PEOPLE’S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), PETITIONER, VS. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, AND JA…

People's Broadcasting Service versus Secretary of the Department of Labor and Employment

The Case

This is a petition for certiorari brought by People's Broadcasting Service, known as Bombo Radyo Philippines, against the Secretary of the Department of Labor and Employment, the Regional Director of the Department of Labor and Employment for Region Seven, and private respondent Jandeleon Juezan. The dispute began as a money claim for labor standards benefits, but it grew into a question of institutional power: may the Department of Labor and Employment, in the exercise of its visitorial and enforcement power, determine whether an employer-employee relationship exists, or must it defer to the National Labor Relations Commission? The case matters because the Court, upon a motion for clarification, revisited and abandoned its earlier ruling and drew the jurisdictional boundary between the Department of Labor and Employment and the National Labor Relations Commission.

Procedural History

Private respondent Juezan filed a complaint with the Regional Office of the Department of Labor and Employment in Cebu City for illegal deduction, nonpayment of service incentive leave, thirteenth month pay, premium pay for holiday and rest day, illegal diminution of benefits, delayed payment of wages, and noncoverage of Social Security System, Pag-IBIG, and PhilHealth. After summary investigations and the submission of position papers, the Regional Director found that Juezan was an employee of the petitioner and was entitled to his money claims. The petitioner sought reconsideration, which was denied. On appeal, the Acting Secretary of Labor dismissed the appeal because the petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety bond.

The petitioner then went to the Court of Appeals on a petition for certiorari, claiming it had been denied due process. The Court of Appeals held that the petitioner had been accorded due process because it was given the opportunity to be heard, and that the Secretary of Labor had jurisdiction over the matter, since the jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the Secretary under Article 128(b) had been repealed by Republic Act Number 7730.

On the petitioner's recourse to this Court, the Court reversed and set aside the Court of Appeals and dismissed the complaint, finding no employer-employee relationship and holding that the National Labor Relations Commission was the primary agency to determine the existence of such a relationship. The Public Attorney's Office then filed a Motion for Clarification, and the Department of Labor and Employment filed its Comment also seeking clarification. The Court treated the motion as a second motion for reconsideration, granted it, and reinstated the petition, issuing the ruling now before us.

Facts

Jandeleon Juezan filed a complaint against Bombo Radyo with the Regional Office of the Department of Labor and Employment in Cebu City, demanding money claims for various labor standards benefits. The Department conducted an inspection and later summary investigations, and both parties submitted evidence. The petitioner maintained throughout that Juezan was not its employee, but a drama talent hired on a per drama basis.

The Regional Director found that Juezan was an employee of the petitioner and ordered payment of his money claims. The petitioner moved for reconsideration and submitted additional evidence, but the motion was denied. The petitioner then appealed to the Secretary of Labor, but the Acting Secretary dismissed the appeal on the ground that the petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a cash or surety bond.

On review, the Court examined the evidence and found that there was no employer-employee relationship between the petitioner and Juezan. Juezan had presented self-serving allegations and self-defeating evidence, and the findings of the Regional Director were not based on substantial evidence. Because no employer-employee relationship existed, the Department of Labor and Employment had no jurisdiction over the case.

Issues

• Whether or not the Department of Labor and Employment, in the exercise of its visitorial and enforcement power, may determine the existence of an employer-employee relationship.
• Whether or not such determination by the Department of Labor and Employment is co-extensive with its visitorial and enforcement power, or merely preliminary and subordinate to the power of the National Labor Relations Commission.
• Whether or not the Department of Labor and Employment had jurisdiction over the complaint of Juezan against the petitioner.

Applicable Provisions

Article 128(b) of the Labor Code, as amended by Republic Act Number 7730, provides:

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.

This provision is the source of the visitorial and enforcement power of the Department of Labor and Employment, and the clause requiring that the employer-employee relationship still exists is the very language the Court construes in fixing jurisdiction.

Article 217(3) of the Labor Code provides:

The Labor Arbiter shall have original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement.

This provision marks the boundary of the Department's power, because a complaint accompanied by a claim for reinstatement belongs to the Labor Arbiter rather than to the Department.

Ruling

On the first issue, the Court ruled in the affirmative. The Department of Labor and Employment may determine whether an employer-employee relationship exists. The Court held that no limitation in the law was placed upon this power, and no procedure was laid down requiring the Department to make only a preliminary finding or to refer the matter to the National Labor Relations Commission. The Department must have the power to determine whether an employer-employee relationship exists, and from there to decide whether to issue compliance orders under Article 128(b).

On the second issue, the Court abandoned its earlier ruling and held that the determination is not merely preliminary. The Department uses the same guidelines the courts use, namely the selection and engagement of the employee, the payment of wages, the power of dismissal, and the employer's power to control the employee's conduct. The Court reasoned that the expanded visitorial and enforcement power granted by Republic Act Number 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the National Labor Relations Commission. If the Department finds an existing employer-employee relationship, it takes cognizance of the matter to the exclusion of the National Labor Relations Commission. The Department loses jurisdiction only if the relationship has already been terminated, or if it appears upon review that no such relationship existed in the first place. The Court stressed that the Department's determination is not beyond review, and may be questioned through a petition for certiorari under Rule 65.

On the third issue, the Court ruled that the Department had no jurisdiction over this particular complaint. Reviewing the evidence, the Court found that there was no employer-employee relationship between the petitioner and Juezan. Juezan presented self-serving allegations and self-defeating evidence, and the findings of the Regional Director were not based on substantial evidence. Since no employer-employee relationship existed, the dismissal of the complaint was proper.

Doctrine

The Department of Labor and Employment is fully empowered, in the exercise of its visitorial and enforcement power under Article 128(b) of the Labor Code as amended by Republic Act Number 7730, to determine the existence of an employer-employee relationship, to the exclusion of the National Labor Relations Commission. This power is subject to judicial review, not review by the National Labor Relations Commission.

If the Department finds an existing employer-employee relationship, it exercises jurisdiction to the exclusion of the National Labor Relations Commission. If it finds no employer-employee relationship, jurisdiction properly lies with the National Labor Relations Commission. If the complaint is accompanied by a claim for reinstatement, jurisdiction lies with the Labor Arbiter under Article 217(3). If a complaint is filed with the National Labor Relations Commission and an employer-employee relationship still exists, jurisdiction properly lies with the Department. The Department's findings may be questioned through a petition for certiorari under Rule 65.

Disposition

The Court affirmed its earlier Decision dismissing the complaint against the petitioner, with the modification that in the exercise of the Department of Labor and Employment's visitorial and enforcement power, the Labor Secretary or the latter's authorized representative shall have the power to determine the existence of an employer-employee relationship, to the exclusion of the National Labor Relations Commission.

Remember This

The one line worth memorizing is that the Department of Labor and Employment may determine the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, to the exclusion of the National Labor Relations Commission, subject only to judicial review. Examiners like to use this case to test the jurisdictional boundary between the Department of Labor and Employment and the National Labor Relations Commission, and the effect of Republic Act Number 7730 in expanding the Department's power.