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PHILIPPINE SUPREME COURT DECISIONS

EN BANC

G.R. Nos. 82805 & 83225. June 29, 1989.]

BRIAD AGRO DEVELOPMENT CORPORATION, Petitioner, v. HONORABLE DIONISIO DELA SERNA, IN HIS CAPACITY AS UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS)-WFTU LOCAL CHAPTER NO. RO1-005, ALFRED DELA CRUZ, ET AL., * respondents.

[G.R. No. 83225. June 29, 1989.]

L.M. CAMUS ENGINEERING CORPORATION, Petitioner, v. THE HON. SECRETARY OF LABOR, The HON. UNDERSECRETARY DIONISIO C. DELA SERNA, VICTORIANO ATIENZA, JR., JOSNERI DIOCARES, REYNALDO PAREÑO, WINNIE ORTOSIT, NELEN SEVERINO, MARLON RESONABLE, ROLANDO ALDANESE, ALICIO SEBIAO, CARLINTO PAQUERO, JULIAN GOSONA, ROLANDO CASIMERO, ALFREDO DE LEON, VICTORIANO MACHANG, ARMANDO SALAZAR, ANITO DE JESUS, FRANCISCO DELGADO, PAQUITO PITULAN, DANILO CENTINO, ROMEO DELOS SANTOS, RUBEN LARA, ROGELIO MAGHUYOR, BEN ABDANI, RUDY PALASUGLO, WILLIAM BALDADO, ROMEO LABIGAN, TANNY JANOLO and EDGAR A. OREZ, Respondents.

Corazon R. Paulino for petitioner in G.R. No. 82805.

Raoul B. Agrava & Associates for petitioner in G.R. No. 83225.

Lar, Comia, Manala & Associates for respondents in G.R. No. 82805.

Jesus Balicanta for respondents in G.R. No. 83225.


SYLLABUS


1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; JURISDICTION OVER MONEY CLAIMS; SECRETARY OF LABOR AND REGIONAL DIRECTORS BESTOWED JURISDICTION PURSUANT TO EXECUTIVE ORDER NO. 111. — The Court rules that, in view of the promulgation of Executive Order No. 111, Zambales Base Metals v. Minister of Labor is no longer good law. Executive Order No. 111 is in the character of a curative law, that is to say, it was intended to remedy a defect that, in the opinion of the legislature (the incumbent Chief Executive in this case, in the exercise of her lawmaking powers under the Freedom Constitution) had attached to the provision subject of the amendment. This is clear from the proviso: "The provisions of Article 217 of this Code to the contrary notwithstanding . . ." Plainly, the amendment was meant to make both the Secretary of Labor (or the various Regional Directors) and the Labor Arbiters share jurisdiction.

2. STATUTORY CONSTRUCTION AND INTERPRETATION; CURATIVE STATUTES, PURPOSES AND CONDITIONS FOR VALIDITY. — Curative statutes have long been considered valid in this jurisdiction. Their purpose is to give validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with. They are, however, subject to exceptions. For one, they must not be against the Constitution and for another, they cannot impair vested rights or the obligation of contracts.

3. ID.; RULE THAT A STATUTE IS TO BE READ IN A MANNER THAT WOULD BREATHE LIFE INTO IT, RATHER THAN DEFEAT IT, APPLIED TO EXECUTIVE ORDER NO. 111; CASE AT BAR. — Executive Order vests in Regional Directors jurisdiction," [t]he provisions of Article 217 of this Code to the contrary notwithstanding", it would have rendered such a proviso — and the amendment itself — useless to say that they (Regional Directors) retained the self-same restricted powers, despite such an amendment. It is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it. At any rate, and as we have observed, the language of Executive Order No. 111 is comprehensive enough to extend to the resolution of employer-employee controversies covered by Article 217.

4. LABOR AND SOCIAL LEGISLATION; EXECUTIVE ORDER NO. 111, WITH RETROACTIVE APPLICATION. — The Executive Order in question being a curative statute has retrospective effect.

5. REMEDIAL LAW; ESTOPPEL; A PARTY MAY NOT ATTACK A TRIBUNAL’S JURISDICTION AND AT THE SAME TIME ASK FOR AFFIRMATIVE RELIEF; CASE AT BAR. — With respect moreover to Camus Engineering’s petition (G.R. No. 83225), it is the Court’s considered opinion that the petitioner is estopped from assailing Director Kong’s jurisdiction. The rule is that a party may not attack a tribunal’s jurisdiction and at the same time ask for affirmative relief. The records disclose that the petitioner had entered into an amicable settlement with a total of forty-seven employees and had it approved by Director Kong. The petitioner must, therefore, be said to have accepted Director Kong’s jurisdiction. It cannot now assail it.


D E C I S I O N


SARMIENTO, J.:


Submitted for decision are these two consolidated cases, both in the nature of challenges to the jurisdiction of the various Regional Directors of the Department of Labor and Employment to act on money claims. 1

ANTECEDENT FACTS AND PROCEEDINGS.

I. G.R. No. 82805

This case originated from a complaint filed on February 21, 1987 to recover unpaid wages and wage supplements filed with Regional Director Filomeno Balbin of the Labor Department’s Regional Office No. I sitting in San Fernando, La Union. The facts appear in his order:cralawnad

This case arose out of a complaint filed by TRADE UNION OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU Local Chapter No. ROI-005, against respondent agricultural firm, for alleged underpayment/non-payment of minimum wage, ECOLA, overtime pay, legal holiday pay, night shift differential pay, 13th month pay and service incentive leave pay.

Acting on this complaint and pursuant to a corresponding authority issued, a routine inspection was conducted on subject establishment by Labor Standards and Welfare Officer Danilo T. Basa on May 20, 1987, but the same did not materialize since no records were presented for examination, as the same are allegedly all being kept at the firm’s Manila Office. Nevertheless, LSWO Basa advised the firm’s Officer-in-Charge, Mr. Virgilio Villa-Real to present the said records for verification at our Dagupan Labor Office. However, to date and despite the fact that respondent has been duly notified to present the same, no records were presented for verification.

x       x       x


Respondent’s repeated failure to appear during the scheduled conferences despite due notices, is construed as a waiver of its right to adduce evidence to controvert the above-noted claims. Likewise, its failure to present the required employment records is presumed to mean that the presentation of the same will be against the interest of the respondent and said records will prove the claims of herein complainants.

Based on the records on hand, the workers/members of the complaining Union have been found to be underpaid of their wages and unpaid of their ECOLA, holiday pay, service incentive leave pay and 13th month pay from January 1984 to April 1987. The claims for non-payment of overtime pay and night shift differential pay have not been clearly shown and proven, hence, are not included in the computed deficiencies. 2

Director Balbin then held against Briad Agro Development Corporation, and disposed as follows:chanrob1es virtual 1aw library

WHEREFORE, PREMISES CONSIDERED, and considering further that said deficiencies form part of the legal remuneration of herein employees, respondent is hereby ordered to satisfy the same and pay the total amount of FIVE MILLION THREE HUNDRED SIXTY NINE THOUSAND NINE HUNDRED NINE PESOS and 30/ 100 (P5,369,909.30) in the manner above-stated, within fifteen (15) days from receipt hereof, and to submit proof of payment within the same period. Otherwise, a Writ of Execution will be issued to the proper sheriffs to enforce this Order. The claims for non-payment of overtime pay and night shift differential pay, are hereby DISMISSED for lack of merit.

Let the parties be notified accordingly.

SO ORDERED. 3

In its appeal to the National Labor Relations Commission, Briad Agro Development contended that the Regional Director has no authority to entertain pecuniary claims of workers, following this Court’s ruling in Zambales Base Metals, Inc. v. Minister of Labor, 4 in which we held that money claims are the exclusive domain of the labor arbiters. The National Labor Relations Commission dismissed the appeal on the strength of Executive Order No. 111, 5 amending Article 128(b) of the Labor Code, in which jurisdiction to so act on monetary claims was supposedly granted to regional directors. In its petition to this Court, Briad Agro Development reiterates its jurisdictional challenge.chanrobles virtual lawlibrary

II. G.R. No. 83225.

The money award in this case, as and for unpaid emergency cost of living allowances, and thirteenth-month and holiday pays, was granted originally in favor of seventy-four employees of L.M. Camus Engineering following an inspection by Regional Director David Kong of the Department of Labor’s Regional Office No. IX, Zamboanga City. In his order, issued on May 16, 1983, Director Kong condemned the corporation to pay a total of P146,181.20. Forty-seven employees were, however, later dropped from the case following an amicable settlement with the petitioner. The facts are as follows:chanrob1es virtual 1aw library

Records disclosed that on the basis of the complaint filed by the herein complainants, an inspection was conducted in respondent’s premises but both the project manager and the project engineer were out of town, except the internal auditor who informed the Labor Regulations Officer (now known as Labor Standards and Welfare Officer) that he had no authority to produce the employment records needed; that the internal auditor promised to inform the project manager and the project engineer about the required employment records but no information was received since then. Consequently, a subpoena duces tecum was issued by the Regional Director on August 20, 1982, addressed to the Manager of respondent company ordering the latter to submit the pertinent employment records before the Field Service Division, Regional Office No. IX, Zamboanga City on August 25, 1982 at 9:30 a.m. Notwithstanding receipt of such subpoena duces tecum and the follow-up letter to the said Manager of respondent, plus another subpoena addressed to respondent’s project manager, respondent failed to submit the required pertinent records. Consequently, on October 25, 1982 the Regional Director issued the Order in dispute, copy of which was received by respondent on November 1982.

On November 18, 1982, counsel for respondent, Atty. Nicolito L. Bustos, filed a motion for extension of time to file his motion to set aside and/or reconsider Order dated 25 October 1982.

On November 24, 1982, respondent filed a Motion to Set Aside and/or Reconsider the Order dated 25 October 1982 on the following grounds namely:chanrob1es virtual 1aw library

1. That the Order dated 25 October 1982 was issued without notice and hearing.

2. That the questioned Order is not supported by the facts and the law of the case.

Respondent argues that the awards are void because the composition of each award was not indicated; that complainants were either its employees or that of its subcontractor Carlos Balinagay; that of the 74 complainants only three, namely: Julian Gajana, Jose Casimora and Jose Roxas failed to execute quitclaims; and that for these reasons the disputed Order may be validly set aside and/or reconsidered.

Complainants, thru counsel, filed their opposition to the aforesaid Motion to Set Aside Order dated 25 October 1982. They maintain that the Order in question was issued in the valid exercise of the visitorial and enforcement power of the Minister (now Secretary) of Labor and Employment, thru the Regional Director as his duly authorized representative; that before the said Order was issued, respondent or its representative was directed time and again by the Regional Director to submit the pertinent employment records of complainants but respondent chose to ignore the said directives; that during the hearing of respondent’s motion on November 25, 1982 each complainant testified that no quitclaim was ever executed by them, although they remembered having signed a certain document which respondent thru its representative made them believe to be simply an evidence of payment of salary and not a quitclaim.

On May 16, 1983, the Regional Director issued an Order denying respondent’s motion.

On May 27, 1983, a Motion to Dismiss was filed alleging that "the parties have agreed to settle amicably the individual claims of the various complainants who are listed in the order of 25 October 1982."cralaw virtua1aw library

Respondent likewise moved for the reconsideration of the May 16, 1983-Order on the ground that the Regional Office never had any jurisdiction over the nature of the dispute. 6

The petitioner then appealed to the Office of the Secretary of Labor, an appeal that did not prosper. On behalf of the Secretary, Undersecretary Dionisio de la Serna affirmed Director Kong’s award, as modified.

The petitioner moved for reconsideration, impugning the authority of the Regional Director. Undersecretary Dionisio dela Serna denied reconsideration and sustained the Regional Director’s jurisdiction.

The petitioner, in this petition, primarily questions Regional Directors’ jurisdiction to pass upon money claims.

III. The cases before the Court; the question of jurisdiction.

The petitioners in these two consolidated cases submit that the jurisdiction over money claims is exclusive on the Labor Arbiters of the National Labor Relations Commission, by force of Article 217 of the Labor Code:chanrob1es virtual 1aw library

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving all workers, whether agricultural or non-agricultural:chanrobles virtual lawlibrary

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other terms an conditions of employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees’ compensation, social security, medicare and maternity benefits.

4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. 7

The Solicitor General, on the other hand, relies on the provisions of Executive Order No. 111, amending, among other things, Article 128, paragraph (b), of the Labor Code:chanrob1es virtual 1aw library

(b) The provisions of Article 217 of this Code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists, the Minister of Labor and Employment or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code and other labor legislation based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their orders except in case where the employer contests the findings of the labor regulation officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection. 8

He further submits that, as a consequence, Zambales Base Metals, Inc. v. Minister of Labor is no longer controlling (although in his comment in G.R. No. 83225, he maintains that it is still in force and effect.) 9

IV. The Court’s decision.

The Court rules that, in view of the promulgation of Executive Order No. 111, Zambales Base Metals v. Minister of Labor is no longer good law. Executive Order No. 111 is in the character of a curative law, that is to say, it was intended to remedy a defect that, in the opinion of the legislature (the incumbent Chief Executive in this case, in the exercise of her lawmaking powers under the Freedom Constitution) had attached to the provision subject of the amendment. This is clear from the proviso: "The provisions of Article 217 of this Code to the contrary notwithstanding . . ." Plainly, the amendment was meant to make both the Secretary of Labor (or the various Regional Directors) and the Labor Arbiters share jurisdiction.

Curative statutes have long been considered valid in this jurisdiction. Their purpose is to give validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with. They are, however, subject to exceptions. For one, they must not be against the Constitution and for another, they cannot impair vested rights or the obligation of contracts. 10 It has not been shown in this case that these exceptions apply.

That Executive Order No. 111 intended to make the jurisdiction to pass upon money claims, among the other cases mentioned by Article 217 of the Labor Code, concurrent between the Secretary of Labor (or Regional Directors) and the Labor Arbiters is clear from its perambulatory clauses, to wit:chanrob1es virtual 1aw library

WHEREAS, the welfare of the workers is a primary concern of the government.

WHEREAS, it is necessary to amend or repeal provisions of laws that repress the rights of workers and of their trade unions. 11

Executive Order No. 111, it is obvious, was enacted to widen workers’ access to the Government for redress of grievances.

The language of the provision is indeed broad enough to encompass cases over which Labor Arbiters had hitherto exercised exclusive jurisdiction. We quote, in part:chanrob1es virtual 1aw library

. . . the Minister of Labor and Employment or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code and other labor legislation . . . 12

We can no longer accept the contention that the Regional Directors’ singular concern, under the said provision, is to ensure compliance with labor standards, such as industrial safety and similar concerns. In Zambales Base Metals, it was our reading of Section 128(b) of the Code that the aforesaid labor officials’ authority stopped there, 13 but we have, in view of the amendment under Executive Order No. 111, since taken a second look. As we said, the Executive Order vests in Regional Directors jurisdiction," [t]he provisions of Article 217 of this Code to the contrary notwithstanding", it would have rendered such a proviso — and the amendment itself — useless to say that they (Regional Directors) retained the self-same restricted powers, despite such an amendment. It is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it. At any rate, and as we have observed, the language of Executive Order No. 111 is comprehensive enough to extend to the resolution of employer-employee controversies covered by Article 217.

It is interesting to note that the Government itself (through the Solicitor General) considers Zambales Base Metals v. Minister of Labor as Executive Order No. 111’s very raison d’etre. 14 If this is so, the intent of the legislator to grant Regional Directors the jurisdiction now impugned cannot any more be clearer.

Being a curative statute, the Executive Order in question has retrospective effect. In Garcia v. Martinez, 15 we held that legislation "which is in the nature of a curative statute" 16 has "retrospective application to a pending proceeding." 17 Hence, these cases should be decided in the light of the presidential issuance in question, although they might have come pending further proceedings. Be that as it may, the records show that G.R. No. 82805 had come about during the effectivity of Executive Order No. 111. (In G.R. No. 82805, the complaint was filed on February 21, 1987; in G.R. No. 83225, the material dates do not appear in the records but the order decreeing the money award was issued on October 25, 1982 and a subponena duces tecum appears to have been issued, in connection with the inspections that prefaced the complaint, on August 20, 1982. 18) With respect to G.R. No. 82805, therefore, the Executive Order squarely applies, while insofar as G.R. No. 83225 is concerned, we give it a retroactive operation.

With respect moreover to Camus Engineering’s petition (G.R. No. 83225), it is the Court’s considered opinion that the petitioner is estopped from assailing Director Kong’s jurisdiction. The rule is that a party may not attack a tribunal’s jurisdiction and at the same time ask for affirmative relief. 19 The records disclose that the petitioner had entered into an amicable settlement with a total of forty-seven employees and had it approved by Director Kong. The petitioner must, therefore, be said to have accepted Director Kong’s jurisdiction. It cannot now assail it.chanrobles law library : red

Accordingly, we sustain the jurisdiction of the respondents Regional Directors.

WHEREFORE, these petitions are DISMISSED. No costs.

SO ORDERED.

Melencio-Herrera, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Separate Opinions


NARVASA, J., concurring:chanrob1es virtual 1aw library

While, for the reasons hereinafter stated, I concur in the result reached in the main opinion, I cannot quite bring myself to agree with its express or clearly implied postulate that Executive Order No. 111 worked any substantive change in the law previous thereto as far as concerns the extent and character of the authority vested in the Secretary of Labor and Employment or his representatives in labor standards disputes. A survey of the state of the law prior to and after the issuance of said Executive Order will, I hope, make the point clearer.

1. The Law Prior to EO 111. 1

a. Exclusive Original Jurisdiction of Labor Arbiters. — Prior to the effectivity of EO 111, the Labor Arbiters had "original and exclusive jurisdiction (inter alia) to hear and decide" (1) "cases . . . that workers may file involving wages, hours of work and other terms and conditions of employment . . .," and (2) "all money claims of workers involving non-payment or underpayment of wages, overtime or premium compensation, maternity or service incentive leave, separation pay and other money claims arising from employer-employee relations, except claims for employee’s compensation, social security and medicare benefits and as otherwise provided in Article 127 of (the Labor) Code . . ." 2

b. Power Granted to Secretary of Labor or Representative. — Notwithstanding that the jurisdiction of the Labor Arbiters above mentioned was pronounced to be original and exclusive, some power over the same subject matter (over wages [e.g., non-payment or under-payment], hours of work [e.g., overtime or premium compensation], and other terms and conditions of employment [e.g., separation pay, maternity and other leave benefits]) was in measure also vested in the Secretary of Labor or his duly authorized representative, i.e., the Regional Director.

(1) Article 128 of the Labor Code. — Article 128 of the Labor Code, 3 as amended by P.D. No. 850, 4 conferred on the "Secretary of Labor or his duly authorized representatives . . . the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of . . . (the) Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order."cralaw virtua1aw library

(2) Labor Standards Provisions. — The "labor standards provisions" referred to are, of course, those concerning wages, hours of work, separation pay, maternity and other leaves, industrial or occupational safety, medical and dental treatment, etc. 5

(3) Rules and Regulations Implementing the Labor Code. — The Rules and Regulations implementing the Labor Code promulgated on February 16, 1976 provided, among other things, 6 that the Regional Director had power to cause investigation of complaints filed by aggrieved parties if employer-employee relationship still existed between the parties, and take such other action as may be necessary in accordance with Article 128 of the Code; but if the employment relation no longer existed, the case would be assigned to a Conciliator for determination of the issues and effecting of an amicable settlement, and if no settlement was reached, the case would be certified to the Appropriate Labor Arbiter. However, the Regional Director could deny certification of the case to the Labor Arbiter if: (a) the complaint patently lacked cause of action; (b) the causes of action had already prescribed; (c) the complaint patently partook (of) the nature of harassment; and (d) the complaint was barred by prior judgment. The denial of the certification could however be subject of appeal by the Bureau of Labor Standards.

