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People’s Broadcasting v. Sec.

of Labor CA Decision was reversed and set aside, and

complaint was dismissed.
GR 179652; March 6, 2012
The Court found that there was no employer-
employee relationship between petitioner and
If a complaint is brought before the DOLE to give private respondent. It was held that while the DOLE
effect to the labor standards provisions of the Labor may make a determination of the existence of an
Code or other labor legislation, and there is a employer-employee relationship, this function could
finding by the DOLE that there is an existing not be co-extensive with the visitorial and
employer-employee relationship, the DOLE enforcement power provided in Art. 128(b) of the
exercises jurisdiction to the exclusion of the NLRC. Labor Code, as amended by RA 7730. The National
If a complaint is filed with the DOLE, and it is Labor Relations Commission (NLRC) was held to
accompanied by a claim for reinstatement, the be the primary agency in determining the existence
jurisdiction is properly with the Labor Arbiter, of an employer-employee relationship. This was the
under Art. 217(3) of the Labor Code. If a complaint interpretation of the Court of the clause "in cases
is filed with the NLRC, and there is still an existing where the relationship of employer-employee still
employer-employee relationship, the jurisdiction is exists" in Art. 128(b).
properly with the DOLE. The findings of the DOLE,
however, may still be questioned through a petition Public Attorney’s Office (PAO) filed a Motion for
Clarification of Decision (with Leave of Court to
for certiorari under Rule 65 of the Rules of Court.
clarify as to when the visitorial and enforcement
RA 7730 did away with the P5,000 limitation, power of the DOLE be not considered as co-
allowing the DOLE to exercise its visitorial and extensive with the power to determine the existence
enforcement power for claims beyond P5,000. of an employer-employee relationship. DOLE
sought clarification as well. Such was granted.

Private respondent Jandeleon Juezan filed a ISSUE:
complaint against petitioner DOLE Regional Office May the DOLE make a determination of whether or
VII, Cebu City, for illegal deduction, nonpayment not an employer-employee relationship exists, and
of service incentive leave, 13th month pay, if so, to what extent?
premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages
and noncoverage of SSS, PAG-IBIG and Philhealth. HELD:
DOLE Regional Director found that private DOLE Jurisdiction to determine ER-EE
respondent was an employee of petitioner, and was Relationship. YES. No limitation in the law was
entitled to his money claims. Petitioner sought placed upon the power of the DOLE to determine
reconsideration of the Director’s Order, but failed. the existence of an employer-employee relationship.
The Acting DOLE Secretary dismissed petitioner’s No procedure was laid down where the DOLE
appeal on the ground that petitioner submitted a would only make a preliminary finding, that the
Deed of Assignment of Bank Deposit instead of power was primarily held by the NLRC. The law
posting a cash or surety bond. did not say that the DOLE would first seek the
NLRC’s determination of the existence of an
When the matter was brought before the CA, where
employer-employee relationship, or that should the
petitioner claimed that it had been denied due
existence of the employer-employee relationship be
process, it was held that petitioner was accorded
disputed, the DOLE would refer the matter to the
due process as it had been given the opportunity to
be heard, and that the DOLE Secretary had
jurisdiction over the matter, as the jurisdictional The DOLE, in determining the existence of an
limitation imposed by Article 129 of the Labor employer-employee relationship, has a ready set of
Code on the power of the DOLE Secretary under guidelines to follow, the same guide the courts
Art. 128(b) of the Code had been repealed by themselves use. The elements to determine the
Republic Act No. (RA) 7730. existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the no employer-employee relationship between
payment of wages; (3) the power of dismissal; (4) petitioner and private respondent, based on the
the employer’s power to control the employee’s evidence presented. The DOLE had no jurisdiction
conduct. The use of this test is not solely limited to over the case, as there was no employer-employee
the NLRC. The DOLE Secretary, or his or her relationship present. Thus, the dismissal of the
representatives, can utilize the same test, even in the complaint against petitioner is proper.
course of inspection, making use of the same DOLE Visitorial and Enforcement Powers. There
evidence that would have been presented before the is a view that despite Art. 128(b) of the Labor Code,
NLRC. as amended by RA 7730, there is still a threshold
The expanded visitorial and enforcement power of amount set by Arts. 129 and 217 of the Labor Code
the DOLE granted by RA 7730 would be rendered when money claims are involved, i.e., that if it is for
nugatory if the alleged employer could, by the PhP 5,000 and below, the jurisdiction is with the
simple expedient of disputing the employer- regional director of the DOLE, under Art. 129, and
employee relationship, force the referral of the if the amount involved exceeds PhP 5,000, the
matter to the NLRC. jurisdiction is with the labor arbiter, under Art. 217.
