Peoples-broadcasting-lapanday-agricultural-cases.docx

People’s Broadcasting v. Sec. of Labor GR 179652; March 6, 2012 DOCTRINE: If a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. RA 7730 did away with the P5,000 limitation, allowing the DOLE to exercise its visitorial and enforcement power for claims beyond P5,000.

CA Decision was reversed and set aside, and complaint was dismissed. The Court found that there was no employeremployee relationship between petitioner and private respondent. It was held that while the DOLE may make a determination of the existence of an employer-employee relationship, this function could not be co-extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations Commission (NLRC) was held to be the primary agency in determining the existence of an employer-employee relationship. This was the interpretation of the Court of the clause "in cases where the relationship of employer-employee still exists" in Art. 128(b). Public Attorney’s Office (PAO) filed a Motion for Clarification of Decision (with Leave of Court to clarify as to when the visitorial and enforcement power of the DOLE be not considered as coextensive with the power to determine the existence of an employer-employee relationship. DOLE sought clarification as well. Such was granted.

FACTS: Private respondent Jandeleon Juezan filed a complaint against petitioner DOLE Regional Office VII, Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth.

ISSUE:

DOLE Regional Director found that private respondent was an employee of petitioner, and was entitled to his money claims. Petitioner sought reconsideration of the Director’s Order, but failed. The Acting DOLE Secretary dismissed petitioner’s appeal on the ground that petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety bond.

DOLE Jurisdiction to determine ER-EE Relationship. YES. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRC’s determination of the existence of an employer-employee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE would refer the matter to the NLRC.

When the matter was brought before the CA, where petitioner claimed that it had been denied due process, it was held that petitioner was accorded 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 limitation imposed by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730.

May the DOLE make a determination of whether or not an employer-employee relationship exists, and if so, to what extent? HELD:

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to follow, the same guide the courts themselves use. The elements to determine the existence of an employment relationship are: (1) the

selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the employer’s power to control the employee’s conduct. The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employeremployee relationship, force the referral of the matter to the NLRC. If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed in the first place. The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate 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 DOLE. 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 employeremployee 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 employeremployee relationship has been subjected to review by this Court, with the finding being that there was

no employer-employee relationship between petitioner and private respondent, based on the evidence presented. The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is proper. DOLE Visitorial and Enforcement Powers. There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a threshold amount set by Arts. 129 and 217 of the Labor Code when money claims are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is with the regional director of the DOLE, under Art. 129, and if the amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217. The view states that despite the wording of Art. 128(b), this would only apply in the course of regular inspections undertaken by the DOLE, as differentiated from cases under Arts. 129 and 217, which originate from complaints. There are several cases, however, where the Court has ruled that Art. 128(b) has been amended to expand the powers of the DOLE Secretary and his duly authorized representatives by RA 7730. In these cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the money claims involved.

Lapanday Agricultural Dev. Corp. v. CA GR 112139; January 31, 2000 Doctrine: Where no employer-employee relationship exists, it is the Regional Trial Court that has jurisdiction. The principal and the contractor are jointly and severally liable to the employees for their wages. The right of the contractor to recover from the principal arises only if he has paid the amounts for which both of them are solidarily liable in line with Article 1217 of the Civil Code. Facts: In June 1986, plaintiff Commando Security Service Agency, Inc., and defendant Lapanday Agricultural Development Corporation entered into a Guard Service Contract. Plaintiff provided security guards in defendant's banana plantation. The contract called for the payment to a guard of P754.28 on a daily 8-hour basis and an additional P565.72 for a four hour overtime while the shift-in-charge was to be paid P811.40 on a daily 8-hour basis and P808.60 for the 4-hour overtime. Wage Orders increasing the minimum wage in 1983 were complied with by the defendant. On June 16, 1984, Wage Order No. 5 was promulgated directing an increase of P3.00 per day on the minimum wage of workers in the private sector and a P5.00 increase on the ECOLA. On November 1, 1984, Wage Order No. 6 further increased said minimum wage by P3.00 on the ECOLA. Both Wage Orders contain the following provision: "In the case of contract for construction projects and for security, janitorial and similar services, the increase in the minimum wage and allowances rates of the workers shall be borne by the principal or client of the construction/service contractor and the contracts shall be deemed amended accordingly, subject to the provisions of Sec. 3 (b) of this order" Plaintiff demanded that its contract with defendant be upgraded in compliance with Wage Order Nos. 5 and 6. Defendant refused. Their Contract expired on June 6, 1986 without the rate adjustment. By the time of the filing of plaintiff's Complaint, the rate adjustment payable by defendant amounted to

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; (2) assuming its liability, the sum it should pay is 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 for the security agency to pay the security guards, the Wage Orders made specific provisions to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. As to the issue of impairment of contract of the wage orders, the court sustained the validity and constitutionality of labor and social legislation. Petitioner asserts that private respondent has no factual and legal basis to collect the benefits under subject wage orders intended for the security guards without the authorization of the security guards concerned. Inasmuch as the services of the 42 security guards were already terminated at the time the complaint was filed, private respondent's complaint partakes of the nature of an action for recovery of what was supposedly due the guards. Moreover, petitioner submits that it is the NLRC and not the RTC (civil courts) that has jurisdiction to resolve the issue involved in this case for it refers to the enforcement of wage adjustment and other benefits due. Private respondent contends that the basis of its action against petitioner-appellant is the enforcement of the Guard Service Contract; the increases/adjustments in wages and ECOLA are due to private respondent and not to the security guards who are not parties to the said contract. It is therefore immaterial whether or not private respondent paid its security guards their wages as adjusted by said Wage Orders and that since the forty-two (42) security guards are not parties to the Guard Service Contract, there is no need for them to authorize the filing of, or be joined in, this suit. Furthermore, the enforcement of this written contract does not fall under the jurisdiction of the NLRC because the money claims involved therein did not arise from employer-employee relations between the parties and is intrinsically a civil dispute. Thus, jurisdiction lies with the regular courts.

Issue: Whether the RTC has jurisdiction. Whether or not petitioner is liable to the private respondent for the wage adjustments provided under Wage Order Nos. 5 and 6. Held: Jurisdiction. YES. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over the following: 1. Unfair labor practices; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral exemplary and other form of damages arising from employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. Liability for Wage Adjustments. YES. Private respondent admits that there is no employeremployee relationship between it and the petitioner. The private respondent is an independent/job

contractor who assigned security guards at the petitioner's premises for a stipulated amount per guard per month. The Contract of Security Services expressly stipulated that the security guards are employees of the Agency and not of the petitioner. Art. 106. Contractor or sub contractor. — Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. Art. 107. Indirect employer. — The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. It will be seen from the above provisions that the principal (petitioner) and the contractor (respondent) are jointly and severally liable to the employees for their wages. It is only when contractor pays the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor) arises only if he has paid the amounts for which both of them are jointly and severally liable, in line with Article 1217 of the Civil Code. The records show that the judgment holds both petitioner and private respondent jointly and solidarily liable to the security guards. However, it is not disputed that the private respondent has not actually paid the security guards the wage increases. Accordingly, private respondent has no cause of action against petitioner to recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the laborers and the contractor may not assert a claim against the principal for salary wage adjustments that it has not

actually paid. Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself.