Department of Labor and Employment (DOLE) vs. Kentex Manufacturing Corporation and Ong King Guan

A final and executory DOLE-NCR Compliance Order may no longer be altered or modified by the Court of Appeals, even to discharge a corporate officer from solidary liability, where no appeal was perfected to the Secretary of Labor within the period fixed by Department Order No. 131-13, Series of 2013, and none of the recognized exceptions to the immutability of final judgments applies.

Kentex Manufacturing Corporation owned a factory in Valenzuela City and contracted CJC Manpower Services for the deployment of workers. Ong King Guan was Kentex's Chief Finance Officer, while Beato Ang was its Chairman and Chief Executive Officer. The controversy unfolded within the DOLE's labor laws compliance system, under which a Compliance Order may be appealed to the Secretary of Labor and Employment by Memorandum of Appeal within ten days from receipt under Department Order No. 131-13, Series of 2013.

Kentex Manufacturing Corporation owned a factory in Valenzuela City. Ong King Guan was its Chief Finance Officer, and Beato Ang was its Chairman and Chief Executive Officer. On May 13, 2015, a fire broke out in the factory, claiming 72 lives and injuring a number of workers. As part of its standard procedures, personnel of the DOLE Caloocan, Malabon, Navotas and Valenzuela Field Office went to Kentex's premises, while the DOLE-NCR assessed Kentex's compliance with occupational health and safety standards.

The investigation discovered that Kentex had contracted with CJC Manpower Services for the deployment of workers. The DOLE-NCR directed Kentex and CJC to attend the mandatory conference set on May 18 and 20, 2015 at the DOLE-NCR Office in Malate, Manila; Kentex, Beato Ang, and Ong were made parties to the case before the DOLE-NCR. On May 15, 2015, the DOLE Regional Office No. III conducted its own Joint Assessment of CJC and found that CJC, which deployed workers to Kentex, was an unregistered private recruitment and placement agency and was non-compliant with occupational health and safety standards and labor standards, including underpayment of wages and nonpayment of statutory benefits. On June 8, 2015, the DOLE-RO III issued a Compliance Order declaring CJC a labor-only contractor with Kentex as its principal. During the mandatory conference, CJC's representatives admitted that there was no service contract between CJC and Kentex; that CJC had deployed 99 workers at the Kentex factory on the day of the fire; that there were no employment contracts between CJC and the workers; that a CJC representative was sent once a week to Kentex only to check the workers' daily time records; and that Kentex remitted to CJC the wage of Php230.00/day for each deployed worker, from which CJC deducted administrative costs and other statutory contributions, leaving each worker a mere wage of Php202.50 a day.

Kentex and its corporate officers, through counsel, refuted CJC's claims. They alleged that CJC's workers were originally engaged by Panday Management and Labor Consultancy, which CJC later absorbed; and that the workers' wages ranged from Php250.00 to Php350.00/day on top of CJC's wage of, more or less, Php202/day. They contended that while the corporate and employment records had all been gutted by fire, Kentex nevertheless complied with labor standards, particularly the minimum wage requirement, and with occupational health and safety standards, as evidenced by a Certificate of Compliance signed by DOLE-NCR Regional Director Alex Avila.

In a June 26, 2015 Order, the DOLE-NCR rejected Kentex's arguments. It declared that Kentex could not invoke the Certificate of Compliance because it only attested to the findings of the compliance officer at the time of the assessment or inspection, even as Kentex was duty-bound to observe continuing compliance with labor standards and occupational health and safety standards. Like the June 8, 2015 Compliance Order of the DOLE-RO III, the DOLE-NCR found that CJC was a mere labor-only contractor because it was unregistered with the DOLE Regional Office where it operated. The DOLE-NCR likewise found that the workers were underpaid and computed the monetary claims due them. It ordered Kentex Manufacturing Corporation and/or Beato C. Ang and/or Ong King Guan to pay Louie Andaya and 56 other similarly situated employees an aggregate amount of One Million Four Hundred Forty Thousand Six Hundred Forty-One Pesos and Thirty-Nine Centavos (₱1,440,641.39) within ten days from receipt, with failure to pay causing the imposition of double indemnity pursuant to Republic Act No. 8188.