(4) Policy Instructions No. 14. — Policy Instructions No. 14, on the subject, "Termination Cases," effective April 23, 1976, recognized the jurisdiction of the Regional Director to conduct a summary investigation of applications for clearance to dismiss employees and decide whether or not to deny the application; but "if he does not deny the application, he shall immediately certify the case to the Executive Arbiter for hearing and decision on the merits." 7

c. Allocation of Jurisdiction. — Considering that apart from the Regional Director (in representation of the Secretary of Labor) and the Labor Arbiter, there were other officers, i.e., the Conciliators in the Bureau of Labor Relations, who also had some power relative to "labor standards cases," it was thought necessary to define more precisely the competence of the different officials on the matter. This was done in Policy Instructions No. 6 issued by the Ministry of Labor and Employment on April 23, 1976, dealing explicitly with the subject, "Distribution of Jurisdiction over Labor Cases."cralaw virtua1aw library

(1) The Regional Director. — Placed within the exclusive original jurisdiction of the REGIONAL DIRECTOR were labor standards cases "arising from violations of labor standard laws discovered in the course of inspection or complaints where employer-employee relations still exist." 8

(2) The Conciliation Section. — Placed within the exclusive original jurisdiction of the CONCILIATION SECTION were labor standards cases "where employer-employee relations no longer exist." 9

(3) The Labor Arbiters. — Declared as "CERTIFIABLE" to the Labor Arbiters were cases which were "not settled by the Conciliation Section of the Regional Office" "where employer-employee relations no longer exist" or those concerning (a) "questions of law," or (b) "claims involving an amount exceeding P100,000 or 40% of the paid-up capital of the employer, whichever is lower, or (c) evidentiary matters not disclosed or verified in the normal course of inspection." 10

d. Additional Prescriptions. — Further refinement of the power of the Regional Directors over Labor Standards Cases was effected by Policy Instructions No. 7. Policy Instructions No. 7 declared that a Regional Director could exercise jurisdiction over labor standards controversies except in those cases —

(1) where questions of law are involved as determined by the Regional Director; 11

(2) where the amount involved exceeds P100,000 or over 40% of the equity of the employer, whichever is lower;

(3) where evidentiary matters not disclosed or verified in the normal course of inspection are required; or

(4) where there is no more employer-employee relationship. 12

e. Later Rules. —

(1) PD 1367. — Presidential Decree No. 1367 confirmed the jurisdiction of Labor Arbiters over "cases arising from employer-employee relations duly indorsed (or "certified") by the Regional Directors." 13

(2) Policy Instructions No. 37. — Policy Instructions No. 37, issued on October 7, 1978 in connection with PD 1391, provided that "cases, involving violation of labor standards laws where employer-employee relationship still exists shall be assigned to the Labor Arbiters where: (a) intricate questions of law are involved; or (b) evidentiary matters not disclosed or verified in the normal course of inspection by labor regulations officers are required for their proper disposition." 14 It declared, too, that the so-called "conciliable cases" theretofore under the jurisdiction of the defunct Conciliation Section for purposes of conciliation or amicable settlement, became immediately assignable to the Arbitration Branch for joint conciliation and compulsory arbitration. 15

(3) PD 1691. — PD 1691 further amended Article 127 (re-numbered 128) by the addition of a proviso relative to the situation referred to in Policy Instructions Numbered 7 and 37, supra, i.e., where the employer contests the findings of labor regulations officers, viz.: 16

"x       x       x

"(b) The Minister of Labor or his duly authorized representative shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulation officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection."cralaw virtua1aw library

f. Restatement of Power of Secretary of Labor or Representative Prior to EO 111. — In light of the laws and rules just cited, and the pronouncement in Policy Instructions No. 7 that labor standards cases had been taken from the arbitration system and placed under the enforcement system to the end that "the worker need not litigate to get what legally belongs to him," the fact of the matter is that the power of Regional Directors over labor standards cases prior to EO 111 consisted merely of the enforcement of UNCONTESTED MONEY CLAIMS OF PERSONS STILL EMPLOYED, i.e., money claims of persons arising from violations of labor standards provisions of the Labor Code (or other statute) discovered by labor regulations officers in the course of normal inspection, where the employment relationship still existed, or the employer did not contest or otherwise raise any issue respecting the findings of said labor regulations officers.

(1) No adjudicatory power. — Indeed, no adjudicative power as that possessed by Labor Arbiters was ever reposed in the Regional Director, in the sense of trying and deciding (or hearing and determining) legal controversies or justiciable causes involving labor standards laws. The Regional Director actually did not have the power or faculty known as "jurisdiction," vested in a judge, for instance, or a labor arbiter, i.e., to receive evidence adduced by parties involved in a labor standards controversy, determine on the basis thereof the factual issues, and apply the law to the facts thus deemed established, in order that the controversy or litigation might be authoritatively resolved. He did not have the power to resolve controversies (understood in the popular sense, as clashes of opposing views). He merely had functions that can only be described as ministerial. He had visitorial power, as representative of the Minister or Secretary of Labor, to cause inspection of establishments to ascertain observance of labor standards provisions, and in the event of discovered violations thereof, to require compliance therewith if the employer admitted the infractions; but if it should appear, at the hearing required to be held after discovery of the infractions, that a controversy existed, i.e., the employer was not accepting but was on the contrary contesting said officers’ findings, or that no employment relationship existed any longer, the Regional Director himself could not try and decide the case but had to refer or certify it to the appropriate Labor Arbiter for hearing and judgment. There was, in fine, no sharing by the Regional Director of the original and exclusive jurisdiction reposed by law in Labor Arbiters even with respect to money claims arising from alleged breach of labor standards provisions of the Labor Code.chanrobles law library

3. Relevant Jurisprudence. — It was in this sense — of the Regional Director’s lack of adjudicatory authority, or the power of compulsory arbitration — that the law was applied in Zambales Base Metals v. Minister of Labor, 146 SCRA 50 (Nov. 26, 1986), concerning money claims 17 arising from alleged violations of labor standards provisions not discovered in the course of normal inspection, Oreshoot Mining Co. v. Arellano, 156 SCRA 500 (Dec. 14, 1987), involving, among others, employees whose employment had been terminated, 18 and Ong v. Parel, 156 SCRA 768 (Dec. 21, 1987), in which the employer inter alia disputed the adequacy of the evidentiary foundation (employees’ affidavits) of the findings of the labor standards inspectors. Noteworthy is that, as observed in Ong v. Parel, the Solicitor General had taken the position (as late as January, 1987) that the respondent Regional Director was "not empowered to adjudicate money claims because such authority is reposed in the Labor Arbiter and the National Labor Relations Commission as provided under Art. 127 of the same Code, as amended . . . (and) that the visitorial and enforcement powers of the public respondent under Art. 128 of the Labor Code are limited to awards not exceeding P100,000.00 pursuant to MOLE Policy Instruction No. 7." 19

4. Amendments Under EO 111. — Another amendment of paragraph (b) of Article 128 of the Labor Code was made by Executive Order No. 111 which took effect, as aforestated, on March 3, 1987. The amendment consisted merely in the intercalation of two (2) clauses, to wit: (a) "The provisions of Article 217 of this code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists," and (b) "and other labor legislation." As thus amended, 20 paragraph (b) Article 128 now reads:jgc:chanrobles.com.ph

"(b) The provisions of Article 217 of this Code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists, the Minister of Labor and Employment or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code and other labor legislation based on the findings of labor regulations officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection."cralaw virtua1aw library

5. Actual Effect of EO 111. — According to the Solicitor General, Executive Order No. 111 was promulgated precisely to revise the law as pronounced and applied in the Zambales Base Metals decision. 21 If this be so, the formulation of the executive order falls short of the purpose, and is, in light of the prior state of the law, inefficacious to bring about the intended revision.

The insertion of the clause, "where the relationship of employer-employee still exists," to qualify the power of the Minister (now Secretary) of Labor and Employment or his duly authorized representatives — the necessary implication being that where the employment relation no longer existed, said Minister (Secretary) or his representatives had no such power — was quite unnecessary for in Policy Instructions Numbered 6, 7 and 37, supra, it was explicitly acknowledged that these officials really had no jurisdiction over cases where the relationship of employer and employee no longer existed.

The inclusion of the phrase, "and other labor legislation," was also unnecessary for it is obvious that labor standards provisions may be found in the Labor Code as well as in other statutes. In any event, the phrase did not affect the subject of jurisdiction of Regional Directors.chanroblesvirtualawlibrary

Neither does the intercalation of the phrase, "the provisions of Article 217 of this Code to the contrary notwithstanding," work a change in the existing law. For even before the effectivity of EO 111 — and notwithstanding that under said Article 217 Labor Arbiters had exclusive original jurisdiction over cases . . . (and all) money claims of workers involving non-payment or underpayment of wages, overtime or premium compensation, maternity or service incentive leave, separation pay and other money claims arising from employer-employee relations, except claims for employee’s compensation, social security and medicare benefits" — the Minister (Secretary) of Labor or his duly authorized representatives already had the power (albeit not truly adjudicative) — where the employer-employee relationship still existed —

". . . to order and administer, after due notice and hearing, compliance with the labor standards provisions of this code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulation officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection."cralaw virtua1aw library

In other words, even without the qualifying phrase, "the provisions of Article 217 of this Code to the contrary notwithstanding," the Secretary of Labor or his duly authorized representatives already "shared" in some measure the jurisdiction of Labor Arbiters to order observance of labor laws — denominated exclusive and original in said Article 217 — in that in UNCONTESTED MONEY CLAIMS OF PERSONS STILL EMPLOYED, Regional Directors had power to "order and administer . . . compliance with the labor standards provisions . . . and to issue writs of execution to the appropriate authority for the enforcement of their order." The principle has not been changed. Even under EO 111 no other aspect of the Labor Arbiter’s jurisdiction may be deemed to be shared by the Secretary or his representatives, in view of the retention of the provisos requiring (1) the existence of the employment relationship and (2) the absence of a contest or issue raised by the employer anent the findings of the labor regulations officers. Whether under EO 111 or the prior law, therefore, the Secretary of Labor or his representatives could, notwithstanding the exclusive original jurisdiction conferred on Labor Arbiters, order compliance with the legal provisions governing wages, hours of employment and other terms of employment, found to have been violated in the normal course of inspection, provided that (1) the employment relationship still existed and (2) the case was uncontested, i.e., the employer did not contest or raise any issue relative to the findings of the labor standards officers.

To recapitulate, under EO 111, the Regional Directors, in representation of the Secretary of Labor — and notwithstanding the grant of exclusive original jurisdiction to Labor Arbiters by Article 217 of the Labor Code, as amended — have power to hear cases involving violations of labor standards provisions of the Labor Code or other legislation discovered in the course of normal inspection, and order compliance therewith, provided that:chanrob1es virtual 1aw library

1) the alleged violations of the employer involve persons who are still his employees, i.e., not dismissed: and

2) the employer does not contest the findings of the labor regulations officer or raise issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection.

These propositions relative to uncontested cases are reflected in Rule III of the Rules Implementing Executive Order 111 governing the "Endorsement of Cases to the National Labor Relations Commission," viz.:jgc:chanrobles.com.ph

"Section 1. Contested Cases. —

a) In cases where the employer contests the findings of the Labor Standards and Welfare Officers and the issues cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection, the Regional Director shall endorse such case to the appropriate Arbitration Branch of the National Labor Relations Commission.

b) The employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. The issue of whether or not the case shall be endorsed to the NLRC shall be resolved by the Regional Director in the final disposition of the case.

Section 2. Labor Standards and Welfare Officers (LSWOs) as witnesses — In cases that have been endorsed to the NLRC, the LSWOs who participated in the investigation shall make themselves available as witnesses in the proceedings before the Labor Arbiter concerned."cralaw virtua1aw library

It may finally be observed that the hearing to be conducted by the Regional Director is limited to a determination of whether or not (1) the employment relationship still exists, and/or (2) the employer accepts the findings of the LSWOs and raises no issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection. In the affirmative case, the Regional Director may properly order compliance with the legal provisions violated and issue writs of execution to the appropriate authority for the enforcement of this order; otherwise, the Regional Director ceases to have competence to take cognizance of and decide the case but must refer or certify it to the Labor Arbiter for hearing and judgment.chanrobles virtual lawlibrary

6. Application of the Law to Cases at Bar. — In G.R. No. 82805 (Briad Agro Development Corporation v. de la Serna), the employer refused to present its records for inspection by the Regional Office. This may be deemed a waiver of the right to contest the conclusions of the Labor Inspectors drawn from the evidence and records at hand. Under Executive Order 111, which is applicable since the violations of labor standards took place after its effectivity, it was within the authority of the Regional Director to order compliance with the labor standards statutes, and to issue a writ of execution to the appropriate authority to enforce his order.

In G.R. No. 83255 (L.M. Camus Engineering Corporation v. Secretary of Labor), the employer similarly refused to produce its relevant records, despite several requests therefor by the Regional Office. Its refusal may be regarded as a waiver of the right to contest the Director’s findings made on the basis of the records and evidence available, including the fact that the employer had impliedly acknowledged the imputed infractions of labor standards when it made payments on account thereof to several of its employees by way of amicable settlement. Under the law prior to Executive Order 111, the Regional Director had the power, in cases where the employment relationship still existed, to order compliance with labor standards and issue a writ of execution to the appropriate authorities for the enforcement of his awards. In any event, said Executive Order, as a "curative statute . . . has retrospective application to a pending proceeding." 22

I suggest that in both cases, even without the sanction of Executive Order 111, which neither enlarged nor otherwise altered the authority of the Secretary of Labor and the Regional Directors as regards labor standards cases, the assailed actions of said officials may be sustained as properly within the powers vested in them by the law in force before the effectivity of said enactment. Upon this proposition, the dismissal of both petitions is entirely in order.

7. Republic Act No. 6715. — What in fact conferred upon Regional Directors adjudicative power in the true sense of the term, i.e., the power take cognizance of, receive evidence on and determine legal controversies brought before them, is Republic Act No. 6715, signed into law on March 2, 1988 and effective "fifteen (15) days after its publication in the Official Gazette or in at least two (2) national newspapers of general circulation, whichever comes earlier."cralaw virtua1aw library

a. Amendment of Article 129. — RA 6715 amended Article 129 of the Labor Code to read as follows:chanrob1es virtual 1aw library

ART. 129. Recovery of wages, simple money claims and other benefits. — Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this code, arising from employer-employee relations; Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the aggregate money claims of each employee or househelper do not exceed five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same . . .

Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules.

x       x       x


b. Amendment of Article 217. — Amended by RA 6715, too, was Article 217 of the same Code, to read as follows:chanrob1es virtual 1aw library

ART. 217. Jurisdiction of Labor Arbiters and the Commission. — Except as otherwise provided under this code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:chanrob1es virtual 1aw library

(1) Unfair labor practice cases;

(2) Termination disputes;

(3) If accompanied with a claim of reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relation;

(5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

(6) Except claims for employees compensation, social security, medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00), whether or not accompanied with a claim for reinstatement.

x       x       x


c. Requisites for Exercise of Jurisdiction by Regional Director, etc. — Quite clearly, under the provisions of said Act, Regional Directors and other hearing officers of the Department of Labor (aside from the Labor Arbiters) have real jurisdiction — i.e., they may try and decide, or hear and determine — any claim brought before them for recovery of wages and other monetary claims and benefits, including legal interest, if the following requisites concur, to wit:chanrobles virtual lawlibrary

1) the claim is presented by an employee or person employed in domestic or household service, or househelper under the Code;

2) the claimant, no longer being employed, does not seek reinstatement; and

3) the aggregate money claim of the employee or househelper does not exceed five thousand pesos (P5,000.00).

d. When Labor Arbiter has exclusive jurisdiction. — Where these three (3) requisites do not co-exist, the Labor Arbiters have exclusive original jurisdiction over all claims arising from employer-employee relations, other than those for employees’ compensation, social security, medicare and maternity benefits.

Fernan, C.J., Cruz and Gutierrez, Jr., JJ., concur.

Endnotes:



* Actual title of the petition. Per the Court’s resolution dated November 15, 1988, the Court required the petitioner (in G.R. No. 82805) to submit the names of the respondents. As of the time of promulgation hereof, the petitioners have not complied. But since the petition raises pure principles of law, the Court is promulgating judgment herein without the names of respondents required. The Court reserves the right, however, to impose proper disciplinary measures against the petitioner for failing without justifiable reason to comply with its directives.

1. Per the Court’s resolution dated August 26, 1988, these cases were consolidated.

2. G.R. No. 82805, Rollo, 12-13.

3. Id., 19.

4. Nos. L-73184-88, November 26, 1986, 146 SCRA 50.

5. Promulgated on December 24, 1986.

6. Rollo, id., 34-36.

7. Pres. Decree No. 442, art. 217.

8. Exec. Order No. 111, supra, sec. 2; Emphasis supplied.

9. For purposes of these petitions, we overlook this apparent lapse and consider the Solicitor’s comments in G.R. No. 82805 as the Government’s official position since they agree with the Department of Labor’s stand.

10. Government of P.I. v. Municipality of Binalonan, 32 Phil. 634 (1915).

11. Exec. Ord. No. 111, supra.

12. Supra; Emphasis supplied.

13. Zambales Base Metals, Inc. v. Minister of Labor, supra, 52.

14. G.R. No. 82805, rollo, id., 51.

15. No. L-47629, May 28, 1979, 90 SCRA 331; see also Calderon v. Court of Appeals, No. L-52235, October 28, 1980, 100 SCRA 459.

16. Supra, 333.

17. Supra.

18. Rollo, id., 35.

19. Balais v. Balais, G.R. No. 33924, March 18, 1988.

1. EO 111 expressly declared that its provisions would become effective 15 days after publication in the Official Gazette. The executive order was so published on February 16, 1987 (83 O.G. No. 7, p. 577) and therefore became effective on March 3, 1987.

2. ART. 217, Labor Code, as amended by PD 850. The reference to ART. 127 was later removed by P.D. No. 1691, May 1, 1980.

3. PD 442, effective May 1, 1974.

4. Effective Dec. 16, 1975.

5. See Book Ill (Conditions of Employment) and Book IV (Health, Safety and Social Welfare Benefits) of the Labor Code, and Secs. 2-3, Rule X, Book III, Rules Implementing the Labor Code.

6. SECS. 1, 3 and 7, Rule XII, Book V.

7. SEE Columbia Development Corporation v. Minister of Labor and Employment, 146 SCRA 425 and Cebu Institute of Technology v. Minister of Labor, 113 SCRA 257, upholding the jurisdiction of the Regional Director to summarily hear applications for clearance and decide whether to deny or certify the same; EDI Staff Builders International, Inc. v. Leogardo, G.R. No. 71907, July 30, 1987.

8. Policy Instructions No. 6, par. 1.

9. Id., par 2. The Conciliation Section however could only conciliate, it had no power to decide the case. If conciliation was not possible, the case had to be referred to the Labor Arbiter for trial and judgment.

10. Id., par. 6. N.B. There appears to be no statutory basis for these dispositions in Policy Instructions No. 6 governing the matter of jurisdiction.

11. SEE footnote 1 at page 4, infra, re Policy Instructions No. 37 which, among others, qualifies "questions of law" by the adjective, "intricate."

12. N.B. As already stated, there are no statutory foundations for these jurisdictional rules. According to the MOLE, the "clear purpose" of PD 850 — which avowedly took labor standards cases from the arbitration system and placed them; under the enforcement system subject to certain exceptions — was "to assure the worker the rights and benefits due to him under labor standards laws without having to go through arbitration. The worker need not litigate to get what legally belongs to him. The whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge." (Policy Instructions No. 7).

13. PD 1367 became effective on May 29, 1978.

14.Emphasis supplied; SEE footnote 9, supra.

15. PD 1391, eff. May 29, 1978.

16. The proviso added is indicated by italics.

17. For unpaid wages, 13th month pay and service incentive leave.

18. The employees were seeking reinstatement, back wages and other monetary benefits.

19. 156 SCRA 768; Italics supplied.

20. The amendment being indicated by italics.

21. SEE rollos of G.R. No. 82805 (p. 51) and G.R. No. 74621.

22. Garcia v. Martinez, 90 SCRA 331.

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