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

Midland Insurance versus Secretary of Labor and Employment

The Case

This is a petition for certiorari brought by Midland Insurance Corporation against the Secretary of the Department of Labor and Employment and several of its former branch employees. Midland asks the Supreme Court to annul the orders of the Secretary affirming a Regional Director's award of unpaid salaries, thirteenth month pay, and service incentive leave pay. The case matters because it fixes the boundary between two labor tribunals: the Regional Director, who may hear only small money claims in a summary proceeding, and the Labor Arbiter, who has original and exclusive jurisdiction once a single employee's claim exceeds five thousand pesos.

Procedural History

The employees filed their complaint for money claims before the Department of Labor and Employment. The Regional Director conducted an inspection and a preliminary hearing, then issued an order on September 25, 1989 directing Midland to pay the aggregate sum of 553,343.90 pesos. Midland appealed to the Office of the Secretary, which denied the appeal on March 27, 1990. Two motions for reconsideration were likewise denied, by orders dated July 16, 1990 and October 1, 1990. Midland then elevated the matter to the Supreme Court by petition for certiorari, and the Court issued a temporary restraining order on October 24, 1990 enjoining enforcement of the disputed orders.

Facts

Midland assigned its director and Vice-President for Operations, Atty. Armando Abad, Jr., to operate and head its Escolta extension office in Manila. He was authorized to hire the staff, among them the private respondents, and their wages and office expenses were paid from Midland's funds. Midland's officers visited the extension office two to three times a week to confer with him on its operations.

In August 1987, Atty. Abad suffered a stroke that totally disabled him for work, and Midland's business representative took over as head of the office. From April 1986 up to May 1989, the employees were not paid the balance of their salaries, their thirteenth month pay, and their vacation, sick leave, and service incentive leave benefits for 1986, 1987, and 1988.

On March 31, 1989, the employees filed their complaint before the Department of Labor and Employment. Midland refused to submit its employment and financial records despite being ordered three times to do so, and instead moved to dismiss on the ground that the employees were never its employees but those of Atty. Abad, its general agent. The Regional Director adopted the employees' computation and ordered payment of the total claim.

Issues

• Whether or not the Regional Director had jurisdiction to hear and decide the money claims of the private respondents.
• Whether or not the Secretary of Labor gravely abused his discretion in affirming the Regional Director's order.

Applicable Provisions

Article 129 of the Labor Code, as amended, defines the Regional Director's power over money claims:

Article 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.

The five thousand peso ceiling is the very limit that the Regional Director exceeded, since every individual claim in this case was far above it.

Article 217 of the Labor Code, as amended, fixes the jurisdiction of the Labor Arbiter:

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

This provision removes from the Regional Director any claim exceeding five thousand pesos per employee, whether or not reinstatement is sought.

Ruling

On the first issue, the Court held that the Regional Director had no jurisdiction. It noted that one glance at the claims showed each to be more than five thousand pesos, and that the Regional Director, apparently peeved at Midland's repeated refusal to submit its records, forgot that his jurisdiction lies only where the claim does not exceed that amount. Money claims beyond five thousand pesos per employee fall under the Labor Arbiter under Article 217.

The Court then restated the settled rule, drawn from its earlier resolutions and decisions, that Regional Directors may try money claims only when three requisites concur:

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.

On the second issue, because the Regional Director acted without jurisdiction, the Secretary's affirmance of that order could not stand, and the petition had to be granted.

Doctrine

A Regional Director may hear and decide money claims only in a summary proceeding, and only where the claim is presented by an employee or househelper, the claimant no longer seeks reinstatement, and the aggregate claim of each employee does not exceed five thousand pesos. Once an individual claim exceeds five thousand pesos, jurisdiction is vested originally and exclusively in the Labor Arbiter under Article 217, regardless of whether reinstatement is also claimed. An order rendered without jurisdiction is void and must be set aside, however justified the tribunal's irritation at a party's non-compliance may be.

Disposition

The petition was granted; the questioned orders of the Secretary were set aside, the case was referred to the Labor Arbiter for proper proceedings, and the temporary restraining order was made permanent.

Remember This

Memorize the three requisites for Regional Director jurisdiction, with the five thousand peso ceiling per employee as the hinge. Examiners use this case to test whether you can distinguish the Regional Director's summary power under Article 129 from the Labor Arbiter's exclusive jurisdiction under Article 217.