THIRD DIVISION

[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, v. 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 decision1 of the Court of Appeals
(CA) dated September 16, 2003 and the resolution2 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 found, 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.

x x x

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. v.
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
12915 and Article 21716 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.

x x x

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.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

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. ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

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.
Endnotes: