
least six months in any calendar year.

2. Business Permit for the current year from the appropriate government
agency.
D. For Establishments Adversely Affected by Natural Calamities

1. Affidavit from the General Manager or Chief Executive Officer of the

establishment regarding the following:

a. Date and type of calamity

b. Amount of losses/damages suffered as a direct result of the
calamity
c. List of properties damaged/lost together with estimated
valuation
d. For properties that are not insured, a statement that the same are
not covered by insurance.
 2. Copies of insurance policy contracts covering the properties damaged,
if any.
3. Adjuster's report for insured properties.
4. Audited financial statements for the last full accounting period
preceding the effectivity of the Order stamped received by the
appropriate government agency.

The Board may require the submission of other pertinent documents

to support the application for exemption.
On the other hand, if the exemption was outside of the four exemptible categories, like
here, the exemptible category should be: (1) in accord with the rationale for exemption;
(2) reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage
order must submit a strong and justifiable reason or reasons for the inclusion of such
category. It is the compliance with the second requisite that is at issue here.

The CA reversed the decisions of the NWPC dated February 28, 2000 and July 17, 2000
mainly on the ground that Wage Order No. NCR-07, specifically its Section 2(A) and
Section 9(2), had not been reviewed or approved by the NWPC. However, the NWPC
stated that it had reviewed and approved the challenged sections when it upheld the
validity of Wage Order No. NCR-07 in its decisions of February 28, 2000 and July 17,
2000.

We rule in favor of petitioners.

The wage orders issued by the RTWPBs could be reviewed by the NWPC motu proprio or
upon appeal.[15] Any party aggrieved by the wage order issued by the RTWPBs could
appeal. Here, APL and TNMR appealed on October 26, 1999, submitting to the NWPC
precisely the issue of the validity of the Section 2(A) and Section 9(2) of Wage Order No.
NCR-07. The NWPC, in arriving at its decision, weighed the arguments of the parties and
ruled that the RTWPB-NCR had substantial and justifiable reasons in exempting the
sectors and establishments enumerated in Section 2(A) and Section 9(2) based on the
public hearings and consultations, meetings, social-economic data and informations
gathered prior to the issuance of Wage Order No. NCR-07. The very fact that the validity
of the assailed sections of Wage Order No. NCR-07 had been already passed upon and
upheld by the NWPC meant that the NWPC had already given the wage order its
necessary legal imprimatur. Accordingly, the requisite approval or review was complied
with.

In creating the RTWPBs, Congress intended to rationalize wages, firstly, by establishing

full time boards to police wages round-the-clock, and secondly, by giving the boards
enough powers to achieve this objective. In Employers Confederation of the Phils. v. National
Wages and Productivity Commission,[16] this Court all too clearly pronounced that Congress
meant the RTWPBs to be creative in resolving the annual question of wages without
Labor and Management knocking on the doors of Congress at every turn. The RTWPBs
are the thinking group of men and women guided by statutory standards and bound by
the rules and guidelines prescribed by the NWPC. In the nature of their functions, the
RTWPBs investigate and study all the pertinent facts to ascertain the conditions in their
respective regions. Hence, they are logically vested with the competence to determine the
applicable minimum wages to be imposed as well as the industries and sectors to exempt
from the coverage of their wage orders.

Lastly, Wage Order No. NCR-07 is presumed to be regularly issued in the absence of any
strong showing of grave abuse of discretion on the part of RTWPB-NCR. The
presumption of validity is made stronger by the fact that its validity was upheld by the
NWPC upon review.

WHEREFORE, we GRANT the petition for review on certiorari; SET ASIDE the
decision promulgated on June 15, 2001 and resolution promulgated on September 11,
2001 by the Court of Appeals; REINSTATE the decisions rendered on February 28,
2000 and July 17, 2000 by the National Wages and Productivity Commission; and
DIRECT the respondents to pay the costs of suit.

SO ORDERED.

Sereno, C.J., Leonardo-De Castro, Villarama, Jr., and Reyes, JJ., concur.

G.R. No. 179652, May 08, 2009

PEOPLE'S BROADCASTING (BOMBO RADYO PHILS., INC.), PETITIONER, VS.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE
REGIONAL DIRECTOR, DOLE REGION VII, AND JANDELEON JUEZAN,
RESPONDENTS.

DECISION

TINGA, J.:
The present controversy concerns a matter of first impression, requiring as it does the
determination of the demarcation line between the prerogative of the Department of
Labor and Employment (DOLE) Secretary and his duly authorized representatives, on
the one hand, and the jurisdiction of the National Labor Relations Commission, on the
other, under Article 128 (b) of the Labor Code in an instance where the employer has
challenged the jurisdiction of the DOLE at the very first level on the ground that no
employer-employee relationship ever existed between the parties.
I.

The instant petition for certiorari under Rule 65 assails the decision and the resolution of
the Court of Appeals dated 26 October 2006 and 26 June 2007, respectively, in C.A. G.R.
CEB-SP No. 00855.[1]
The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent)
against People's Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for
illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay
for holiday and rest day and illegal diminution of benefits, delayed payment of wages and
non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and
Employment (DOLE) Regional Office No. VII, Cebu City.[2] On the basis of the
complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the
Inspection Report Form,[3] the Labor Inspector wrote under the heading
"Findings/Recommendations" "non-diminution of benefits" and "Note: Respondent
deny employer-employee relationship with the complainant- see Notice of Inspection
results." In the Notice of Inspection Results[4] also bearing the date 23 September 2003, the
Labor Inspector made the following notations:
Management representative informed that complainant is a drama talent hired on a per
drama " participation basis" hence no employer-employeeship [sic] existed between
them. As proof of this, management presented photocopies of cash vouchers, billing
statement, employments of specific undertaking (a contract between the talent director &
the complainant), summary of billing of drama production etc. They (mgt.) has [sic] not
control of the talent if he ventures into another contract w/ other broadcasting
industries.

On the other hand, complainant Juezan's alleged violation of non-diminution of benefits

is computed as follows:

@ P 2,000/15 days + 1.5 mos = P 6,000

(August 1/03 to Sept 15/03)

Note: Recommend for summary investigation or whatever action deem proper.[5]

Petitioner was required to rectify/restitute the violations within five (5) days from receipt.
No rectification was effected by petitioner; thus, summary investigations were conducted,
with the parties eventually ordered to submit their respective position papers.[6]

In his Order dated 27 February 2004,[7] DOLE Regional Director Atty. Rodolfo M.
Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that
the former is entitled to his money claims amounting to P203,726.30. Petitioner sought
reconsideration of the Order, claiming that the Regional Director gave credence to the
documents offered by respondent without examining the originals, but at the same time
he missed or failed to consider petitioner's evidence. Petitioner's motion for
reconsideration was denied.[8] On appeal to the DOLE Secretary, petitioner denied once
more the existence of employer-employee relationship. In its Order dated 27 January
2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did
not post a cash or surety bond and instead submitted a Deed of Assignment of Bank
Deposit.[9]

Petitioner elevated the case to the Court of Appeals, claiming that it was denied due
process when the DOLE Secretary disregarded the evidence it presented and failed to
give it the opportunity to refute the claims of respondent. Petitioner maintained that
there is no employer-employee relationship had ever existed between it and respondent
because it was the drama directors and producers who paid, supervised and disciplined
respondent. It also added that the case was beyond the jurisdiction of the DOLE and
should have been considered by the labor arbiter because respondent's claim exceeded
P5,000.00.

