MIDLAND INSURANCE CORPORATION, PETITIONER, VS. HON. SECRETARY OF LABOR AND EMPLOYMENT, YOLANDO OSORIO, DANTE DELOS SANTOS, OSCAR MANLANGIT, ANGELITO ENRIQUEZ, GUILLERMO LISBOA, …

Petitioner Midland Insurance Corporation (MIDLAND for brevity)
questions the March 27, 1990 Order of public
respondent Secretary of the Department of Labor and Employment^[1]
denying its appeal from the decision^[2] dated
September 25, 1989 of the Regional Director granting the money claims of
private respondents against MIDLAND, as well as the July 16, 1990^[3] and
October 1, 1990^[4]
Resolutions denying its Motions for Reconsideration of said March 27, 1990
decision.

The Solicitor General summarizes the facts of the case as
follows:

“Gleaned from the records, Atty. Armando A. Abad, Jr., a
member of the Board of Directors of petitioner and Vice-President for
Operations was assigned to operate and head petitioner’s branch or extension
office at Rooms 204-206, Natividad Bldg., Escolta, Manila. As head of said extension office, Atty. Abad
was authorized by petitioner to hire employees (among those hired were private
respondents) to comprise the Escolta extension office staff. Wages or salaries of these employees were
paid by Atty. Abad from the funds coming from the coffers of petitioner. The same was true with other office
expenditures such as office space rentals, and office supplies.

“In its supervision and examination of the performance of the
Escolta extension office, petitioner, two (2) to three (3) times a week, sent
its Vice-President of the Bonding and Surety Department, Justo de la Cruz and
Business Representative Gerry Domingo (representing petitioner’s Finance
Manager and Corporate Secretary, Estela P. Domingo) to the extension office to
conduct conferences with Atty. Abad regarding the operation of the office.

“On August 1987, Atty. Abad suffered a stroke which totally
disabled him for work. As a
consequence, petitioner’s Business Representative Gerry Domingo was tasked to
take over Atty. Abad’s position as head of the Escolta extension office.

“With Atty. Abad’s sudden departure from the office, private
respondents’ problems began cropping up. Records show that from April 1986 up to May 1989, private respondents
were not paid the remaining balance of their respective salaries as well as
their corresponding 13th month pay, vacation and sick leave benefits as well as service incentive leave pay for
1986, 1987 and 1988.

“Thus, left with no other recourse, on March 31, 1989, private
respondents filed their corresponding complaint before the DOLE.

“Acting thereon, on April 6, 1989, an Order for inspection of
the premises of petitioner was issued by DOLE Regional Director Luna C. Piezas. Thereafter, a preliminary hearing was
conducted. Both parties were required
to submit their respective position papers. In addition, petitioner was directed to submit its employment/financial
records for examination and verification by the Regional Director.

“Instead of submitting the required employment/financial
records, however, petitioner, on May 17, 1989 filed a Manifestation/Motion to
Dismiss grounded on alleged lack of cause of action. In support thereof, it averred among others, that private
respondents were not and have never been its employees, and that Atty. Abad,
its general agent, was the main employer of private respondents.

“On May 29, 1989, private respondents filed their Position
Paper containing the computation of their claims. For its part, on June 2, 1989, petitioner submitted its Position
Paper. On the bases of the Position
Papers and other documents submitted, an
Inspection Report was prepared by Labor Inspector Nicanor M. Torres
recommending that an Order for Compliance be issued by Director Piezas against
petitioner to pay private respondents the aggregate amount of P553,343.00
representing their claims for non-payment of wages, 13th month pay and service
incentive leave pay.

“After consideration of the Inspection Report, an Order was
issued by Director Piezas on September 25, 1989 requiring petitioner to pay
private respondents the corresponding amounts as recommended by Inspector Torres.

“Disagreeing with the Order of the Regional Director,
petitioner appealed to the Office of the Secretary (DOLE), raising the
following issues: a) the Labor
Enforcement Development Officer (LEDO) and Inspector as well as the Regional
Director have no jurisdiction to take cognizance of the case and issue the
questioned Order; and b) the Regional Director committed grave abuse of
discretion in proceeding with his decision without indorsing the case to the
appropriate NLRC branch.