On July 3, 2015, only Ong moved for reconsideration of the June 26, 2015 Order. In a July 7, 2015 letter, DOLE-NCR Regional Director Avila explained that Ong's motion for reconsideration was not the proper remedy; instead, an appeal to the DOLE Secretary should have been made within 10 days from receipt of the Order pursuant to Section 1, Rule 11 of Department Order No. 131, Series of 2013. Since Ong received the June 26, 2015 Order on the same day, he had only until July 6, 2015 within which to appeal to the DOLE Secretary, but he never did; thus, the Compliance Order attained finality. Kentex and Ong then filed with the Court of Appeals a Rule 43 Petition assailing the June 8, 2015 Compliance Order, the June 26, 2015 Order, and the July 7, 2015 letter of the DOLE-NCR Regional Director. Among the errors assigned was the DOLE-NCR's finding that Ong was solidarily liable with Kentex for the monetary awards due the workers. The Court of Appeals found no act of Ong in the June 26, 2015 Order showing his involvement in Kentex's wrongdoing.

• Finality and Immutability: Petitioner contended that the Court of Appeals erred in releasing or discharging Ong from liability because the June 26, 2015 DOLE-NCR Order had already become final and executory, no appeal having been made or perfected to the DOLE Secretary; consequently, the Court of Appeals could no longer alter the subject Order.

• Separate Juridical Personality: Respondents countered that the Court of Appeals correctly released Ong from monetary liability because a corporate officer has a juridical personality entirely separate and distinct from the corporation.
• Void Judgment and Due Process: Respondents claimed that the DOLE-NCR Order was a void judgment because they were deprived of due process; they asserted that they could not expect a fair decision if they appealed because the then DOLE Secretary had previously announced that cases would be filed against Kentex, an announcement clearly designed for media consumption and to gain publicity mileage.

• Finality and Immutability: Whether the Court of Appeals erred in modifying the June 26, 2015 DOLE-NCR Order by discharging Ong from liability after the Order had become final and executory for failure to appeal to the DOLE Secretary.
• Due Process: Whether the DOLE-NCR Order was a void judgment because respondents were allegedly deprived of due process, including on the claim that an appeal to the DOLE Secretary would be futile due to her prior media pronouncements.

• Finality and Immutability: Yes. The Court of Appeals erred in modifying the June 26, 2015 DOLE-NCR Order, which had become final and executory because no appeal was perfected to the DOLE Secretary within ten days under Department Order No. 131-13, Series of 2013; a final judgment is immutable and unalterable, and no exception applied.
• Due Process: No. Respondents were not denied due process; they substantially participated in the DOLE-NCR proceedings and had a fair and reasonable opportunity to explain their side.

• Finality and Immutability: Under Rule 11, Section 1 of Department Order No. 131-13, Series of 2013, a Compliance Order may be appealed to the Office of the Secretary of Labor and Employment by filing a Memorandum of Appeal within ten days from receipt; no further motion for extension is entertained, and a mere notice of appeal does not stop the running of the period. Ong instead moved for reconsideration, which did not halt or stop the period to elevate the matter to the DOLE Secretary. The DOLE-NCR took no action on the motion and categorically informed Ong that the motion was procedurally infirm. The June 26, 2015 Order therefore became final and could no longer be altered or modified by discharging or releasing Ong. The Court of Appeals committed serious error when it ordered Ong's discharge, because settled jurisprudence holds that a definitive final judgment, however erroneous, is no longer subject to change or revision; a decision that has acquired finality becomes immutable and unalterable, precluding modification even to correct erroneous conclusions of fact and law, whether by the court that rendered it or by the highest court. The only exceptions are correction of clerical errors, nunc pro tunc entries causing no prejudice, and void judgments. No showing was made that the Court of Appeals' modification fell within these exceptions, so the DOLE-NCR Order had to be upheld and respected.
• Due Process: Respondents' claim that the DOLE Secretary had prejudged their liability through media pronouncements, making an appeal futile, was untenable; the rules require an appeal, and failure to conform renders the judgment final and executory. Litigation is not a game of technicalities, but every case must be presented in accordance with prescribed procedure to ensure orderly and speedy administration of justice. Neither were respondents denied due process: the facts showed they substantially participated in the DOLE-NCR proceedings from the mandatory conference up to the filing of a position paper where their side was sufficiently heard. The essence of due process is to be heard; as applied to administrative proceedings, this means a fair and reasonable opportunity to explain one's side, or an opportunity to seek reconsideration of the action or ruling complained of.

• Immutability of Final Judgments — A definitive final judgment, however erroneous, is no longer subject to change or revision. A decision that has acquired finality becomes immutable and unalterable, and this quality precludes modification even if the modification is meant to correct erroneous conclusions of fact and law; it holds true whether the modification is made by the court that rendered it or by the highest court. The exceptions are (1) correction of clerical errors, (2) nunc pro tunc entries that cause no prejudice to any party, and (3) void judgments. In this case, the June 26, 2015 DOLE-NCR Order had become final for failure to appeal to the DOLE Secretary, and the Court of Appeals' modification releasing Ong did not fall within any exception, so the modification was reversed.
• Finality of DOLE Compliance Orders — Under Rule 11, Section 1 of Department Order No. 131-13, Series of 2013, a Compliance Order may be appealed to the Office of the Secretary of Labor and Employment by filing a Memorandum of Appeal within ten days from receipt; no further motion for extension is entertained, and a mere notice of appeal does not stop the running of the period. A motion for reconsideration does not toll the period. Applied: Ong's motion for reconsideration did not stop the period; no appeal was perfected; the order became final and immutable.
• Procedural Due Process in Administrative Proceedings — The observance of fairness in the conduct of any investigation is at the very heart of procedural due process. The essence of due process is to be heard; in administrative proceedings, this means a fair and reasonable opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained of. Applied: respondents substantially participated from mandatory conference to position paper, so no denial.

• "A definitive final judgment, however erroneous, is no longer subject to change or revision. A decision that has acquired finality becomes immutable and unalterable. This quality of immutability precludes the modification of a final judgment, even if the modification is meant to correct erroneous conclusions of fact and law. And this postulate holds true whether the modification is made by the court that rendered it or by the highest court in the land." — The Court quoted this passage to explain why the Court of Appeals could not alter the final DOLE-NCR Order.
• "The only exceptions to the rule on the immutability of final judgments are (1) the correction of clerical errors, (2) the so-called nunc pro tunc entries which cause no prejudice to any party, and (3) void judgments." — The Court enumerated the exceptions and found none applied to the Court of Appeals' modification.
• "The essence of due process is to be heard, and, as applied to administrative proceedings, this means a fair and reasonable opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained of." — The Court used this definition to reject respondents' due process claim.
• "The June 26, 2015 Order having become final, it could no longer be altered or modified by discharging or releasing Ong from his accountability." — This is the ratio on the finality issue, directly reversing the Court of Appeals' discharge of Ong.

• Mocorro, Jr. vs. Ramirez, 582 Phil. 357 (2008) — The Court quoted this case for the immutability of final judgments, including the rule that finality precludes modification even to correct erroneous conclusions of fact and law and the three exceptions. It served as the controlling precedent for reversing the Court of Appeals' modification of the final DOLE-NCR Order.
• Vivo vs. Philippine Amusement and Gaming Corporation, 721 Phil. 34, 39 (2013) — Cited for the definition of procedural due process in administrative proceedings, which the Court used to reject respondents' claim that they were denied due process.

• Rule 11, Section 1, Department Order No. 131-13, Series of 2013 — A Compliance Order may be appealed to the Office of the Secretary of Labor and Employment by filing a Memorandum of Appeal within ten days from receipt; no further motion for extension is entertained; a mere notice of appeal does not stop the running of the period. Applied: Ong's motion for reconsideration did not stop the period, and no appeal was perfected, so the June 26, 2015 Order became final and executory.
• Section 14, Department Order No. 18-A, Series of 2011 — Mandatory registration of contractors; failure to register gives rise to the presumption that the contractor is engaged in labor-only contracting. Applied: the DOLE-NCR found CJC to be a labor-only contractor because it was unregistered with the DOLE Regional Office where it operated, with Kentex as principal.
• Republic Act No. 8188 — An Act Increasing the Penalty and Imposing Double Indemnity for Violation of the Prescribed Increase or Adjustment in the Wage Rates. The DOLE-NCR Order warned that failure to pay the workers within ten days would cause the imposition of double indemnity pursuant to this law.
• Section 31, Corporation Code — Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation, or who are guilty of gross negligence or bad faith in directing the affairs of the corporation, shall be liable jointly and severally for all damages resulting therefrom. The Court of Appeals cited this provision in holding that Ong could not be personally liable absent bad faith or wrongdoing; the Supreme Court did not rely on it, reversing the Court of Appeals' discharge on finality grounds.

Bersamin, C.J., Jardeleza, Gesmundo, and Carandang, JJ., concur.