G.R. No. L-14759; July 31, 1961
THE EARNSHAWS DOCKS & HONOLULU IRON WORKS, petitioner-appellee, vs. ATANACIO A. MARDO, in his capacity as Chief Hearing Officer of the Regional Office No. 3 of the Department of Labor (Manila), RAYMUNDO POLANCOS, AGUSTIN DINIO and LUIS RAMOS, respondents-appellants.

FACTS

The respondents, Raymundo Polancos, Agustin Dinio, and Luis Ramos, filed a complaint for overtime pay, attorney’s fees, and damages against their employer, Earnshaws Docks & Honolulu Iron Works, before Regional Office No. 3 of the Department of Labor. The Regional Office, acting under the authority of Reorganization Plan No. 20-A and its implementing rules, assumed jurisdiction, issued summons, and proceeded with the case. The employer moved to dismiss the complaint on the grounds of prescription and, crucially, lack of jurisdiction, arguing that the Regional Office was not vested with judicial or quasi-judicial power to hear and decide such money claims. The Chief Hearing Officer denied the motion to dismiss and the subsequent motion for reconsideration.
Earnshaws Docks then filed a petition for certiorari and prohibition with the Court of First Instance of Manila, seeking to annul Reorganization Plan No. 20-A and the implementing rules as unconstitutional and void for conferring judicial functions on an executive body. The employer also prayed for a writ of preliminary injunction to halt the proceedings before the Regional Office. The trial court granted the injunction and, after proceedings, rendered a judgment declaring the Regional Office’s actions null and void for grave abuse of discretion and for violating the constitutional separation of powers. The Regional Office officials and the employee-claimants appealed this decision to the Supreme Court.

ISSUE

The principal issue is whether Regional Office No. 3 of the Department of Labor, under Reorganization Plan No. 20-A, validly possesses original and exclusive jurisdiction to hear and determine money claims of employees, such as for overtime compensation.

RULING

The Supreme Court affirmed the judgment of the Court of First Instance, ruling that the Regional Office had no jurisdiction over the money claims. The legal logic is anchored on the doctrine of separation of powers and the statutory authority of the Reorganization Commission. Reorganization Plan No. 20-A, specifically Section 25, which vested regional offices with “original and exclusive jurisdiction” over money claims, was promulgated by the Reorganization Commission under Republic Act No. 997 . The Supreme Court, citing its contemporaneous rulings in related cases, held that RA 997 did not authorize the Commission to confer judicial or quasi-judicial powers upon administrative entities like the regional labor offices. The adjudication of money claims, which involves the determination of rights and liabilities based on law and evidence, is inherently a judicial function.
Since the enabling law (RA 997) did not grant the Commission the power to create courts or endow executive offices with jurisdiction over justiciable controversies, the provision in Reorganization Plan No. 20-A attempting to do so was ultra vires and, consequently, null and void. Therefore, the Regional Office’s assumption of jurisdiction over the overtime pay claims was an act without legal authority. The Supreme Court upheld the permanent injunction against the Regional Office, effectively stating that such claims fall within the jurisdiction of the regular courts unless a valid statute explicitly confers jurisdiction upon an administrative body.