BATONG BUHAY GOLD MINES, INC. petitioner vs. HONORABLE DIONISIO DELA SERNA IN HIS CAPACITY AS THE UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ELSIE ROSALINDA TY, ANTONIO MENDELEBAR, MA. CONCEPCION Q. REYES, AND THE OTHER COMPLAINANTS* IN CASE NO. NCR-LSED-CI-2047-87; MFT CORPORATION AND SALTER HOLDINGS PTY. LTD., respondents. [Attachment "Q", Rollo, pp. 175-191.] Jksm

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court with a Prayer for Preliminary Injunction and or Restraining Order brought by Batong Buhay Gold Mines, Inc. (BBGMI for brevity) to annul three orders issued by respondent

Undersecretary Dionisio dela Serna of the Department of Labor and Employment, dated September 16, 1988, December 14, 1988 and February 13, 1989, respectively.

The Order of September 16, 1988 stated the facts as follows:

BBGMI appealed the Order dated July 31, 1987 of Regional Director Luna C. Piezas to respondent Undersecretary Dionisio de la Serna, contending that the Regional Director had no jurisdiction over the case.

On September 16, 1988, the public respondent issued the first challenged Order upholding the jurisdiction of the Regional Director and annulling all the auction sales conducted by Special Sheriff John Ramos. The decretal portion of the said Order ruled:

On October 13, 1988, a Motion for Reconsideration of the aforesaid order was presented by the complainants in Case No. NCR-LSED-CI-2047-87 but the same was denied.

On November 7, 1988, a Motion for Intervention was filed by MFT Corporation, inviting attention to a Deed of Sale executed in its favor by Fidel Bermudez, the highest bidder in the auction sale conducted on October 29, 1987. Xlaw

On December 2, 1988, another Motion for Intervention was filed, this time by Salter Holdings Pty., Ltd., claiming that MFT Corporation assigned its rights over the subject properties in favor of movant as evidenced by a Sales Agreement between MFT Corp. and Salter Holdings Pty., Ltd.

The two Motions for Intervention were granted in the second questioned order dated December 14, 1988, directing the exclusion from annulment of the properties sold at the October 29, 1987 auction sale and claimed by the intervenors, including one cluster of junk mining machineries, equipment and supplies, and disposing thus:

xxx.......xxx.......xxx"

Motions for Reconsideration were interposed by Batong Buhay Gold Mining, Inc. and the respondent employees but to no avail. The same were likewise denied in the third assailed Order dated February 13, 1989.

Hence, the petition under scrutiny, ascribing grave abuse of discretion amounting to lack or excess of jurisdiction to the public respondent in issuing the three Orders under attack.

The questioned Orders aforementioned have given rise to the issues: (1) whether the Regional Director has jurisdiction over the complaint filed by the employees of BBGMI; and (2) whether or not the auction sales conducted by the said Special Sheriff are valid. Scmis

Anent the first issue, an affirmative ruling is indicated. The Regional Director has jurisdiction over the BBGMI employees who are the complainants in Case Number NCR-LSED-CI-2047-87.

The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of Department of Labor and Employment (DOLE). Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety and health standards.4 [Section 7, Rule 1, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987.] Labor standards cases are governed by Article 128(b) of the Labor Code.

The pivot of inquiry here is whether the Regional Director has jurisdiction over subject labor standards case.

As can be gleaned from the records on hand, subject labor standards case was filed on February 5, 1987 at which time Article 128 (b) read as follows:5 [PD 850 as amended by PD 1691, latter became effective May 1, 1980.]

Petitioner theorizes that the Regional Director is without jurisdiction over subject case, placing reliance on the ruling in Zambales Base Inc. vs. Minister of Labor6 [146 SCRA 51.] and Oreshoot Mining Company vs. Arellano.7 [156 SCRA 498.]

Respondent Undersecretary Dionision C. Dela Serna, on the other hand, upheld the jurisdiction of Regional Director Luna C. Piezas by relying on E.O. 111, to quote:

The Court agrees with the public respondent. In the case of Maternity Children’s Hospital vs Secretary of Labor (174 SCRA 632), the Court in upholding the jurisdiction of the Regional Director over the complaint on underpayment of wages and ECOLAs filed on May 23, 1986, by the employees of Maternity Children’s Hospital, held:

In the aforecited case, the Court in reinforcing its conclusion that Regional Director has jurisdiction over labor standards cases, treated E.O. 111 as a curative statute, ruling as follows:

With regard to the petitioner’s reliance on the cases of Zambales Base, Inc. vs. Minister of Labor (supra) and Oreshoot Mining Company vs. Arellano, (supra), this is misplaced. In the case of Zambales Base, Inc., the court has already ruled that:

xxx.......xxx.......xxx"9 [Briad Agro Development Corporation vs. Dionisio dela Serna, 174 SCRA 524.]

The case of Oreshoot Mining Corporation, on the other hand, involved money claims of illegally dismissed employees. As the employer-employee relationship has already ceased and reinstatement is sought, jurisdiction necessarily falls under the Labor Arbiter. Petitioner should not have used this to support its theory as this petition involves labor standards cases and not monetary claims of illegally dismissed employees.

The Court would have ruled differently had the petitioner shown that subject labor standards case is within the purview of the exception clause in Article 128 (b) of the Labor Code. Said provision requires the concurrence of the following elements in order to divest the Regional Director or his representatives of jurisdiction, to wit: (a) that the petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.10 [SSK Parts Corporation vs. Camas, 181 SCRA 675.] Slxsc

Nowhere in the records does it appear that the petitioner alleged any of the aforestated grounds. In fact, in its Motion for Reconsideration of the Order of the Regional Director dated August 20, 1987, the grounds which petitioner raised were the following:

In the other pleadings filed by petitioner in NCR-LSED-C1-2047-87, such as the Urgent Omnibus Motion to declare void the Writ of Execution for lack of jurisdiction and the Oppositions it filed on the Motions for Intervention questioning the legal personality of the intervenors, questions as to the amounts complained of by the employees or absence of violation of labor standards laws were never raised. Raising lack of jurisdiction in a Motion to Dismiss is not the contest contemplated by the exception clause under Article 128(b) of the Labor Code which would take the case out of the jurisdiction of the Regional Director and bring it before the Labor Arbiter. Kyle

The only instance when there was a semblance of raising the aforestated grounds, was when they filed an Appeal Memorandum dated January 14, 1988, before the respondent undersecretary. In the said Appeal Memorandum, petitioner comes up with the defense that the Regional Director was without jurisdiction, as employer-employee relationship was absent, since petitioner had ceased doing business since 1985.

Records indicate that the Labor Standards and Welfare Officers, pursuant to Complaint Inspection Authority No. CI-2-047-87, were not allowed to look into records, vouchers and other related documents. The officers of the petitioner alleged that the company is presently under receivership of the Development Bank of the Philippines.11 [Rollo, page 65.] In lieu of this, the Regional Director had ordered that a summary investigation be conducted.12 [Section 11. Hearing. Where no proof of compliance is submitted by the employer after seven (7) calendar days from receipt of the inspection results, the Regional Director shall summon the employer and the complainants to a summary investigation. In regular routine inspection cases however, such investigation shall be conducted where no complete field investigation can be made for reasons attributable to the fault of the employer or his representatives, such as those but not limited to instances when the field inspectors are denied access to the premises, employment records, or workers of the employer. (Rules on the Disposition of Labor Standards Cases)] Despite proper notices, the petitioner refused to appear before the Regional Director. To give it another chance, an order to file its position paper was issued to substantiate its defenses. Notwithstanding all these opportunities to be heard, petitioner chose not to avail of such.

As held in the case of M. Ramirez Industries vs. Sec. of Labor and Employment, (266 SCRA 111):

Petitioner’s refusal to allow the Labor Standards and Welfare Officers to conduct inspection in the premises of their head office in Makati and the failure to file their position paper is equivalent to a waiver of its right to contest the claims of the employees. This Court had occasion to hold there is no violation of due process where the Regional Director merely required the submission of position papers and resolved the case summarily thereafter.13 [Villadolid vs. Inciong, 121 SCRA 205.] Furthermore, the issuance of the compliance order was well within the jurisdiction of the Regional Director, as Section 14 of the Rules on the Disposition of Labor Standards Cases provides: Scslx

It bears stressing that this petition involves a labor standards case and it is in keeping with the law that "the worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge."14 [MOLE Policy Instructions No. 7.]

Thus, their claim of closure for business, among other things, are factual issues which cannot be brought here for the first time. As petitioner refused to participate in the proceedings below where it could have ventilated the appropriate defenses, to do so in this petition is unavailing. The reason for this is that factual issues are not proper subjects of a special civil action for certiorari to the Supreme Court.15 [Philippine Long Distance Company vs. NLRC, 190 SCRA 717.]

It is therefore abundantly clear that at the time of the filing of the claims of petitioner’s employees, the Regional Director was already exercising visitorial and enforcement powers.

Regional Director’s visitorial and enforcement powers under Art. 128 (b) has undergone series of amendments which the Court feels to be worth mentioning. Sclaw

Confusion was engendered by the promulgation of the decision in the case of Servando’s Inc. vs. Secretary of Labor and Employment and the Regional Director, Region VI, Department of Labor and Employment.16 [184 SCRA 664.] In the said case, the Regional Director took cognizance of the labor standards cases of the employees of Servando’s Inc., but this Court held that:

The Servando ruling, in effect, expanded the jurisdictional limitation provided for by RA 6715 as to include labor standards cases under Article 128 (b) and no longer limited to ordinary monetary claims under Article 129.

In fact, in the Motion for Reconsideration18 [198 SCRA 156.] presented by the private respondents in the Servando case, the court applied more squarely the P5,000 limit to the visitorial and enforcement power of the Regional Director, to wit:

But prevailing law and jurisprudence rendered the Servando ruling inapplicable. In the recent case of Francisco Guico, Jr. versus The Honorable Secretary of Labor & Employment Leonardo A. Quisumbing, GR # 131750, promulgated on November 16, 1998, this Court upheld the jurisdiction of the Regional Director notwithstanding the fact that the amounts awarded exceeded P5,000.

Republic Act 7730, the law governing the visitorial and enforcement powers of the Labor Secretary and his representatives reads: Esâ msc

The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director has jurisdiction over the present labor standards case. EsmmÓ is

Well-settled is the rule that jurisdiction over the subject matter is determined by the law in force when the action was commenced, unless a subsequent statute provides for its retroactive application, as when it is a curative legislation.19 [Atlas Fertilizer Corporation vs. Navarro, April 30, 1987.]

Curative statutes are intended to supply defects, abridge superfluities in existing laws and curb certain evils. They are intended to enable persons to carry into effect that which they have designed and intended, but has failed of expected legal consequence by reason of some statutory disability or irregularity in their own action. They make valid that which, before the enactment of the statute, was invalid.20 [Agpalo, Ruben. Statutory Construction. Citing the cases of Del Castillo vs. SEC, 96 Phil 119; Santos vs. Duata, 14 SCRA 1041; DBP vs. CA, 96 SCRA 342.]

In arriving at this conclusion, the case of Briad Agro Development vs. De la Cerna21 [179 SCRA 270.] comes to the fore. In the said case, RA 6715 was held to be a curative statute. There, the Court ruled that RA 6715 is deemed a curative statute and should be applied to pending cases. The rationale of the ruling of the Court was that prior to RA 6715, Article 217 as amended by E.O. 111, created a scenario where the Labor Arbiter and the Regional Director of DOLE had overlapping jurisdiction over money claims. Such a situation was viewed as a defect in the law so that when RA 6715 was passed, it was treated or interpreted by the Court as a rectification of the infirmity of the law, and therefore curative in nature, with retroactive application.

Parenthetically, the same rationale applies in treating RA 7730 as a curative statute. Explicit in its title.22 [Entitled "AN ACT FURTHER STRENGTHENING THE VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE 128OF PD 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES", approved by the President on June 2, 1994.] is the legislative intent to rectify the error brought about by this Court’s ruling that RA 6715 covers even labor standards cases where the amounts to be awarded by the Regional Director exceed P5,000 as provided for under RA 6715. Congressional records relative to Republic Act 7730 reveal that, "this bill seeks to do away with the jurisdictional limitations imposed thru said ruling (referring to Servando) and to finally settle any lingering doubts on the visitorial and enforcement powers of the Secretary of Labor and Employment."23 [The records of the House of Representatives showed that Congressman Alberto S. Veloso and Eriberto V. Loreto sponsored RA 7730.] justice

All the foregoing studiedly considered, the ineluctable conclusion is that the application of RA 7730 to the case under consideration is proper.

Thus, it is decisively clear that the public respondent did not act with grave abuse of discretion in issuing the Order dated September 16, 1988.

The second issue for resolution is the validity of the auction sales conducted by Special Sheriff Ramos. It bears stressing that the writ of execution issued by the Regional Director led to the several auction sales conducted on September 24, 1987, October 2, 1987, October 23, 1987, October 29, 1987 and October 30, 1987.

In the first Order of public respondent, the five (5) auction sales were declared null and void. As the public respondent put it, "the scandalously low price for which the personal properties of the respondent were sold leads us to no other recourse but to invalidate the auction sales conducted by the special sheriff."24 [Rollo, p. 203.]

In the September 16, 1988 Order25 [Rollo, pp. 200-202.] of public respondent, the personal properties and corresponding prices for which they were sold were as follows:

As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed absent any showing of grave abuse of discretion tainting the same. But in the case under scrutiny, there was grave abuse of discretion when the public respondent, without any evidentiary support, adjudged such prices as "scandalously low". He merely relied on the self-serving assertion by the petitioner that the value of the auctioned properties was more than the price bid. Obviously, this ratiocination did not suffice to set aside the auction sales.

The presumption of regularity in the performance of official function is applicable here. Conformably, any party alleging irregularity vitiating auction sales must come forward with clear and convincing proof.

Furthermore, it is a well-settled principle that:

Consequently, in declaring the nullity of the subject auction sales on the ground of inadequacy of price, the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

But, this is not to declare the questioned auction sales as valid. The same are null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines, as shown by the: Esä m

The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP) even prior to the filing of the complaint of petitioner’s employees. The properties having been mortgaged to DBP, the applicable law is Section 14 of Executive Order No. 81, dated 3 December 1986, otherwise known as the "The 1986 Revised Charter of the Development Bank of the Philippines," which exempts the properties of petitioner mortgaged to DBP from attachment or execution sales. Section 14 of E.O. 81, reads:

In fact, a letter dated January 31, 1990 of Jose C. Sison, Associate Executive Trustee of the Asset Privatization Trust, to the Office of the Clerk of Court of the Supreme Court, certified that the petitioner is covered by Proclamation No. 50 issued on December 8, 1986 by President Corazon C. Aquino.

Quoted hereunder are the pertinent portions of the said letter:28 [Rollo, pp. 451-452.]

The exemption referred to in the aforecited letter is one of the circumstances contemplated by Rule 39 of the Revised Rules of Court, to wit:

Private respondents contend that even if subject properties were mortgaged to DBP (now under Asset Privatization Trust), Article 11029 [Art. 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of government and other creditors may be paid.] of the Labor Code, as amended by RA 6715, applies just the same. According to them, the said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This contention is untenable. In the case of DBP vs. NLRC,30 [183 SCRA 328.] the Supreme Court held that the workers preference regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates bankruptcy or liquidation proceedings of the employer’s business. What is more, it does not disregard the preferential lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification, concurrence and preference of credits.

We now come to the issue with respect to the second Order, dated December 14, 1988, which declared as valid the auction sale conducted on October 29, 1987 by Special Sheriff John Ramos. Public respondent had no authority to validate the said auction sale on the ground that the intervenors, MFT Corporation and Salter Holdings Pty., Ltd., as purchasers for value, acquired legal title over subject properties. ScmisÓ

It is well to remember that the said properties were transferred to the intervenors, when Fidel Bermudez, the highest bidder at the auction sale, sold the properties to MFT Corporation which, in turn, sold the same properties to Salter Holdings Pty., Ltd. Public respondent opined that the contract of sale between the intervenors and the highest bidder should be respected as these sales took place during the interregnum after the auction sale was conducted on October 29, 1987 and before the issuance of the first disputed Order declaring all the auction sales null and void.

On this issue, the Court rules otherwise.

As regards personal properties, the general rule is that title, like a stream, cannot rise higher than its source.31 [Tolentino, Arturo M. CIVIL CODE OF THE PHILIPPINES, Vol. V, page 65, citing National Bank vs. Wisconsin, C.R. Co., 44 Minn, 224, 46 N.W. 342, 9 L. R. A., 20 Am. St. Rep 566.] Consequently, a seller without title cannot transfer a title better than what he holds. MFT Corporation and Salter Holdings Pty., Ltd. trace their title from Fidel Bermudez, who was the highest bidder of a void auction sale over properties exempt from execution. Such being the case, the subsequent sale made by him (Fidel Bermudez) is incapable of vesting title or ownership in the vendee.

The Order dated December 14, 1988, declaring the October 29, 1987 auction sale as valid, was issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

WHEREFORE, the petition is hereby GRANTED, insofar as the Order dated December 14, 1988 of Undersecretary Dionisio dela Serna is concerned, which Order is SET ASIDE. The Order of September 16, 1988, upholding the jurisdiction of the Regional Director, is AFFIRMED. No pronouncement as to costs. xä law

Melo, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.