15. South Cotobato Communications Corporation and AUTHOR: Ocampo, Miguel Angelo C.

Gauvain Benzonan vs. Hon. Patricia Sto. Tomas, SOLE, NOTES:

Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe
Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos,
Merlyn Coliao, and Edgar Jopson
G.R. No. 217575. June 15, 2016.
TOPIC:
PONENTE: Velasco, Jr., J.
CASE LAW/ DOCTRINE:
Emergency Recit: DOLE used its LC128 powers on petitioner’s radio station. The inspection resulted to a finding that petitioner
wasn’t complying with labor standard provisions. Hence, DOLE set a hearing but petitioner failed to attend. So, the Regional
Director, and later the SOLE, ordered petitioner to pay respondents their wages, bonuses, etc. CA affirms. SC reverses for
petitioner. But, first, SC said petitioners weren’t denied due process because it is petitioner’s failure that they couldn’t attend the
hearings twice. Secondly, in ruling for petitioners, the Regional Director’s and SOLE’s orders didn’t sufficiently establish the
existence of an ER-EE relationship between the parties. Moreover, the money claims were w/o factual and legal basis. Hence,
petitioner is not liable for respondents’ money claims.
FACTS:
 On Jan. 19, 2004, DOLE Region 12 conducted a complaint inspection at the premises of DXCP Radio Station, which is
owned by petitioner South Cotobato Communications Corp. The inspection yielded a finding of violation of labor standard
provisions of the LC involving the 9 private respondents, such as:
a. Underpayment of wages;
b. Underpayment of 13th month pay;
c. Non-payment of the 5 days Service Incentive Leave (SIL) Pay;
d. Non-payment of Rest Day Premium Pay;
e. Non-payment of the Holiday Premium Pay;
f. Non-remittance of SSS Contributions; and
g. Some EEs are paid on commission basis aside from their allowances.
 The DOLE issued a notice of inspection result directing petitioner and/or its president, Gauvin Benzonan, to effect
restitution and/or correction of the alleged violations w/in 5 days from notice. Petitioner failed to comply, hence, DOLE
scheduled on March 3, 2004 a summary investigation at its Regional Office No. 12 in General Santos City.
 Petitioners failed to appear despite due notice. So, another hearing was scheduled on April 1, 2004 but petitioners’ lawyer,
Atty. Thomas Jacobo, failed to attend due to an alleged conflict in schedule. Instead, the lawyer’s secretary, Nona Gido,
appeared on the lawyer’s behalf to request a resetting.
 DOLE Regional Office denies. The Regional Director ordered petitioners to pay private respondents P759,752k.
Petitioners appeal to SOLE arguing:
1. Denial of due process – Predicated on the refusal of the Hearing Officer to reset the hearing, thus, deprived petitioners
of the opportunity to present their evidence; and
2. Lack of factual and legal basis of the order – The Regional Director’s order does not state that an ER-EE relationship
exists between petitioners and respondents, which is necessary to confer jurisdiction to the DOLE over the alleged
violations.
 SOLE affirms DOLE Regional Director’s findings because petitioners failed to question, despite notice of hearing, the
noted violations or to submit any proof of compliance therewith. And in view of petitioner’s failure to present evidence,
the SOLE adopted the Labor Inspector’s findings and considered the interviews as substantial evidence. SOLE also
sustained what is considered as the straight computation method adopted by the Regional Office as regards respondents’
monetary claims.
 Petitioners elevate the case to CA via 65. CA dismissed because petitioners failed to attach a Secretary’s Certificate
evidencing the authority of petitioner Benzonan, as President, to sign the petition. On appeal, SC remanded the case back
to CA for determination on the merits.
 CA – Upheld the SOLE’s decision. Their failure to present evidence being attributed to their negligence. Petitioners appeal
reiterating their arguments but added the NLRC’s ruling in Rolando Fabrigar, et. al. vs. DXCP Radio Station, et. al. where
the NLRC said that no ER-EE relationship exists between petitioners and respondents Fabrigar, Jopson, and Velarde. In
such case, there 2 separate actions filed by the 3 respondents: (1) For violation of labor standards provisions with the
DOLE; and (2) For illegal dismissal with the NLRC as they claim constructive dismissal effected by petitioners following
the DOLE’s inspection.
ISSUE(S):
 WON CA didn’t completely and properly dispose of the case pending before it as it never resolved all justiciable issues
raised, particularly, that the determination of presence/absence of ER-EE relationship is indispensable in the resolution of
the case as jurisdiction is dependent upon it;
 WON there’s no factual/legal basis for the issuance of the order by the Regional Director against petitioners as it was
issued based on pure allegations and w/o any substantial proof on the claimants’ part;
 WON CA erred in ruling that the SOLE didn’t act with GADALEJ in affirming the Regional Director’s order despite the
 glaring fact that no evidence were submitted by respondents as to the basis of their claim and nature of their employment;
 WON CA erred in ruling that the SOLE didn’t deny petitioners’ right to due process in affirming the Regional Director’s
order despite the evidence submitted that there exist no ER-EE relationship among the parties and that the DOLE has no
jurisdiction
HELD: YES. YES. YES. YES. Petition is granted. CA ruling reversed and set aside. Regional Director’s and SOLE’s orders
annulled.
RATIO:
 On the issue of denial of due process, petitioners argue they were prevented from presenting evidence to prove that
respondents are not their EEs when the Regional Director submitted the case for resolution w/o affording them an
opportunity to ventilate their case or rebut the findings in the inspection. They also assail the lack of basis because there’s
no ER-EE relationship, which is a pre-requisite before the DOLE can have jurisdiction.
 DOLE counter-argues that the results of the interviews conducted in the DXCP’s premises constitute substantial evidence
that served as basis for the monetary awards to respondents.
 Supreme Court said that:
a. As to due process, petitioners weren’t denied:
i. Essence of due process is simply an opportunity to be heard, or an opportunity to explain one’s side or an
opportunity to seek a reconsideration of the action/ruling complained of. As long as the parties are given such
opportunity, there’s due process;
ii. Here, petitioners were given ample opportunity to present their evidence before the Regional Director. They
were notified of the summary investigations conducted on March 3, 2004, and April 1, 2004, both of which
they failed to attend. They tried to justify their non-appearance due to unavailability of their lawyer. But the
Court said no explanation was given as to why they failed to attend the first hearing. They were negligent
because they should have ensured the availability of their lawyer on the hearing dates.
b. As to whether there’s ER-EE relationship to warrant exercise by DOLE of its jurisdiction, the orders do not contain
clear and distinct factual basis to establish DOLE’s jurisdiction and to justify the monetary awards to respondents:
i. Court first discussed requirements, rules, the governing laws, etc. The findings of fact should be supported by
substantial evidence from which the tribunals can make their own independent evaluation of the facts. In
labor cases, the quantum of proof necessary is substantial evidence, or such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion. Hence, there should be substantial
evidence to prove the existence of an ER-EE relationship;
ii. The Court said that the Regional Director’s and the SOLE’s order were issued pursuant to LC128. Under
such provision, the SOLE, or his/her reps., is granted visitorial and enforcement powers for the purpose of
determining violations of, and enforcing, the LC and any labor law, wage order, or rules and regulations
issued pursuant thereto. Existence of an actual ER-EE relationship is, thus, indispensable to the DOLE’s
exercise of such power;
iii. The DOLE’s power to determine the existence of such relationship has been established in the case of
Bombo Radyo, where it was held that determination of an ER-EE relationship is merely preliminary,
incidental, and collateral to the DOLE’s primary function of enforcing labor standard provisions. Even if it is
ruled here that it can’t be coextensive with the LC128 powers, as it is still primarily lodged with the NLRC, it
can be assumed that the DOLE can somehow make a determination because this is the meaning of the clause
“in cases where the ER-EE relationship still exists” in LC128(b);
iv. Thus, before the DOLE may exercise LC128 powers, it must resolve 2 important questions: (1) Does ER-EE
relationship still exist, or alternatively, was there ever such relationship to speak of; and (2) Are there
violations of the LC or of any labor law? The existence of an ER-EE relationship is a statutory prerequisite to
