G.R. No. 190509 , 196143, 201041. July 20, 2022.
PEAK VENTURES CORPORATION, PETITIONER, VS. SECRETARY OF LABOR AND EMPLOYMENT, CLUB FILIPINO, INC., ROGELIO M. FERNANDEZ, GERARDO PLANTIG, GUILLERMO BANAGA AND RODOLFO REYES, RESPONDENTS. [Consolidated Cases]

FACTS

Respondent security guards were engaged by Club Filipino, Inc. (CFI) through a security service agreement with Peak Ventures Corporation (PVC). They filed a complaint with the DOLE for underpayment of wages and non-payment of various statutory benefits. The DOLE Regional Director, after being denied access to PVC’s records, conducted employee interviews and found violations. An Order was issued directing both PVC and CFI to pay the monetary awards. CFI and PVC filed separate appeals. The Secretary of Labor initially held PVC solely liable, ordering payment from its supersedeas bond, but later, upon PVC’s motion, issued an Order declaring PVC and CFI solidarily liable.
The case spawned multiple petitions. PVC assailed the finding of liability before the Court of Appeals. CFI, after a writ of garnishment was issued against its bank accounts, challenged the solidary liability ruling and later, the denial of its motion to lift the garnishment. The Court of Appeals, in one petition, reinstated the Secretary’s initial order holding only PVC liable via its bond. In another, it dismissed CFI’s challenge to the solidary liability ruling, reasoning that the error was not grave abuse of discretion since a solidary debtor who pays can seek reimbursement.

ISSUE

The core issue is whether the Secretary of Labor committed grave abuse of discretion in holding CFI solidarily liable with PVC for the monetary claims of the security guards.

RULING

The Supreme Court ruled in the negative, finding no grave abuse of discretion. The Court clarified that the visitorial power of the Secretary of Labor under Article 128 of the Labor Code extends to determining the existence of an employer-employee relationship as a preliminary matter to assess liability for labor standards violations. The law imposes solidary liability on the principal (CFI) and the contractor (PVC) for any violations of the Labor Code, pursuant to Department Order No. 18-02, Series of 2002, and established jurisprudence. This solidary liability is mandated to ensure workers are not deprived of their statutory benefits due to the contractual arrangement between the principal and the contractor.
The Court emphasized that the existence of PVC’s appeal bond does not negate CFI’s solidary liability. A solidary obligation allows the creditor to proceed against any one of the debtors. Therefore, the DOLE correctly enforced the award against CFI’s assets via garnishment. The fact that CFI could later seek reimbursement from PVC or claim against its bond is a separate concern that does not invalidate the enforcement action. The Secretary of Labor’s act of holding both parties solidarily liable and proceeding with garnishment against CFI was a valid exercise of enforcement power to ensure the workers’ claims are satisfied, and did not constitute a capricious or whimsical exercise of judgment equivalent to grave abuse of discretion. The petitions were denied.