G.R. No. 85840 - Servando's Inc. vs. Secretary of Labor and Employment

The case originated from a routine labor inspection at the petitioner’s establishment by officers of the Labor Standards and Welfare Office, Department of Labor and Employment (DOLE).
The inspection revealed alleged violations of labor standards, including occupational health and safety measures, prompting the issuance of orders concerning compliance with labor laws.

The Regional Director, acting on the inspection findings, issued orders requiring:

Payment of wage and allowance differentials aggregating P964,952.50 to 54 employees.
Compliance with labor standards, including specific orders such as clearing the passageway of waste material and installing fire extinguishers.

The petitioner was given an opportunity to present its payrolls and records but failed to do so, which was held to constitute a waiver of its right to present countervailing evidence.
The petitioner subsequently contested the Regional Director’s computations, arguing that the calculations were a “straight computation” that omitted relevant factors like actual days worked, employee status, absences, and allowances.

The petitioner initially challenged the Regional Director’s orders by filing an appeal with the National Labor Relations Commission, which affirmed the orders.
The case then proceeded to the Court, which on April 26, 1990, ruled that the matter involving wage differentials should be referred to the appropriate Labor Arbiter.
A motion for reconsideration was later filed by the respondents, contesting the referral based on the claim that the visitorial and enforcement power of the Secretary of Labor under Article 128(b) of the Labor Code should enable the Regional Director to hear these claims.
The petition raised by the petitioner for certiorari emphasized that the contested issues were evidentiary in nature and required proper judicial scrutiny through full hearings before a Labor Arbiter.

The respondents argued that the visitorial power under Article 128(b) of the Labor Code is separate and distinct from the adjudicatory power under Article 129.
Three key provisions were identified as determinative:

Article 217(a)(6) – Grants original and exclusive jurisdiction to Labor Arbiters to hear and decide money claims exceeding P5,000.00 for each employee (except claims for employee compensation, social security, medicare, and maternity benefits).
Article 129 – Empowers the Regional Director to adjudicate simple money claims provided each employee’s aggregate monetary claim does not exceed P5,000.00 and excludes cases involving reinstatement.
Article 128(b) – Confers upon the Secretary of Labor (and his authorized representatives) the visitorial and enforcement power to order compliance with labor standards after inspections, subject to limitations if evidentiary disputes arise.

The core dispute revolved around whether the visitorial power under Article 128(b) extends to cases where employees’ monetary claims exceed the P5,000.00 threshold, effectively challenging the exclusive jurisdiction granted to Labor Arbiters by Article 217(a)(6).

Whether the visitorial and enforcement powers of the Secretary of Labor, as conferred by Article 128(b) of the Labor Code, include the authority to hear and decide wage claims and other monetary claims arising from employer-employee relations even when such claims exceed P5,000.00 per employee.
Whether the interpretation of Article 217(a)(6) (exclusive jurisdiction of Labor Arbiters over monetary claims exceeding P5,000.00) should preclude the application of the visitorial powers of the Secretary of Labor in cases involving substantial wage claims.

How the provisions of Articles 217, 129, and 128(b) should be read in harmony, especially regarding the boundary between summary enforcement measures and full adjudicatory proceedings.
Whether extending the visitorial power to include adjudication in wage claims exceeding P5,000.00 would render the exclusive provision of Article 217(a)(6) and the limitations of Article 129 meaningless.

The adequacy of summary proceedings under the visitorial power to handle evidentiary issues arising from contested findings in labor inspections.
Whether the procedural demands of due process would be compromised if the Secretary of Labor were allowed to adjudicate claims that are inherently evidentiary and complex in nature.