and a limitation of the SOLE’s power, one which the legislature is entitled to impose. Rationale is to
eliminate the prospect of competing conclusions of the SOLE and the NLRC on a matter fraught with
questions of fact and law, which is best resolved by the quasi-judicial body, the NLRC, rather than an
administrative official of the executive branch. If the SOLE proceeds to exercise his LC128 powers, his
office confers jurisdiction on itself which it can’t acquire;
v. In the same case of Bombo Radyo, the ruling above-stated was reiterated and clarified in the resolution of the
reconsideration, wherein the DOLE’s jurisdiction was delineated vis-à-vis the NLRC where the ER-EE
relationship is at issue. It was ruled that there’s no limitation in law upon the DOLE’s power to determine the
existence of such a relationship. No procedure was laid down where the DOLE would only make a
preliminary finding, and that the power to determine was primarily lodged with the NLRC. The law didn’t
say that the DOLE would first seek the NLRC’s determination of the existence of an ER-EE relationship, or
if disputed, the DOLE would refer the matter to the NLRC. Hence, the SOLE and is reps, can utilize the 4
tests in determining, even in the course of inspection, WON there’s an ER-EE relationship;
c. The Regional Director’s and the SOLE’s orders don’t contain clear and distinct factual basis necessary to establish the
DOLE’s jurisdiction and to justify the monetary awards to respondents:
i. The Regional Director’s order merely noted the discovery of violations of labor standards provisions in the
course of inspection of DXCP’s premises. No determination was made on the existence of an ER-EE
relationship. It presumed, not demonstrated, the existence of the relationship. DOLE also failed to show that
 petitioners exercised control over respondents’ conduct in the workplace;
ii. Neither did the orders state nor make reference to any concrete evidence to support a finding of an ER-EE
relationship and justify the monetary awards. Substantial evidence, such as proofs of employment, clear
exercise of control, and power to dismiss, etc. are grossly absent in this case. Furthermore, the orders do not
even allude to the substance of the interviews during the inspection that became the basis of the finding of an
ER-EE relationship;
iii. The SOLE’s arguments and the respondents’ allegations falls below the quantum of proof necessary to
establish the facts. Hence, it can’t be said that respondents are EEs of petitioners;
iv. With regard to the use of the straight computation method in awarding the P759k, it was w/o reference to any
other evidence other than the interviews conducted during the inspection. DOLE failed to prove on how they
arrived at such amount;
v. It’s quite unlikely for the 9 respondents to be entitled to uniform amounts of SIL pay, holiday pay premium,
and rest day premium pay for 3 years, w/o any disparity in the amounts due them since entitle to such
benefits would largely depend on the actual rest days and holidays worked and amount of remaining leave
credits in a year. The burden of proving entitlement to OT pay and premium pay for holidays and rest days
lies with the EE because these are not incurred in the normal course of business. In this case, respondents
failed to prove such;
d. The Regional Director’s and SOLE’s orders do not comply with Art. 8, Sec. 14 of the 1987 Constitution:
i. Such provision requires courts to express clearly and distinctly the facts and law on which decisions are
based;
ii. Court cites San Jose vs. NLRC – Faithful compliance by the courts and quasi-judicial bodies, such as the
DOLE, with Sec. 14 is a vital element of due process as it enables parties to know how decisions are arrived
at as well as the legal basis behind them. If such a decision had to be completely overturned or set aside, it
should also state the factual and legal basis relied upon. This is because the court should be able to justify the
sudden change of court. Otherwise, the parties will be left in the dark as to how it was reached and it would
be prejudicial to the losing party, who’s unable to pinpoint the possible errors of the court for review by a
higher tribunal;
iii. Court cites UP Diliman vs. Hon. Dizon where it tells that the Constitution and the Rules of Court require not
only that a decision should state the ultimate facts but also that it should specify the supporting evidentiary
facts, for they are what are called the findings of fact. Otherwise, the parties will be left in the dark as to how
it was reached bla bla bla;
iv. Hence, petitioners, as ER, can’t be made to answer for claims that have neither been sufficiently proved nor
substantiated.