The Court of Appeals held that petitioner was not deprived of due process as the essence
thereof is only an opportunity to be heard, which petitioner had when it filed a motion
for reconsideration with the DOLE Secretary. It further ruled that the latter had the
power to order and enforce compliance with labor standard laws irrespective of the
amount of individual claims because the limitation imposed by Article 29 of the Labor
Code had been repealed by Republic Act No. 7730.[10] Petitioner sought reconsideration
of the decision but its motion was denied.[11]

Before this Court, petitioner argues that the National Labor Relations Commission
(NLRC), and not the DOLE Secretary, has jurisdiction over respondent's claim, in view
of Articles 217 and 128 of the Labor Code.[12] It adds that the Court of Appeals
committed grave abuse of discretion when it dismissed petitioner's appeal without delving
on the issues raised therein, particularly the claim that no employer-employee relationship
had ever existed between petitioner and respondent. Finally, petitioner avers that there is
no appeal, or any plain, speedy and adequate remedy in the ordinary course of law
available to it.

On the other hand, respondent posits that the Court of Appeals did not abuse its
discretion. He invokes Republic Act No. 7730, which "removes the jurisdiction of the
Secretary of Labor and Employment or his duly authorized representatives, from the
effects of the restrictive provisions of Article 129 and 217 of the Labor Code, regarding
the confinement of jurisdiction based on the amount of claims."[13] Respondent also
claims that petitioner was not denied due process since even when the case was with the
Regional Director, a hearing was conducted and pieces of evidence were presented.
Respondent stands by the propriety of the Court of Appeals' ruling that there exists an
employer-employee relationship between him and petitioner. Finally, respondent
argues that the instant petition for certiorari is a wrong mode of appeal considering that
petitioner had earlier filed a Petition for Certiorari, Mandamus and Prohibition with the
Court of Appeals; petitioner, instead, should have filed a Petition for Review.[14]
II.

The significance of this case may be reduced to one simple questiondoes the Secretary
of Labor have the power to determine the existence of an employer-employee
relationship?

To resolve this pivotal issue, one must look into the extent of the visitorial and
enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as
amended by Republic Act 7730. It reads:
Article 128 (b) Notwithstanding the provisions of Articles 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 representative 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. (emphasis supplied)

xxx
The provision is quite explicit that the visitorial and enforcement power of the DOLE
comes into play only "in cases when the relationship of employer-employee still
exists." It also underscores the avowed objective underlying the grant of power to the
DOLE which is "to give effect to the labor standard provision of this Code and other
labor legislation." Of course, a person's entitlement to labor standard benefits under the
labor laws presupposes the existence of employer-employee relationship in the first place.

The clause "in cases where the relationship of employer-employee still exists" signifies
that the employer-employee relationship must have existed even before the emergence of
the controversy. Necessarily, the DOLE's power does not apply in two instances,
namely: (a) where the employer-employee relationship has ceased; and (b) where
no such relationship has ever existed.

The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition
of Labor Standards Cases[15] issued by the DOLE Secretary. It reads:
Rule II MONEY CLAIMS ARISING FROM
COMPLAINT/ROUTINE INSPECTION

Sec. 3. Complaints where no employer-employee relationship actually exists. Where employer-

employee relationship no longer exists by reason of the fact that it has already been
severed, claims for payment of monetary benefits fall within the exclusive and original
jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be
ascertained that employer-employee relationship no longer exists, the case, whether
accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the
Regional Director to the appropriate branch of the National Labor Relations Commission
(NLRC).
In the recent case of Bay Haven, Inc. v. Abuan,[16] this Court recognized the first situation
and accordingly ruled that a complainant's allegation of his illegal dismissal had deprived
the DOLE of jurisdiction as per Article 217 of the Labor Code.[17]

In the first situation, the claim has to be referred to the NLRC because it is the NLRC
which has jurisdiction in view of the termination of the employer-employee relationship.
The same procedure has to be followed in the second situation since it is the NLRC that
has jurisdiction in view of the absence of employer-employee relationship between the
evidentiary parties from the start.

Clearly the law accords a prerogative to the NLRC over the claim when the employer-
employee relationship has terminated or such relationship has not arisen at all. The
reason is obvious. In the second situation especially, the existence of an employer-
employee relationship is a matter which is not easily determinable from an ordinary
inspection, necessarily so, because the elements of such a relationship are not verifiable
from a mere ocular examination. The intricacies and implications of an employer-
employee relationship demand that the level of scrutiny should be far above the cursory
and the mechanical. While documents, particularly documents found in the employer's
office are the primary source materials, what may prove decisive are factors related to the
history of the employer's business operations, its current state as well as accepted
contemporary practices in the industry. More often than not, the question of employer-
employee relationship becomes a battle of evidence, the determination of which should
be comprehensive and intensive and therefore best left to the specialized quasi-judicial
body that is the NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement
power somehow has to make a determination of the existence of an employer-
employee relationship. Such prerogatival determination, however, cannot be
coextensive with the visitorial and enforcement power itself. Indeed, such
determination is merely preliminary, incidental and collateral to the DOLE's
primary function of enforcing labor standards provisions. The determination of
the existence of employer-employee relationship is still primarily lodged with the
NLRC. This is the meaning of the clause "in cases where the relationship of
employer-employee still exists" in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important
questions must be resolved: (1) Does the employer-employee relationship still exist, or
alternatively, was there ever an employer-employee relationship to speak of; and (2) Are
there violations of the Labor Code or of any labor law?

The existence of an employer-employee relationship is a statutory prerequisite to

and a limitation on the power of the Secretary of Labor, one which the legislative
branch is entitled to impose. The rationale underlying this limitation is to eliminate the
prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter
fraught with questions of fact and law, which is best resolved by the quasi-judicial body,
which is the NRLC, rather than an administrative official of the executive branch of the
government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement
powers absent the first requisite, as the dissent proposes, his office confers jurisdiction
on itself which it cannot otherwise acquire.

The approach suggested by the dissent is frowned upon by common law. To wit:
[I]t is a general rule, that no court of limited jurisdiction can give itself
jurisdiction by a wrong decision on a point collateral to the merits of the case
upon which the limit to its jurisdiction depends; and however its decision may be
final on all particulars, making up together that subject matter which, if true, is within its
jurisdiction, and however necessary in many cases it may be for it to make a preliminary
inquiry, whether some collateral matter be or be not within the limits, yet, upon this
preliminary question, its decision must always be open to inquiry in the superior court.[18]
A more liberal interpretative mode, "pragmatic or functional analysis," has also emerged
in ascertaining the jurisdictional boundaries of administrative agencies whose jurisdiction
is established by statute. Under this approach, the Court examines the intended function
of the tribunal and decides whether a particular provision falls within or outside that
function, rather than making the provision itself the determining centerpiece of the
analysis.[19] Yet even under this more expansive approach, the dissent fails.

A reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his
authorized representatives was granted visitorial and enforcement powers for the
purpose of determining violations of, and enforcing, the Labor Code and any labor law,
wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual
existence of an employer-employee relationship affects the complexion of the putative
findings that the Secretary of Labor may determine, since employees are entitled to a
different set of rights under the Labor Code from the employer as opposed to non-
employees. Among these differentiated rights are those accorded by the "labor
standards" provisions of the Labor Code, which the Secretary of Labor is mandated to
enforce. If there is no employer-employee relationship in the first place, the duty of the
employer to adhere to those labor standards with respect to the non-employees is
questionable.

This decision should not be considered as placing an undue burden on the Secretary of
Labor in the exercise of visitorial and enforcement powers, nor seen as an
unprecedented diminution of the same, but rather a recognition of the statutory
limitations thereon. A mere assertion of absence of employer-employee relationship does
not deprive the DOLE of jurisdiction over the claim under Article 128 of the Labor
Code. At least a prima facie showing of such absence of relationship, as in this case, is
needed to preclude the DOLE from the exercise of its power. The Secretary of Labor
would not have been precluded from exercising the powers under Article 128 (b) over
petitioner if another person with better-grounded claim of employment than that which
respondent had. Respondent, especially if he were an employee, could have very well
enjoined other employees to complain with the DOLE, and, at the same time, petitioner
could ill-afford to disclaim an employment relationship with all of the people under its
aegis.

Without a doubt, petitioner, since the inception of this case had been consistent in
maintaining that respondent is not its employee. Certainly, a preliminary determination,
based on the evidence offered, and noted by the Labor Inspector during the inspection as
well as submitted during the proceedings before the Regional Director puts in genuine
doubt the existence of employer-employee relationship. From that point on, the prudent
recourse on the part of the DOLE should have been to refer respondent to the NLRC
for the proper dispensation of his claims. Furthermore, as discussed earlier, even the
evidence relied on by the Regional Director in his order are mere self-serving declarations
of respondent, and hence cannot be relied upon as proof of employer-employee
relationship.
III.

Aside from lack of jurisdiction, there is another cogent reason to to set aside the Regional
Director's 27 February 2004 Order. A careful study of the case reveals that the said
Order, which found respondent as an employee of petitioner and directed the payment
of respondent's money claims, is not supported by substantial evidence, and was
even made in disregard of the evidence on record.

It is not enough that the evidence be simply considered. The standard is substantial
evidence as in all other quasi-judicial agencies. The standard employed in the last
sentence of Article 128(b) of the Labor Code that the documentary proofs be "considered
in the course of inspection" does not apply. It applies only to issues other than the
fundamental issue of existence of employer-employee relationship. A contrary rule would
lead to controversies on the part of labor officials in resolving the issue of employer-
employee relationship. The onset of arbitrariness is the advent of denial of substantive
due process.

As a general rule, the Supreme Court is not a trier of facts. This applies with greater force
in cases before quasi-judicial agencies whose findings of fact are accorded great respect
and even finality. To be sure, the same findings should be supported by substantial
evidence from which the said tribunals can make its own independent evaluation of the
facts. Likewise, it must not be rendered with grave abuse of discretion; otherwise, this
Court will not uphold the tribunals' conclusion.[20] In the same manner, this Court will
not hesitate to set aside the labor tribunal's findings of fact when it is clearly shown that
they were arrived at arbitrarily or in disregard of the evidence on record or when there is
showing of fraud or error of law.[21]

At the onset, it is the Court's considered view that the existence of employer- employee
relationship could have been easily resolved, or at least prima facie determined by the labor
inspector, during the inspection by looking at the records of petitioner which can be
found in the work premises. Nevertheless, even if the labor inspector had noted
petitioner's manifestation and documents in the Notice of Inspection Results, it is clear that he
did not give much credence to said evidence, as he did not find the need to investigate the
matter further. Considering that the documents shown by petitioner, namely: cash
vouchers, checks and statements of account, summary billings evidencing payment to
the alleged real employer of respondent, letter-contracts denominated as "Employment
for a Specific Undertaking," prima facie negate the existence of employer-employee
relationship, the labor inspector could have exerted a bit more effort and looked into
petitioner's payroll, for example, or its roll of employees, or interviewed other employees
in the premises. After all, the labor inspector, as a labor regulation officer is given "access
to employer's records and premises at any time of day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any employee and
investigate any fact, condition or matter which may be necessary to determine violations
or which may aid in the enforcement of this Code and of any labor law, wage order or
rules and regulations pursuant thereto."[22] Despite these far-reaching powers of labor
regulation officers, records reveal that no additional efforts were exerted in the course of
the inspection.

The Court further examined the records and discovered to its dismay that even the
Regional Director turned a blind eye to the evidence presented by petitioner and relied
instead on the self-serving claims of respondent.

In his position paper, respondent claimed that he was hired by petitioner in September
1996 as a radio talent/spinner, working from 8:00 am until 5 p.m., six days a week, on a
gross rate of P60.00 per script, earning an average of P15,0000.00 per month, payable on
a semi-monthly basis. He added that the payment of wages was delayed; that he was not
given any service incentive leave or its monetary commutation, or his 13th month pay; and
that he was not made a member of the Social Security System (SSS), Pag-Ibig and
PhilHealth. By January 2001, the number of radio programs of which respondent was a
talent/spinner was reduced, resulting in the reduction of his monthly income from
P15,000.00 to only P4,000.00, an amount he could barely live on. Anent the claim of
petitioner that no employer-employee relationship ever existed, respondent argued that
that he was hired by petitioner, his wages were paid under the payroll of the latter, he was
under the control of petitioner and its agents, and it was petitioner who had the power to
dismiss him from his employment.[23] In support of his position paper, respondent
attached a photocopy of an identification card purportedly issued by petitioner, bearing
respondent's picture and name with the designation "Spinner"; at the back of the I.D., the
following is written: " This certifies that the card holder is a duly Authorized MEDIA
Representative of BOMBO RADYO PHILIPPINES ... THE NO.1 Radio Network in
the Country ***BASTA RADYO BOMBO***"[24] Respondent likewise included a
Certification which reads:
This is to certify that MR. JANDELEON JUEZAN is a program employee of
PEOPLE'S BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu) since
1990 up to the present.

Furtherly certifies that Mr. Juezan is receiving a monthly salary of FIFTEEN

THOUSAND (P15,000.00) PESOS.
This certification is issued upon the request of the above stated name to substantiate loan
requirement.

Given this 18th day of April 2000, Cebu City , Philippines.

(signed)
GREMAN B. SOLANTE
Station Manager
On the other hand, petitioner maintained in its position paper that respondent had never
been its employee. Attached as annexes to its position paper are photocopies of cash
vouchers it issued to drama producers, as well as letters of employment captioned
"Employment for a Specific Undertaking", wherein respondent was appointed by
different drama directors as spinner/narrator for specific radio programs.[25]

In his Order, the Regional Director merely made a passing remark on petitioner's claim of
lack of employer-employee relationshipa token paragraphand proceeded to a detailed
recitation of respondent's allegations. The documents introduced by petitioner in its
position paper and even those presented during the inspection were not given an iota of
credibility. Instead, full recognition and acceptance was accorded to the claims of
respondentfrom the hours of work to his monthly salary, to his alleged actual duties, as
well as to his alleged "evidence." In fact, the findings are anchored almost verbatim on
the self-serving allegations of respondent.

Furthermore, respondent's pieces of evidencethe identification card and the

certification issued by petitioner's Greman Solante are not even determinative of an
employer-employee relationship. The certification, issued upon the request of
respondent, specifically stated that "MR. JANDELEON JUEZAN is a program
employee of PEOPLE'S BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo
Cebu)," it is not therefore "crystal clear that complainant is a station employee rather
than a program employee hence entitled to all the benefits appurtenant thereto,"[26]
as found by the DOLE Regional Director. Respondent should be bound by his own
evidence. Moreover, the classification as to whether one is a "station employee" and
"program employee," as lifted from Policy Instruction No. 40,[27] dividing the workers in
the broadcast industry into only two groups is not binding on this Court, especially when
the classification has no basis either in law or in fact.[28]

Even the identification card purportedly issued by petitioner is not proof of employer-
employee relationship since it only identified respondent as an "Authorized
Representative of Bombo Radyo...," and not as an employee. The phrase gains
significance when compared vis a vis the following notation in the sample identification
cards presented by petitioner in its motion for reconsideration:
1. This is to certify that the person whose picture and signature appear hereon is
an employee of Bombo Radio Philippines.
2. This ID must be worn at all times within Bombo Radyo Philippines premises for
proper identification and security. Furthermore, this is the property of Bombo Radyo
Philippines and must be surrendered upon separation from the company.
HUMAN RESOURCE DEPARMENT
(Signed)
JENALIN D. PALER
HRD HEAD
Respondent tried to address the discrepancy between his identification card and the
standard identification cards issued by petitioner to its employees by arguing that what he
annexed to his position paper was the old identification card issued to him by
petitioner. He then presented a photocopy of another "old" identification card, this time
purportedly issued to one of the employees who was issued the new identification card
presented by petitioner.[29] Respondent's argument does not convince. If it were true that
he is an employee of petitioner, he would have been issued a new identification card
similar to the ones presented by petitioner, and he should have presented a copy of such
new identification card. His failure to show a new identification card merely
demonstrates that what he has is only his "Media" ID, which does not constitute proof of
his employment with petitioner.

