Power to penalize minimum wage violation with double indemnity

Regarding the Labor Arbiter’s authority to impose the penalty of double indemnity for violations of the Minimum Wage Law, in the case of Grand Asian v. Galvez (G.R. No. 178184, January 29, 2014), petitioners argued that the authority to issue compliance orders in relation to underpayment of wages should be read as vested exclusively on the Secretary of Labor or the Regional Director and that the Labor Arbiter has no jurisdiction thereover. They cite Section 12 of RA 6727,[1] as amended by RA 8188, which provides:
Sec. 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act shall be punished by a fine [of] not less than Twenty-five thousand pesos (P25,000) nor more than One hundred thousand pesos (P100,000) or imprisonment of not less than two (2) years nor more than four (4) years or both such fine and imprisonment at the discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law.

The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of indemnity shall not absolve the employer from the criminal liability under this Act.

If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entity’s responsible officers including but not limited to, the president, vice president, chief executive officer, general manager, managing director or partner.
The Supreme Court rejected petitioners’ contention as untenable. First, there is no provision in RA 6727 or RA 8188 which precludes the Labor Arbiter from imposing the penalty of double indemnity against employers. Second, Article 217 of the Labor Code gives the Labor Arbiter jurisdiction over cases of termination disputes and those cases accompanied with a claim for reinstatement. Thus, in Bay Haven, Inc. v. Abuan[2] the High Court held that an allegation of illegal dismissal deprives the Secretary of Labor of jurisdiction over claims to enforce compliance with labor standards law. This was also pronounced in People’s Broadcasting Service (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment,[3] wherein it was stated that the Secretary of Labor has no jurisdiction in cases where employer-employee relationship has been terminated. In sum, the Court sustained the Labor Arbiter’s award of double indemnity.

[1] Wage Rationalization Act.

[2] G.R. No. 160859, July 30, 2008, 560 SCRA 457, 469.

[3] G.R. No. 179652, March 6, 2012, 667 SCRA 538, 547.

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