ANTONIO ONG, SR., PETITIONER, VS. HENRY M. PAREL, IN HIS CAPACITY AS REGIONAL DIRECTOR OF THE MINISTRY OF LABOR AND EMPLOYMENT, ROWENA RETERACION, ROSEMARIE VERZO, SANDRA FERNAN…

Ong versus Parel

The Case

This is a special civil action for certiorari and prohibition brought by Antonio Ong, Senior, owner of the Mansion House Restaurant in Iloilo City, against Henry M. Parel, in his capacity as Regional Director of the Ministry of Labor and Employment, together with the worker-complainants led by Rowena Reteracion. Ong asks the Supreme Court to annul, for lack of jurisdiction, the Regional Director's Final Order for Compliance, the order denying reconsideration, and the writ of execution, and to prohibit further proceedings. The case matters because it draws the boundary between two powers that are easy to confuse: the visitorial and enforcement power of the Regional Director under Article 128 of the Labor Code, and the original and exclusive jurisdiction of the Labor Arbiter over money claims under Article 217.

Procedural History

The matter began not in a court but in the Regional Office of the Ministry of Labor and Employment in Iloilo City, through a request for inspection filed by the union president. After an on-the-spot inspection, a second visit, and a subpoena duces tecum that the owner did not comply with, the Regional Director issued a Final Order for Compliance ordering payment of 254,841 pesos and 26 centavos representing the claims of thirteen workers. Ong moved for reconsideration, raising lack of jurisdiction and denial of due process. The Regional Director denied the motion, holding that he had validly assumed jurisdiction under Article 128 of the Labor Code. A writ of execution followed, and Ong issued a postdated check for the amount. Ong then went directly to the Supreme Court by a special civil action for certiorari and prohibition, there being no appeal from the Regional Director's orders. The Solicitor General sided with Ong.

Facts

Antonio Ong owned the Mansion House Restaurant on J. M. Basa Street in Iloilo City. On July 28, 1986, Rowena Reteracion, president of the Mansion House Genuine Labor Union, requested an inspection of the restaurant, citing the owner's failure to comply with labor standard laws on the minimum wage, the emergency cost of living allowance, the thirteenth month pay, and the five-day incentive leave pay.

On July 30, 1986, labor representatives conducted an on-the-spot inspection. Ong could not present his business records, saying they were with his accountant, and was given five days to produce them. Thirteen employees signed affidavits supporting the charges. On August 4, the inspectors returned, and again no records were presented. On August 7, a subpoena duces tecum was issued. Instead of complying, Ong sent a letter asking whether the inspection was routinary or based on a complaint. He failed to comply by the last day, August 14.

On September 2, 1986, the inspectors submitted a narrative report with a summary of the workers' claims. On October 7, the Regional Director issued the Final Order for Compliance. Ong's motion for reconsideration was denied on November 18, and a writ of execution was issued on December 12. Ong then filed this petition.

Issues

• Whether or not the Regional Director acted without or in excess of jurisdiction, or with grave abuse of discretion, in entertaining the money claims of the private respondents and in issuing the Final Order for Compliance.
• Whether or not the Regional Director acted without or in excess of jurisdiction, or with grave abuse of discretion, in denying the motion for reconsideration and in issuing the writ of execution.
• Whether or not, assuming the Regional Director had jurisdiction, due process of law was observed in the issuance of the orders and the writ of execution.

Applicable Provisions

Article 128, subparagraphs (a) and (b), of the Labor Code, as amended, provides:

Visitorial and enforcement power. -- (a) The Secretary of Labor or his duly authorized representatives, including labor regulation officers, shall have access to employers' records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

(b) The Minister of Labor 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 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 regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection.

This is the power the Regional Director invoked, but the Court reads it as confined to enforcing labor standards, not to adjudicating money claims.

Article 217 of the Labor Code provides:

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:

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;

This is the provision that decides the case, because the claims here are precisely money claims of workers.

The first paragraph of MOLE Policy Instructions Number 7 reads:

Under PD 850, labor standards cases have been taken from the arbitration system and placed under the enforcement system except where a) questions of law are involved as determined by the Regional Director, b) the amount involved exceeds P100,000 or over 40% of the equity of the employer, whichever is lower, c) the case requires evidentiary matters not disclosed or verified in the normal course of inspection, or d) there is no more employer-employee relationship.

The Court construes the 100,000 peso ceiling as a limit on enforcement, not a grant of adjudicatory power.

Section II, Rule X, Book III of the Implementing Rules provides:

Sec. II. Place of records. -- All employment records of the employees of an employer shall be kept and maintained in or about the premises of the workplace. The premises of a workplace shall be understood to mean the main or branch office or establishment, if any, depending upon where the employees are regularly assigned. The keeping of the employee's records in another place is prohibited.

This supports the finding that Ong violated the rules on keeping employment records, which bears on the due process issue.

Ruling

On the first issue, the Court ruled for Ong. Article 217 is written in unequivocal terms, using the words original and exclusive. The Court explained that original jurisdiction means jurisdiction to take cognizance of a cause at its inception, try it, and pass judgment on the law and facts, while exclusive jurisdiction precludes the idea of co-existence. Article 217 does not empower the Regional Director to share in that jurisdiction. The Regional Director's power under Article 128 extends only to checking compliance with labor standard laws and ordering the necessary rectifications; it does not include adjudication of money claims. The 100,000 peso limit in Policy Instructions Number 7 grants no implied power to adjudicate claims.

On the second issue, the denial of reconsideration and the writ of execution fall with the Final Order, because they rest on a void order issued without jurisdiction.

On the third issue, the Court found no denial of due process. Ong was given five days to produce his records, failed on the second visit, and answered the subpoena with a letter the Court called a dilatory tactic, since the authority shown to him already stated that the inspection arose from a letter-request of his own employee. The Court held that there is no denial of due process where a party is afforded an opportunity to present his case, and that the essence of the right is having one's day in court, which means the affording of an opportunity to be heard.

Doctrine

First, the Labor Arbiter has original and exclusive jurisdiction over all money claims of workers, including claims for non-payment or underpayment of wages and other benefits provided by law. Second, the Regional Director's visitorial and enforcement power under Article 128 is limited to checking compliance with labor standards and ordering rectifications; it does not include the adjudication of money claims. Third, the 100,000 peso ceiling in MOLE Policy Instructions Number 7 limits enforcement and confers no implied power to adjudicate. Fourth, there is no denial of due process where the party was given an opportunity to be heard, even if he did not take it.

Disposition

The petition was granted; the orders of October 7 and November 18, 1986 were set aside as null and void for lack of jurisdiction, and the money claims were remanded to the corresponding labor arbiter for appropriate action without delay.

Remember This

Memorize the line: the Regional Director may inspect and enforce, but only the Labor Arbiter may adjudicate money claims. Examiners use this case to test the boundary between Article 128 enforcement power and Article 217 original and exclusive jurisdiction.