It has long been established that in administrative and quasi-judicial proceedings,

substantial evidence is sufficient as a basis for judgment on the existence of employer-
employee relationship. Substantial evidence, which is the quantum of proof required in
labor cases, is "that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."[30] No particular form of evidence is required to prove
the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted.[31] Hence, while no particular form
of evidence is required, a finding that such relationship exists must still rest on some
substantial evidence. Moreover, the substantiality of the evidence depends on its
quantitative as well as its qualitative aspects.[32]

In the instant case, save for respondent's self-serving allegations and self-defeating
evidence, there is no substantial basis to warrant the Regional Director's finding that
respondent is an employee of petitioner. Interestingly, the Order of the Secretary of
Labor denying petitioner's appeal dated 27 January 2005, as well as the decision of the
Court of Appeals dismissing the petition for certiorari, are silent on the issue of the
existence of an employer-employee relationship, which further suggests that no real and
proper determination the existence of such relationship was ever made by these
tribunals. Even the dissent skirted away from the issue of the existence of employer-
employee relationship and conveniently ignored the dearth of evidence presented by
respondent.

Although substantial evidence is not a function of quantity but rather of quality, the
peculiar environmental circumstances of the instant case demand that something more
should have been proffered.[33] Had there been other proofs of employment, such as
respondent's inclusion in petitioner's payroll, or a clear exercise of control, the Court
would have affirmed the finding of employer-employee relationship. The Regional
Director, therefore, committed grievous error in ordering petitioner to answer for
respondent's claims. Moreover, with the conclusion that no employer-employee
relationship has ever existed between petitioner and respondent, it is crystal-clear that the
DOLE Regional Director had no jurisdiction over respondent's complaint. Thus, the
improvident exercise of power by the Secretary of Labor and the Regional Director
behooves the court to subject their actions for review and to invalidate all the subsequent
orders they issued.
IV.
The records show that petitioner's appeal was denied because it had allegedly failed to
post a cash or surety bond. What it attached instead to its appeal was the Letter
Agreement[34] executed by petitioner and its bank, the cash voucher,[35] and the Deed of
Assignment of Bank Deposits.[36] According to the DOLE, these documents do not
constitute the cash or surety bond contemplated by law; thus, it is as if no cash or surety
bond was posted when it filed its appeal.

The Court does not agree.

The provision on appeals from the DOLE Regional Offices to the DOLE Secretary is in
the last paragraph of Art. 128 (b) of the Labor Code, which reads:
An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Secretary of Labor and Employment in the amount equivalent to
the monetary award in the order appealed from. (emphasis supplied)
While the requirements for perfecting an appeal must be strictly followed as they are
considered indispensable interdictions against needless delays and for orderly discharge of
judicial business, the law does admit exceptions when warranted by the circumstances.
Technicality should not be allowed to stand in the way of equitably and completely
resolving the rights and obligations of the parties.[37] Thus, in some cases, the bond
requirement on appeals involving monetary awards had been relaxed, such as when (i)
there was substantial compliance with the Rules; (ii) the surrounding facts and
circumstances constitute meritorious ground to reduce the bond; (iii) a liberal
interpretation of the requirement of an appeal bond would serve the desired objective of
resolving controversies on the merits; or (iv) the appellants, at the very least exhibited
their willingness and/or good faith by posting a partial bond during the reglementary
period.[38]

A review of the documents submitted by petitioner is called for to determine whether

they should have been admitted as or in lieu of the surety or cash bond to sustain the
appeal and serve the ends of substantial justice.

The Deed of Assignment reads:

DEED OF ASSIGNMENT OF BANK DEPOSIT
WITH SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That I, GREMAN B. SOLANTE in my capacity as Station Manager of DYMF Cebu

City, PEOPLE'S BROADCASTING SERVICES, INC., a corporation duly authorized
and existing under and by virtue of the laws of the Philippines, for and in consideration of
the sum of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED
TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, as CASH
BOND GUARANTEE for the monetary award in favor to the Plaintiff in the Labor
Case docketed as LSED Case No. R0700-2003-09-CI-09, now pending appeal.

That Respondent-Appellant do hereby undertake to guarantee available and sufficient

funds covered by Platinum Savings Deposit (PSD) No. 010-8-00038-4 of PEOPLE'S
BROADCASTING SERVICES, INC. in the amount of PESOS: TWO HUNDRED
THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY
(P203,726.30) payable to Plaintiff-Appellee/Department of Labor and Employment
Regional Office VII at Queen City Development Bank, Cebu Branch, Sanciangko St.
Cebu City.

It is understood that the said bank has the full control of Platinum Savings Deposit (PSD)
No. 010-8-00038-4 from and after this date and that said sum cannot be withdrawn by the
Plaintiff-Appellee/ Department of Labor and Employment Regional Office VII until
such time that a Writ of Execution shall be ordered by the Appellate Office.

FURTHER, this Deed of Assignment is limited to the principal amount of PESOS:

TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX
PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, therefore, any interest to be
earned from the said Deposit will be for the account holder.

IN WITNESS WHEREOF, I have hereunto affixed my signature this 18th day if June,
2004, in the City of Cebu, Philippines.
PEOPLE'S BROADCASTING SERVICES, INC.
By:

(Signed)
GREMAN B. SOLANTE
Station Manager

As priorly mentioned, the Deed of Assignment was accompanied by a Letter Agreement

between Queen City Development Bank and petitioner concerning Platinum Savings
Deposit (PSD) No. 010-8-00038-4,[39] and a Cash Voucher issued by petitioner showing
the amount of P203,726.30 deposited at the said bank.

Casting aside the technical imprecision and inaptness of words that mark the three
documents, a liberal reading reveals the documents petitioner did assign, as cash bond for
the monetary award in favor of respondent in LSED Case NO. RO700-2003-CI-09, the
amount of P203,726.30 covered by petitioner's PSD Account No. 010-8-00038-4 with the
Queen City Development Bank at Sanciangko St. Cebu City, with the depositary bank
authorized to remit the amount to, and upon withdrawal by respondent and or the
Department of Labor and Employment Regional Office VII, on the basis of the proper
writ of execution. The Court finds that the Deed of Assignment constitutes substantial
compliance with the bond requirement.
The purpose of an appeal bond is to ensure, during the period of appeal, against any
occurrence that would defeat or diminish recovery by the aggrieved employees under the
judgment if subsequently affirmed.[40] The Deed of Assignment in the instant case, like a
cash or surety bond, serves the same purpose. First, the Deed of Assignment constitutes
not just a partial amount, but rather the entire award in the appealed Order. Second, it is
clear from the Deed of Assignment that the entire amount is under the full control of the
bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to be
withdrawn by the same office after it had issued a writ of execution. For all intents and
purposes, the Deed of Assignment in tandem with the Letter Agreement and Cash
Voucher is as good as cash. Third, the Court finds that the execution of the Deed of
Assignment, the Letter Agreement and the Cash Voucher were made in good faith, and
constituted clear manifestation of petitioner's willingness to pay the judgment amount.

The Deed of Assignment must be distinguished from the type of bank certification
submitted by appellants in Cordova v. Keysa's Boutique,[41] wherein this Court found that
such bank certification did not come close to the cash or surety bond required by law.
The bank certification in Cordova merely stated that the employer maintains a depository
account with a balance of P23,008.19, and that the certification was issued upon the
depositor's request for whatever legal purposes it may serve. There was no indication that
the said deposit was made specifically for the pending appeal, as in the instant case. Thus,
the Court ruled that the bank certification had not in any way ensured that the award
would be paid should the appeal fail. Neither was the appellee in the case prevented from
making withdrawals from the savings account. Finally, the amount deposited was measly
compared to the total monetary award in the judgment.[42]
V.

Another question of technicality was posed against the instant petition in the hope that it
would not be given due course. Respondent asserts that petitioner pursued the wrong
mode of appeal and thus the instant petition must be dismissed. Once more, the Court
is not convinced.

A petition for certiorari is the proper remedy when any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction
and there is no appeal, nor any plain speedy, and adequate remedy at law. There is "grave
abuse of discretion" when respondent acts in a capricious or whimsical manner in the
exercise of its judgment as to be equivalent to lack of jurisdiction.[43]

Respondent may have a point in asserting that in this case a Rule 65 petition is a wrong
mode of appeal, as indeed the writ of certiorari is an extraordinary remedy, and certiorari
jurisdiction is not to be equated with appellate jurisdiction. Nevertheless, it is settled, as a
general proposition, that the availability of an appeal does not foreclose recourse to the
extraordinary remedies, such as certiorari and prohibition, where appeal is not adequate or
equally beneficial, speedy and sufficient, as where the orders of the trial court were issued
in excess of or without jurisdiction, or there is need to promptly relieve the aggrieved
party from the injurious effects of the acts of an inferior court or tribunal, e.g., the court
has authorized execution of the judgment.[44] This Court has even recognized that a
recourse to certiorari is proper not only where there is a clear deprivation of petitioner's
fundamental right to due process, but so also where other special circumstances warrant
immediate and more direct action.[45]

In one case, it was held that the extraordinary writ of certiorari will lie if it is satisfactorily
established that the tribunal acted capriciously and whimsically in total disregard of
evidence material to or even decisive of the controversy,[46] and if it is shown that the
refusal to allow a Rule 65 petition would result in the infliction of an injustice on a party
by a judgment that evidently was rendered whimsically and capriciously, ignoring and
disregarding uncontroverted facts and familiar legal principles without any valid cause
whatsoever.[47]

It must be remembered that a wide breadth of discretion is granted a court of justice in

certiorari proceedings.[48] The Court has not too infrequently given due course to a
petition for certiorari, even when the proper remedy would have been an appeal, where
valid and compelling considerations would warrant such a recourse.[49] Moreover, the
Court allowed a Rule 65 petition, despite the availability of plain, speedy or
adequate remedy, in view of the importance of the issues raised therein.[50] The rules were
also relaxed by the Court after considering the public interest involved in the case;[51]
when public welfare and the advancement of public policy dictates; when the broader
interest of justice so requires; when the writs issued are null and void; or when the
questioned order amounts to an oppressive exercise of judicial authority.[52]

"The peculiar circumstances of this case warrant, as we held in Republic v. Court of Appeals,
107 SCRA 504, 524, the `exercise once more of our exclusive prerogative to suspend our
own rules or to exempt a particular case from its operation as in x x Republic of the
Philippines v. Court of Appeals, et al., (83 SCRA 453, 478-480 [1978]), thus: ` x x The Rules
have been drafted with the primary objective of enhancing fair trials and expediting
justice. As a corollary, if their applications and operation tend to subvert and defeat
instead of promote and enhance it, their suspension is justified."[53]

The Regional Director fully relied on the self-serving allegations of respondent and
misinterpreted the documents presented as evidence by respondent. To make matters
worse, DOLE denied petitioner's appeal based solely on petitioner's alleged failure to file
a cash or surety bond, without any discussion on the merits of the case. Since the petition
for certiorari before the Court of Appeals sought the reversal of the two aforesaid orders,
the appellate court necessarily had to examine the evidence anew to determine whether
the conclusions of the DOLE were supported by the evidence presented. It appears,
however, that the Court of Appeals did not even review the assailed orders and focused
instead on a general discussion of due process and the jurisdiction of the Regional
Director. Had the appellate court truly reviewed the records of the case, it would have
seen that there existed valid and sufficient grounds for finding grave abuse of discretion
on the part of the DOLE Secretary as well the Regional Director. In ruling and acting as
it did, the Court finds that the Court of Appeals may be properly subjected to its
certiorari jurisdiction. After all, this Court has previously ruled that the extraordinary writ
of certiorari will lie if it is satisfactorily established that the tribunal had acted capriciously
and whimsically in total disregard of evidence material to or even decisive of the
controversy.[54]

The most important consideration for the allowance of the instant petition is the
opportunity for the Court not only to set the demarcation between the NLRC's
jurisdiction and the DOLE's prerogative but also the procedure when the case
involves the fundamental challenge on the DOLE's prerogative based on lack of
employer-employee relationship. As exhaustively discussed here, the DOLE's
prerogative hinges on the existence of employer-employee relationship, the issue
is which is at the very heart of this case. And the evidence clearly indicates private
respondent has never been petitioner's employee. But the DOLE did not address,
while the Court of Appeals glossed over, the issue. The peremptory dismissal of
the instant petition on a technicality would deprive the Court of the opportunity
to resolve the novel controversy.

WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and
the Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No.
00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of
the Department of Labor and Employment dated 27 January 2005 denying petitioner's

appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May
2004 and 27 February 2004, respectively, are ANNULLED. The complaint against
petitioner is DISMISSED.

SO ORDERED.

Velasco, Jr., J., concur.

Leonardo-De Castro, J.,** in the result.
Brion, J., pls. see dissenting opinion.
Carpio-Morales,* (Acting Chairperson), joins the dissent of J. Brion, please see separate
opinion.

G.R. No. 161794, June 16, 2009

NESTOR J. BALLADARES, ROLDAN L. GUANIZO, ARNULFO E. MERTO,
GERONIMO G. GOBUYAN, EDGARDO O. AVILA, AND EDUARD F. RAMOS, JR.,
PETITIONERS, VS.PEAK VENTURES CORPORATION/EL TIGRE SECURITY AND
INVESTIGATION AGENCY AND YANGCO MARKET OWNERS
ASSOCIATION/LAO TI SIOK BEE, RESPONDENTS.

DECISION
NACHURA, J.:
This is a petition for review on certiorari of the decision[1] of the Court of Appeals (CA)
dated September 16, 2003 and the resolution[2] denying the motion for reconsideration
thereof in CA-G.R. SP No. 67587.

Petitioners Nestor J. Balladares, Roldan L. Guanizo, Arnulfo E. Merto, Geronimo G.

Gobuyan, Edgardo O. Avila, and Eduard F. Ramos, Jr. were employed by respondent
Peak Ventures Corporation/El Tigre Security and Investigation Agency (Peak Ventures)
as security guards and were assigned at the premises of respondent Yangco Market
Owners and Administrators Association (YMOAA). They filed a complaint for
underpayment of wages against their employer, Peak Ventures, with the Department of
Labor and Employment (DOLE).

Acting on the complaint, DOLE conducted an inspection of Peak Ventures on March 4,

1999, and the following violations were noted:
- underpayment of the minimum wage and other auxiliary benefits;

- pertinent employment records (payrolls, daily time records, contract of employment)

were not available at the time of inspection.[3]
A Notice of Inspection Result was issued to and received by the Human Resource
Department Manager, Ms. Cristina Q. Villacrusis. Peak Ventures was instructed to effect
restitution and/or to file its objections within five (5) working days from receipt thereof.

Respondent failed to correct the violations or contest the findings as required; hence, the
parties were summoned for hearing. During the scheduled hearing on March 26, 1999,
both complainants and Peak Ventures moved to implead its client, YMOAA, represented
by its President, Ms. Lao Ti Siok Bee, as party respondent. YMOAA opposed on the
ground that it was not the employer of petitioners. On May 25, 1999, Peak Ventures filed
a Third-Party Complaint and/or Position Paper with leave of court, alleging that Peak
Ventures was entitled to indemnity or subrogation from YMOAA in respect to the
monetary claims of petitioners, because the cause of the underpayment of wages, if any,
arose from the failure of the YMOAA to pay the security agency the correct amount due
petitioners as prescribed by various Wage Orders.[4]

In the Order dated July 21, 1999, Regional Director Maximo Baguyot Lim rendered
judgment in favor of petitioners and ruled that the contractor was jointly and severally
liable with the principal, pursuant to the law and jurisprudence on the matter.[5] He
further stated that:
In view of the respondents' failure to controvert the complainants' contentions and
repeated denial to give access to its employment records despite demands by the labor
inspector and hearing officer, it is deemed to have waived its constitutional right to due
process, therefore, this is an implied admission of the violations discovered, hence, we
have no other recourse but to rule in favor of the complainants and compute the salary
differentials due them based on their affidavits x x x.
xxxx

WHEREFORE, premises considered, respondents PEAK VENTURES CORP./EL

TIGRE SECURITY AND INVESTIGATION AGENCY AND/OR YANGCO
MARKET OWNERS AND ADMINISTRATORS ASSOCIATION/MS. LAO TI
SIOK BEE are hereby jointly and severally ordered to pay complainants NESTOR
BALLADARES AND TEN (10) OTHER SIMILARLY SITUATED EMPLOYEES the
sum opposite their names or a total amount of ONE MILLION ONE HUNDRED SIX
THOUSAND TWO HUNDRED NINETY EIGHT PESOS AND 07/100
(P1,106,298.07) corresponding to their claims within ten (10) calendar days from receipt
hereof, otherwise, WRIT OF EXECUTION shall be issued unless an Appeal shall have
been filed within the reglementary period together with a Cash or Surety Bond equivalent
to the monetary award.[6]
Respondent Peak Ventures filed a Motion for Reconsideration which was denied for lack
of merit.

Respondent appealed the Order to the Office of the Secretary of Labor positing that the
Regional Director committed serious errors in awarding the amount of P1,106,298.00 to
petitioners, which it alleged to be quite excessive.

On December 7, 2000, respondent's appeal was dismissed.[7] A subsequent motion for

reconsideration was, likewise, denied by the Secretary of Labor in a Resolution dated
September 11, 2001.[8]

Undaunted, respondent Peak Ventures elevated the case to the CA, alleging that public
respondent Secretary of DOLE acted without, or in excess of, jurisdiction or with grave
abuse of discretion.[9]

The CA granted the petition, ruling that the Regional Director had no jurisdiction to hear
and decide the case, because the claims of each of the petitioners exceeded P5,000.00, and
the power to adjudicate such claims belonged to the Labor Arbiter, pursuant to
Servando's, Inc. v. Secretary of Labor.[10] The appellate court ratiocinated that this exclusive
jurisdiction of the Labor Arbiters was confirmed by Article 129 of the Labor Code, which
excludes from the jurisdiction of the Regional Directors or any hearing officer of the
DOLE the power to hear and decide claims of employees arising from employer-
employee relations exceeding the amount of P5,000.00 for each employee. The
dispositive portion of the decision, thus, reads as follows:
WHEREFORE, petition is GRANTED. The Order of public respondent Secretary of
Labor and Employment dated December 7, 2000 and the Resolution dated September 11,
2001 are SET ASIDE and declared null and void. The case is REFERRED to the
appropriate Labor Arbiter for proper determination.[11]
Petitioners now come to this Court assigning the following errors:
The Court of Appeals, Third Division erred in applying Article 129 of the Labor Code
instead of Article 128.
The Court of Appeals, Third Division erred in applying the Servando's, Inc. versus Secretary of
Labor, which had long been abandoned.[12]
Only Peak Ventures filed its comment. Several resolutions of the Court sent to
respondent YMOAA were returned unserved, despite earnest efforts to obtain its current
address. Meanwhile, the Court received a letter in the vernacular, dated May 16, 2006,
from petitioner Nestor Balladares, for and on behalf of petitioners. Therein, petitioners
expressed their apprehension over the sale by Lao Siok Bee of Section 9 of Yangco
Market to her nephew, Kay Ken Wah, which may be detrimental to their cause, with a
request for justice in this case. The letter was noted by the Court in the Resolution dated
June 28, 2006.[13]

In its comment, Peak Ventures averred that the CA did not err in applying Article 129
and Article 217 of the Labor Code, because the instant case arose from a complaint for
recovery of wages, simple money claims and other benefits, and the claims exceeded
P5,000.00. It argued that the inspection conducted by the DOLE using the "visitorial and
enforcement powers" of the Secretary of Labor and Employment did not, in any way,
convert the case to one falling under Article 128, otherwise, there would be no need for
Article 129.[14] It reiterated that Article 129[15] and Article 217[16] provide that it is the
Labor Arbiter which has jurisdiction over claims arising from employer-employee
relations, including those of persons in domestic or household service involving an
amount exceeding P5,000.00.

We uphold the jurisdiction of the DOLE Regional Director.

It should be noted that petitioners' complaint involved underpayment of wages and other
benefits. In order to verify the allegations in the complaint, DOLE conducted an
inspection, which yielded proof of violations of labor standards. By the nature of the
complaint and from the result of the inspection, the authority of the DOLE, under
Article 128, came into play regardless of the monetary value of the claims involved.[17] The
extent of this authority and the powers flowing therefrom are defined and set forth in
Article 128 of the Labor Code, as amended by R.A. No. 7730,[18] the pertinent portions of
which read as follows:
ART. 128. Visitorial and enforcement power. - (a) The Secretary of Labor or his duly
authorized representatives, including labor regulation officers, shall have access to
employer's records and premises at any time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any employee and
investigate any fact, condition or matter which may be necessary to determine violations
or which may aid in the enforcement of this Code and of any labor law, wage order or
rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 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 finding of the labor employment and enforcement officer and raises issues supported
by documentary proofs which were not considered in the course of inspection.

An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the
Secretary of Labor and Employment in the amount equivalent to the monetary award in
the order appealed from.

xxxx
This Court has held in a plethora of cases[19] that reliance on the Servando ruling is no
longer tenable in view of the enactment of R.A. No. 7730, amending Article 128 (b) of
the Labor Code. The Secretary of Labor or his duly authorized representatives is now
empowered to hear and decide, in a summary proceeding, any matter involving the
recovery of any amount of wages and other monetary claims arising out of employer-
employee relations at the time of the inspection, even if the amount of the money claim
exceeds P5,000.00. In Ex-Bataan Veterans Security Agency, Inc. v. Laguesma,[20] the Court
elucidated:
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has
jurisdiction to hear and decide cases where the aggregate money claims of each employee
exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article 128 of the Labor
Code (as amended by R.A. No. 7730) x x x

The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of
the Labor Code by the phrase "(N)otwithstanding the provisions of Articles 129 and 217
of this Code to the contrary x x x" thereby retaining and further strengthening the power
of the Secretary of Labor or his duly authorized representatives to issue compliance
orders to give effect to the labor standards provisions of said Code and other labor
legislation based on the findings of labor employment and enforcement officer or
industrial safety engineer made in the course of inspection.
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where we
sustained the jurisdiction of the DOLE Regional Director and held 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, if the labor standards case is covered by the exception clause in Article 128 (b)
of the Labor Code, then the Regional Director will have to endorse the case to the
appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or
his representatives of jurisdiction, the following elements must be present: (a) that the
employer contests the findings of the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine evidentiary matters; and
(c) that such matters are not verifiable in the normal course of inspection. The rules also
provide that the employer shall raise such objections during the hearing of the case or at
any time after receipt of the notice of inspection results.