“On March 27, 1990, Undersecretary Dionisio C. de la Serna, acting
for and in behalf of the Secretary of Labor, issued an Order affirming the
September 25, 1989 Order of the Regional Director and denying petitioner’s
appeal for lack of merit.

“Two (2) Motions for Reconsideration
subsequently filed by petitioner having been both denied (Orders dated July 16,
1990 and October 1, 1990 respectively), petitioner elevated its case to this
Honorable Court via the instant petition for certiorari.”^[5]

A Temporary Restraining Order was issued by the Court on October
24, 1990 enjoining the respondents from enforcing the disputed Orders.

MIDLAND’s fate lies in the answer to the question of whether the
Regional Director had jurisdiction to entertain the claims of private
respondent. If he had none, then public
respondent Secretary of Labor did gravely abuse his discretion and We would
rule in petitioner’s favor. If he had,
then this petition must be denied as there would have been no grave abuse of
discretion.

The pertinent law involved is Article 129 of the Labor Code, as amended, which reads as follows:

“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 interests, 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 does 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. x x x.” (Emphasis and
italics supplied)

When petitioner MIDLAND was sued by the private respondents for
non-payment of salaries, 13th month pay and service incentive leave pay for the
years 1986, 1987 and 1988, it claimed that said employees were not its
employees but employees of Atty. Armando Abad, Jr., its general agent and
refused to submit its employment/financial records to the Regional Director for
inspection and verification in spite of being ordered thrice^[6]
to do so.

Thus, the Regional Director ruled against MIDLAND, as follows:

“The following computation of claims submitted by herein
complainants on May 29, 1989 has been found to be in order and is hereby
adopted to form an integral part of this Order.

“WHEREFORE, premises considered, respondent Midland Insurance
Corporation is hereby ordered to pay the complainants the total amount of FIVE
HUNDRED FIFTY THREE THOUSAND THREE HUNDRED FORTY THREE and 90/100 PESOS
(P553,343.90) by way of unpaid salaries from April 1986 to May 1989, and 13th
month pay and service incentive leave pay from 1986 to 1988, within ten (10)
days from receipt of this order.”^[7]

One glance tells Us why the Regional Director should have
immediately referred their claims to the Labor Arbiter — each claim is more
than Five Thousand Pesos (P5,000.00) Pesos. The Regional Director must have been peeved at MIDLAND’S refusal
to submit its employment/financial records
when ordered to do so thrice that he forgot that his jurisdiction lies only
when the claim does not exceed Five Thousand (P5,000.00) Pesos and thus
proceeded to rule against MIDLAND.

Money claims for more than Five Thousand (P5,000.00) Pesos per
employee fall under the jurisdiction of the Labor Arbiter as mandated by
Article 217 of the Labor Code, as amended, which reads as follows:

“ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) 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:

x x x x x x   x
x x

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) regardless of whether or not accompanied with a claim for
reinstatement.

x x x  x x x   x x x.”

Ever since Briad
Agro Development Corporation vs. de la Serna^[8] was
reconsidered and set aside by this Court in a Resolution promulgated in
November 9, 1989,^[9]
followed by South Motorist’s Enterprises vs. Tosoc,^[10]
Brokenshire Memorial Hospital, Inc. vs. Minister of Labor and Employment,^[11]
Servando’s Inc. vs. Secretary of Labor and Employment,^[12]
which became subject of a motion
for reconsideration but which was affirmed in a Resolution of this Court
promulgated on June 5, 1991,^[13]
it has been the consistent rule, the latest of which is Baritua vs.
Secretary of the Department of Labor and Employment,^[14] that the Regional Directors can
try money claims, provided the following requisites concur, to wit:

“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 housekeeper does not exceed five thousand pesos (P5,000.00).”^[15]

The Regional Director, therefore, did not have jurisdiction to
entertain the money claims of private respondents which they filed against
MIDLAND.

