The Supreme Court affirmed the Secretary of Labor’s authority to issue compliance orders based on labor standards violations, even when employee claims exceed P5,000.00. This decision reinforces the DOLE’s visitorial powers to enforce labor laws and protect workers’ rights, emphasizing that technical rules of evidence should not hinder the swift administration of justice in labor cases. Ultimately, the ruling strengthens the government’s ability to ensure employers comply with labor laws.

Jethro and Yakult: When Can the Labor Secretary Intervene?

Jethro Intelligence and Security Corporation, a security service contractor for Yakult Phils., Inc., faced a complaint from one of its security guards, Frederick Garcia, regarding underpayment of wages and other benefits. This triggered a Department of Labor and Employment (DOLE) inspection at Yakult’s premises, which revealed several labor standards violations by Jethro. The central legal question was whether the Secretary of Labor and Employment (SOLE) had jurisdiction to issue compliance orders, considering that the individual employee claims exceeded the P5,000.00 threshold typically required for Labor Arbiter jurisdiction.

The DOLE Regional Director found Jethro and Yakult jointly and severally liable for over P800,000 in unpaid wages and benefits. Jethro appealed to the SOLE, arguing that the judgment award was improperly based on Garcia’s affidavit and that the SOLE lacked jurisdiction due to the amount of the claims. The SOLE partially granted the appeal, removing a penalty but affirming the core findings. The Court of Appeals upheld the SOLE’s decision, emphasizing the SOLE’s visitorial and enforcement powers under Article 128 of the Labor Code.

The Supreme Court, in affirming the Court of Appeals, underscored that the SOLE’s authority to issue compliance orders stems from Article 128 of the Labor Code, as amended by R.A. No. 7730. This provision explicitly grants the Secretary of Labor and Employment or authorized representatives the power to enforce labor standards provisions, notwithstanding Articles 129 and 217, which outline the Labor Arbiter’s jurisdiction over monetary claims exceeding P5,000.00. The Court cited Allied Investigation Bureau, Inc. v. Secretary of Labor and Employment to clarify the scope of the SOLE’s visitorial powers.

The Court differentiated the SOLE’s power to issue compliance orders based on labor standards violations discovered during inspections from the Labor Arbiter’s jurisdiction over individual claims exceeding P5,000.00. Furthermore, the Supreme Court emphasized that if the case falls under the exception clause in Article 128(b) of the Labor Code, the Regional Director must endorse the case to the appropriate Arbitration Branch of the NLRC. The requirements to divest the Regional Director of jurisdiction involve the employer contesting findings, the need to examine evidence, and such matters not being verifiable in a normal inspection. However, the Court found that these elements were not met in this case.

The Supreme Court also addressed petitioners’ objection to the weight given to Garcia’s affidavit. The court reiterated Article 221 of the Labor Code stating that technical rules are not binding in labor cases, and labor tribunals should use all reasonable means to ascertain facts speedily and objectively. Thus, the lack of cross-examination was not fatal, especially since Jethro had the opportunity to contest the affidavit’s contents but failed to do so. Mayon Hotel and Restaurant vs. Adana provided the instruction that the rules of evidence shall not be controlling in labor cases. This principle highlights the importance of substantial justice over strict adherence to procedural rules in labor disputes.

The Court found that while Jethro’s first counsel was not initially furnished a copy of the Director’s Order, this was rendered moot when new counsel entered an appearance, and Jethro filed an appeal. The SOLE’s subsequent actions of deleting the double indemnity award and nullifying initial writs of execution underscored the procedural fairness extended to Jethro, while also ensuring the eventual enforcement of valid labor standards. The Supreme Court noted the importance of compliance orders under Article 128, as amended, affirming that lower courts cannot issue injunctions against the enforcement of such orders.

FAQs

What was the key issue in this case?	The key issue was whether the Secretary of Labor and Employment (SOLE) had jurisdiction to issue compliance orders for labor standards violations when individual employee claims exceeded P5,000.
What is the significance of Article 128 of the Labor Code?	Article 128 grants the SOLE or authorized representatives the power to issue compliance orders based on labor standards violations discovered during inspections, regardless of the monetary claim amount. It is the primary basis for the DOLE’s visitorial and enforcement powers.
What happens if an employer contests the findings of a labor inspection?	If the employer contests the findings and raises issues requiring the examination of evidence not verifiable during a normal inspection, the case may be endorsed to the NLRC Arbitration Branch. However, this requires contesting the initial findings during hearings, the necessity of examining evidentiary matters and such matters must not be verifiable.
Are technical rules of evidence strictly applied in labor cases?	No, Article 221 of the Labor Code states that technical rules are not binding in labor cases. The focus is on achieving substantial justice, with labor tribunals using all reasonable means to ascertain facts speedily and objectively.
What weight is given to affidavits in labor proceedings?	Affidavits can be admitted as evidence, and the lack of cross-examination is not necessarily fatal, especially if the opposing party had an opportunity to contest the affidavit’s contents. Labor laws aim for speedy administration of justice while maintaining due process.
What are the implications for service contractors like Jethro?	Service contractors must comply with all labor standards provisions, including proper wage payments, benefits, and registration with the DOLE, irrespective of where the employee performs their duties. Failure to do so can lead to joint and several liability with the principal employer.
Can lower courts issue injunctions against DOLE enforcement orders?	No, Article 128 of the Labor Code prohibits inferior courts or entities from issuing injunctions or restraining orders against enforcement orders issued by the Secretary of Labor or authorized representatives. This provision ensures the DOLE’s orders remain effective.
What is a compliance order?	A compliance order is an order issued by the Secretary of Labor and Employment or his/her representatives, requiring an employer to rectify labor standards violations such as underpayment of wages and benefits. It is designed to give effect to the Labor Code and labor laws.

This ruling reaffirms the DOLE’s critical role in ensuring compliance with labor laws and protecting the rights of employees. By upholding the SOLE’s authority and prioritizing substantial justice over technicalities, the Supreme Court reinforces the importance of fair labor practices in the Philippines.

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

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Jethro Intelligence & Security Corporation vs. The Hon. Secretary of Labor and Employment, G.R. No. 172537, August 14, 2009