In this case, the Regional Director validly assumed jurisdiction over the money claims of
private respondents even if the claims exceeded P5,000 because such jurisdiction was
exercised in accordance with Article 128(b) of the Labor Code and the case does not fall
under the exception clause.

The Court notes that EBVSAI did not contest the findings of the labor regulations officer
during the hearing or after receipt of the notice of inspection results. It was only in its
supplemental motion for reconsideration before the Regional Director that EBVSAI
questioned the findings of the labor regulations officer and presented documentary
evidence to controvert the claims of private respondent. But even if this was the case, the
Regional Director and the Secretary of Labor still looked into and considered EBVSAI's
documentary evidence and found that such did not warrant the reversal of the Regional
Director's order. The Secretary of Labor also doubted the veracity and authenticity of
EBVSAI's documentary evidence. Moreover, the pieces of evidence presented by
EBVSAI were verifiable in the normal course of inspection because all the employment
records of the employees should be kept and maintained in or about the premises of the
workplace, which in this case is in Ambuklao Plant, the establishment where the private
respondents were regularly assigned.[21]
Accordingly, we find no sufficient reason to warrant the certification of the instant case to
the Labor Arbiter and divest the Regional Director of jurisdiction. Respondent did not
contest the findings of the labor regulations officer. Even during the hearing, respondent
never denied that petitioners were not paid correct wages and benefits. This was, in
fact, even admitted by respondent in its petition filed before the CA.[22] In its defense,
respondent tried to pass the buck to YMOAA, which failed to pay the correct wages
pursuant to the wage orders. Considering that the liability of the principal and the
contractor is joint and solidary, respondent thereby prayed for a re-computation of the
awards it claimed to be quite excessive. In the motion for reconsideration filed before the
Regional Director, respondent submitted its own computation of the salary adjustment
due petitioners in the amount of P533,220.33 as wage differentials, deducting further the
amount of P39,371.52, which was already allegedly received by petitioners, as shown in
petitioners' sample pay slips and earning cards.[23] This contention, however, was
unacceptable, as the Secretary of Labor ruled:
The arguments of the respondents that the award of the Regional Director is excessive
considering that it has only a total amount of P533,220.00 as they have computed, does
not warrant consideration.

As correctly pointed out by the Regional Director, "the alleged salary adjustment of the
complainants for the years 1996, 1997, 1998 and 1999 failed to show from what source and on what
basis have respondent arrived at the said computations. Likewise, the documents presented is not
sufficient to re-compute the award."

"With regard to the salary differentials paid to eight guards for the period covering June 30, 1997 as
evidenced by the payment, but unfortunately nowhere in their annexes can we find a clear indication of
such payment. However, complainants admitted having received such salary differentials from respondents,
but the same was intended as wage adjustments under Wage Order No. 1, No. NCR-03. Their claims
in this instant case are backpay for Wage Order Nos. NCR-04, NCR-5 and NCR-6. Hence, the
amount of P39,371.52 cannot be deducted from the computed monetary award of P1,106,298.00."

We find no cogent reason to deviate from the foregoing.[24]

It bears stressing that this petition clearly involves a labor standards case, and it is in
keeping with the law that "the worker need not litigate to get what legally belongs to him,
for the whole enforcement machinery of the DOLE exists to insure its expeditious
delivery to him free of charge."[25] We, therefore, sustain the jurisdiction of the DOLE
Regional Director in this case.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals

dated September 16, 2003 is REVERSED and SET ASIDE. The decision of the
Secretary of Labor is REINSTATED.

SO ORDERED.

Ynares-Santiago, (Chairperson), Chico-Nazario, Velasco, Jr., and Peralta, JJ., concur.

G.R. No. 167708, August 22, 2008

THE HON. SECRETARY OF LABOR AND EMPLOYMENT, EDGARDO M. AGAPAY
AND SAMILLANO A. ALONSO, JR., PETITIONERS, VS. PANAY VETERAN'S
SECURITY AND INVESTIGATION AGENCY, INC. AND JULITO JALECO,[1]
RESPONDENTS.

DECISION

CORONA, J.:
This is a petition for review[2] of the November 25, 2004 amended decision[3] of the Court
of Appeals (CA) in CA-G.R. SP No. 72713.

Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr.[4] were hired by respondent
Panay Veteran's Security and Investigation Agency, Inc. as security guards sometime in
1988. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa,
Laguna until FII terminated its contract with respondent security agency on July 6, 2000.
They were not given new assignments and their benefits (including 13th month pay,
overtime pay and holiday pay as well as wage differentials due to underpayment of wages)
were withheld by respondent security agency. This prompted them to file a complaint for
violation of labor standards in the regional office of the Department of Labor and
Employment in the National Capital Region (DOLE-NCR).

Acting on the complaint, Manuel M. Cayabyab, a labor employment officer of the

DOLE-NCR, conducted an inspection of respondent security agency on October 30,
2000. During the inspection, respondent security agency failed to present its payroll as
well as the daily time records submitted by petitioners Agapay and Alonso, Jr. Such failure
was noted as a violation.

After conducting his inspection, Cayabyab issued a notice of inspection to respondent

security agency through its authorized representative, respondent Julito Jaleco.[5] Cayabyab
explained the contents and significance of the notice to respondent Jaleco. He
emphasized the need for respondents either to comply with labor standards by paying the
claims of petitioners Agapay and Alonso, Jr. (as computed by Cayabyab) or to raise any
question regarding the notice to the DOLE-NCR within five days.

Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned
the labor employment officer's findings. Thus, in his May 10, 2001 order, the Regional
Director of the DOLE-NCR adopted the findings and computation of Cayabyab as to the
unpaid benefits due to petitioners Agapay and Alonso, Jr. The dispositive portion of the
order read:
WHEREFORE, premises considered, Panay Veterans Security and Investigation Agency,
Inc. and/or Julius Jaleco [are/]is hereby ordered to pay Edgardo Agapay, [et al.] the
aggregate amount of P206,569.20 representing 13th month, overtime and legal holiday
[pay] & [underpaid] wages within ten (10) days from receipt hereof.

Otherwise, a [w]rit of [e]xecution shall be issued for the enforcement of [this] order.

SO ORDERED.[6]
Respondents moved for reconsideration but the DOLE-NCR Regional Director denied
it.

Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond) to
the Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary of Labor
and Employment found that respondents failed to perfect their appeal since they did not
post a cash or surety bond equivalent to the monetary award. Thus, the appeal was
dismissed and the DOLE-NCR Regional Director's May 10, 2001 order was declared final
and executory. The Secretary of Labor and Employment denied reconsideration.

Respondents assailed the Secretary of Labor and Employment's July 9, 2002 order via a
petition for certiorari in the CA. The CA initially dismissed the petition for lack of merit
and ordered respondents to pay a total recomputed amount of P224,603.26.[7] However,
the CA granted reconsideration by applying the following ruling in Star Angel Handicraft v.
National Labor Relations Commission[8] (NLRC) by analogy:
Inasmuch as in practice, the NLRC allows the reduction of the appeal bond upon motion
of appellant and on meritorious grounds, it follows that a motion to that effect may be
filed within the reglementary period for appealing. Such motion may be filed in lieu of a
bond which amount is being contested. In the meantime, the appeal is not deemed
perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has
acted on the motion and appellant has filed the bond as fixed by the NLRC.
Thus, the CA amended its decision and allowed respondents to pursue their appeal.[9] The
Secretary of Labor and Employment moved for reconsideration but it was denied. Thus,
this petition.

The Secretary of Labor and Employment contends that respondents failed to perfect their
appeal in the manner prescribed by the Labor Code. He further asserts that a motion to
reduce the appeal bond is not allowed by the Labor Code and the Rules of Disposition of
Labor Standards Cases in the Regional Offices (Rules on the Disposition of Labor
Standards Cases) and does not suspend the period of appeal. Moreover, the rules of
procedure of the NLRC do not apply in this case.

We uphold the Secretary of Labor and Employment.

Respondents Failed to
Perfect Their Appeal

Article 128 of the Labor Code provides:

ART. 128. Visitorial and enforcement power. -

(a) The Secretary of Labor or his duly authorized representatives, including labor
regulation officers, shall have access to employer's records and premises at any time of the
day or night whenever work is being undertaken therein, and the right to copy therefrom,
to question any employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of this Code and
of any labor law, wage order or rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee 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 finding
of the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.

An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this Article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Secretary of Labor and Employment in the amount equivalent to
the monetary award in the order appealed from. (emphasis supplied)
In this connection, this Court ruled in Guico, Jr. v. Hon. Quisumbing:[10]
Article 128(b) of the Labor Code clearly provides that the appeal bond must be "in the
amount equivalent to the monetary award in the order appealed from." The records show
that petitioner failed to post the required amount of the appeal bond. His appeal was
therefore not perfected.
The rule is that, to perfect an appeal of the Regional Director's order involving a
monetary award in cases which concern the visitorial and enforcement powers of the
Secretary of Labor and Employment, the appeal must be filed and the cash or surety
bond equivalent to the monetary award must be posted within ten calendar days from
receipt of the order.[11] Failure either to file the appeal or post the bond within the
prescribed period renders the order final and executory.

The legislative intent to make the bond an indispensable requisite for the perfection of an
appeal by the employer is underscored by the provision that "an appeal by the employer
may be perfected only upon the posting of a cash or surety bond."[12] The word "only"
makes it clear that the lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer's appeal may be perfected.[13]
In one case, we held that:
Anent the issue of whether or not the respondent Secretary of Labor acted with grave
abuse of discretion in dismissing petitioner's appeal on the ground that petitioner failed to
post the required cash or surety bond, we rule in the negative.

Article 128 of the Labor Code likewise explicitly provides that in case an order issued
by the duly authorized representative of the Secretary of Labor and Employment
involves a monetary award, an appeal by the employer may be perfected only upon
posting of a cash or surety bond in an amount equivalent to the monetary award in
the order appealed from.

As correctly noted by the Office of the Solicitor General, since the Order appealed
from involves a monetary award, an appeal by petitioner may be perfected only
upon posting of a cash or surety bond issued by a reputable bonding company
duly accredited by respondent Secretary of Labor in the amount equivalent to the
monetary award in the Order appealed from.

It is undisputed that petitioner herein did not post a cash or surety bond when it filed its
appeal with the Office of respondent Secretary of Labor. Consequently, petitioner failed
to perfect its appeal on time and the Order of respondent Regional Director became final
and executory.

Thus, the Secretary of Labor and Employment thru Undersecretary Cresenciano B.

Trajano correctly dismissed petitioner's appeal.[14] (emphasis supplied)
In this case, respondents admit that they failed to post the required bond when they filed
their appeal to the Secretary of Labor and Employment. Because of such failure, the
appeal was never perfected and the May 10, 2001 order of the DOLE-NCR Regional
Director attained finality.

MOTION TO REDUCE APPEAL BOND IS NOT ALLOWED IN APPEALS

TO THE SECRETARY OF LABOR

The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor
and Employment. In the exercise of their respective jurisdictions, each agency is
governed by its own rules of procedure. In other words, the rules of procedure of the
NLRC are different from (and do not apply in) cases cognizable by the Secretary of Labor
and Employment.

Unlike the New Rules of Procedure of the NLRC,[15] no provision in the Rules on the
Disposition of Labor Standards Cases governs the filing of a motion for the reduction of
the amount of the bond. However, on matters that are not covered by the Rules on the
Disposition of Labor Standards Cases, the suppletory application of the Rules of Court is
authorized.[16] In other words, the Rules on the Disposition of Labor Standards Cases does not sanction
the suppletory resort to the rules of procedure of the NLRC.

By ruling that the rules of procedure of the NLRC should be applied suppletorily to
respondents' appeal to the Secretary of Labor of Employment, the CA effectively
amended the Rules on the Disposition of Labor Standards Cases. In the process, it
encroached on the rule-making power of the Secretary of Labor and Employment.

The CA's amended decision also contradicted the spirit that animates all labor laws, the
promotion of social justice and the protection of workers. The posting of a cash or surety
bond to perfect an appeal of an order involving a monetary award has a two-fold
purpose: (1) to assure the employee that, if he finally prevails in the case, the monetary
award will be given to him upon dismissal of the employer's appeal and (2) to discourage
the employer from using the appeal to delay or evade payment of his obligations to the
employee.[17] The CA disregarded these pro-labor objectives when it treated respondents'
failure to post the required bond with undue leniency. The CA should have resolved any
doubt in the implementation and interpretation of the Labor Code and its implementing
rules in favor of labor.[18] For like all laws which govern industrial relations (assuming all
things are equal), the rules governing the proceedings in labor disputes should be
interpreted in favor of the worker.

Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the
appeal bond because the Court recognized the NLRC's existing practice at that time to
allow the reduction of the appeal bond "upon motion of appellant and on meritorious
grounds." In fact, the practice was subsequently institutionalized in the rules of procedure
of the NLRC which now allow the reduction of the amount of the bond "in justifiable
cases and upon motion of the appellant."[19] On the contrary, no such practice ever
existed in cases taken cognizance of by the Secretary of Labor and Employment in the
exercise of his visitorial and enforcement powers. Hence, Star Angel Handicraft cannot be
applied in labor standards cases appealed to the Secretary of Labor and Employment.

In ruling that Star Angel Handicraft was applicable by analogy to appeals to the Secretary of
Labor and Employment in cases involving his visitorial and enforcement powers, the CA
effectively reversed Guico, Jr. and Allied Investigation Bureau, Inc. v. Secretary of Labor,[20] thus
arrogating to itself a power that it did not possess, a power only this Court sitting en banc
may exercise.[21] For this reason, the amended decision was invalid as it was rendered by
the CA in excess of its jurisdiction.

MONETARY AWARD IS
SUBJECT TO LEGAL INTEREST

In Eastern Shipping Lines, Inc. v. Court of Appeals,[22] the Court laid down the following
guidelines:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-

contracts, delicts or quasi-delicts, is breached, the contravenor can be
held liable for damages. The provisions under Title XVIII on
"Damages" of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment
of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. Accordingly, where
the demand is established with reasonable certainty, the interest
shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the
 judgment of the court is made (at which time the quantification
of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether
the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit.
The obligation of respondents to pay the lawful claims of petitioners Agapay and Alonso,
Jr. was established with reasonable certainty on October 30, 2000 when respondents
received the notice of inspection from the labor employment officer. Since such
obligation did not constitute a loan or forbearance of money, it was subject to legal
interest at the rate of 6% per annum from that date until the May 10, 2001 order of the
DOLE-NCR Regional Director attained finality. From the time the May 10, 2001 order
of the DOLE-NCR Regional Director became final and executory, petitioners Agapay
and Alonso, Jr. were entitled to 12% legal interest per annum until the full satisfaction of
their respective claims.

WHEREFORE, the petition is hereby GRANTED. The November 25, 2004 amended
decision of the Court of Appeals in CA-G.R. SP No. 72713 is REVERSED and SET
ASIDE. The July 9, 2002 order of the Secretary of Labor and Employment affirming the
May 10, 2001 order of the DOLE-NCR Regional Director is hereby REINSTATED
with the modification that the monetary award shall earn 6% legal interest per annum
from October 30, 2000 until the finality of the May 10, 2001 order of the DOLE-NCR
Regional Director and, thereafter, 12% legal interest per annum until the full satisfaction
thereof.

SO ORDERED.

Puno, C.J., (Chairperson), Carpio, Azcuna, and Leonardo-De Castro, JJ., concur.