The view states that despite the wording of Art.
If the DOLE makes a finding that there is an
128(b), this would only apply in the course of
existing employer-employee relationship, it takes
regular inspections undertaken by the DOLE, as
cognizance of the matter, to the exclusion of the
differentiated from cases under Arts. 129 and 217,
NLRC. The DOLE would have no jurisdiction only
which originate from complaints. There are several
if the employer-employee relationship has already
cases, however, where the Court has ruled that Art.
been terminated, or it appears, upon review, that no
128(b) has been amended to expand the powers of
employer-employee relationship existed in the first
the DOLE Secretary and his duly authorized
representatives by RA 7730. In these cases, the
The Court, in limiting the power of the DOLE, gave Court resolved that the DOLE had the jurisdiction,
the rationale that such limitation would eliminate despite the amount of the money claims involved.
the prospect of competing conclusions between the
DOLE and the NLRC.
This is not to say that the determination by the
DOLE is beyond question or review. Suffice it to
say, there are judicial remedies such as a petition for
certiorari under Rule 65 that may be availed of,
should a party wish to dispute the findings of the
The power of the DOLE to determine the existence
of an employer-employee relationship need not
necessarily result in an affirmative finding. The
DOLE may well make the determination that no
employer-employee relationship exists, thus
divesting itself of jurisdiction over the case.
Under Art. 128(b) of the Labor Code, as amended
by RA 7730, the DOLE is fully empowered to make
a determination as to the existence of an employer-
employee relationship in the exercise of its visitorial
and enforcement power, subject to judicial review,
not review by the NLRC.
In the present case, the finding of the DOLE
Regional Director that there was an employer-
employee relationship has been subjected to review
by this Court, with the finding being that there was
P462,346.25. Defendant opposed the Complaint by
raising that: (1) the rate adjustment is the obligation
of the plaintiff as employer of the security guards;
Lapanday Agricultural Dev. Corp. v. CA (2) assuming its liability, the sum it should pay is
GR 112139; January 31, 2000 less in amount; and (3) the Wage Orders violate the
impairment clause of the Constitution.
TC – in favor of plaintiff. It held: However, in order
Doctrine: for the security agency to pay the security guards,
Where no employer-employee relationship exists, it the Wage Orders made specific provisions to amend
is the Regional Trial Court that has jurisdiction. The existing contracts for security services by allowing
principal and the contractor are jointly and severally the adjustment of the consideration paid by the
liable to the employees for their wages. The right of principal to the security agency concerned. As to
the contractor to recover from the principal arises the issue of impairment of contract of the wage
only if he has paid the amounts for which both of orders, the court sustained the validity and
them are solidarily liable in line with Article 1217 constitutionality of labor and social legislation.
of the Civil Code. Petitioner asserts that private respondent has no
Facts: factual and legal basis to collect the benefits under
subject wage orders intended for the security guards
In June 1986, plaintiff Commando Security Service without the authorization of the security guards
Agency, Inc., and defendant Lapanday Agricultural concerned. Inasmuch as the services of the 42
Development Corporation entered into a Guard security guards were already terminated at the time
Service Contract. Plaintiff provided security guards the complaint was filed, private respondent's
in defendant's banana plantation. The contract complaint partakes of the nature of an action for
called for the payment to a guard of P754.28 on a recovery of what was supposedly due the guards.
daily 8-hour basis and an additional P565.72 for a
four hour overtime while the shift-in-charge was to Moreover, petitioner submits that it is the NLRC
be paid P811.40 on a daily 8-hour basis and and not the RTC (civil courts) that has jurisdiction
P808.60 for the 4-hour overtime. to resolve the issue involved in this case for it refers
to the enforcement of wage adjustment and other
Wage Orders increasing the minimum wage in 1983 benefits due.
were complied with by the defendant. On June 16,
1984, Wage Order No. 5 was promulgated directing Private respondent contends that the basis of its
an increase of P3.00 per day on the minimum wage action against petitioner-appellant is the
of workers in the private sector and a P5.00 increase enforcement of the Guard Service Contract; the
on the ECOLA. On November 1, 1984, Wage Order increases/adjustments in wages and ECOLA are due
No. 6 further increased said minimum wage by to private respondent and not to the security guards
P3.00 on the ECOLA. Both Wage Orders contain who are not parties to the said contract. It is
the following provision: therefore immaterial whether or not private
respondent paid its security guards their wages as
"In the case of contract for construction projects and adjusted by said Wage Orders and that since the
for security, janitorial and similar services, the forty-two (42) security guards are not parties to the
increase in the minimum wage and allowances rates Guard Service Contract, there is no need for them to
of the workers shall be borne by the principal or authorize the filing of, or be joined in, this suit.
