Title
Supreme Court
South Cotabato Communications Corp. vs. Sto. Tomas
Case
G.R. No. 217575
Decision Date
Jun 15, 2016
DOLE ordered DXCP Radio Station to pay labor violations, but SC reversed, citing lack of employer-employee relationship evidence and insufficient due process claims.

Case Summary (G.R. No. L-25710)

Facts and Procedural History

On January 19, 2004, DOLE Region XII conducted a labor standards inspection at DXCP Radio Station, finding multiple violations, including underpayment of wages, 13th month pay, service incentive leave pay, rest day and holiday premium pay, non-remittance of SSS contributions, and issues with commission-based payments. Petitioners were directed to comply with corrective measures within five days but failed to do so. Summary investigations were scheduled but petitioners failed to appear or sent a secretary’s request for resetting, which DOLE denied. The DOLE Regional Director issued an Order on May 20, 2004, directing payment of ₱759,752 to the private respondents based on these findings. Petitioners appealed to the Secretary of Labor on grounds of denial of due process and lack of factual and legal basis, particularly disputing the existence of an employer-employee relationship necessary for DOLE jurisdiction. The Secretary of Labor affirmed the Regional Director’s Order on November 8, 2004. Petitioners filed a petition for certiorari with the Court of Appeals (CA), which was initially dismissed on procedural grounds but later remanded by the Supreme Court. The CA ultimately affirmed the Secretary of Labor’s decision in 2014, and denied reconsideration in 2015. Petitioners elevated the matter to the Supreme Court.

Issues on Appeal

The Supreme Court identified the core issues as:

  1. Whether the petitioners were denied due process.
  2. Whether the DOLE had jurisdiction, which depends on establishing an employer-employee relationship between petitioners and private respondents.
  3. Whether the Orders issued contain sufficient factual and legal basis, especially regarding jurisdiction and the monetary awards granted.
  4. Whether the decisions complied with constitutional requirements on clear and distinct expression of facts and law under Article VIII, Section 14 of the 1987 Constitution.

Analysis on Due Process

The Court held that petitioners were not denied due process because they were duly notified and given multiple opportunities to present evidence during the summary investigations; their failure to appear was due to their own negligence. Due process requires only an opportunity to be heard, which was satisfied. The absence or denial of resetting a hearing does not constitute denial of due process where adequate notice was given and the party failed to attend without proper justification.

Jurisdiction and Employer-Employee Relationship

The existence of an employer-employee relationship is a statutory and jurisdictional prerequisite under Article 128(b) of the Labor Code for the Secretary of Labor or DOLE representatives to exercise visitorial and enforcement powers. This principle was reaffirmed, citing the Bombo Radyo case (People’s Broadcasting Corporation v. Secretary of Labor). While DOLE can preliminarily determine the employer-employee relationship during inspections, this agency’s jurisdiction is limited and subordinate to the National Labor Relations Commission (NLRC) in resolving complex disputes on such relationship.

The Court emphasized the test to determine the employer-employee relationship consists of:

  1. Selection and engagement of the employee;
  2. Payment of wages;
  3. Power of dismissal; and
  4. Employer’s control over the employee’s conduct.

The DOLE must make independent and substantial findings applying these criteria to establish jurisdiction.

Insufficiency of Factual Findings and Substantial Evidence

The Court found that the DOLE orders lacked clear factual findings and concrete evidence establishing the employer-employee relationship. The May 20, 2004 Order merely noted discovered labor standards violations without applying the four-element test or presenting evidence showing that petitioners exercised control or engagement over the complainants. Similarly, the Secretary of Labor’s affirmation relied primarily on unverified allegations and interviews conducted during inspections, which do not meet the evidentiary threshold of substantial evidence.

Moreover, the straight computation of monetary awards, assuming uniform entitlements to benefits over three years without accounting for actual workdays or leave credits, was arbitrary and not supported by any detailed proof. Private respondents carried the burden to prove their employment claims and entitlement to benefits; their failure to substantiate these claims rendered the orders untenable.

Non-Compliance with Constitutional Requirements on Decisions

The Court underscored the constitutional mandate under Article VIII, Section 14 of the 1987 Constitution requiring courts and quasi-judicial bodies to clearly and distinctly state the facts and the law in their decisions. The DOLE orders and the Secretary of Labor’s decision failed in this regard by not providing factual findings or clear legal reasoning justifying jurisdiction and the awards. This impedes the parties’ ability to understand the basis of the ruling or to properly assess error for a

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