WHEREFORE, the petition is granted. The questioned orders of the public
respondent are hereby SET ASIDE
and the case is referred to the Labor Arbiter for proper proceedings. The temporary restraining order issued is hereby MADE PERMANENT.

SO ORDERED.

Narvasa, C.J., (Chairman), Feliciano, Regalado, and Campos, Jr., JJ., concur.

^[1]
Penned by the Hon. Dionisio C. de la Serna; Rollo, pp. 23-27.

^[2]
Penned by the Hon. Luna C. Piezas; Rollo, pp.
43-­45.

^[3]
Penned by the Hon. Bienvenido E. Laguesma; Rollo,
pp. 28-33.

^[4]
Penned by the Hon. Cresenciano B.
Trajano; Rollo, pp. 35-36.

^[5]
Rollo, pp. 159-162.

^[6]
Ibid, p. 25.

^[7]
Ibid, p. 44.

^[8]
Where the Court ruled that the then
prevailing law, E.O. 111 (s’86) intended to make the jurisdiction to pass upon
money claims concurrent between the Secretary of Labor (or Regional Directors)
and the Labor Arbiter (174 SCRA 524, 532).

^[9]
Where the Court ruled that reconsideration is proper in view of the enactment
of RA 6715 approved on March 2, 1989, Section 9 of said law amended Article 217
of the Labor Code divested Regional Directors of the power to hear money claims
where the claims exceed P5,000.00, whether or not accompanied with a claim for
reinstatement (179 SCRA 269, 274).

^[10]
181 SCRA 386.

^[11]
182 SCRA 5.

^[12]
A Second Division Case Penned by
Padilla, J., concurred in by Melencio-Herrera, Paras, Sarmiento and Regalado,
JJ.

^[13]
It was affirmed by the Court En Banc, with Padilla, J., as ponente,
concurred in by Melencio­Herrera, Gutierrez, Jr., Paras, Bidin, Sarmiento,
Griño-Aquino, Regalado and Davide, Jr.,
JJ. with a dissenting opinion by Narvasa, J.,
and joined in by Fernan, C.J., Cruz, Feliciano, Gancayco and Medialdea, JJ. (198 SCRA 156).

In their motion for reconsideration
filed therein, the private respondents contended “that Art. 217 (a)(6) of
the Labor Code granting original and exclusive jurisdiction to Labor Arbiters
over all money claims arising from employer-employee relations involving an
amount exceeding P5,000.00, whether or not accompanied with a claim for
reinstatement, should not be interpreted as an amendment to Art. 128(b), i.e.,
as providing for an additional exception to the visitorial and enforcement power of the Secretary of
Labor.” (at pp. 158-159)

The majority opinion said that “To sustain the respondents’
position would, in effect, sanction a situation where all employees’ claims
regardless of amount, can be heard and determined by the Secretary of Labor
under his visitorial power. This does
not, however, appear to be the legislative intent.” (at p. 160)

The dissenting opinion’s main
thesis is that “the fact that both provisions deal with distinct and
distinguishable powers, the grant in Article 217 to the Labor Arbiters of original and exclusive jurisdiction over claims in
excess of P5,000.00 arising from employer-employee relations, does not operate
to oust Regional Directors of their visitorial and enforcement powers vis-a-vis
labor standards infractions also involving amounts exceeding such sum. A contrary reading would do violence to the
language of said phrase and render it entirely meaningless.” (at p. 171)

(NOTE: The Court took cognizance of this majority opinion when it
“note(d) that refusal by sugar planters to carry out this distribution (of
the share corresponding to the laborers to be made under the supervision of the
Department of Labor) would also activate the exercise of the visitorial and enforcement
powers of the Secretary under Article 128(b) of the Labor Code, in a proceeding
summary in nature, PROVIDED THAT the individual laborers’ individual claims for
each crop year did not exceed P5,000.00. [Page 13, Decision, Independent
Sagay-Escalante Planters, Inc. vs. National Labor Relations Commission, Fourth
Division, Cebu City, G.R. No. 100926, March 13, 1992; Feliciano, J.
ponente; emphasis and italics supplied])

^[14]
204 SCRA 332.

^[15]
Ibid., at p. 336.