client of the construction/service contractor and the Furthermore, the enforcement of this written
contracts shall be deemed amended accordingly, contract does not fall under the jurisdiction of the
subject to the provisions of Sec. 3 (b) of this order" NLRC because the money claims involved therein
Plaintiff demanded that its contract with defendant did not arise from employer-employee relations
be upgraded in compliance with Wage Order Nos. 5 between the parties and is intrinsically a civil
and 6. Defendant refused. Their Contract expired on dispute. Thus, jurisdiction lies with the regular
June 6, 1986 without the rate adjustment. By the courts.
time of the filing of plaintiff's Complaint, the rate
adjustment payable by defendant amounted to
Issue: contractor who assigned security guards at the
petitioner's premises for a stipulated amount per
Whether the RTC has jurisdiction.
guard per month. The Contract of Security Services
Whether or not petitioner is liable to the private expressly stipulated that the security guards are
respondent for the wage adjustments provided under employees of the Agency and not of the petitioner.
Wage Order Nos. 5 and 6.
Art. 106. Contractor or sub contractor. — Whenever
an employer enters into a contract with another
Held: person for the performance of the former's work, the
employees of the contractor and of the latter's
Jurisdiction. YES. It is well settled in law and subcontractor, if any, shall be paid in accordance
jurisprudence that where no employer-employee with the provisions of this Code.
relationship exists between the parties and no issue
is involved which may be resolved by reference to In the event that the contractor or subcontractor fails
the Labor Code, other labor statutes or any to pay the wages of his employees in accordance
collective bargaining agreement, it is the Regional with this Code, the employer shall be jointly and
Trial Court that has jurisdiction. In its complaint, severally liable with his contractor or subcontractor
private respondent is not seeking any relief under to such employees to the extent of the work
the Labor Code but seeks payment of a sum of performed under the contract, in the same manner
money and damages on account of petitioner's and extent that he is liable to employees directly
alleged breach of its obligation under their Guard employed by him.
Service Contract. The action is within the realm of Art. 107. Indirect employer. — The provisions of
civil law hence jurisdiction over the case belongs to the immediately preceding Article shall likewise
the regular courts. While the resolution of the issue apply to any person, partnership, association or
involves the application of labor laws, reference to corporation which, not being an employer, contracts
the labor code was only for the determination of the with an independent contractor for the performance
solidary liability of the petitioner to the respondent of any work, task, job or project.
where no employer-employee relation exists.
It will be seen from the above provisions that the
Article 217 of the Labor Code as amended vests
principal (petitioner) and the contractor (respondent)
upon the labor arbiters exclusive original
are jointly and severally liable to the employees for
jurisdiction only over the following:
their wages.
1. Unfair labor practices; 2. Termination disputes; 3.
It is only when contractor pays the increases
If accompanied with a claim for reinstatement,
mandated that it can claim an adjustment from the
those cases that workers may file involving wages,
principal to cover the increases payable to the
rates of pay, hours of work and other terms and
security guards. The conclusion that the right of the
conditions of employment; 4. Claims for actual,
contractor (as principal debtor) to recover from the
moral exemplary and other form of damages arising
principal as solidary co-debtor) arises only if he has
from employer-employee relations; 5. Cases arising
paid the amounts for which both of them are jointly
from any violation of Article 264 of this Code,
and severally liable, in line with Article 1217 of the
including questions involving legality of strikes and
Civil Code.
lockouts; and 6. Except claims for Employees
Compensation, Social Security, Medicare and The records show that the judgment holds both
maternity benefits, all other claims, arising from petitioner and private respondent jointly and
employer-employee relations, including those of solidarily liable to the security guards. However, it
persons in domestic or household service, involving is not disputed that the private respondent has not
an amount exceeding five thousand pesos actually paid the security guards the wage increases.
(P5,000.00) regardless of whether accompanied Accordingly, private respondent has no cause of
with a claim for reinstatement. action against petitioner to recover the wage
increases. Needless to stress, the increases in wages
Liability for Wage Adjustments. YES. Private
are intended for the benefit of the laborers and the
respondent admits that there is no employer-
contractor may not assert a claim against the
employee relationship between it and the petitioner.
principal for salary wage adjustments that it has not
The private respondent is an independent/job
actually paid. Otherwise, as correctly put by the
respondent, the contractor would be unduly
enriching itself.